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E-Land Apparel Ltd.

BSE: 532820 Sector: Industrials
NSE: ELAND ISIN Code: INE311H01018
BSE LIVE 19:43 | 19 Oct 17.90 0.45
(2.58%)
OPEN

17.20

HIGH

18.40

LOW

17.20

NSE 19:31 | 19 Oct 17.80 0.45
(2.59%)
OPEN

17.60

HIGH

18.45

LOW

17.45

OPEN 17.20
PREVIOUS CLOSE 17.45
VOLUME 24046
52-Week high 33.30
52-Week low 13.50
P/E
Mkt Cap.(Rs cr) 86
Buy Price 0.00
Buy Qty 0.00
Sell Price 17.90
Sell Qty 1810.00
OPEN 17.20
CLOSE 17.45
VOLUME 24046
52-Week high 33.30
52-Week low 13.50
P/E
Mkt Cap.(Rs cr) 86
Buy Price 0.00
Buy Qty 0.00
Sell Price 17.90
Sell Qty 1810.00

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 2016 theStatement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of 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 accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safe guarding of 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 the design implementation and maintenance of adequate internal financialcontrol that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation ofthe 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. 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 there under. We conducted our audit in accordancewith the Standards on Auditing issued by the Institute of Chartered Accountants of Indiaas specified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by the Company’s Directors as well as evaluating theoverall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner 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 2016 its loss and its cash flows for the year ended on that date.

Emphasis of Matters

a. We draw attention to Note 40 of the financial statements. The Company has incurredlosses during the current period and the accumulated losses of the Company at the close ofthe period exceed its paid up capital and reserves and surplus. These conditions as setforth in Note 40 indicate the existence of a material uncertainty that may castsignificant doubt about the Company’s ability to continue as a going concern.

b. We draw attention to Note 30 (ii) of the financial statements in respect ofcontingency related to ‘compensation payable in lieu of bank sacrifice pursuant tothe right of recompense’ the outcome of which is materially uncertain and cannot bedetermined currently.

c. We draw attention to Note 10 of the financial statements in respect ofcompany’s land in Bengaluru wherein the Company has made an application for extensionof time period to comply with the conditions mentioned in the lease cum sale agreement.The extended time period to comply with the conditions expired during the current year.Pending disposal of the Company’s application for further extension of time noadjustment has been made in the financial statements.

d. We draw attention to Note 41 of the financial statements where pending disposal ofthe company’s compounding application by the Reserve Bank of India no adjustment hasbeen made in the financial statements.

e. We draw attention to Note 39 of the financial statements regarding managerialremuneration paid by the Company for the year ended March 31 2015 in excess of the limitsprescribed under the Companies Act 2013. As informed to us the Company has receivedapproval from Central Government for excess remuneration paid to two directors and is inthe process of filing revised application with the Central Government for one of itsdirectors.

Our audit opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure 1 a statement on the matters specified inparagraphs 3 and 4 of the Order.

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 and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required bylaw have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

(d) The matter described in para (a) in Emphasis of Matters paragraph above in ouropinion may have an adverse effect on the functioning of the company;

(e) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

(f) On the basis of written representations received from the directors as on March 312016 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of section 164 (2) ofthe Act;

(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 2" to this report;

(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 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 30 to the 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.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Vikram Mehta
Partner
Membership Number: 105938
Place of Signature: Mumbai
Date: May 30 2016

Annexure 1 referred to in paragraph 1 under the heading ‘Report on Other Legal andRegulatory Requirements’ 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 Company has performed physical verification of all the assets located at themanufacturing facility at Bangalore in the current year except for plant &machineries which were verified in the previous year. No material discrepancies werenoticed on such verification.

The Company has a regular programme of verification which in our opinion isreasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in fixed assets are held in the name of thecompany.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year. Discrepancies noted on physical verification of inventorieswere not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the company.

(v) The Company has not accepted any deposits from the public.

(vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under Section 148(1) of the Companies Act 2013for the products/services of the Company.

(vii) (a) Undisputed statutory dues including provident fund employees’ stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax cess and other material statutory dues have not been regularly deposited with theappropriate authorities and there have been serious delays in large number of cases.

(b) According to the information and explanations given to us undisputed dues inrespect of provident fund employees’ state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax cess and other materialstatutory dues which were outstanding at the year end for a period of more than sixmonths from the date they became payable are as follows:

Name of the Statute Nature of the Dues Amount (Rs. Lakhs) Date of Payment
Navi Mumbai Municipal Corporation Municipal Taxes 100.23 Not Paid yet

(c) According to the records of the Company the dues outstanding of income-tax andsales-tax on account of any dispute are as follows:

Name of the statute Nature of dues Amount Period to which the amount relates Forum where dispute is pending
(Rs. Lakhs)
Sales Tax Works Contract Tax 250.22 2004-05 to 2011-12 Commissioner of Sales Tax Maharashtra
Income Tax Act 1961 Income Tax 69.46 Assessment Year 2009-10 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 70.86 Assessment Year 2010-11 Commissioner of Income Tax (Appeals)

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of dues to a financial institutionbank or debenture holders or Government.

(ix) According to the information and explanations given by the management the Companyhas not raised any money by way of initial public offer / further public offer / debtinstruments and term loans hence reporting under clause (ix) is not applicable to theCompany and hence not commented upon.

(x) We report that there are certain allegations relating to disposal of assets andstatutory non compliances which are currently under investigation by the management of thecompany and hence we are unable to comment on the same.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.

(xii) In our opinion the Company is not a Nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Vikram Mehta
Partner
Membership Number: 105938
Place of Signature: Mumbai
Date: May 30 2016

Annexure 2 referred to in paragraph 2(f) under the heading ‘Report on Other Legaland Regulatory Requirements’ of our report of even date

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of E-landApparel Limited ("the Company") as of March 31 2016 in conjunction with ouraudit of the 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 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 the Company’s policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the 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") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 audit opinion on the internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 31 2016:

(a) The Company did not have appropriate internal control system over inviting andanalysing quotations for purchases of raw materials and fixed assets which couldpotentially result in purchases at higher than market price.

(b) The Company did not have appropriate internal control system over identificationand selection of counterparty and inviting and analysing tenders/bids for sale ofcompany’s assets which could potentially result in company’s assets being soldat a lower than market price and could potentially create opportunities for fraud on thecompany.

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.

In our opinion except for the possible effects of the material weaknesses describedabove on the achievement of the objectives of the control criteria the Company hasmaintained in all material respects adequate internal financial controls over financialreporting and such internal financial controls over financial reporting were operatingeffectively as of March 31 2016 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.

Explanatory paragraph

We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the financial statements of E-land Apparel Limited Company which comprise theBalance Sheet as at March 31 2016 and the related Statement of Profit and Loss and CashFlow Statement for the year then ended and a summary of significant accounting policiesand other explanatory information. The material weaknesses identified as above wasconsidered in determining the nature timing and extent of audit tests applied in ouraudit of the March 2016 financial statements of the company and this report does notaffect our report dated May 30 2016 on which expressed an unqualified opinion on thefinancial statements.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Vikram Mehta
Partner
Membership Number: 105938
Place of Signature: Mumbai
Date: May 30 2016