To the Members of COVENTRY COIL-O-MATIC (HARYANA) LIMITED .
Report on the Financial Statements .
We have audited the accompanying financial statements of COVENTRY COIL-O-MATIC(HARYANA) LIMITED ("the Company")which comprise the Balance Sheet as at 31 stMarch2016the Statement of Profit and Lossthe Cash Flow Statement for the year thenendedand a summary of the significant accounting policies and other explanatoryinformation.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act2013 ("the Act") -with respect to the preparation ofthese financial statements that give a true and fair view of the financialpositionfinancial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in Indiaincluding the Accounting Standardsspecified under Section 133 of the Actread with Rule 7 of the Companies (Accounts)Rules2014.This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for Safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accountingpolicies; making judgments and estimates that are reasonable andprudent; and designimplementation and maintenance of adequate internal financialcontrolsthat were operating effectively for ensuring the accuracy and completeness of theaccounting recordsrelevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatementwhetherdufe to fraud or error._
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Actthe accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act.Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements.The procedures selected depend on theauditor's judgmentincluding the assessment of the risks of material misstatement of thefinancial statementswhether due to fraud or error.In making those risk assessmentstheauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances.An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Companys Directorsas well as evaluating the overallpresentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.
Basis for Qualified Opinion .
1.Note No.(xx) of 20(B) of other notes to financial statement regarding Going ConcernAssumption may no longer be appropriate -As the Company has incurred significant operatinglossesnegative operating cash flowsadjudication of legal process against the company forloan liability and negative net worth indicating that going concern assumption is nolonger be appropriate.Consequentlyadjustment for amount of assets and classification ofliabilities required to be recorded has not been carried..
2.2.1 The company has not made provisions of Interest & Other Charges on SecuredLoans taken from Financial Institutions/ Banks Rs.70533652 as per interim order of thedivisional bench of Punjab .and Haryana high courtChandigarhas stated in Note No-(viii)of Other notes 20(B).
2.2 Note No.20(B) (viii) para (j) of other notes to financial statements describes thatcompany has not made provision calculated on the IFCI debts confirmed by the order dated18-01-2016 in DRT-INew Delhi by AARCL for the recovery of Rs.844938818'together withsimple interest @ 13.50% p.a.from 14-05-2007 which amounttoRs.1857788964.
2.3 Had the Provision been madethe Loss up to the year after tax Rs.22249293/-wouldhave resulted ' in loss of Rs.1950571909/-Reserve & Surplus Deficit (Balance ofStatement of Profit and Loss ) would have been Rs.2032992734/-instead of Rs!104670118/
3.The company had given physical possession of Approx.10 Acre land as stated in NoteNo.7 (b) whose approx.cost appearing in books is Rs.12.02 Lacto Alchemist AssetReconstruction Company Ltd.assignees of IDBI & IFCI (Financial Institutions) on 8thMarch 2013 as per the directions of the Honble Supreme Court who re-affirmed theInterim Orders of Hon'ble Punjab & Haryana High CourtChandigarh of 09-08-2011.Sincethis was only an interim order and the amount is yet to be adjudicatedno effect has beengiven in the Fixed Assets Schedule of the Accountsconsequent effect of profit/loss on thesaid land in these Accounts.
In our opinion and to the best of our information and according to the explanationsgiven to usexcept for the effects/possible effects of the matter described in the basisfor qualified opinion paragraphthe aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in Indiaof the state of affairs of theCompany as at 31 st March2016and its Loss and its cash flows for the year ended on thatdate.
Emphasis of Matter
We draw attention to:
a) Note No.20 (B) para (xv) (ii)to financial statementwhich describes contingentliability not provided for claims under adjudication
in DRT-llNewDelhibyKMBLforrecoveryofRs.47206961 and
in DRT-INew Delhi by AARCLfor recover ofthe dues calculated on the IDBI DebtsRs.931519000 (The Company has also filed counter claims of more than Rs.500 Crores onboth KMBL and AARCL.)
b) Note No.20 (B) para (iii) to financial statementwhich describes AccountReconciliation/Confirmation in respect of certain accounts of Debtors have not beenreceived and they are subject to confirmations and reconciliation.The management is of theopinion that adjustmentif anyarising out of such reconciliation would not havematerial effect on the financial statement of current year.*
c) Note No.20 (B) para (iv) to financial statementwhich describes AccountReconciliation/Confirmation in respect of certain accounts of Vendor's have not beenreceived and they are subject to confirmations and reconciliation.The management is oftheopinion that adjustmentif anyarising out of such reconciliation would not have materialeffect on the financial statement of current year.
Our opinion is not qualified on above matter.
Report on Other Legal and Regulatory Requirements
1.As required by the Companies (Auditor's Report) Order2015 ("theOrder")issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Actwe give in the Annexure a statement on .the matters specified inparagraphs 3 and 4 ofthe Orderto the extent applicable.
2.As required by Section 143 (3) of the Actwe report that:
a.We have sought and obtained all the information and explanations which to the best ofour Knowledge and belief were necessary for the purposes of our audit..
b.Except for the effects of matter described in the Basis for Qualified Opinionparagraph abovein our opinionproper books of account as required by law have been keptby the Company so far as it appears from pur examination of those books.
c.The Balance Sheetthe Statement of Profit and Lossand the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d.Except for the effects of matter described in the Basis for Qualified Opinionparagraph abovein our opinionthe aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Actread with Rule 7 of theCompanies (Accounts) Rules2014.
e.On the basis of the written representations received from the directors as on 31stMarch2016 and taken on record by the Board -of Directorsnorie of thedirectors is disqualified as on 31st March2016 from being appointed as adirector interms of Section 164 (2) of the Act.
f.The matter described in Basis for Qualified Opinion paragraph above may have anadverse effect on the functioning of the company.
g.With respect to the adequacy of the internal financial controls over financial1reporting of the Company and the operating effectiveness of such controls relevantdocuments not provided to test its effectiveness.Hence we are unable to comment on itseffectiveness.
h.With respect to the other matters to be included in the Auditor's Reportin.accordance with Rule 11 of the Companies (Audit and Auditors) Rules2016in 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 on its financial positionin its financial statements refer Note 20 (B)(xv) to the Financial Statements;
ii.The Company did not have any material foreseeabJe losses on long term contractsincluding derivative contracts;
iii.There has been no delay in transferring amountsrequired to be transferredto theInvestor Education & Protection Fund by the company
Annexure referred to in paragraph 1 of our report of even date on the other legal andregulatory requirements
Re: COVENTRY COIL-O-MATIC (HARYANA) LIMITED
(I) a.The Company has maintained proper records showing full particularsincludingquantitative details and situation of fixed assets..
b.The management has made a policy to conduct physical verification once in a block of3 years.Butno .physical verification has been carried out during the year.
c.According to the information and explanations given to us and on the basis of ourexamination of the records ofthe Companythe title deeds of immovable properties are heldin the name ofthe Company except the Company had given physical Possession on 08-03-2013of approx.10 Acre land whose approx.cost appearing in the books is Rs.12.02 LakhstoM/s.Alchemist Asset Reconstruction Company Ltd.(assigneesof IDBI & IFCI)as perthedirections ofthe Hon'ble Supreme Courtwho reaffirmed the Interim Orders of Hon'ble Punjab& Haryana High CourtChandigarh of 09-08-2011.Since this was only an Interim Orderand the amount is yet to be adjudicatedno effect has been given in the Fixed AssetsSchedule of the Accounts.
(ii) As explained to usinventories were physically verified during the year by themanagement.In our opinion the frequency of verification is reasonable and no materialdiscrepancies were noticed on such physical verification.
(iii) The Company has not granted loans secured or unsecured to companiesfirms orother parties covered in the register maintained under section 189 ofthe CompaniesAct.Accordinglythe requirements of clauses
(iii) (a) to (b) of the paragraph 3 of the order are not applicable..
(iv) According to the information and explanation given to usthe Company has not givenany loansmade investmentsgiven guarantee or securities during the year under theprovisions of section 185 and 186therefore provision of this clause is not applicable tothe company.
(v) In our opinion and according to the information and explanations given to ustheCompany has not accepted any deposits from the public within the meaning of directivesissued by the Reserve Bank of India and hence provisions of Section 73 to 76 or any otherrelevant provisions of Companies Act2013 and .rules framed there under with regard to thedeposits accepted from the public are not applicable to the company.
(vi) The company is required to maintain cost records pursuant to the rules made by thecentral government for the maintenance of cost records under sub-section (1) of section148 of the Companies Actand are of the opinion that prima facie the prescribed accountsand records have been made and maintained.We have nothowevermade a detailed examinationof the records with a view to determine whether they are accurate or complete.
(vii) a.According to the records ofthe Companythe Company is irregular in depositingundisputed statutory dues including provident fundemployees'stateinsuranceincome-taxsales taxservice taxduty of custom duty of excisevalueadded-taxcess and other statutory dues applicable to it with the appropriateauthorities.Company has not deposited Service Tax of Rs.17.07 Lakhs at the year-end for aperiod of more than six months.
b.According to the information and explanation given to us and records of theCompanythere are no dues outstanding of income tax sales taxwealth tax .service taxduty of customduty of excise .value added tax or cess on account of any dispute.otherthan the following: -
|Name of Statue ||Nature of Dues ||Periods to which the amount pertain ||Amount (in Rs.) (Net of Deposit) ||Forum where dispute is pending |
|Central Excise ||Service Tax ' ||2007-08 ||410613' ||CESTAT |
|Haryana VAT ||Demand against nonsubmission of C Form ||2012-13 ||3315991 ||Haryana VAT Department |
(viii) In regard to the default in repayment of Term Loanthe divisional bench ofPunjab and Haryana High CourtChandigarh has passed an interim order of total long termloan interest etc.for Rs.185000000/-.The company has not made provision during theyear for balance amount of Rs.705-33652/-as referred to in note no.-(viii)of Othernotes 20(B).
Alsothe company has not made provision calculated on the IFCI debts confirmed by theorder dated 18- 01-20161n DRT-INew Delhi byAARCLforthe recovery of Rs.844938818together with simple interest @ 13.50% p.a.from 14-05-2007 which amount toRs.'1857788964 as referred in Note No.20(B) (viii) para (j) of other notes to financialstatements.
(ix) The company has not taken any terms loan and has not raised any moneys by way ofpublic offer during the year the refore provisio of this clause is not applicable to theCompany.
(x) Based on our examination of the books and records of the Companycarried out inaccordance with the generally accepted auditing practice in India and according to theinformation and explanations given to usno fraud on or by the Companynoticed or reportedduring the year.
(xi) Based on our examination of the books and records of the Company and according tothe information and explanations given to usthe company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule V to the Companies Act.
(xii) The Company is not a Nidhi Companytherefore provisions of this clause are notapplicable to the company.
(xiii) Based on our examination of the books and records of the Companyalltransactions with related parties are in compliance with sections 177 and 188 of the Actwhere applicable and details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly .convertible debentures during the year under reviewthereforeprovisions of this clause are not applicable to the company.
(xv) To the best of our knowledge and belief and according to.the information andexplanations given to usthe company hasn't entered into any non-cash transactions withdirectors or persons connected with himtherefore provisions of this clause are notapplicable to the company.
(xvi) Company is not required to be registered under section 45-IA of the Reserve Bankof India Act1934the refore provision soft his clause are not applicable to the company.
| ||For SINGHI & CO. |
| ||Chartered Accountants |
| ||Firm Registration No.302049E |
| ||B.L.Choraria |
|Place: New Delhi ||Partner |
|Date: 30thMay'2016 ||Membership No.022973 |