The Members of
Greenearth Resource & Projects Limited.
Report on the Financial Statements
We have audited the accompanying financial statements of M/s Greenearth Resource& Projects Limited (hereinafter referred to as "the Company") comprisingof the Balance Sheet as at 31st March 2016 the Statement of Profit and Loss and the CashFlow Statement for the year then ended and a summary of the significant accountingpolicies and other explanatory information (hereinafter referred to as "the financialstatements").
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the preparation of these financialstatements in terms of the requirements of the Companies Act 2013 (hereinafter referredto as "the Act") 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 specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. TheBoard of Directors of the companies are responsible for maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; the selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls 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 which have been used for the purpose ofpreparation of the financial statements by the Directors of the Company as aforesaid.
Our responsibility is to express an opinion on these financial statements based on ouraudit. While conducting the audit we have taken into account the provisions of the Actthe accounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's 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 but not for the purpose of expressing an opinionon whether the Company has an adequate internal financial controls system over financialreporting in place and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Board of Directors aswell as evaluating the overall presentation of the financial statements.
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;
a) In the case of the Balance Sheet of the state of affairs of the Company as at March31 2016;
b) In the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and
c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.
Emphasis of Matters
We draw attention to the following matters in the Notes to the financial statements:
a) Note: 29 in the financial statement which indicates that the Company hasaccumulated losses and its Net worth has been fully eroded the Company has incurred NetLoss of Rs. 1887.00 Lacs during the current financial year (Previous Year Rs. 3538.07Lacs) and net cash loss during the current year of Rs. 125.39 Lacs (Previous year Rs.250.45 Lacs) also the Company current liabilities exceeded its current assets as atthe balance sheet date. These conditions along with other matters set forth in Note:29 indicate the existence of a material uncertainty that cast significant doubt aboutthe Company's ability to continue as a going concern. However the financial statements ofthe Company have been prepared on a going concern basis for the reasons stated in the NoteNo. 23 &24.
Our opinion is not modified in respect of these matters.
Report on other Legal and Regulatory Requirements
1. 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 based on the comments in the auditors' reports of the Company we give in theAnnexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order to theextent 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 and belief were necessary for the purposes of our audit exceptinformation and explanations read with auditors' report for the year ended 31.03.2010;
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 by this Report are in agreement with the books of account.
d) 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.
e) The going concern matter described in sub-paragraph under the Emphasis of Mattersparagraph above in our opinion may have an adverse effect on the functioning of theCompany.
f) On the basis of written representations received from the directors as on 31 March2016 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2016 from being appointed as a director in terms of Section 164(2) of theAct.
g) With respect to the other matters included in the Auditor's Report and to our bestof our information and according to the explanations given to us we further report that :-
As per AS-22 Accounting for Taxes on Income and Note No.24 forming part ofBalance Sheet and Profit & Loss Statement company has not provided for deferred taxassets or liabilities that may arise on account of timing differences which are capable ofreversal in one or more subsequent periods using the tax rates and tax laws that areenacted or substantively enacted.
The Accumulated losses of the Company is Rs. 598.11 crores (Previous period:Loss Rs. 583.18 crores) and its net worth is negative Rs. 277.72 Crores (Previous period:Negative Rs. 258.57 crores) as at the end of the reporting period which indicates erosionof Net worth of the Company. The Company can be termed as "SICK" within themeaning of clause (O) of sub section (1) of section 3 of the Sick Industrial Companies(Special Provision) Act 1985.
Company has not made any Provision for Interest on Working Capital Facility andTerm Loan availed from Various Banks the amounts not having been ascertained as the sameis not charged by Banks. This is because of classification of its account by the concernedBanks and Financial Institution as Non-performing Assets (NPA).
Company has received Notice u/s. 13(2) and Section 13(4) of Securitization andReconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (No.3 of2002) dated 17th October 2011 from its banker as the operation of and conduct of thefinancial assistance / credit facilities have become irregular and company's debt with itsbankers has been classified as Non-Performing Asset (NPA) as per the guidelines issued byRBI.
During the previous year State Bank of India Stressed Assets Management BranchMumbai vide their letter no. SBI/SAMB/SB/NIPL/0569 dated 04th June 2014 have absolutelyassigned all the rights title and interest in financial assistance in favour of"Invent Assets Securitisation & Reconstruction Private Limited". AccordinglyInvent Assets Securitisation & Reconstruction Private Limited has become the securedlender and all the rights title and interests of State Bank of India have vested inInvent Assets Securitisation & Reconstruction Private Limited in respect of thefinancial assistances granted by State Bank of India and Bank of India.
During the period under review company signed a two number settlement agreementsboth dated 31st day of July 2015 with "M/s Invent Assets Securitisation &Reconstruction Private Limited" (Secured Creditor) and "M/s Simplex coke andRefractory Private Limited" (Sponsor/Lessee/confirming party) for settlement of itsdebt pertaining to INVENT/1314/S9 Trust (SBI) as well as INVENT/14-15/S15 Trust(BOI).Further the company simultaneously entered into an arrangement/agreement dated 31st day ofJuly 2015 with "M/s Simplex coke and Refractory Private Limited"(Sponsor/Lessee/confirming party) to sponsor the settlement amount and agreed to assurethe compliance of payment of settlement amount and directly pay the settlement amount toInvent being the secured creditor for and on behalf of the company.
Consequent to the receipt of the entire settlement amount by the secured creditorthrough sponsor/lessee/confirming party the amount paid by sponsor/lessee /confirmingparty shall be appropriated against the consideration for the purchase of the entiremortgaged & hypothecated assets of the company as agreed in terms of the saidagreement dated 31.07.2015.
Also the company singed an "Agreement for Sale" on 31st day of July 2015with M/s Simplex Coke and Refractory Private Limited and it has been agreed that M/sSimplex Coke and Refractory Private Limited will be the beneficial owner of all presentand future encumbered or unencumbered tangible assets receivables and advances ofcompany in lieu of settlement/payment to the secured creditor/lender being "M/sInvent Assets Securitisation & Reconstruction Private Limited" and "IDBIBank" (the secured creditor/secured lender) considering the lower depreciable valueof the tangible assets of the company.(Refer Note no. 24)
Also M/s Simplex coke and Refractory Private Limited agrees to use production facilityof the company on lease basis vide a separate lease agreement dated 10th July 2015.
During the previous year the Securities and Exchange Board of India Mumbaiissued notices dated 26th March 2014 under Rule 4 of SEBI (Procedure for Holding Inquiryand Imposing Penalties by Adjudication officer) Rules 1995. However the management hassubmitted its reply and outcome of the same is still pending.
During the previous reporting period the proceeding of SFIO is pending beforeits adjudication before the Company Law Board / Court at Kolkata. Since the liability isnot materialized yet hence no provision regarding the same has been made in the books ofaccounts; however the management has filed compounding application.
During the period under review the proceedings under section 217(3) & 383Aof the Companies Act 1956 are being compound by the Company Law Board Kolkata Branch videits orders dated 16th March. 2016. Also the application for compounding the proceeding U/s372A (3) being rejected by the Company Law Board vide its order dated 07th Dec. 2015.
During the period under review SFIO filed a petition before CLB PrincipalBench New Delhi against the company seeking inter-alia the relief of invoking sections388b 397/398RW 401402406 &408 of the Companies Act 1956. The Honble CLBPrincipal Bench New Delhi admitted the above petition filed by SFIO and passed an interimorder dated 22.12.2015 and in compliance thereto company has filed its reply for kindconsideration of the Honble CLB Principal Bench New Delhi (now known as NationalCompany Law Tribunal) and outcome of the same is still pending.
Balances of Loans Sundry Debtors Loans and Advances and Current Liabilitiesare subject to confirmation from the respective parties and reconciliations if any.
Annexure to the Independent Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2016 we reportthat:
(I) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets subject to the annexure to the AuditorsReport for the period ended on 31.03.2010.
(b) As explained to us all fixed assets have not been physically verified by themanagement during the period but there is a regular programme of verification which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.
(ii) (a) As explained to us inventories have been physically verified during thereporting period by the management at reasonable intervals.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.
(c) In our opinion and on the basis of our examination of the records the Company isgenerally maintaining proper records of its inventories. No material discrepancy wasnoticed on physical verification of stocks by the management as compared to book recordssubject to the annexure to the Auditors Report for the previous financial period ended on31.03.2010.
(iii) As per the information and explanations given to us during the period underaudit the Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013 ('the Act'). Accordingly Clause 3(iii) (a) (b) and (c) of the order are notapplicable for the year.
(iv) In our opinion and according the information and explanation given to us duringthe period under audit there are no loans guarantees and securities granted in respect ofwhich provisions of section 185 and 186 of the Companies Act 2013 are applicable and hencenot commented upon.
(v) The Company has not accepted any deposits from the public during the year.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the companies Act 2013.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of statutory dues were in arrears as at 31 March2016 for a period of more than six months from the date they became payable exceptProfessional tax Sales tax and Income tax and the except the dues mentioned in point no.(vii) (b) below.
(b) According to information and explanations given to us some dues of income taxsales tax and service tax have not been deposited by the Company on account of disputes.
(viii) The Accumulated losses of the Company is Rs. 598.11 Crores (Previous year: LossRs. 583.18 crores) and its net worth is negative Rs. 277.72 Crores (Previous period:Negative Rs. 258.57crores) at the end of the reporting period which indicates erosion ofNet worth of the Company. The Company can be termed as"SICK" within the meaningof clause (O) of sub section (1) of section 3 of the Sick Industrial Companies (SpecialProvision) Act 1985. Earlier the Company has made a reference to the "Board forIndustrial & Financial Reconstruction" under section 15(1) of Sick IndustrialCompanies (Special Provisions) Act 1985 however the same reference has been declined byBIFR".Considering the same the Company's ability to continue as going concern is indoubt and will depend upon any revival programme as stated in the Note No.24
(ix) The Company is having outstanding dues to financial institutions or banks duringthe year as mentioned under the Emphasis of Matters & Report on other Legal andRegulatory Requirements paragraph above.
(x) According to the information and explanation given by the management the companyhas neither raised any monies by way of initial public offer or further public offer andterm loan during the year. Hence reporting under clause (ix) is not applicable.
(xi) According to the information and explanation given by the management we reportthat the managerial remuneration has been paid/provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the companiesAct 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) In our opinion during the period under review all transactions with the relatedparties are in compliance with section177 and 188 of Companies Act 2013 and the detailshave been disclosed in the Financial Statements as required by the applicable accountingstandards.
(xiv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
(xv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.
(xvi) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company and hence not commented upon.
For and on behalf of
For K.M. Tapuriah&Co
Firm Regn. No.:314043E
CA Naveen Mohta
Membership No: 048111
Place : Mumbai
Date : August 13 2016