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Ramky Infrastructure

BSE: 533262|NSE: RAMKY|ISIN: INE874I01013|SECTOR: Construction & Contracting - Civil
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Auditor's Report (Ramky Infrastructure) Year End : Mar '18

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Ramky Infrastructure Limited (“the Company”), which comprise the Balance Sheet as at 31st March 2018, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred as “standalone Ind AS financial statements”).

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit of the standalone Ind AS Financial Statements in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

Attention is invited to

a Note 49 to the standalone Ind AS financial statements in respect of existence of material uncertainties over the realisability of certain construction work in progress, inventories and trade receivables aggregating to Rs. 3,607.42 mn, which are subject matters of arbitration proceedings/negotiations with the customers and contractors due to foreclosure of contracts and other disputes. The management of the Company, keeping in view the status of negotiations and the outcome of arbitration proceedings on the basis of which steps to recover these amounts are currently in process, is confident of recovering the aforesaid dues. In view of pending billing of project WIP/slow progress/termination of these projects, and lack of other alternate audit evidence to corroborate management’s assessment of recoverability of these balances, we are unable to comment on the extent to which these balances are recoverable.

b Note 50 to the standalone Ind AS financial statements with regard to insurance claim due to floods on one of the Company’s project in Srinagar, Jammu and Kashmir, the Company has recognised insurance claim revenue aggregating to Rs. 350.46 mn to the extent measured reliably and accounted/charged off related additional costs incurred towards damage by floods.

c Note 51 to the standalone Ind AS financial statements in respect of write back of the ‘liabilities no longer required’ outstanding for a long period aggregating to Rs. 2,388.04 mn. The management is confident that the liabilities no longer required and no material adjustment will be required.

d Note 52 to the standalone Ind AS financial statements in respect of write off of the ‘assets no longer receivable’ outstanding for a long period aggregating to Rs. 1,437.82 mn. The management considered it prudent not to carry such receivables.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1 As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of subsection 11 of section 143 of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2 As required by section 143 (3) of the Act, we report that:

a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity dealt with by this report are in agreement with the books of account;

d. in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

e. on the basis of the written representations received from the directors as on 31st March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2018 from being appointed as a director in terms of section 164 (2) of the Act;

f. with respect to the adequacy of internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure B” to this report; and

g. with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements; (Refer Note 42 to the standalone Ind AS financial statements);

ii. the Company has made provision as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts; (Refer Note 36 to the standalone Ind AS financial statements) and

iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

“ANNEXURE A” TO THE INDEPENDENT AUDITORS’ REPORT

The Annexure referred to in Paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ in our Independent Auditors’ Report to the members of the Company on the standalone Ind AS financial statements for the year ended, 31st March, 2018, we report that;

(i) In respect of the Company’s fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the management in accordance with a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, the discrepancies noticed on such verification were not material.

(c) According to the information and explanations given to us, the title deeds of immovable properties included in property, plant and equipment are held in the name of the Company.

(ii) In respect of the Company’s Inventory:

According to the information and explanations given to us, the management has conducted physical verification of inventory at reasonable intervals during the year. The discrepancies noticed on verification between physical stocks and book records were not material.

(iii) The Company has granted unsecured loans to 5 companies (out of which the loans granted to 2 companies are interest free) covered in the register maintained under section 189 of the Act, in respect of such loans;

a) In our opinion, the terms and conditions of the loans granted by the Company are not prejudicial to the interest of the Company except in the case of interest free unsecured loans granted to 2 parties, aggregating to Rs. 1,350.70 mn as at March 31, 2018, having regard to the cost of funds to the Company which are prejudicial to the interest of the Company.

b) The receipt of principal amount and interest, wherever stipulated is regular other than an amount disclosed in (c) below. Further in case of interest free loan granted to 2 parties where the schedule of repayment of the principal and payment of interest has not been stipulated, we are unable to comment as to whether repayments are regular.

c) In case of loans carrying interest, there is an overdue interest amounting to Rs.170.95 mn for more than 90 days. As per the information and explanations given to us, the Company has made reasonable steps to recover overdue interest portion. Further, in case of interest free unsecured loans granted to 2 parties as the schedule of repayment has not been stipulated, we are unable to comment whether any amount is overdue and whether any steps for recovery of the principal is required.

(iv) According to information and explanations given to us and based on the legal opinion obtained by the Company that it is engaged in the business of providing infrastructure facilities in terms of Section 186, the Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013, in respect of grant of loans, making investments and providing guarantees and securities as applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposits during the year within the meaning of section 73 to 76 of the Act and the Rules framed thereunder, as amended.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Rules made by the Central Government under section 148 (1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us:

(a) According to information and explanations given to us and records of the Company examined by us, amounts deducted/ accrued in the books of accounts in respect of undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, value added tax, goods and services tax, cess and other material statutory dues as applicable have been actually/regularly deposited with the appropriate authorities and there have been delays in number of cases during the year. As per information and explanations given to us the Company did not have any dues on the account of excise duty and customs duty. Details of undisputed dues in respect of provident fund, employees state insurance, service tax, sales tax, entry tax, works contract tax, value added tax and income-tax that were in arrears for a period of more than six months from the date they become payable are provided in Appendix-I.

(b) According to the information and explanations given to us and records of the Company examined by us, particulars of dues outstanding in respect of sales tax, service tax, and value added tax which have not been deposited on account of any dispute are given in Appendix-II to this report.

(viii) In our opinion and according to the information and explanations given to us, the Company has defaulted in the repayment of certain dues to financial institutions and banks. The details of such default are setout in Appendix-III to the report. There are no loans or borrowings payable to Government and debenture holders.

(ix) According to the information and explanations given to us, the Company has not raised moneys by way of initial public offer or further public offer including debt instruments and term loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

(x) Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, the provisions of clause 3 (xii) of the Order are not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable. The details of related party transactions as required by the applicable accounting standards have been disclosed in the notes to standalone Ind AS financial statements.

(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

Appendix I as referred to in Para vii (a) of Annexure A to the Independent Auditor’s Report

Name of the statue

Nature of the due

Amount Rs. in mn

Andhra Pradesh VAT Act,2005

Value Added Tax (VAT)

7.76

Telangana VAT

Value Added Tax (VAT)

6.36

Chandigarh Value Added Tax Act

Works Contract Tax Deducted at source

0.20

Chhattisgarh Value Added Tax Act

Works Contract Tax Deducted at source

1.38

Madhya Pradesh Value Added Tax Act

Works Contract Tax Deducted at source

20.39

New Delhi Value Added Tax Act

Works Contract Tax Deducted at source

3.88

Telangana Value Added Tax Act

Works Contract Tax Deducted at source

0.33

Uttar Pradesh Value Added Tax Act

Works Contract Tax Deducted at source

6.84

West Bengal Value Added Tax Act

Works Contract Tax Deducted at source

2.03

Central Sales Tax Act, Telangana

Central Sales Tax

3.29

Central Sales Tax Act, Karnataka

Central Sales Tax

1.70

Madhya Pradesh Entry Tax Act

Entry Tax

4.49

Central Sales Tax Act, Telangana

Central Sales Tax

3.29

Finance Act 1994

Service Tax

4.76

Employees Provident Fund and Miscellaneous Provisions Act

Employees Provident Fund

0.03

Employees State Insurance Act

Employees State Insurance

0.17

Income-tax Act, 1961

Tax deducted at Source

0.17

Appendix II as referred to in Para vii (b) of Annexure A to the Independent Auditor’s Report

Name of the Statue

Nature of the due

Amount (Rs. in mn)

Period to which it pertain

Forum where dispute pending

Andhra Pradesh General sales Tax Act, 1957

Tax

1.74

2001-02

High Court of Andhra Pradesh. High Court dismissed the petition. Company waiting for order.

(0.35)*

Andhra Pradesh General sales Tax Act, 1957

Tax

9.07

2002-03

Sales Tax Appellate Tribunal, Hyderabad

(4.53)*

Andhra Pradesh VAT Act, 2005

Tax and Penalty

142.46

2005-09

Sales Tax Appellate Tribunal, Hyderabad

(74.60)*

Andhra Pradesh VAT Act, 2005

Tax

63.08

2010-11

High Court, Andhra Pradesh and Telangana

Andhra Pradesh VAT Act, 2005

11.90

Sales Tax Appellate Tribunal, Hyderabad

Tax

(4.35)*

2007-09

Bihar VAT Act, 2005

Penalty

44.61

2010-12

DCCT(Appeal), Patna

JVAT Act

Penalty

15.60

2012-13

DCCT, Jamshedpur

Karnataka Value Added Tax, 2003

Tax

8.76

2005-06

Joint Commissioner of CT- Appeal 3

(8.76)*

Madhya Pradesh Value Added Tax, 2002

Tax

23.79

2010-14

Appellate Tribunal, Bhopal

(5.95)*

Maharashtra Value Added Tax

Tax

44.43

2011-14

DCCT, Jamshedpur

Punjab Value Added Tax, 2005

Tax

3.50

2006-07

VAT Tribunal, Punjab, Chandigarh

Punjab Value Added Tax, 2005

Tax

3.41

2008-09

Appealed before AETC(Appeal)

West Bengal Value Added Tax, 2005

Tax

261.61

2005-13

The Additional Commissioner Commercial taxes, Kolkata

(0.36)*

West Bengal Value Added Tax,

Tax

85.22

2010-13

DCCT, Bureau of Investigation, Kolkata

2005

(1.00)*

West Bengal Value Added Tax, 2005

Tax

16.26

2013-14

Joint Commissioner Appeals

West Bengal Commercial Tax Appellate & Revision Board

West Bengal Value Added Tax, 2005

Tax

3.04

2014-15

Sr. JCCT(Appeal)

* indicates pre-security deposits with respective authorities

Appendix II as referred to in Para vii (b) of Annexure A to the Independent Auditor’s Report_

Name of the Statue

Nature of the due

Amount (Rs. in mn)

Period to which it pertain

Forum where dispute pending

Finance Act 1994

Tax

30.50

2004-05 to 2006-07

Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru

Finance Act 1994

Tax

7.98

2002-03

Central Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata

(0.80)*

Finance Act 1994

Tax

10.45

(4.00)*

2007-08 to 2009-10

Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru

Finance Act 1994

Tax

442.35

(2.30)*

2004-05 to 2007-08

Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru

Finance Act 1994

Tax

142.61

(2.00)*

01-04-2007 to 30-092008

Central Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata

Finance Act 1994

Tax

17.90

2005-07

Commissioner of Customs, Central Excise & Service Tax, Orissa

Finance Act 1994

Tax

17.33

01-07-2005 to 30-062010

Central Excise & Service Tax Appellate Tribunal (CESTAT), Hyderabad

Finance Act 1994

Tax

42.86

01.04.2007 to 31.03.2010

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Tamilnadu

Finance Act 1994

Tax

1.92

01.04.2010 to 31.03.2011

Commissioner of Service tax Tamilnadu-35

Finance Act 1994

Tax

138.72

01.04.2007 to 31.03.2012

Commissioner of Service tax Andhra Pradesh

Finance Act 1994

Tax

6.82

01.04.2010 to 31.03.2011

Commissioner of Service tax Tamilnadu

Finance Act 1994

Tax

21.75

01.10.2007 to 31.03.2012

Commissioner of Service tax Andhra Pradesh

Finance Act 1994

Tax

27.07

(2.03)*

2009-10 to 2011-12

Commissioner of Service tax Andhra Pradesh

Finance Act 1994

Tax

26.09

2010-11 to 2012-13

Hyderabad II Service Tax Commissionerate

Finance Act 1994

Tax

12.99

(0.49)*

2010-11 to 2011-12

Commissioner of Service tax, Shillong

Finance Act 1994

Tax

27.56

2011-12 to 2013-14

Commissioner of Service tax, Telangana

Finance Act 1994

Tax

1.99

2011-12 to 2013-14

Asst. Commissioner (Audit), Service Tax Cell, Visakhapatnam

Finance Act 1994

Tax

5.24

2011-12 to 2013-14

Additional Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Tamilnadu

Finance Act 1994

Tax

0.26

2004-05 to 2006-07

Commissioner of Customs, Central Excise & Service Tax (CCCE&S)

Finance Act 1994

Tax

0.38

2007-08

Commissioner of Customs, Central Excise & Service Tax (CCCE&S) (Appeals), Chennai.

Finance Act 1994

Tax

1.34

2007-08

Commissioner of Customs, Central Excise & Service Tax (CCCE&S) (Appeals), Chennai.

Finance Act 1994

Tax

9.85

2007-08

Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru

Finance Act 1994

Tax

59.42

01.08.2012 to 31.03.2015

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

Finance Act 1994

Tax

41.94

(10.00)*

1-6-2007 to 31-5-2008

High Court of Andhra Pradesh

Finance Act 1994

Tax

19.35

01.06.2008 to 31.03.2009

High Court of Andhra Pradesh

Finance Act 1994

Tax

23.00

01.04.2009 to 31.03.2010

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

Finance Act 1994

Tax

6.38

01.04.2010 to 31.03.2011

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

Finance Act 1994

Tax

4.65

01.04.2011 to 31.03.2012

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

Finance Act 1994

Tax

8.03

01.04.2011 to 31.03.2012

Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru

Finance Act 1994

Tax

1.81

01.06.2008 to 31.03.2009

Central Excise & Service Tax Appellate Tribunal (CESTAT), Bengaluru

Finance Act 1994

Tax

1.91

01.04.2009 to 31.03.2010

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

Finance Act 1994

Tax

6.54

01.04.2010 to 31.03.2011

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

Finance Act 1994

Tax

6.11

01.04.2011 to 31.03.2012

Commissioner of Customs, Central Excise & Service Tax (CCCE&S), Hyderabad

* indicates pre-security deposits with respective authorities

Appendix III as referred to in para viii of Annexure A to the Independent Auditor’s Report:

Details of delay in repayment of dues to banks and others, which were outstanding as at 31 March, 2018.(i.e. continuing default) i) FITL

Particulars

Total amount of Principal in Default (Rs. in mn)

Period of Default (In days)

Punjab National Bank (Principal)

276.96

1

IDBI (Principal)

78.05

1

ii) Term loans

Particulars

Total amount of Principal in Default (Rs. in mn)

Period of Default (In days)

State Bank of India (Principal) - WCTL I

22.21

1

Punjab National Bank - WCTL I

7.10

1

IDBI - WCTL I

3.08

1

Punjab National Bank - WCTL II

1.30

1

IDBI - WCTL II

0.03

1

iii) Other defaults

Particulars

Total amount of Principal in Default (Rs. in mn)

Period of Default (In days)

Punjab National Bank (Principal) -Priority debt

7.10

1

IDBI -Priority debt

219.46

1

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Ramky Infrastructure Limited. (“the Company”) as of March 31, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (“the Guidance Note”) issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. However, the Company needs to improve its systems with respect to realisation of receivables including retention monies, work-in-progress, etc.

For M V NARAYANA REDDY & CO.,

Chartered Accountants

Firm Registration No. 002370S

Sd/-

M V NARAYANA REDDY

Place : Hyderabad Partner

Date : 30-May-2018 Membership No. 028046

Source : Dion Global Solutions Limited
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