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 31s1March 2017 and the Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.
Managements Responsibility forthe Financial Statements
The Companys Board of Directors is responsible forthe matters stated in Section 134(5)of the Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 (as amended).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 to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue 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 Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Companys 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 Directors as well as evaluating the overall presentationof the financial statements. '
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our 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 CqncernAssumption may no longer be appropriate - As the Company has incurred significantoperating losses negative operating cash flows adjudication of legal process against thecompany for loan liability and negative net worth indicating that going concern assumptionis no longer be appropriate. Consequently adjustment for amount of assets andclassification of liabilities 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 the divisionalbench of Punjab and Haryana high court Chandigarh as stated in Note No. - (viii) ofOther notes 20(B).
2.2 Note No. 20(B) (viii) para (j) of other notes to financial statements describesthat company has not made provision calculated on the IFCI debts confirmed by the orderdated 18-01-2016 in DRT-I New
Delhi by AARCL for the recovery of Rs. 844938818 together with simple interest @13.50% p.a. from 14-05-2007 which amount to Rs. 1972793246.
2.3 Had the Provision been made the Loss up to the year after tax Rs.14048105/-wou!dhaveresulted in loss of Rs. 2018015347/- Reserve & SurplusDeficit (Balance of Statement of Profit and Loss)wouldhavebeenRs.2122685465/-insteadofRs.118718223/-
3. The company had to give physical possession of a part of land comprising of approx.10 acres as stated in Note No. 7 (b) whose approx cost appearing in books is Rs. 12.02Lakhs to Alchemist Asset Reconstruction Company Ltd. assignees of IDBI & IFCI(Financial Institution) on 8th March 2013 as per the direction of Honourable Supreme Courtwho re-affirmed the interim orders of Honourable Punjab & Haryana High CourtChandigarh of 9th August 2011. As informed to us registry and other documents relating tosale of the land to third party is not available with the company therefore necessaryaccounting entries could not be made in view of the matter stated above we are unable toform any opinion relating to state of affairs profit&loss etc. in regards to theland.
In our opinion and to the best of our information and according to the explanationsgiven to us for the effects/ possible effects of the matter described in the basis forqualified opinion paragraph the aforesaid financial statements give the informationrequired by the Act in the manner so required but does not give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 st March 2017 and its Loss and its cash flows for theyear ended on that date
Emphasis of Matter
We draw attention to:
a) Note No. 20 (B) para (xv) (ii) to financial statement which describes contingentliability not provided for claims under adjudication
in DRT-I New Delhi by AARCL for recovery of the dues calculated bn the IDCIDebts Rs. 931519000
(The Company has also filed counter claims of more than Rs.500 Crores on both KMBL andAARCL.)
b) Note No. 20 (B) para (iii) to financial statement which describes AccountReconciliation/Confirmation in respect of certain accounts of Debtors have not beenreceived and they are subject to confirmations and ' reconciliation. The management is ofthe opinion that adjustment if any arising out of such reconciliation would not havematerial effect on the financial statement of current year.
c) Note No. 20 (B) para (iv) to financial statement which describes AccountReconciliation/Confirmation in respect of certain accounts of Vendors have not beenreceived and they are subject to confirmations and reconciliation. The management is ofthe opinion that adjustment if any arising out of such reconciliation would not havematerial effect on the financial statement of current year.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in paragraphs 3and 4 of the Order to the extent applicable.
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 ancfbeliefwere necessary forthepurposesofouraudit.
b. for the effects/ possible effects of the matter described in the basis for qualifiedopinion paragraph in our opinion in our opinion proper books of account as required bylaw have not been kept by the Company so far as it appears from our examination of thosebooks.
c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account. .
d. for the effects/ possible effects of the matter described in the basis for qualifiedopinion paragraph in our opinion the aforesaid financial statements does not comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 (as amended).
e. On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 3T March 2017 from being appointed as a director in terms ofSection .164 (2) of the Act.
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 Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2017 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 on its financialposition in its financial statements - Refer Note 20 (B) (viii) and (xv) to the FinancialStatements;
ii. The Company did not have any material foreseeable losses on long term contractsincluding derivative contracts;
iii. There were no amounts which were required to be transferred to the InvestorEducation & Protection Fund by the company.
iv. The Company has provided requisite disclosures in Note No. Note 20 (B) (xxi) tothese financial statements as to holding of Specified Bank Notes on November 82016 andDecember 302016 as well as dealing in Specified Bank Notes during the period fromNovember 8 2016 to December 30 2016. Based on our audit procedures and relying on themanagement representation regarding the holding and nature of cash transactions includingSpecified Bank Notes we report that these disclosures are in accordance with the book ofaccounts maintained by the company as produced to us.
| ||For SINGHI & CO. |
| ||Chartered Accountants |
| ||Firm Registration No. 302049E |
| ||B.L. Choraria |
|Place: Noida ||Partner |
|Date: 30.05.2017 ||Membership No. 022973 |