You are here » Home » Companies » Company Overview » Hanung Toys and Textiles Ltd

Hanung Toys and Textiles Ltd.

BSE: 532770 Sector: Industrials
NSE: HANUNG ISIN Code: INE648H01013
BSE LIVE 13:43 | 20 Nov 3.64 0.09
(2.54%)
OPEN

3.55

HIGH

3.72

LOW

3.55

NSE 15:31 | 20 Nov 3.60 -0.05
(-1.37%)
OPEN

3.65

HIGH

3.80

LOW

3.50

OPEN 3.55
PREVIOUS CLOSE 3.55
VOLUME 5479
52-Week high 6.40
52-Week low 3.42
P/E 0.16
Mkt Cap.(Rs cr) 11
Buy Price 3.56
Buy Qty 400.00
Sell Price 3.64
Sell Qty 90.00
OPEN 3.55
CLOSE 3.55
VOLUME 5479
52-Week high 6.40
52-Week low 3.42
P/E 0.16
Mkt Cap.(Rs cr) 11
Buy Price 3.56
Buy Qty 400.00
Sell Price 3.64
Sell Qty 90.00

Hanung Toys and Textiles Ltd. (HANUNG) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

HANUNG TOYS AND TEXTILES LIMITED

1) Report on the Financial Statements

We have audited the accompanying financial statements of HANUNG TOYS AND TEXTILESLIMITED ("the Company") which comprise the Balance Sheet as at 31st March2017 the Statement of Profit and Loss and the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatory information.

2) 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial 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.

3) Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

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 specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatements.

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 control relevant to the Company's preparation and presentationof the financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrols system over financial reporting and to the operating effectiveness of suchcontrol. An audit also includes evaluating the appropriateness of the accounting policiesused and the reasonableness of the accounting estimates made by the Management/Company'sDirectors as well as evaluating the overall presentation of the financial statements.

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

4) Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements subject to matters referred in Emphasis ofMatter paragraph herein below give the information required by the Act in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31st March2017 and its loss and its cash flows for the year ended on that date.

5) Emphasis of Matter

Without qualifying our opinion we draw attention to the following matters in the Notesto the financial statements:

1. Note no. 3.1 to the financial statement. We report that the Company has incurred anet loss of Rs. 11023.88 Lacs during the year ended March 31 2017 and the accumulatedlosses of the Company as at March 31 2017 amount to Rs.268260.58 Lacs leading to erosionof its entire net worth. The current liabilities of the Company as at the same date exceedits current assets by Rs. 280607.93 Lacs . These conditions indicate the existence of auncertainty and cast significant doubt about the Company's ability to continue as a goingconcern in view of note no. 7.5 to the financial statements..

2. Note No. 4.17.2 and 7.6 to the financial statement. we report that lenders of theCompany have recall the borrowings granted to the Company under Securitisation andRecovery of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI) andalso enforced the security in the form of assets of the Company. Accordingly the Companyhas classified the outstanding long term borrowings from Banks as current liabilities.Further the balance of loans from lenders Banks are subject to confirmation andreconciliation. Therefore the exact liability of the Company towards its lenders banksare not confirmed at the Balance Sheet date.

3. Note No. 9.3 to the financial statement. We report that the Company has not provideddepreciation on the assets situated at its units126 127 and 129E NSEZ Noida andB-8910 Hosiery Complex Phase-II Noida the above units exclusively mortgage to ICICIBank and the said Bank has taken physical possession of the properties under theSecuritisation and Recovery of Financial Assets and Enforcement of Security Interest Act2002 (SARFAESI) which has the effect of understatement of loss of the Company for theyear ended March 31 2017 by Rs. 95.18 Lacs.

4. Note No. 23.1 to the financial statement. We report that during the quarter endedMarch 31 2017 the Company has not provided for interest on borrowings from Banks andFinancial Institutions and also reversed the interest provided on adhoc basis onborrowings for last 3 quarters for the financial year 2016-17 as the lenders of theCompany had taken possession of assets of the Company under section 13(4) of theSecuritisation and Reconstruction of Financial Assets and Enforcement of Security InterestAct 2002 (SARFAESI) which has the effect of understatement of loss ofthe Company for theyear ended March 312017 to the extent of interest on borrowings not provided for.

5. Note No. 29.1 to the financial statements which describes the uncertainty relatedto the outcome of the lawsuit filed against the Company by certain creditors for recoveryof their dues.

6) 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 in terms of Section 143(11) ofthe Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. As required by Section 143(3) ofthe Act we report that:

(a) We have obtained all the information and explanations which to the best of ourknowledge 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 books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 ofthe Act read with Rule 7 oftheCompanies (Accounts) Rules 2014;

(e) On the basis of the written representations received from the directors as on March312017 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) ofthe Act.

(f) With respect to the adequacy ofthe internal financial controls over financialreporting ofthe Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 ofthe 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 in accordance with the generally accepted accounting practicedisclosed the impact of pending litigations on its financial position in its financialstatements- Refer Note 14 and 29.1 to the financial statements.

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses under the applicable law oraccounting standard.

(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 had provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016 these are in accordance with the books of accounts maintainedby the company.

Date: May 30 2017 For RAVINDRA SHARMA & ASSOCIATES
Place : Noida Chartered Accountants
(CA Ravindra Sharma
Partner
Membership No.: 085271

ANNEXURE-A TO THE INDEPENDENT AUDITORS' REPORT

(i) The Annexure referred to in Independent Auditors' Report to the members of theCompany on the financial statements for the year ended March 312017 we report that:

In respect of fixed assets:

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

b) The Company has a regular system of verification of fixed assets at the end of eachyear which in our opinion is reasonable having regard to the size of the Company and thenature of its assets. According to the information and explanations given to us nomaterial discrepancies were noticed on such verification.

c) According to information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) The inventory was physically verified during the year by the Management atreasonable interval during the year. In our opinion and according to the information andexplanation provided to us the procedure and frequency of verification of inventoriescarried out by the management is reasonable and adequate in relation to the size of theCompany and nature of its business.As explained to us the discrepancies noticed onphysical verification as compared to book records have been properly dealt with in thebooks of account for the year ended March 312017.

(iii) According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not granted/taken any loans securedor unsecured to/from companies firms or other parties covered in the register maintainedunder Section 189 of the Companies Act 2013 and accordingly the provisions of clauses(iii) of paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to information and explanations given to us theCompany has complied with the provision of section 185 and 186 of the Companies Act 2013with respect to the loans and investments made.

(v) According to the information & explanation given to us the Company has notaccepted any deposits and accordingly the provision of clause (v) of paragraph 3 of theOrder are not applicable to the Company.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant toRule made by the Central Government for the maintenance of cost records under Section 148of the Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been maintained. We have however not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.

(vii) According to the information & explanation given to us and on the basis ofour examination of the records ofthe Company in respect of statutory dues;

a) The Company has not been generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income tax sales tax service taxduty of customs duty of excise value added tax cess and other material statutory duesapplicable to it with appropriate authorities during the year. Details of the outstandingstatutory dues as at March 31 2017 have been given in the note no. 7.1 of the financialstatements. According to the information and explanation given by the Company there aresome undisputed amounts payable in respect of Employee's state insurance Employee'sprovident fund Tax deducted at source Sales Tax Service Tax of Rs. 115.61 lacs Rs.35.16 lacs Rs. 50.35 lacs Rs. 142.30 lacs and Rs. 2.98 lacs respectively which wereoutstanding as at March 31 2017 for a period of more than six months from the date theybecame payable.

b) According to information and explanation given to us and the records of the Companyexamined by us there are no dues of service tax sales tax duty of custom duty ofexcise value added tax cess and any other statutory dues which have not been depositedon account of any dispute. The particular of dues of income tax as at March 31 2017 whichhas not been deposited on account of any dispute are as follow-

Name of the statute Nature of dues Amount Rs. in lacs Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Income tax including interest as applicable 196.23 Assessment Year 2010-11 Income-tax Appellate Tribunal
Income Tax A ct 1961 Income tax including interest as applicable 435.03 Assessment Year 2011-12 Commissioner of Income Tax (Appeal)
Income Tax Act 1961 Income tax including interest as applicable 2404.63 Assessment Year 2012-13 Commissioner of Income Tax (Appeal)
Income Tax Act 1961 Income tax including interest as applicable 2823.66 Assessment Year 2013-14 Commissioner of Income Tax (Appeal)

(viii) According to information and explanations given to us and based on ourexamination of the records of the Company we are of the opinion that the Company haddefaulted in repayment of dues to financial institution and banks particulars of whichare as follow:

Name of Bank Nature

Amount of defaults (Rs. In lacs)

More than 365 days Less than 365 days
Allahabad Bank Interest 5946.58 -
Andhra Bank Interest 970.23 -
Bank of Baroda Interest 4235.01 -
Bank of India Interest 3700.02 -
Bank of Maharastra Interest 1264.42 -
Central Bank of India Interest 6694.26 -
Exim Bank Interest 1956.99 -
ICICI Bank Interest 7560.47 -
Karnataka Bank Interest 753.64 -
Karur Vysa Bank Interest 877.67 -
Oriental Bank of Commerce Interest 3492.14 -
Punjab National Bank Interest 15122.33 -
State Bank of India Interest 4526.20 -
Syndicate Bank Interest 3090.59 -
Union Bank Of India Interest 3056.41 -
UCO Bank Interest 2733.53 -

We further report that during the financial year covered by our audit all the bankshave classified the accounts of the Company as NPA and accordingly the banks recalled thefacilities granted to the Company. Therefore the balances as on March 31 2017as perbooks of account of the Company of Rs. 214819.75 Lacs forming part of notes no. 5 and 7to the financial statements became payable to which the Company has defaulted..

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instrument) and term loan during the year. Accordingly theprovision of clause (ix) of paragraph 3 of the Order is not applicable to the Company.

(x) To the best of our knowledge and according to the information and explanationsgiven to us and considering the size and nature of the Company's operations no fraud ofmaterial significance by the Company or on the Company by its officers or employee hasbeen noticed or reported during the course of our audit.

(xi) According to information and explanations given to us and based on our examinationof the records of the Company the Company has paid/ provided for managerial remunerationin accordance with the requisite approvals mandated by the provision of section 197 readwith Schedule V of the Companies Act 2013.

(xii) In our opinion and according to information and explanations given to us theCompany is not a nidhi company. Accordingly the provision of clause (xii) of paragraph 3of the Order is not applicable to the Company.

(xiii) According to information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with sections 177 and 188 of the Companies Act 2013 where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.

(xiv) According to information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debenture duringthe year.

(xv) According to information and explanations given to us and based on our examinationof the records of the Company the Company has not entered into non cash transactions withdirectors or persons connected with him. Accordingly the provision of clause (xv) ofparagraph 3 of the Order is not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA ofReserve BankofIndia Act 1934.

For RAVINDRA SHARMA & ASSOCIATES
Date: May 30 2017 Chartered Accountants
Place : Noida
(CA Ravindra Sharma
Partner
Membership No.: 085271

ANNEXURE- B TO THE INDEPENDENT AUDITORS' REPORT

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 Hanung Toysand Textiles Limited ("the Company") as at March 31 2017 in conjunction withour audit 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 ('ICAI'). These responsibilityinclude the design implementation and maintenance of adequate internal financialcontrolsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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.

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 Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandard and Guidance Note require that we comply with ethical requirements and plan andperform the 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 adequacy of theinternal financial controls systems 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud and error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting is process designed toprovide reasonable assurance regarding the reliability of financial reporting andpreparation 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and their receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company;

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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 to be detected.Also projections of any evaluation of 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 change in conditions or thatthe degree of compliance with policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For RAVINDRA SHARMA & ASSOCIATES
Chartered Accountants
Date: May 30 2017
Place : Noida
(CA Ravindra Sharma
Partner
Membership No.: 085271