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AUDITOR'S REPORT

Rail Vikas Nigam Ltd.

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Market Cap. (₹) 5337.65 Cr. P/BV 1.36 Book Value (₹) 18.82
52 Week High/Low (₹) 27/19 FV/ML 10/1 P/E(X) 9.37
Bookclosure EPS (₹) 2.73 Div Yield (%) 3.13
Year End :2018-03 

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF RAIL VIKAS NIGAM LIMITED 1. Report on the Standalone Ind AS Financial Statements

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

2. Management’s Responsibility forthe 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 (hereinafter referred to as “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 (Ind As) 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 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.

3. Auditor’s 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 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.

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, of the state of affairs of the Company as at March 31,2018, and its profit, total comprehensive income, the changes in equity and its cash flows for the year ended on that date.

5. Emphasis of Matter (EOM)

- Without qualifying our report attention is invited to note no. 10.1(i) of standalone Ind AS financial statements Trade Receivable from Related Party. RVNL receives advance payment from SPV’s for incurring expenditure on their projects. However in case of Krishnapatnam Railway Company Ltd., RVNL is incurring project expenditure on a regular basis but insignificant amount is being received from Krishnapatnam Railway Company Ltd. as advance payment. During the Financial year 2017-18, RVNL has incurred project expenditure amounting to Rs, 44,654.19 Lakhs on Krishnapatnam Railway Company Ltd. Total Trade Receivable from Krishnapatnam Railway Company Ltd. as on 31st March, 2018 is Rs, 76,363.97 Lakhs.

- Without qualifying our report attention is invited to Note No. 12 (a) regarding Advance to Zonal Railways. No Balance confirmation has been received relating to advance given to zonal railways of Rs, 29,962.58 Lakhs as on 31.03.2018.

6. Report on Other Legal and Regulatory Requirements

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

II. As required by the directions issued by the Comptroller and Auditor General of India, in terms of section 143(5) of the Act, we give the compliance in Annexure ‘B’.

III. 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 Statement of Cash Flow and 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) Rule, 2015, as amended.

e. In terms of Ministry of Company Affairs notification no. GSR 463 (E) dated 5th June 2015, Government Companies are exempt from applicability of provisions of section 164 (2) of Companies Act, 2013.

f. 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 C’. Our report expresses an unqualified opinion on the adequacy and operating effectiveness of the company’s internal financial controls over financial reporting.

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) Rule, 2014, 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 financial statements- Refer Note No. 37 to the financial statement.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

Annexure to the Independent Auditors’ Report referred to in paragraph 6(1) of our report of even date on the standalone Ind AS Financial Statements of Rail Vikas Nigam Limited for the Year ended 31st March, 2018

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

b) The fixed assets have been physically verified by the management during the year at reasonable interval. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the records examined by us and based on the examination of the conveyance deeds provided to us, we report that, the Lease deeds, comprising all the immovable properties of land and buildings which are leasehold, are held in the name of the Company as at the balance sheet date. The company does not own any freehold land or building.

2. The company is in business of implementing railway infrastructure projects and the inventory primarily consists of project work in progress. The inventories are physically verified during the year and the same is recorded in the measurement book. Keeping in view the nature of business and inventory, the frequency of physical verification in our opinion is reasonable.

3. In our opinion and 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.

4. 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 Company Act, 2013, with respect to the loans and investment made.

5. According to the information and explanation given to us, the company has not accepted any deposit during the year from the public.

6. The maintenance of cost records has not been specified by the Central Government under section 148(1) of the Companies Act, 2013.

7. a) According to information and explanations given to us and on the basis of our examination of the books of account, and records, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess, Goods and Service Tax, and any other statutory dues with the appropriate authorities. According, to the information and explanation given to us, no undisputed amount payable in respect of any statutory dues were outstanding as at 31.03.2018 for a period of more than six months from the date they become payable.

b) According to the information and explanation given to us, there are disputed dues of income tax amounting to Rs, 15.28 Lakhs and no dues of sales tax or wealth tax or service tax or custom duty or excise duty or value added tax or cess or Goods and services Tax which have not been deposited on account of any dispute. The details of unpaid disputed income tax liability is as under:

Assessment Year

Amount (Rs, In lakhs)

Forum where pending

2008-09

15.17

Assessing Officer u/s 154

2012-13

0.06

CPC u/s 220(2)

2014-15

0.02

Assessing Officer u/s 143(3)

2015-16

0.03

CPC u/s 143(1a)

8. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, government or bank or debenture holders.

9. During the year, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). Terms loans have been applied by the company for the purpose for which they were raised.

10. To the best of our knowledge and according to the information and explanations given to us, no fraud by the company and no fraud on the company by its officers or employees has been noticed or reported during the year.

11. The provisions of section197 of the Companies Act, 2013 are not applicable since the company is a government company.

12. The Company is not a Nidhi Company and hence Para (xii) is not applicable.

13. In our opinion and according to the information and explanations given to us, the transactions with related parties are incompliance with provisions of section 177 and 188 of the Companies Act, 2013 as applicable and adequate disclosures have been made in the financial statements as required by the applicable accounting standards.

14. The Company has not made any preferential allotment or private placement of share or fully or partly convertible debentures during the year.

15. In our opinion and according to the information and explanations given to us, the company has not entered into any non-cash transactions with the directors or persons connected with them under the provisions of section 192 of the Companies Act, 2013.

16. In our opinion and as per the information and explanation given to us, the company is not required to be registered under section 45-IA of Reserve Bank of India Act, 1934.

Annexure to the Independent Auditors’ Report referred to in paragraph 6(11) of our report of even date on the standalone Ind AS financial statements of RAIL VIKAS NIGAM LIMITED for the Year ended 31st March, 2018

S.No.

CAG’s Directions

Our Report

Action

Taken

thereon

Impact on

financial

statements

1.

Whether the company has clear title/lease deeds for freehold and leasehold land respectively Rs, If not please state the area of freehold and leasehold land for which title/lease deeds are not available.

The company has leasehold land that have been taken on lease and disclosed as Property, Plant, and Equipment in the standalone financial statements, the lease agreements are in the name of the Company. Company also has commercial space for which lease deed has been executed with the owner. The company does not own any freehold land.

No action required

NIL

2.

Please report whether there are any cases of waiver/write off of debts/ loans/interest etc., if any, the reasons there for and the amount involved.

There is no case of waiver/ write off of debts/ loans/ interest during the year.

No action required

NIL

3.

Whether proper records are maintained for inventories lying with third parties & assets received as gifts from Govt, or other authorities.

No inventory is lying with third parties and no asset has been received as gifts from Government or any other authorities by RVNL.

No action required

NIL

Annexure to the Independent Auditors’ Report referred to in paragraph 6(lll)(f) of our report of even date on the standalone Ind AS financial statements of RAIL VIKAS NIGAM LIMITED for the Year ended 31st March, 2018

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 Rail Vikas Nigam 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 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 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 internals 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.

For Raj Har Gopal & Co.

Chartered Accountants

(FRN: 002074N)

Sd/-

G.K. Gupta

( Partner)

Date:13th August2018 M. No. 081085

Place: New Delhi

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