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E-Land Apparel Ltd.

BSE: 532820 Sector: Industrials
NSE: ELAND ISIN Code: INE311H01018
BSE LIVE 15:40 | 14 Dec 17.00 -0.20
(-1.16%)
OPEN

17.00

HIGH

18.10

LOW

16.75

NSE 15:44 | 14 Dec 17.05 -0.15
(-0.87%)
OPEN

17.90

HIGH

18.40

LOW

16.85

OPEN 17.00
PREVIOUS CLOSE 17.20
VOLUME 4667
52-Week high 29.50
52-Week low 13.50
P/E
Mkt Cap.(Rs cr) 82
Buy Price 17.15
Buy Qty 1.00
Sell Price 0.00
Sell Qty 0.00
OPEN 17.00
CLOSE 17.20
VOLUME 4667
52-Week high 29.50
52-Week low 13.50
P/E
Mkt Cap.(Rs cr) 82
Buy Price 17.15
Buy Qty 1.00
Sell Price 0.00
Sell Qty 0.00

E-Land Apparel Ltd. (ELAND) - Auditors Report

Company auditors report

TO THE MEMBERS OF E-LAND APPAREL LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of E-LAND APPAREL LIMITED("the Company") which comprise the Balance Sheet as at March 31 2017 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

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 Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards prescribedunder section 133 of the Act.

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 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the 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 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 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 Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

Opinion

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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2017 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 37 which indicates that the Company has incurred losses ofRs. 3835.88 lakhs for the year ended March 31 2017 and the accumulated losses amountingto Rs. 44921.20 lakhs as on that date have completely eroded the net-worth of theCompany. These conditions indicate the existence of a material uncertainty that may castsignificant doubt about the Company's ability to continue as a going concern andtherefore that it may be unable to realise its assets and discharge its liabilities inthe normal course of business. However the financial statements have been prepared on agoing concern basis considering the confirmation of the Holding Company to providefinancial and operational support to the Company and the management's future operationalplans and cash flows to discharge its liabilities in the normal course of the business asdescribed in the said Note. The ability of the Company to continue as going concern isdependent on the successful outcome of the mitigation plans. Our opinion is not modifiedin respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report to theextent applicable that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge 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 theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the relevant books of account.

d) In our opinion the aforesaid financial statements comply with the AccountingStandards prescribed under section 133 of the Act.

e) The going concern matter described under the Emphasis of Matters paragraph above inour opinion may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on March31 2017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct.

g) 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 A". Our report expresses a qualified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements;

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

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in the financial statements asregards its holding and dealings in Specified Bank Notes as defined in the NotificationS.O. 3407(E) dated the 8th November 2016 of the Ministry of Finance during the periodfrom November 8 2016 to December 30 2016. However as stated in note 40 to the financialstatements amounts aggregating to Rs.54.90 lakhs as represented to us by the Managementhave been utilized for other than permitted transactions. Based on audit proceduresperformed and the representations provided to us by the management we report that thedisclosures are in accordance with the books of account maintained by the Company and asproduced to us by the Management.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Monisha Parikh
Bengaluru Partner
30th May 2017 (Membership No. 47840)

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1(g) under ‘Report on Other Legal and RegulatoryRequirements' of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of E-LANDAPPAREL LIMITED Company Limited ("the Company") as of March 31 2017 inconjunction with our audit of the financial statements of the Company for the year endedon 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.

Auditor's Responsibility

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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 qualified audit opinion on the Company's internal financialcontrols system over 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany'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 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.

Basis for Qualified opinion

According to the information and explanations given to us and based on our auditmaterial weakness has been identified as at March 31 2017 in the Company's internalfinancial controls over financial reporting in respect of having inadequate internalcontrol system over analysing quotations for purchases of raw materials and fixed assetswhich could potentially result in purchases at higher than market price.

A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's annual or interim financialstatements will not be prevented or detected on a timely basis.

Qualified Opinion

In our opinion to the best of our information and according to the explanations givento us except for the possible effects of the material weakness described in Basis forQualified Opinion paragraph above on the achievement of the objectives of the controlcriteria the Company has maintained in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as of March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the financialstatements of the Company for the year ended March 31 2017 and these material weaknessdo not affect our opinion on the said financial statements of the Company.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Monisha Parikh
Bengaluru Partner
30th May 2017 (Membership No. 47840)

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals.

According to the information and explanation given to us no material discrepancieswere noticed on such verification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings are held in the name of the Company as at thebalance sheet date except the following.

Particulars of the land and building Gross Block as at March 31 2017 Net Block as at March 31 2017 Remarks
(` Lakhs) (` Lakhs)
Freehold land and building located at Bommasandra Industrial Estate Jigani Hobli Bangalore admeasuring 104478.83 sft and 42090.83 sft respectively 2520.79 2473.00 Transferred in the name of the Company on April 25 2017

Immovable properties of land and buildings whose title deeds have been pledged assecurity for loans guarantees etc. held in the name of the Company are verified basedon the confirmations directly received by us from lenders.

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as fixed asset in the financial statements the lease agreements are in thename of the Company where the Company is the lessee in the agreement.

ii. As explained to us the inventories were physically verified during the year by theManagement at reasonable intervals and no material discrepancies were noticed on physicalverification.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Companies Act 2013.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.

v. According to the information and explanations given to us the Company has notaccepted any deposit during the year and does not have any unclaimed deposits.

vi. The maintenance of cost records has not been specified by the Central Governmentunder Section 148(1) of the Companies Act 2013.

vii. According to the information and explanations given to us in respect of statutorydues:

(a) Undisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax duty of custom duty of excise value added tax cesshave not been regularly deposited with the appropriate authorities and there have beenserious delays in a large number of cases.

(b) The undisputed amounts payable in respect of Provident Fund Employees' StateInsurance Income-tax Service Tax Customs Duty cess and other material statutory duesin arrears as at March 31 2017 for a period of more than six months from the date theybecame payable are as follows:

Name of Statute Nature of Dues Amount Period to which the Amount Relates Due Date Date of subsequent payment
(Rs. Lakhs)
Bombay Provincial Municipal Corporation Act 1949 Property Tax 67.38 2015-16 June 11 2016 Not paid
Provident Fund and Miscellaneous Provisions Act 1952 Provident Fund 0.20 2016-17 September 15 2016 Not paid
Employees' State Insurance Act 1948 Employees State Insurance 10.35 2016-17 Various dates from August 21 2016 to September 21 2016 Not paid
The Karnataka Tax on Professions Trades Callings and Employment Act 1976 Professional Tax 3.36 2016-17 Various dates from May 31 2016 to September 30 2016 Not paid
Sales Tax Central Sales Tax 1.07 2014-15 & 2015-16 April 21 2015 & August 21 2015 Not paid

(c) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise Dutyand Value Added Tax which have not been deposited as on March 31 2017 on account ofdisputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount
(Rs. Lakhs)
Income-tax Act 1961 Income tax Commissioner of Income Tax (Appeals) 2008-09 & 2009-10 140.32
Sales Tax Sales Tax including interest and penalty Commissioner of Sales Tax Maharashtra 2001-02 to 2004-05 250.22

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and government. The Company has not issued any debentures.

ix. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe Order is not applicable.

x. With regard to the allegations made in the previous year relating to disposal ofassets and statutory non-compliances the Company has concluded based on theinvestigation carried out that there is no financial or other impact with regard to thealleged matters. (Refer Note 42)

To the best of our knowledge and according to the information and explanation given tous no fraud by the Company and no fraud on the Company by its officers or employees hasbeen noticed or reported during the year.

xi. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards.

xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with them and hence provisions of Section 192 of theCompanies Act 2013 are not applicable.

xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Monisha Parikh
Bengaluru Partner
30th May 2017 (Membership No. 47840)