We have audited the accompanying Financial Statements of RESTILE CERAMICS LIMITED ("theCompany"), which comprise the Balance Sheet as at March 31, 2025, the Statement of Profit and Loss,Statement of Changes in Equity and Statement of Cash flows for the year then ended, and a summary ofthe material accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us,except for the effect of the matters described in the Basis for qualified opinion paragraph, the aforesaidInd AS financial statements give the information required by the Act in the manner so required andgive a true and fair view in conformity with the Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015, as amended, ("Ind AS")and other Accounting principles generally accepted in India, of the state of affairs of the Company as atMarch 31, 2025, the loss and total comprehensive income, changes in equity and its cash flows for theyear ended on that date.
(i)The Company has generated negative cashflows from operations, incurred substantial operating lossesand significant deterioration in value of assets used to generate cash flows all of which indicate existenceof material uncertainty in the Company's ability to continue as a going concern for a reasonable period oftime. The attached financial statements do not include any adjustments that might result had the aboveuncertainties been known.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in ouraudit of the financial statements of the current year. These matters were addressed in the context of ouraudit of the financial statements as a whole, and in forming our opinion thereon, and we do not providea separate opinion on these matters. We have determined the matters described below to be the keyaudit matters to be communicated in our report
Key Audit Matter Description
Response to Key Audit Matter
A. Revenue Recognition
Reference may be made to note 1B.6 ofMaterial accounting policies and note 38 tothe financial statements of the Company.Revenue recognition is inherently an area ofaudit risk, which we have substantiallyfocused on mainly covering the aspects ofcut off. Considering the impact of Ind AS 115and cut-off are key audit matters
Principal Audit Procedures
Audit procedures relating to revenue comprisedof test of controls and substantive proceduresincluding the following:
i. We performed procedures to assess the designand internal controls established by themanagement and tested the operatingeffectiveness of relevant controls related to therecognition of revenue.
ii. Selected a sample of continuing and newcontracts, and tested the operatingeffectiveness of the internal control, relating toidentification of the distinct performanceobligations and determination of transactionprice. We carried out a combination ofprocedures involving enquiry and observation,reperformance and inspection of evidence inrespect of operation of these controls.
iii. We have tested, on a sample basis, whetherspecific revenue transactions around thereporting date has been recognised in theappropriate period by comparing thetransactions selected with relevant underlyingdocumentation, including goods delivery notes,customer acknowledgement/proof ofacceptance and the terms of sales.
iv. We have also validated subsequent creditnotes and sales returns up to the date of thisReport to ensure the appropriateness andaccuracy of the revenue recognition.
v. We have tested journal entries on a samplebasis to identify any unusual or irregular items.
vi. We also considered the adequacy of thedisclosures in Company's financial statements inrelation to Ind AS 115 and were satisfied theymeet the disclosure requirements.
Conclusion
Based on the procedures performed above, wedid not find any material exceptions withregards to timing of revenue recognition andwere satisfied they meet the disclosurerequirements of Ind AS 115 Revenue Fromcontracts with Customer.
B. Inventory valuation
Reference may be made to note 1C ofMaterial accounting policies and note 22 tothe financial statements of the Company.
> Under Ind AS 2 Inventories, materials andother supplies held for use in productionare not written down below cost if thefinished goods in which they will beincorporated are expected to be sold at orabove cost. The valuation of raw materialand other supplies held for productionhave been an area of our focus in view ofloss incurred and the inability to haveoperating margins. The valuation offinished goods has also been focusedupon in view of the production of goodshaving ceased and the passage of timethat has lapsed.
Considering the above risks valuation ofInventory in accordance with Ind AS 2 hasthus been considered as a key auditmatter.
Our audit procedures comprised of thefollowing:
1. We performed procedures to assess thedesign and internal controls establishedby the management and tested theoperating effectiveness of relevantcontrols related to the valuation ofinventory.
2. We have selected a sample of items ofRaw materials and other supplies heldfor production to check whether therate per unit adopted for valuation isreflective of the last purchase rate(Realizable price). Similarly, the rate perunit of various finished goods have beenchecked on a sample basis as to whetherthey reflect the net sale price (Realizableprice).
3. Also obtained management'sassessment of impairment in the valueof inventory carried in the books ofaccounts.
Conclusion:
Based on the procedures performed above, wehave concluded that management has compliedwith the measurement and disclosurerequirements of IND AS 2 "Inventories".
C. Impairment of Property Plant andEquipment
The recoverable value of the PropertyPlant and Equipment requiressignificant judgment of themanagement and hence considered tobe a significant matter.
We have performed the following list of auditprocedures
1. Evaluated the design and effectivenessof internal controls established by theCompany relating to assessment of theimpairment
2. Obtained and evaluated themanagement's assessment ofimpairment.
3. Obtained the valuation report obtainedby the Company.
Based on the procedures performed above,we have concluded that management hascomplied with the measurement anddisclosure requirements of IND AS 16.
D. Non-Payment/belated payment ofStatutory Dues
Company has not paid/paid belatedlyvarious Undisputed Statutory duesincluding Income Tax and applicableValue Added Tax.
Payment of statutory dues regularly andwithin time reflects on the health of thecompany apart from the need for us toreport on issues of non-compliance tomembers.
We have, therefore, consideredpayment of statutory dues as a key auditmatter.
We have performed the following list of auditprocedures.
1. Evaluated the design and effectivenessof internal controls established by theCompany relating to compliance withstatutory dues.
2. Obtained details of payment of variousstatutory dues to be paid by company.
3. Verified that whether company hasbeen regular in payment of statutorydues.
Based on the above procedures performed,we noted that
The payment of statutory dues dependedupon availability of funds and is being paidwith applicable interest and delays notedare disclosed elsewhere in this report.
Information other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The other informationcomprises the information included in the Annual report but does not include the financial statementsand our report thereon.
Our opinion on the financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If,based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
Based on the draft report furnished with us, we have nothing to report in this regard.
Responsibilities of Management for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the CompaniesAct, 2013 ("the Act") with respect to the preparation of these financial statements that give a true andfair view of the financial position, financial performance, total comprehensive income, changes in equityand cash flows of the Company in accordance with the Ind AS and other accounting principles generallyaccepted in India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; and design,implementation and maintenance of adequate internal financial controls, that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records, relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free from materialmisstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate the Company or to ceaseoperations, or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financial reporting process.Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor's report thatincludes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could 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 and maintain professionalskepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraudor error, design and perform audit procedures responsive to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act,we are also responsible for expressing our opinion on whether the Company has adequate internalfinancial controls systems in place and the operating effectiveness of such controls
• Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company's ability to continue as a going concern. Ifwe conclude that a material uncertainty exists, we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Company to cease to continueas a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that, individually or inaggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of thefinancial statements may be influenced. We consider quantitative materiality and qualitative factors in (i)planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate theeffect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies in internalcontrol that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.
From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the financial statements of the current period and are thereforethe key audit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section143 (3) of the Companies Act, 2013, we report that:
(a) We have sought and obtained all the information and explanations which to the best of ourknowledge 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 sofar as it appears from our examination of those books except for the matters stated in theparagraph 1(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors)Rules, 2014.
(c) The Balance Sheet, the Statement of Profit and Loss, including other Comprehensive income, theStatement of Changes in Equity and the Statement of Cash Flows dealt with by this report are inagreement with the books of account.
(d) In our opinion, except for matters described in the Basis of Qualified Opinion Paragraph, theaforesaid Financial Statements comply with the Indian Accounting Standards prescribed underSection 133 of the Act read with the relevant rules issued thereunder.
(e) The matters described in the Basis for Qualified Opinion paragraph above, in our opinion, mayhave an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from the directors as on March 31, 2025taken on record by the Board of Directors, none of the directors is disqualified as on March31,2025 from being appointed as a director in terms of Section164(2) of the Companies Act, 2013.
(g) With respect to the adequacy of the Internal Financial Controls with references to FinancialStatements of the Company and the operating effectiveness of such controls, refer to ourseparate report in Annexure "A". Our report expresses an unmodified opinion on the adequacyand operating effectiveness of the Company's internal financial controls with references toFinancial Statements.
(h) With respect to the other matters to be included in the Auditor's Report in accordance withrequirements of section 197(16) of the Act, as amended, in our opinion and to the best of ourinformation and according to the explanations given to us, no remuneration other than applicablesitting fees has been paid by the Company to its directors during the year and hence thecompliance with the provisions of the section 197 does not arise.
(i) With respect to the other matters to be included in the Auditor's Report in accordance with Rule11 of the Companies (Audit and Auditor's) Rules, 2014, in our opinion and to the best of ourinformation and according to the explanation given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in itsFinancial Statements. (Refer Note 35)
ii. The company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses as at March 31, 2025.
iii. There were no amounts which were required to be transferred to the Investor Educationand Protection Fund by the Company.
iv. (a) The Management has represented that, to the best of its knowledge and belief, nofunds (which are material either individually or in the aggregate) have been advanced orloaned or invested (either from borrowed funds or any other sources or kind of funds) by
the Company to or in any other person or entity, including foreign entity("Intermediaries"), with the understanding, whether recorded in writing or otherwise,that the Intermediary shall, whether, directly or indirectly lend or invest in other personsor entities identified in any manner whatsoever by or on behalf of the Company("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of theUltimate Beneficiaries.
(b) The Management has represented, that, to the best of its knowledge and belief, nofunds (which are material either individually or in the aggregate) have been received bythe Company from any person or entity, including foreign entity ("Funding Parties"), withthe understanding, whether recorded in writing or otherwise, that the Company shall,whether, directly or indirectly, lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") orprovide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(c) Based on the audit procedures that have been considered reasonable and appropriatein the circumstances, nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and(b) above, contain any material misstatement.
v. There was no dividend declared / paid during the year by the company.
vi. Based on our examination which include test checks, the company has used an accountingsoftware for maintaining its books of account which has a feature of recording audit trail(edit log) facility which has however not been enabled Consequently, we are unable tocomment on audit trail feature of the said software.
2. As required by the Companies (Auditor's Report) Order,2020 ("the Order") issued by the CentralGovernment in terms of Section 143(11) of the Act we give in "Annexure B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
For M.S. Krishnaswami & RajanChartered AccountantsRegistration No. 01554SSd/-
M.S. Murali - PartnerMembership No. 026453UDIN: 25026453BMFXXL6960Date: May 21, 2025Place: Chennai