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Gontermann Peiper (India) Ltd.

BSE: 504701 Sector: Engineering
NSE: GONTERPEIP ISIN Code: INE530A01026
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Gontermann Peiper (India) Ltd. (GONTERPEIP) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

GONTERMANN - PEIPERS (INDIA) LIMITED

(CIN-L27106WB1966PLC101410)

1. Report on the Financial Statements

We have audited the accompanying financial statements of GONTERMANN - PEIPERS (INDIA)LIMITED (having CIN- L27106WB1966PLC101410) ("the company") which comprises theBalance Sheet as at March 312017 the Statement of Profit and Loss and Cash FlowStatement for the year then ended and a summary of significant accounting policies andother explanatory information.

2. Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters in section 134 (5) ofthe Companies Act 2013 (tithe 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. This responsibility also includes the maintenance of adequate accountingrecords in accordance with the provision of the Act for safeguarding of the assets of theCompany and for preventing and detecting the frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of internalfinancial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

3. 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 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 anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments; the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give true and fair view in order to design audit procedures thatare appropriate in the circumstances An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by Company's Directors as well as evaluating the overall presentation ofthe 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.

4. Basis for Qualified Opinion

a) Long outstanding (i) capital advances (Note No. 12) of Rs. 925.25 Lacs (includingamount represented as trade receivable) and (ii) advances to suppliers (Note No. 16) ofRs. 454.55 Lacs (including Rs. 288.61 Lacs recoverable from related party) in respect ofwhich no confirmation acknowledgement schedule of delivery agreements etc. areavailable and in the absence of initiation of concrete steps for recovery/ settlementnon-availability of legal tenable rights and doubt about their ability to pay besidesother factors equivalent provision for advances doubtful for recovery is necessaryconsidering the magnitude of above factors coupled with considerable delay by theseparties non-creation of such provision is contrary to the requirements of AccountingStandard-4 "Contingencies and Events occurring after the Balance Sheet date".Consequently the Loss for the year would be impacted by Rs. 1379.80 Lacs.

b) The company has recognized Net deferred tax asset (DTA) of Rs.5332.49 Lacs(including RS.1385.29 Lacs for the year) up to 31st March 2017 on account of unabsorbeddepreciation carried forward business losses and disallowances under Income tax laws(Refer Note No. 11 and 51) based on the future profitability projections made by themanagement. The company has history of continuous losses for last six years and in theabsence of virtual certainty supported by convincing evidence along with non-disclosure ofnature of evidences supporting its recognition that sufficient taxable income will beavailable against which such deferred tax assets can be realized in near future in ouropinion the recognition of deferred tax asset is in contravention to Accounting Standard-22 "Accounting for Taxes on Income" and impacted the Loss for the year andfinancial position to that extent.

Had the impact of 'Basis of Qualified Opinion' Para 4 (a) and (b) above been consideredand not considering the impact of Para 6 though Emphasized by us

I) the Loss for the year would have been Rs. 5902.59 Lacs as against the reported Lossof Rs. 3137.50 Lacs and

II) the balance in Reserves and Surplus would have been Rs. (11309.71 Lacs) as againstthe reported Reserves and Surplus of Rs. (4597.42 Lacs).

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements except for the possible effects of thematters described in the Basis for Qualified Opinion paragraph 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 India;

a) in the case of the Balance Sheet of the State of Affairs of the Company as at March312017;

b) in the case of the Statement of Profit and Loss of the LOSS the year ended on thatdate; and

c) in the case of the Cash Flow Statement of the Cash Flows for the year ended on thatdate.

6. Emphasis Matters

Without qualifying our opinion we draw attention to the following notes to thefinancial statements:

a) Note No. 30 to the financial statements relating to remuneration paid duringfinancial year 2010-11 to Ex-Managing Director of the Company in excess of the limitsprescribed under section 198 read with Schedule XIII of the erstwhile Companies Act 1956amounting to Rs. 35.62 Lacs (after recovery of amount payable of Rs. 22.15 Lacs)accordingly the said amount has been shown as recoverable under Short term Loans andAdvances (Note No. 16). The company has initiated recovery process of such excessremuneration paid post rejection of application u/s 309(5B) of the Act by the CentralGovernment during financial year 2014-15 however since recovery has not been made yetthe violation of the act still continues.

b) Note No. 32 to the financial statements wherein as explained Corporate DebtRestructuring (CDR) Scheme is effective from 01st January 2012. The outstandingliabilities of the company have been substantially restructured under the aegis of CDRScheme which extends till financial year 2021 and highlighting the position relating to(i) pending creation of pari-passu charge (equitable mortgage) on the immovable assets ofthe company in favour of CDR lending banks (ii) increase in working capital borrowingsfrom CDR lenders on account of conversion and utilization of non-fund based limits intofund based limits and temporary overdraft facilities (short term working capitalfacilities) of Rs. 503.58 lacs (iii) continuous defaults made by the company in repaymentof principal and interest to the CDR lender banks specially UCO bank (Lead bank) theaccount of which is NPA since financial year 2015-16. For status of defaults in repaymentof principal and payment of interest as existing on the balance sheet date refer ClauseNo. (viii) of the Companies (Auditor's Report) Order 2016 annexed to this report.

c) Note No. 33 to the financial statements relating to the Scheme of Amalgamation theaccounting treatment laid out in the scheme and consequential adjustments that would ariseon necessary approval of Hon'ble High Court of Calcutta and Bombay will be dealt by thecompany in the financial statements upon effectiveness of the scheme.

d) Note No. 34 to the financial statements indicating assumption of going concern andcertain basis and factors for complete erosion of net worth of the company on thereporting date and other factors such as:

i) Company has incurred heavy negative operating cash flows during current year and inpast few years on account of economy slowdown under-utilization of installed productioncapacities paucity of adequate working capital & burden of interest costs;

ii) Current liabilities of the company exceed its current assets by Rs. 12382.44 Lacsas at the balance sheet date resulting into negative working capital gaps;

iii) Cancellation of term loans by the CDR lenders as envisaged in the CDR scheme;

iv) There are continuous defaults in repayment of interest and principal on borrowings;(Refer Foot Note 2 and 3 under Note No. 4A);

v) Company's inability to pay its creditors on due dates;

vi) Company's inability to pay wages and salaries to its workers and staff within time;and

vii) Non-deposition and substantial delay in deposition of statutory liabilities withGovernment Exchequer in stipulated time (Total undisputed outstanding statutory dues as on31st March 2017 are Rs. 834.35 Lakhs).

These conditions alongwith other matters set forth in the above referred noteindicates the existence of material uncertainty that casts significant doubt about thecompany's ability to continue functioning as a going concern and that it may be able torealize its assets and discharge is liabilities in the normal course of business.

Though management's perspective of improved performance/ financial position is largelydependent upon other avenues of raising funds large confirmed orders in hand company'sintention to monetize its identified non-core immovable properties and synergy benefitsfrom ongoing amalgamation process under approval from Hon'ble High Courts of Calcutta andBombay and its implementation/ effectiveness.

However in our view the company will be able to function as a going concern only ifmanagement's perspectives/plans are accomplished and the overall industry/ economy boosts.Though under the current situation and based on historical facts and certain inherentlimitations of such perspectives such as shortfall in working capital required to executethe confirmed orders non-compliance of CDR conditions etc. it is doubtful whether thecompany will be able to achieve the outlined perspectives or not.

Under these circumstances the management has prepared the financial statements of thecompany on a going concern basis and in the opinion of the management no adjustments areconsidered necessary to the carrying value of its assets and liabilities and accordinglythe financial statements does not include any adjustments relating to the recoverabilityand classification of recorded assets and classification of liabilities that may benecessary if the entity is unable to continue as a going concern.

e) Note No. 35 to the financial statements relating to receipt of promoters'contribution during financial year 2014-15 in compliance of restructuring package by CDRlenders in foreign currency equivalent to Rs. 91.61 Lacs in the shape of advance againstshare application money which is outstanding and lying on the reporting date under currentliabilities (under Note No. 7) and basis and reasons stated in the said note whichrestrained the company from allotting the shares and the company held such amount in trustin terms of Companies (Acceptance of Deposits) Rules 2014 as amended pursuant to section73 and 74 of the Companies Act 2013. Further as envisaged in the said note during thecurrent year the company has initiated the process of refund with bank(s) subject tocompliances of RBI and other regulatory requirements. As on the date of our audit reportsuch requirements are under compliance.

f) Note No. 38 to the financial statements relating to pending confirmation/reconciliation of balances in respect of trade receivables of Rs. 2373.77 Lakhs tradepayables of Rs. 3421.89 Lakhs advances to suppliers of Rs. 609.83 Lakhs and advance fromcustomers of Rs. 205.45 Lakhs consequential impact whereof cannot be ascertainedpresently.

7. 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 sub-section (11) of section 143 ofthe Act and on the basis of such checks as we considered appropriate and according to theinformation and explanations given to us we enclose in the Annexure-A a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable to thecompany relevant to this year.

ii) 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 purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.

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

d) Except for the matters described in Basis for Qualified Opinion paragraphs above inour opinion the aforesaid financial statements comply with the Accounting Standardsspecified under Section 133 of the Act.

e) The matters described in Point No.4 (a) (b) (d) (e) and (f) of Emphasis ofMatters paragraph and our comments on clause v) vii) viii) and xi) of Companies(Auditor's Report) Order 2016 annexed to this report in our opinion may have anadverse effect on the functioning of the company.

f) On the basis of written representations received from the directors as on 31st March2017 and taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2017 from being appointed as a director in terms of section164(2) of the 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-B. Our report expresses a Qualified Opinion on the adequacyand operating effectiveness of the company's internal financial controls over financialreporting.

h) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in our opinionand to our 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 No. 28 to the financial statements.

ii. The Company did not have any long-term contracts including derivatives contractsthat require provision under any law or accounting standards for which there were anymaterial foreseeable losses.

iii. The company is not liable to transfer any amount of unclaimed dividend to InvestorEducation and Protection Fund.

iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes (amount not material) during theperiod from 8th November 2016 to 30th December 2016 (Refer Note No. 57). Based on auditprocedures and relying on the management representations we report that the disclosuresare in accordance with books of account maintained by the Company and as produced to us bythe Management.

For V. Malik & Associates

Chartered Accountants

ICAI Firm's Reg. No. 000155N

Vipin Malik

(Proprietor)

Membership No. 080468

Place of Signing : New Delhi

Date: 25th May 2017

ANNEXURE - A TO THE AUDITOR'S REPORT TO THE MEMBERS OF GONTERMANN - PEIPERS (INDIA)LIMITED (CIN-L27106WB1966PLC101410) FOR THE YEAR ENDING 31ST MARCH 2017

(Referred to in paragraph (i) under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

Report on Companies (Auditor's Report) Order 2016 ("the Order") issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act

(i) In respect of its Fixed Assets:

(a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;

(b) According to the information and explanation given to us fixed assets have beenphysically verified by the management at reasonable intervals in phased manner; and asinformed no material discrepancies were noticed on such verification. However physicalverification has not been carried out during the year;

(c) The title deeds of Immovable Properties are held in the name of the company

(ii) In respect of its Inventories:

According to information and explanations given to us physical verification ofinventory has been conducted at reasonable intervals by the internal auditors/ externalagency and as explained no material discrepancies were noticed on such verifications.

(iii) Transactions with Related Parties u/s 189 of the Companies Act 2013

According to information and explanations given to us and records of the companyexamined by us the company has not granted any loans; secured or unsecured; to companiesfirms Limited Liability Partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013.

In view of what has been stated above the question (a) whether terms and conditionsof grant of such loans is prejudicial to the company's interest (b) whether the scheduleof repayment of principal and payment of interest has been stipulated and whether therepayments or receipts are regular and (c) whether the amount is overdue state the totalamount overdue for more than ninety days and whether reasonable steps have been taken bythe company for recovery of the principal and interest do not arise;

(iv) Section 185 and 186 of the Companies Act 2013

In our opinion and according to the information and explanations given to us thecompany has not advanced any loan to any of its directors or to any other person in whomdirector is interested or has not given any guarantee or has not provided any security inconnection with any loan taken by such directors or such other person under section 185.

In our opinion and according to the information and explanations given to us thecompany has given any loan or given any guarantee or provided any security or acquired byway of subscription purchase or otherwise the securities of any other body corporate incompliance with the provision of section 186.

(v) Deposits from the Public

According to the information and explanations given to us company has not accepteddeposits from the public under the provisions of sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the rules framed there under However

a) the company had received promoters' contribution in compliance of restructuringpackage by CDR lenders in foreign currency equivalent to Rs. 91.61 Lacs where promotercompany had restrained the company to al/ot shares till finality of formal approval fromits board/ general meeting. During the year promoter company has requested the company torefund the aforesaid money in tranches vide its letter dated 01st August 2016.Accordingly the company has initiated the process of refund with bank(s) subject tocompliances of RBI and other regulatory requirements. As on the date of our audit reportsuch requirements are under compliance; and

b) credit balances of some of the customers which is outstanding in the normal courseof business and pertains to the period prior to 01st April 2016 which arises due to goodsreturned by customers for quality issue and company has issued credit notes in lieu ofsame till replacement is made or liability persist due to part lifting or delay in liftingof goods since production and turnover has been badly affected due to financial crisesaccordingly till such time the company is holding such amount in trust in terms ofCompanies (Acceptance of Deposits) Rules 2014 as amended pursuant to section 73 and 74of the Companies Act 2013 such balances are moneys received or held by the company intrust.

(vi) Maintenance of Cost Records

We have broadly reviewed the books of accounts maintained by the company pursuant tothe order made by the Central Government for the maintenance of cost records under section148(1) of the Companies Act 2013 and are of the opinion that prima-facie the prescribedaccounts and records have been made and maintained. We have not however made a detailedexamination of the records to ascertain whether they are accurate or complete.

(vii) Statutory Dues

(a) According to information and explanations given to us and records of the companyexamined by us in our opinion the company was Generally Not regular in depositingundisputed statutory dues throughout the year including provident fund employees' stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and any other statutory dues to the appropriate authorities during theyear and there have been serious delays in a large number of cases. The arrears ofoutstanding statutory dues as on 31st March 2017 concerned for a period of more than sixmonths from the date they became payable are given below;

Name of the Statute Nature of the Dues Amount (Rs. In Lacs) Period to which the amount relates Due Date Date of Payment
2.61 July 2015 07-Aug-2015 Not Paid
3.74 August 2015 07-Sep-2015 Not Paid
3.00 September 2015 07-0ct-2015 Not Paid
1.47 October 2015 07-Nov-2015 Not Paid
1.85 November 2015 07-Dec-2015 Not Paid
1.43 December 2015 07-Jan-2016 Not Paid
Income tax Act 1961 Tax Deducted and Collected at Source 0.91 January 2016 07-Feb-2016 Not Paid
1.82 February 2016 07-Mar-2016 Not Paid
3.01 March 2016 30-Apr-2016 Not Paid
2.22 April 2016 07-May-2016 Not Paid
3.10 May 2016 07-Jun-2016 Not Paid
4.48 June 2016 07-Jul-2016 Not Paid
3.14 July 2016 07-Aug-2016 Not Paid
6.07 August 2016 07-Sep-2016 Not Paid
SubTotal 38.83
3.12 October 2015 06-Nov-2015 Not Paid
31.03 November 2015 06-Dec-2015 Not Paid
NIL December 2015 06-Jan-2016 Not Paid
40.66 January 2016 06-Feb-2016 Not Paid
8.85 February 2016 06-Mar-2016 Not Paid
Central Excise Excise Duty 22.37 March 2016 31-Mar-2016 Not Paid
Act 1944 10.76 April 2016 06-May-2016 Not Paid
1.80 May 2016 06-Jun-2016 Not Paid
17.15 June 2016 06-Jul-2016 Not Paid
49.98 July 2016 06-Aug-2016 Not Paid
66.33 August 2016 06-Sep-2016 Not Paid
252.04
West Bengal State tax on 0.78 April 2016 21-May-2016 Not Paid
0.79 May 2016 21-Jun-2016 Not Paid
Professions Trades Callings and Employments Act 1979 Professional Tax 0.78 June 2016 21-Jul-2016 Not Paid
0.78 July 2016 21-Aug-2016 Not Paid
0.78 August 2016 21-Sep-2016 Not Paid
SubTotal 3.91
Name of the Statute Nature of the Dues Amount (Rs. In Lacs) Period to which the amount relates Due Date Date of Payment
4.87 March 2015 31-Mar-2015 Not Paid
3.72 April 2015 06-May-2015 Not Paid
4.80 May 2015 06-Jun-2015 Not Paid
2.28 June 2015 06-Jul-2015 Not Paid
2.26 July 2015 06-Aug-2015 Not Paid
5.42 August 2015 06-Sep-2015 Not Paid
2.44 September 2015 06-0ct-2015 Not Paid
2.37 October 2015 06-NOV-2015 Not Paid
Finance Act 1994 Service Tax 2.24 November 2015 06-Dec-2015 Not Paid
3.67 December 2015 06-Jan-2016 Not Paid
2.12 January 2016 06-Feb-2016 Not Paid
3.04 February 2016 06-Mar-2016 Not Paid
8.37 March 2016 31-Mar-2016 Not Paid
NIL April 2016 06-May-2016 Not Paid
1.73 May 2016 06-Jun-2016 Not Paid
2.32 June 2016 06-Jul-2016 Not Paid
3.04 July 2016 06-Aup-2016 Not Paid
2.11 Auaust 2016 06-SeD-2016 Not Paid
SubTotal 56.82
Employer's Contribution to Provident Fund 11.67 Feb 2016 15-Mar-2016 Not Paid
12.27 Mar 2016 15-Apr-2016 Not Paid
11.97 April 2016 15-May-2016 Not Paid
12.04 May 2016 15-Jun-2016 Not Paid
Employees' Provident Fund & Misc. Provisions Act 1952 11.90 June 2016 15-Jul-2016 Not Paid
13.01 July 2016 15-Aug-2016 Not Paid
13.18 August 2016 15-Sep-2016 Not Paid
SubTotal 86.05
Employee's Contribution to Provident Fund 12.60 July 2016 15-Aug-2016 Not Paid
12.77 August 2016 15-Sep-2016 Not Paid
SubTotal 25.37
GrandTotal 463.01

However as on 31st March 2017 the total undisputed outstanding statutory dues are Rs.834.35 Lakhs.

(b) According to information and explanations given to us following disputed demandsof income tax or sales tax or service tax or duty of excise have not been deposited thedetails of disputed dues are:

Nature of the dues Amount (Rs. in Lacs) Period to which amount relates Forum where dispute is pending
Excise Duty 209.09 1975 to 1986 Hon'ble High Court Calcutta
4.66 1993-1994 Tribunal (Central Excise)
1.39 2002-2003 Joint Commissioner (Central Excise)
8.60 1998-1999 Tribunal (Central Excise)
2.02 2007-2008 Tribunal (Central Excise)
2.09 2006-2007 Tribunal (Central Excise)
5.68 2007-2008 Tribunal (Central Excise)
4.57 2008-2009 Tribunal (Central Excise)
0.96 2008-2009 Tribunal (Central Excise)
1.39 2007-2008 Tribunal (Central Excise)
0.31 2008-2009 Tribunal (Central Excise)
6.31 2008-2009 Tribunal (Central Excise)
48.00 2011-2012 Tribunal (Central Excise)
92.29 upto 1977 Hon'ble High Court Calcutta
78.11 2012-2014 Assessing Officer
0.57 2013-2014 Additional Commissioner
30.61 2011-2015 Assessing Officer
Sub-Total 496.66
Sales Tax 34.08 2007-2008 Revision Board of Commercial Tax
84.82 2009-2010 Revision Board of Commercial Tax
21.38 2010-2011 Revision Board of Commercial Tax
9.91 2011-2012 Revision Board of Commercial Tax
23.00 1994-1995 Hon'ble High Court Calcutta
93.36 1994-1995 Hon'ble High Court Calcutta
39.20 2013-2014 Commissioner (Appeal)
Sub-Total 305.76
Custom Duty 1.50 1997-1998 Hon'ble High Court Calcutta
Sub-Total 1.50
Income Tax 2.19 2007-08 to 2016-17 TDS Officer
177.00 A.Y. 1998-1999 Hon'ble High Court
1539.00 A.Y. 2000-2001 Hon'ble High Court
Sub-Total 1718.19
Service Tax 11.17 2006-07 to 2008-09 Tribunal (Central Excise)
1.26 2010-11 Tribunal (Central Excise)
64.47 2004-05 to 2007-08 Commissioner (Appeal)
Sub-Total 76.90
Total 2599.01

(viii) Repayment of dues of Financial Institutions Banks Government DebenturesHolders : Based upon examination of the books of account and related records and our auditprocedures and as per the information and explanations given by the management we are ofthe opinion that the company has defaulted in repayment of principal and payment ofinterest to all CDR lender banks and the default is continuing throughout the year andexists on reporting date.

Details of lender-wise defaults made during the year in respect of TL (Term Loans)WCTL (Working Capital Term Loan) and FITL (Funded Interest Term Loan) of all CDR lenders.(Refer Foot Note 2 under Note No. 4A):

Name of the Bank Nature Instances of Defaults Range of Amount of Default (Min Max) Range of Period of Default (Min Max)
Allahabad Bank Principal 15 Instances Rs.5.25 Lakhs - Rs.43.50 Lakhs 1 day - 166 days
Interest 54 instances Rs.0.02 Lakhs Rs.12.88 Lakhs 1 day 135 days
SBI Principal 11 instances Rs.1.18 Lakhs Rs.12.18 Lakhs 1 day 84 days
Interest 43 instances Rs.0.00 Lakhs Rs.3.21 Lakhs 1 day 170 days
UCO Bank Principal 48 instances Rs.5.16 Lakhs Rs.128.97 Lakhs 1 day 640 days
Interest 144 instances Rs.1.30 Lakhs - Rs.37.85 Lakhs 1 day 701 days

Out of above as on the Balance Sheet date there is a default of Rs.1859.04 Lacs onaccount of principal and Rs.1485.64 Lacs on account of interest the details of which aregiven below (Refer Foot Note 3 under Note No. 4A):

Period of Default

Allahabad Bank

SBI

UCO Bank

(Ranges) Principal Interest Principal Interest Principal Interest Total
Less than 30 days 58.95 13.66 14.73 3.17 223.17 66.18 379.86
30 days to 60 days - 27.30 - 3.59 - 124.45 155.34
60 days to 90 days - 1.88 - 0.01 223.17 64.58 289.64
90 days to 180 days - - - - - 125.50 125.50
180 days to 365 days - - - - 446.34 364.20 810.54
More than 365 days - - - - 892.68 691.12 1583.80
Total 58.95 42.84 14.73 6.77 1785.36 1436.03 3344.68

Working capital facilities from all CDR lender banks (Allahabad Bank State Bank ofIndia and UCO Bank) generally remain overdrawn and the default is continuing throughoutthe year. As on the balance sheet date there is a default of Rs. 1117.38 Lacs on accountof overdrawn amount (including default of Rs. 389.52 Lacs on account of interest).

The Company did not have any outstanding debentures or dues of loan or borrowings tothe financial institutions or government during the year.

(ix) Initial Public Offer or Further Public Offer

According to information and explanations given to us the company has not raisedmoneys by way of initial public offer or further public offer (including debt instruments)during the year.

(x) Fraud

During the course of our examination of the books and records of the company carriedout in accordance with the generally accepted auditing practices in India we have neithercome across any instances of fraud by the company noticed or reported during the yearunder audit nor have we been informed of any such case by the management of the company.

(xi) Managerial Remuneration

In view of defaults made by the company in repayment of loans taken from Banks andinterest thereon for a continuous period of 30 days in the financial year preceding (i.e.Financial Year 2014-15) the date of appointment (i.e. 01st April 2015) of Mr. DwijenLahiri as Whole Time Director (Executive Director) the managerial remuneration of Rs.1437744/- paid to him during the financial year 2016-17 is in excess of the limitsprescribed under section 197 and 198 read with Schedule-V of the Companies Act 2013 andaccordingly the aforesaid provisions have been violated.

(xii) Nidhi Companies

The company is not a Nidhi company hence the question is not applicable.

(xiii) Compliance and Disclosure of Related Party Transactions

According to information and explanations given to us and records examined by us thetransactions with related parties are in compliance with sections 177 and 188 of theCompanies Act 2013 and details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standards.

(xiv) Allotment of Shares

According to information and explanations given to us and records of the companyexamined by us the company has not made any preferential allotment or private placementof shares or fully or partly convertible debentures during the year under review andconsequently the questions of complying with the requirements of section 42 of theCompanies Act 2013 and utilization of amount raised for the purposes for which it wasraised do not arise.

(xv) Non-Cash transactions

According to information and explanations given to us the company has not entered intoany non-cash transactions with directors or persons connected with him and accordingly thequestion of compliance of the provisions of section 192 of Companies Act 2013 does notarise.

(xvi) Registration with RBI

The company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934 and accordingly the question of obtaining registration do not arise.

For V. Malik & Associates

Chartered Accountants

ICAI Firm's Reg. No. 000155N

Vipin Malik

(Proprietor)

Membership No. 080468

Place of Signing :

New Delhi

Date: 25th May 2017

ANNEXURE - B TO THE AUDITOR'S REPORT TO THE MEMBERS OF GONTERMANN - PEIPERS (INDIA)LIMITED (CIN-

L27106WB1966PLC101410) FOR THE YEAR ENDING 31ST MARCH 2017

(Referred to in paragraph (ii) (g) under 'Report on Other Legal and RegulatoryRequirements' section 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")

1. We have audited the internal financial controls over financial reporting ofGontermann - Peipers (India) Limited (having CIN: L27106WB1966PLC101410) ("theCompany") as of March 31 2017 in conjunction with our audit of the financialstatements of the Company for the year ended on that date.

2. 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.

3. Auditors' 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 to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated 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. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our qualified audit opinion on the Company's internal financial controlssystem over financial reporting.

4. 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 & thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles.

A company's internal financial control over financial reporting includes those policiesand procedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

5. 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.

6. Qualified Opinion on adequacy (and therefore operating effectiveness) of InternalFinancial Controls over Financial Reporting

According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 312017:

a) The Company did not have an appropriate internal control system for obtainingperiodic balance confirmations of trade receivables trade payables and advances tosuppliers and advances from customers' which could potentially impact the financialposition and operating statement.

b) The Company did not have an appropriate internal control system for control over SAPsupport (Including AMC of servers and UPS) non-availability of functional consultants forSAP updation/ modification which could potentially impact the company's internal controlsover book keeping book closure and financial reporting.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot 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 312017 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.

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 March 312017financial statements of the Company and these material weaknesses do not affect ouropinion on the financial statements of the Company.

7. Qualified Opinion on operating effectiveness of Internal Financial Controls overFinancial Reporting and unmodified opinion on adequacy of such controls

According to the information and explanations given to me and based on my audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31 2017:

a) The Company's internal financial controls over effective monitoring of action pointsand internal audit recommendations which could potentially result in rendering the systemof internal controls as less effective.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

In our opinion the Company has in all material respects maintained adequate internalfinancial controls over financial reporting as of March 312017 based on for examplethe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India and except for the possible effects of the materialweaknesses described above on the achievement of the objectives of the control criteriathe Company's internal financial controls over financial reporting were operatingeffectively as of March 312017.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in my audit of the March 312017financial statements of the Company and these material weaknesses have affected ouropinion on the standalone financial statements of the Company and we have issued aqualified opinion on the standalone financial statements.

For V. Malik & Associates

Chartered Accountants

ICAI Firm's Reg. No. 000155N

Vipin Malik

(Proprietor)

Membership No. 080468

Place of Signing : New Delhi

Date: 25th May 2017