Kanco Enterprises Ltd.
|BSE: 590084||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE248D01011|
|BSE 12:44 | 14 Nov||Stock Is Not Traded.|
|NSE 05:30 | 01 Jan||Stock Is Not Traded.|
|BSE: 590084||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE248D01011|
|BSE 12:44 | 14 Nov||Stock Is Not Traded.|
|NSE 05:30 | 01 Jan||Stock Is Not Traded.|
To the Members of Kanco Enterprises Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Kanco Enterprises Limited (the"Company") which comprise the Balance Sheet as at March 31 2017 and theStatement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for matters stated in Section 134(5) ofthe 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 flows 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 accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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 thereunder.
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 auditors'judgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorsconsider internal financial control relevant to the Company's preparation of the financialstatements that give a true and fair view in order to design audit procedures that areappropriate in the circumstances but not for the purpose of expressing an opinion onwhether the Company has in place an adequate internal financial controls system overfinancial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.
Basis of Qualified Opinion
We report the following observations:
(a) As referred to in note no. 21(2) (a) (i) (b) of financial statements during theyear ended September 30 2012 the Company has not accounted for Foreign Exchange loss of "117881338/-arising out of Cancellation of Forward Contract and disclosed the same as contingentliability. On account of this accumulated loss as at March 31 2017 is lower by the saidamount. The loss above does not include interest if any.
(b) As referred in note no. 6 (iii) & (iv) Company has stopped repaying Securedloan and interest thereon to State Bank of India and IDBI bank since 2011-2012. Interestcharged on borrowing from State Bank of India has been accounted as per last agreed rateof 2011-2012. We have been explained that the Company has no information about any changein the rate of interest so impact if any of the same in statement of profit and lossand Reserve and Surplus is not determinable. The said loans have been recalled by therespective lenders and matter is sub-judice.
(c) As referred in note no. 4(ii) balance of secured loan and Interest thereon fromState bank of India and IDBI Bank are as per books of accounts and subject to confirmationby lenders.
(d) As referred in note no. 5 (2) the company has not made provision for interest fordelay in payment to vendors during the previous period as per agreed terms with vendors.Also trade Payables are subject to confirmations.
Consequently we were unable to determine whether any adjustments to these amounts werenecessary. (e) As referred in note no. 24 (2) (j) the company has not provided interestfor the period from April 1 2015 to March 31 2016 on unsecured intercorporate loan of "43434766from related party from April 1 2016 to March 31 2017 on unsecured intercorporate loanof " 92434766 and unsecured loan of "1020000received during the current year from related party and unsecured loan of "15000000/-received from non-related party from April 1 2015 to March 31 2017. Amount of theInterest for the current year on the said loan as per last agreed rate with the parties is"11117238/- (PY " 5725768/-)
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid financial statements 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 of the state of affairs of theCompany as at 31st March 2017 and its loss and its cash flows for the year ended on thatdate.
Emphasis of Matter
Without qualifying our opinion we draw attention to Note 21 (2) (k) in the financialstatements which indicates that Company net worth as at March 31 2017 has been completelyeroded on account of accumulated losses of
" 1105126106/-. Further due to operational difficulties and curtail theloss company has suspended its manufacturing operation from September 30 2015. Thefinancial statements as at 31-03-2016 and onwards have been therefore been prepared on nongoing concern basis and assets are stated at lower of carrying value or net realisablevalue.
Report on Other Legal and Regulatory Requirements
1. As required by 'the Companies (Auditor's Report) Order 2016' ("theorder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 and on the basis of such checks of the books andrecords of the Company as we considered appropriate and according to the information andexplanations given to us we give in the Annexure-B a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by section 143 (3) of the Act we report that:
(a) We have sought and except for possible effects of the matter described in theBasis for Qualified Opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit; (b)Except for the possible effects of the matter described in the basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company so far as 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 possible effectsof the matter described in the Basis for Qualified Opinion paragraph in our opinion theBalance Sheet Statement of Profit and Loss and Cash Flow Statement comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014; (e) On the basis of written representations receivedfrom the directors as on March 31 2017 and taken on record by the Board of Directorsnone of the directors is disqualified as on March 31 2017 from being appointed as adirector in terms of Section 164 (2) of the Act.
(f) 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 A".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements.- Refer Note 21(2) (a) (i) to the financial statements; ii. TheCompany did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses; iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany iv. The Company has provided requisite disclosures in the financial statements asto holdings as well as dealings in Specified Bank Notes during the period from 8thNovember 2016 to 30th December 2016. Based on audit procedures and relying on themanagement representation we report that the disclosures are in accordance with books ofaccount maintained by the Company and as produced to us by the Management -Refer Note 21(2) (l)
ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT
Referred to in Annexure referred to in paragraph 2 (f) under the heading "Reporton other legal and regulatory requirements" of our report of even date to the membersof Kanco Enterprises Limited on the financial statements as of and for the year endedMarch 31 2017 Report on the Internal Financial Controls under Clause (i) of Sub-section 3of Section 143 of the Companies Act 2013
We have audited the internal financial controls over financial reporting of KancoEnterprises Limited ("the Company") as of March 31 2017 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat 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.
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 deemed to be prescribedunder section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe 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 the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system over 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 reporting and thepreparation 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 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Qualified of Opinion
According to information and explanation given to us and based on our audit thefollowing material weakness have been identified as at 31 March 2017. a) The company'sinternal financial controls over balance confirmation procedures as on March 31 2017 ofvendor loans and advances and unsecured and secured loan were not operating effectively.b) The Company has during the year not carried out physical verification of its fixedassets as defined in their internal control policy.
In our opinion except for the effects of the material weakness describe above on theachievement of the objective of the control criteria the Company has maintained in allmaterial respects an adequate internal financial controls system over financial reportingand such internal financial controls over financial reporting were operating effectivelyas at March 31 2017 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.
We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the financialstatements of the Company and this material weakness does not affect our opinion on thefinancial statements of the Company.
Referred to in Annexure referred to in paragraph 1 under the heading "Report onother legal and regulatory requirements" of our report of even date to the members ofKanco Enterprises Limited on the financial statements as of and for the year ended March31 2017
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have not been physically verified by the management. In theabsence of physical verification we are not in a position to comment on thediscrepancies if any between physical and book balances and the impact thereof.
(c) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to information and explanations givenby the management the title deeds of immovable properties are held in the name of thecompany.
ii. Physical verification of inventory has been conducted by Management at reasonableintervals. In our opinion the frequency of verification is reasonable.On the basis of ourexamination of the inventory records in our opinion the Company is maintaining properrecords of inventory. The discrepancies noticed on physical verification of inventory ascompared to book records were not material.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon
iv. In our opinion and according to the information and explanations given to us thereare no loans investments guarantees and securities granted in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.
v. The Company has not accepted any deposits from the public.
vi. Manufacturing activities of the Company are under suspension since 30th September2015. The Company has not maintained the cost records as prescribed under sub-section (1)of Section 148 of the Act.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositingundisputed statutory dues in respect of tax deducted at sourcethough there has been aslight delay in a few cases and is regular in depositing undisputed statutory duesincluding income tax sales taxservice tax duty of custom value added tax cess andother statutory dues as applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income tax sales-tax service-tax duty ofcustoms duty of excise and value added tax which have not been deposited on account ofany dispute.
viii. According to the records of the Company examined by us and the information andexplanation given to us during the year the Company has no debentures and loan fromfinancial institution or government. The Company has defaulted in repayment of dues tobanks as detailed below:
ix. The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) any term loans during the year. Accordingly theprovisions of Clause 3(ix) of the Order are not applicable to the Company. x. During thecourse of our examination of the books and records of the Company carried out inaccordance with the generally accepted auditing practices in India and according to theinformation and explanations given to us we have neither come across any fraud by thecompany or any fraud on the company by its officers or employees has been noticed orreported during the year nor have we been informed of any such case by the Management. xi.Based on our audit procedures performed for the purpose of reporting the true and fairview of the financial statements and according to the information and explanations givenby the management we report that the 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. The company is not a Nidhi Company.Accordingly the provisions of Clause 3(xii) of the Order are not applicable to theCompany. xiii. All transaction with the related parties are in compliance with section 177and 188 of Companies Act 2013 and the details have been disclosed in the FinancialsStatements as required by the applicable accounting standards xiv. The company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. xv. According to the information andexplanations given to us and the records of the Company examined by us the company hasnot entered into any non-cash transactions with directors or any person connected to him.xvi. The company is not required to be registered under sections 45-IA of the Reserve Bankof India Act 1934.