TO THE MEMBERS OF EMPIRE INDUSTRIES LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of EmpireIndustries Limited("the Company") which comprise the Balance Sheet as at 31st March 2019 theStatement of Profit and Loss(including other comprehensive income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe financial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards ("Ind AS")prescribed under Section 133 of the act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia of the state of affairs of the Company as at 31st March 2019 and its profit andtotal comprehensive income changes in equity and its cash flows for the year ended onthat date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements for the year ended 31st March 2019.These matters were addressed in the context of our audit of financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report:
1) Accuracy of recognition measurement presentation and disclosures ofrevenues and other related balances in view of adoption of Ind AS 115 "Revenue fromcontracts with Customers" applicable from 1st April 2018.
The application of this new Indian accounting standard from current financial yearinvolves certain key judgments relating to identification of distinct performanceobligations determination of transaction price of identified performance obligations theappropriateness of the basis used to measure revenue recognized over a period anddisclosures including presentations of balances in the financial statements. Estimatedefforts is a critical estimate to determine revenue as it requires consideration ofprogress of the contract efforts incurred till date efforts required to complete theremaining performance obligation.
Principal Audit Procedures
We assessed the Company's internal process to identify the impact of adoption of thenew Indian accounting standard. Our audit approach consisted testing of the design andoperating effectiveness of internal controls and procedures as follows:
Evaluated the design of internal control's relating to implementation of the new Indianaccounting standard.
Selected a sample of existing continuing contracts and new contracts and tested theoperating effectiveness of the internal control relating to identification of thedistinct performance obligations and determination of transaction price.
Tested the relevant information accounting systems and change relating to contractsand related information used in recording and disclosing revenue in accordance with thenew Indian accounting standard.
Reviewed a sample of contracts to identify possible delays in achieving milestoneswhich require change in estimated efforts to complete the remaining performanceobligations.
Performed analytical procedures and test of details for reasonableness and otherrelated material items.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Report Board's Report including Annexures to Board's Report andShareholder's Information but does not include the financial statements and our auditor'sreport thereon. The above mentioned reports are expected to be made available to us afterthe date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the above mentioned reports if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance and take appropriate actions as per the applicable laws and regulations.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation and presentation of these financialstatements that give a true and fair view of the financial position financialperformance total comprehensive income cash flows and changes in equity of the Companyin accordance with the IND AS and other accounting principles generally accepted in India.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant thatto the preparation and presentation of the financialgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditors' Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
Report On Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 (the Order) issued bythe Central Government of India in terms of sub-section (11) of Section 143 of the Act wegive in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of theOrder.
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 bestof 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 theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Cash Flow Statement and the statement of changes in equity dealt with by thisReport are in agreement with the books of account.
d. In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder 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 March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations as at 31st March 2019on its financial position in its financial statements Refer Note 34 to the financialstatements;
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure A to the Independent Auditor's Report of even date on the Financial Statementsof EMPIRE INDUSTRIES LIMITED
We report that
1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) As per the information and explanations given to us Fixed Assets were physicallyverified during the year by the management as per its programme. The frequency ofverification is reasonable and no material discrepancies have been noticed on suchverification.
c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable property are heldin the name of the company.
2. As explained to us inventories have been physically verified during the year by themanagement at reasonable intervals. Stock of Finished Goods Raw Materials stores andspare parts are reported to be physically verified in accordance with the procedurefollowed by the management. No material discrepancy was noticed on physical verificationof stocks by the management as compared to book records.
3. The company has not granted loan to party covered in the register maintained underSection 189 of the Act.
4. In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of Section 185 and 186 of the Act with respectto the loans given and investment made.
5. The Company has accepted deposits from the public. The directives issued by ReserveBank Of India and the provisions of section 73 to 76 or any other relevant provisions ofthe Companies Act and the Rules framed there under where applicable have been compliedwith.
6. We have broadly reviewed the cost records maintained by the Company pursuant to theCompanies (Cost Records and Audit) Rules 2014 as amended prescribed by Central Governmentunder sub section (1) of Section 148 of the Companies Act 2013 and we are of theopinion that prima facie the prescribed cost records have been made and maintained. Wehave not however made a detailed examination of the records with a view to determinewhether they are accurate or complete.
7. a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income tax dutyof excise goods and service tax duty of customs value added tax sales tax cess andother statutory dues have been regularly deposited during the year by the Company with theappropriate authorities.According to the information and explanations given to us noundisputed amounts payable in respect of provident fund income tax sales tax goods andservice tax duty of customs value added tax sales tax cess and other statutory dueswere in arrears as at 31st March 2019 for a period of more than six months from the datethey became payable.
b) According to the information and explanations given to us and on the basis of ourexamination of books of accounts and records the details of the aforesaid statutory duesas at 31st March 2019 which have not been deposited with the appropriate authorities onaccount of any dispute are given below:
|Name of Statute ||Nature of Dues ||Amount (Rs in lakhs) ||Period to which it Relates ||Forum where dispute is Pending |
|1 Income Tax Act 1961 ||Income Tax Demand ||54.18 ||A.Y. 2009- 10 ||ITAT Mumbai |
|2 Income Tax Act 1961 ||Income Tax Demand ||86.39 ||A.Y. 2011- 12 ||ITAT Mumbai |
|3 Income Tax Act 1961 ||Income Tax Demand ||110.06 ||A.Y. 2012- 13 ||CIT (Appeal) |
|4 Income Tax Act 1961 ||Income Tax Demand ||118.90 ||A.Y. 2013- 14 ||CIT (Appeal) |
|5 MVAT Act 2002 ||VAT / CST dues ||58.51* ||F.Y. 2009- 10 ||Jt. Commissioner of Sales Tax (A) |
|6 MVAT Act 2002 ||VAT / CST dues ||13.10 ||F.Y. 2014- 15 ||Jt. Commissioner of Sales Tax (A) |
[*Total demand of Rs. 83.51 Lakhs less amount deposited in dispute of Rs. 25.00 Lakhs.]
8. According to the information and explanation given to us and based on the documentsand records examined by us the company has not defaulted in repayment of loans due tobanks and financial institutions.
9. In our opinion and on the basis of information and explanations given to us thecompany has not raised money by way of public offer.
The term loans raised by the company were applied for the purposes for which they wereraised.
10. According to the information and explanations given to us no fraud on or by thecompany was noticed or reported during the course of our audit.
11. According to the information and explanations given to us and based on theexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
12. In our opinion and according to the explanations given to us the Company is not aNidhi company. Accordingly paragraph 3(xii) of the order is not applicable.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableIndian accounting standards.
14. According to the information and explanation given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly paid convertible debenturesduring the year and hence reporting under paragraph 3(xiv) of the order is not applicable.
15. According to the information and explanations given to us and based on ourexamination of the records of the company the company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe order is not applicable.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure B to the Independent Auditor's Report of even date on the Financial Statementsof EMPIRE INDUSTRIES LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of EmpireIndustries Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the 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 internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For A.T. JAIN & CO. |
| ||Chartered Accountants |
| ||(Firm Registration No. 103886W) |
| ||SUSHIL JAIN |
|Place : Mumbai ||Partner |
|Dated : 24th May 2019 ||Membership No.: 033809 |