TGV SRAAC Ltd.
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ISIN No INE284B01028 52Wk High (Rs.) 90 BV (Rs.) 38.55 FV (Rs.) 10.00
Bookclosure 27/09/2017 52Wk Low (Rs.) 20 EPS (Rs.) 2.23 P/E (X) 32.04
Mkt Cap. (Rs. Cr.) 622.66 P/BV (X) 1.85 Div Yield (%) 0.00 Mkt Lot 1
2016-03

To

The Members of

Sree Rayalaseema Alkalies And Allied Chemicals Limited

(1) Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of M/s.Sree Rayalaseema Alkalies and Allied Chemicals Ltd., Kurnool (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

(2) Management’s Responsibility for the Standalone 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

(3) Auditors’ Responsibility

Our responsibility is to express an opinion on these standalone 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 in accordance with the Standards on Auditing 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 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 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 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 financial statements

(4) Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2016;

b) in the case of the Statement of Profit and Loss, of the Profit of the Company for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

(5) Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order, 2016 (“the Order”’) issued by the Central Government of India in terms of sub section (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,

As required by Section 143(3) of the Act, we further 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 purposes 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) on the basis of the written representations received from the Directors as on 31st March, 2016 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2016, from being appointed as a director in terms of Section 164 (2) of the Act;

t) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and.

g) in our opinion and to the best of our information and according to the explanations given to us, we report as under 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;

(i) the company does not have any pending litigations which would impact its financial position,

(ii) the company did not have any long term contracts including derivative contracts; as such there were no material foreseeable losses thereon,

(iii) during the year under report there are no amounts that require to transfer to the Investor Education and Protection Fund; therefore, delay in transferring such sums does not arise.

Re: Sree Rayalaseema Alkalies and Allied Chemicals Ltd., Kurnool.

Referred to in Paragraph (5) of our report of even date;

(i) In respect of fixed assets;

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

b. As explained to us, the Company has a regular programme of physical verification of its fixed assets and have been physically verified by the management in a phased manner at reasonable intervals and no material discrepancies were noticed on such physical verification.

c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) In respect of inventory;

The physical verification of inventory has been conducted at reasonable intervals by the management during the year and no material discrepancies were noticed on physical verification and the small discrepancies, if any, have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 (‘the Act').

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees and security.

(v) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public specified under the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vi) In our opinion and according to the information and explanations given to us, the Central Government has prescribed for the maintenance of Cost records under sub section (1) of Section 148 of the Companies Act, 2013 in respect of the products manufactured by the company and such accounts and records have been made and maintained by the Company.

(vii) In respect of statutory dues;

a. According to the information and explanations given to us and on the basis of our examination of the records of the company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employee's State Insurance, Income-Tax, Service Tax, Sales Tax, Value Added Tax, duty of Customs, duty of Excise, Cess and other statutory dues, as applicable, to the appropriate authorities and there were no arrears of statutory dues outstanding as at 31.03.2016 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, there are no material dues of Income Tax, and Service Tax, which have not been deposited on account of any dispute. However, the following dues of Sales Tax, Value Added Tax, Duty of Excise and Duty of Customs other statutory dues have not been deposited by the company on account of disputes pending;

Sl.

No.

Name of the Statute

Nature of dues

Amount (Rs. in lakhs)

Period to which the amount relates

Forum where dispute is pending

1.

The Central Excise Act, 1944

CENVAT Credit disallowed on input services

85.62

261.92

11.91

April,2005 to Feb, 2008 Mar,2008 to March,2015 April, 2011 to March, 2013

Central Excise and Service Tax Appellate Tribunal, Bengaluru.

Additional Commissioner/ Commissioner of Central Excise and Customs, Tirupati. Asst Commissioner of Central Excise and Customs, Kurnool.

2.

The Central Excise Act, 1944

CENVAT Credit availed against manufacture of exempted goods disallowed.

95.41

2008-09

Central Excise and Service Tax Appellate Tribunal, Bengaluru.

3.

A.P.VAT Act, 2005

Input tax credit on furnace oil & coal disallowed (Paid)

53.91

(53.91)

April, 2005 to Dec, 2005

High Court of Andhra Pradesh.

4.

AP VAT Act, 2005

Interest on delay payment of deferred sales tax (Paid).

351.14

(69.04)

2005-06 And 2006-07

High Court of Andhra Pradesh.

5.

KERALA VAT Act, 2005

VAT on estimated turnover (paid).VAT on stock transfer price (Paid)

20.51

(5.13)

5.44

(1.81)

2008-09

2010-11

Sales tax Appellate Tribunal, Ernakulam. Sales tax Appellate Tribunal, Ernakulam.

6.

KERALA VAT Act, 2005

Disallowance of input tax on sales returns.(Paid)

8.14

(8.14)

2.68

August,2009

2009-10

Sales tax Appellate Tribunal, Ernakulam. Deputy Commissioner of Appeals,Palakkad

7.

KERALA VAT Act, 2005

Late submission of Form-F

9.95

2009-10

Deputy Commissioner of Appeals, Palakkad.

8.

Karnataka Tax on Entry of Goods Act, 1979

Entry tax on purchase of machinery items and interest ( paid)

3.88

(2.10)

2006-07

2007-08

2008-09

Joint Commissioner of Commercial Taxes, Davangeri.

9.

Indian Customs Act, 1962

Differential customs duty on raw material purchases (Paid)

1161.14

(125.00)

2000 to 2006

Commissioner of Customs, Chennai.

10.

Indian Customs Act, 1962

Finalisation of assessed Bill of Entries pertaining to KCL.

16.06

2006-07

Central Excise and Service Tax Appellate Tribunal, Bengaluru.

11.

Indian Customs Act, 1962

Penalty on classification of goods disputed

9.90

2008-09

High Court of Andhra Pradesh, Hyderabad.

12.

Indian Customs Act, 1962

Anti dumping duty on import of Barium Carbonate

32.69

2010-11

Deputy Commissioner of Customs, Chennai.

13.

Indian Customs Act, 1962

Differential duty on classification of goods disputed (Lauric Acid)(Paid)

10.70

(1.07)

2014-15

Central Excise and Service Tax Appellate Tribunal, Bengaluru.

Sl.

No.

Name of the Statute

Nature of dues

Amount (Rs. in lakhs)

Period to which the amount relates

Forum where dispute is pending

14.

Employees Provident Fund and Miscellaneous Provisions Act, 1952.

PF delay charges/ damages for belated payments

15.34

May, 2002 to Dec, 2007

Regional PF Commissioner, Cuddapah (for waiver).

15.

The Electricity Act, 2003.

Refund of Income tax on account of change in tax rates as per PPA.(paid)

500.00

(500.00)

2000-2005

The Supreme Court of India.

16.

The Electricity Act, 2003.

Fuel Surcharge Adjustment (FSA) charges.

871.93

1255.71

695.34

2008-09 Oct,

2011 to Mar, 2012

April,2009 to June,2010

Supreme Court of India.

Supreme Court of India (demand raised during the year 2014-15)

High Court of Andhra Pradesh, Hyderabad.

17.

The Electricity Act, 2003.

Interest on amount pending in Court Cases

268.05

2014-15

High Court/Supreme Court of India(demand raised during the year 2014-15)

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans to Financial Institutions or Banks or dues to Debenture holders.

(ix) In our opinion and 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 received during the year were applied for the purpose for which the loans were raised.

(x) According to the information and explanations given to us, no material fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us and based on our examination of the records of the Company, the managerial remuneration has been paid or 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. Accordingly, paragraph 3 (xii) of the CARO, 2016 is not applicable.

(xiii) In our opinion and according to the information and explanations given to us and based on our examination of the records of the Company, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements, as required by the applicable Accounting Standards.

(xiv) In our opinion and according to the information and explanations given to us and based on our examination of the records of the Company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. The company has made preferential allotment of Share Warrants and allotment of shares by conversion of warrants during the year under review. The requirements of section 42 of Companies Act, 2013 have been complied with and the amounts raised have been used for the purpose for which the funds were raised.

(xv) In our opinion and according to the information and explanations given to us and based on our examination of the records of the Company, the company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the CARO, 2016 is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

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 M/s.Sree Rayalaseema Alkalies and Allied Chemicals Ltd., Kurnool (“the Company”) as of 31st March, 2016 in conjunction with our audit of the standalone 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 issued by the Institute of Chartered Accountants of India (‘ICAI'). 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 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 on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 auditor's 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 31st March, 2016, 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.

For Brahmayya & Co.,

Chartered Accountants

Firm's Regn. No. 000514S

Sd/-

CA B.DAIVADHEENAM REDDY

Place: Hyderabad (Camp) Partner

Date :12th April, 2016 Membership No.026450