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Impex Ferro Tech Ltd.

BSE: 532614 Sector: Metals & Mining
NSE: IMPEXFERRO ISIN Code: INE691G01015
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VOLUME 25
52-Week high 1.67
52-Week low 0.86
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
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OPEN 0.86
CLOSE 0.86
VOLUME 25
52-Week high 1.67
52-Week low 0.86
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Impex Ferro Tech Ltd. (IMPEXFERRO) - Auditors Report

Company auditors report

To

The Members of Impex Ferro Tech Limited

Report on the Financial Statements

We have audited the accompanying Financial Statements of IMPEX FERRO TECH LIMITED("the Company") which comprises the Balance Sheet as at 31st March 2017Statement of Profit and Loss and the Cash Flow Statement for the year ended on that dateand a summary 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 Companies Act 2013 ('' the Act'') with respect to the preparation of theseFinancial Statements that give a true and fair view of the financial position financialperformance and cash flow of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounti ng records in accordancewith the provision of the Act for safeguarding 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 design implementati on and maintenance of adequate internal financialcontrol that were operating effecti vely for ensuring that accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Financial Statements based on ouraudit.

We have taken into account the provision of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovision of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified undersecti on 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 control relevant to the Company's preparation and fair presentation ofthe Financial Statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by 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 Financial Statements.

Basis for Qualified Opinion

(a) The lenders have stopped charging interest on debts since the dues from theCompany have been categorised as Non Performing Asset (NPA). The Company is in activediscussion/negotiati on with its lenders to restructure its debt at a sustainable level.In view of the above pending finalisati on of the restructuring plan the Company has notprovided accrued interest in its books during the year and reversed interest provided inearlier periods pertaining to the period the account was declared NPA by the respectivelenders. The amount of interest reversed for earlier periods is ' 281.01 lacs. The amountof interest not provided for the year ended 31st March 2017 is ' 3227.11 lacs. Had theaforesaid interest expense been recognised the net loss for the year ended 31st March2017 would have been ' 14218.88 lacs instead of ' 10710.76 lacs.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of our observation stated in (a) above the aforesaidFinancial Statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India

(a) In the case of Balance Sheet of the state of affairs of the Company as at 31stMarch 2017; and

(b) In the case of Statement of Profit & Loss of the loss of the Company for theyear ended on that date and

(c) In the case of Cash Flow Statement of the cash flows of the Company for the yearended on that date.

Emphasis of Matter

(a) We draw your attenti on to Note No. 37 of the Financial Statements which indicatethat as at 31st March 2017 the accumulated losses amounting to ' 25197.12 lacs haseroded the entire net worth of the Company indicating the existence of a materialuncertainty about the Company's ability to continue as a going concern. The FinancialStatements have been prepared on a going concern basis for the reasons stated in the saidnote.

(b) Pending confirmations of certain unsecured loans and advances trade receivablestrade payables and other liabilities as referred in Note no. 32 of accompanyingstatements are subject to confirmations and reconciliation.

Our report is not qualified in this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the 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 weenclose in the "Annexure A" a statement on the matters specified in paragraphs 3and 4 of the Order.

2. As required by section 143(3) of the Act we report that:

(a) We have sought and except for the possible effects of matter (a) described in theBasis of Qualified Opinion paragraph above obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion except for the possible effects of matter (a) described in theBasis of Qualified Opinion paragraph above proper books of account as required by lawhave been kept by the Company 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) Except for the possible effects of matter (a) described in the Basis of QualifiedOpinion paragraph above in our opinion the aforesaid Financial Statements comply withthe Accounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) The matters described in the basis for Qualified opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;

(f) On the basis of written representations received from the directors as on 31stMarch 2017 and taken on record by the Board of Directors none of the directors isdisqualified 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"; and

(h) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014:

i) The Company has disclosed the impact of pending litigations on the financialposition in the Financial Statements - Refer Note - 28 (b) to (f) to its FinancialStatements;

ii) The Company did not have any long-term contracts including derivati ve contractsfor which there were any material foreseeable losses.

iii) There were no amounts which were required to be transferred by the Company to theInvestor Education and Protection Fund.

iv) The Company has 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 and the same are in accordance with the books of accountsmaintained by the Company.

For R. Kothari & Company
Chartered Accountants
FRN: 307069E
CA Manoj Kumar Sethia
Place: Kolkata Partner
Date: 30th May 2017 Membership Number: 064308

The Annexure referred to in paragraph 1 under the heading 'Report on Other Legal &Regulatory Requirement' of our report of

even date to the Financial Statements of the Company for the year ended 31st March2017 we report that:

i. In respect of its Fixed Assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Fixed Assets.

(b) The Fixed Assets were physically verified during the year by the management inaccordance with a regular programme of verificati on which in our opinion provides forphysical verificati on of all the Fixed Assets at reasonable intervals. According to theinformation and explanation given to us no material discrepancies were noticed on suchverification.

(c) According to the 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. As explained to us the stocks of finished goods have been physically verified inaccordance with the instruction of the management at the end of the Financial Year and forstocks of raw materials for which there is a perpetual inventory system a substantialportion of stocks has been verified during the year. In our opinion the frequency ofverification is reasonable. In our opinion and according to the information andexplanations given to us the discrepancies noted on verification between the physicalstock and the book records were not material having regard to the size of the operationsof the Company and the same have been properly dealt with in the books of accounts.

iii. According to the information and explanations given to us the Company has notgranted loans to Companies firms or other parties covered in the Register maintainedunder section 189 of the Companies Act 2013; and therefore reporting under paragraph3(iii) of the Order is not applicable.

iv. In our opinion and according to the information and explanations given to us theCompany has not given any loan not made any investment and have not provided anyguarantee. Accordingly the paragraph 3(iv) of the Order is not applicable.

v. The Company has not accepted any deposits from the public and consequently thedirectives issued by Reserve Bank of India and provisions of section 73 to section 76 orany other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules2015 with regard to the deposits accepted from the public are not applicable.

vi. We have broadly reviewed the books of accounts maintained by the Company in respectof manufacture of iron and Steel product and power generation unit pursuant to the rulesmade by the Central Government for the maintenance of cost records under section 148(1) ofthe Companies Act 2013 and we are of the opinion that prima facie the records have beenmaintained. We have not however made a detailed examination for the records with a view todetermine whether they are accurate & complete.

vii. In respect of statutory dues:

(a) According to the information & explanation given to us and on the basis ofexamination of the books of account the Company has generally been irregular indepositing undisputed statutory dues in respect of Provident Fund Employee's StateInsurance Income Tax Tax deducted at sources Professional Tax Service Tax Cess andother material statutory dues applicable to it with the appropriate authorities. Thefollowing statutory dues remain over due for a period greater than six months as at 31March 2017:

SI. No. Nature of Dues ' (Lacs)
1 Tax Deducted Source 3.55
2 Service tax on Reverse Charge 73.97
TOTAL 77.52

(b) According to the informati on and explanati ons given to us there are no dues ofIncome Tax Sales Tax Value added Tax Service Tax Customs duty Excise duty and Cesswhich have not been deposited with the appropriate authorities on account of any disputeexcept the following :-

Name of the statute Nature of Dues Financial Year '/lacs Forum where Dispute is Pending
Central Excise Act 1994

Excise Duty

2005-06 12.36 Commissioner of Central Excise (Appeals) (III)
2007-08 15.55 CESTAT Calcutta Bench
Total 27.91 ' 20.92 lacs paid under protest
Central Sales Tax and Local Sales Tax Act

VAT

2005-06 304.13 WBCT Appellate and Revisional Board
2006-07 479.91 WBCT Appellate and Revisional Board
2008-09 748.45 WBCT Appellate and Revisional Board
2009-10 211.18 Sr. Joint Commissioner of Commercial Taxes
Total 1743.67 ' 88.43 lacs paid under protest
W.B. Entry Tax Act Entry Tax 2012-13 & 2013-14 272.51 Hon'ble High Court of Calcutta
Total 272.51
Income Tax Act 1961 Income Tax 2011-12 1606.46 Commissioner of Income Tax (Appeals) Kolkata
Total 1606.46

viii. Based upon the audit procedures performed and according to the records of theCompany examined by us and the information and explanation given to us the Company hasdefaulted in payment of principal and interest on borrowings to banks as follows:

Amount of default of Principal portion as on the Balance (Rs. in Lacs)

Name of Bank Funded Interest Term Loan Restructured Term Loan Working Capital Term Loan Cash Credit Period of default TOTAL
State Bank of India 109.12 47.43 353.04 -

Refer Note 5 (IV) (v) of Financial Statements

509.59
Bank of Baroda 37.76 7.56 146.24 - 191.65
Punjab National Bank 29.84 15.84 88.72 - 134.40
State Bank of Travancore 45.20 - 201.20 - 246.40
United Bank of India 44.32 - 196.80 - 241.12
Grand Total 266.24 70.92 986.00 - 1323.16

Amount of default of Interest portion as on the Balance

Name of Bank Funded Interest Term Loan Restructured Term Loan Working Capital Term Loan Cash Credit Period of default TOTAL
State Bank of India 144.28 202.26 532.75 850.60

Refer Note 7(b) of Financial Statements

1729.89
Bank of Baroda 32.67 34.84 237.28 251.54 556.33
Punjab National Bank 34.18 77.78 155.33 231.68 498.97
State Bank of Travancore 45.84 - 251.81 147.20 444.85
United Bank of India 74.11 - 236.43 115.44 425.98
Grand Total 331.08 314.88 1413.60 1596.47 3656.03

ix. Based upon the audit procedures performed and the informati on and explanati onsgiven by the management the Company has not raised monies during the year by way ofinitial public issue/follow-on offer including debt instruments and term loans.

x. Based upon the audit procedures performed and the information and explanations givenby the management we report that no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.

xi. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that managerial remuneration has been paid/ provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V to the Companies Act 2013.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore reporting under Paragraph 3 (xii) of the Orderare not applicable to the Company.

xiii. Based upon the audit procedures performed and the informati on and explanati onsgiven by the management all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable Accounting Standards and Companies Act2013.

xiv. The Company has made not made any preferential allotment of shares during the yearunder review. Therefore reporting under Paragraph 3 (xiv) of the Order is not applicableto the Company and hence not commented upon.

xv. Based upon the audit procedures performed and the informati on and explanati onsgiven by the management the Company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the reporting under Paragraph 3 (xv)of the Order is not applicable to the Company and hence not commented upon.

xvi. In our opinion the Company is not required to be registered under secti on 45 IAof the Reserve Bank of India Act 1934 and accordingly reporting under Paragraph 3 (xvi)of the Order is not applicable to the Company and hence not commented upon.

For R. Kothari & Company
Chartered Accountants
FRN:307069E
CA Manoj Kumar Sethia
Place: Kolkata Partner
Date: 30th May 2017 Membership Number: 064308

Annexure ‘B' to the Independent Auditors' Report

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

We have audited the Internal Financial Controls over Financial Reporting of M/s. IMPEXFERRO TECH LIMITED ("the Company") as of 31st March 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 responsibilitiesinclude the design implementation and maintenance of adequate Internal Financial Controlsthat were operating effecti vely 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 the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by the Institute ofChartered Accountants of India and the Standards on Auditing prescribed 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 judgment 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 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 a process designedto provide reasonable assurance regarding the reliability of Financial Reporti ng and thepreparati on of Financial Statements for external purposes in accordance with GenerallyAccepted Accounti ng Principles. A Company's internal financial control over FinancialReporti ng includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of Financial Statements inaccordance with Generally Accepted Accounting Principles and that receipts andexpenditures of the Company are being made only in accordance with authorization ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

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 31st March 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 R. Kothari & Company
Chartered Accountants
FRN:307069E
CA Manoj Kumar Sethia
Place: Kolkata Partner
Date: 30th May 2017 Membership Number: 064308