TO THE MEMBERSOF M/S MAGNUM VENTURES LIMITED
We have audited the accompanying financial statements of M/s MAGNUM VENTURES LIMITED(gThe Companyh) which comprise the Balance Sheet as at March 31 2016 andthe Statement of Profit and Loss and the Cash Flow Statement for the year then ended anda summary of significant accounting policies and other explanatory information.
The Companys Board of Directors is responsible for the matters in section 134(5)of the 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 the maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating 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 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 materialmisstatement.
An audit involves performing procedures to obtain evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal control relevant to the companys preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by themanagement 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.
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and give a true and fair view (subject to the matters of emphasismentioned below) in conformity with the accounting principles generally accepted inIndia;
i) In the case of Balance Sheet of the state of affairs of the Company as at March 312016;
ii) In the case of the Statement of Profit and Loss for the year ended on that date;and
iii) In the case of the Cash Flow Statement of the Cash Flows for the year ended onthat date.
EMPHASIS OF MATTERS
We draw attention to the following observations:
a) Debtors include Rs. 1098.35 lakhs which are due for more than six months out ofwhich Debtors of Rs. 110.13 lacs are under litigations.(Refer Note No. 8 under other notesin Notes to Accounts annexed with the financial statements for the year ended March 312016)
b) No provisions has been made by the Company for outstanding claims receivable from itsuppliers for Rs. 1394.88 lacs as on 31.03.2015. As per the management same have not beenaccepted by the suppliers and fully written off these claims in the current financialyear hence in our opinion this shows that Company have not proper recovery system.(Refer Note No. 11 under other notes in Notes to Accounts annexed with the financialstatements for the year ended March 31 2016)
c) The Company got approval from CDR EG for second rework vide LOA dated 30th December2013 and as per CDR guidelines the package should be implemented within 120 days from thedate of approval. None of the member banks implemented the packages as per CDR Guidelines.In February 16 all the banks approached CDR EG to exit the account from CDR and giventheir mandate for exit from CDR and CDR EG approved the Exit Proposal vide letter dated22nd March 2016. After the exit from CDR the stipulation of CDR packages stands null& void hence company cancel the Zero Coupon Bond of Rs. 34.12 Cr issued on 31.03.14and reverse/cancel concessions/benefit of interest recorded in FY 13-14 and FY 14-15 asprior period items because of no provision made for differential interest in FY 13-14 andFY 14-15 and provision for the same have been account for because interest not paid bythe company. And Company received a notice from its banks to take a decision mention thatthe proposal for exit of Magnum Ventures Limited from CDR Mechanism on account of thefailure of the approved restructuring package stands approved. Also Company received anotice from Banks that Bank has decided to sell/assign your debts and underlyingsecurities to eligible ARCs.
d) Balances of Debtors & Creditors are subject to confirmation and reconciliationconsequential effect (if any) on the account remained unascertained.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS:
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") as required by Companies Act 2013 and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanations given to us we annex hereto a statement on the mattersspecified in said Order.
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 purpose 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 the Cash Flow Statementdealt with 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) 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 31March 2016 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the other matters included in the Auditors Report and to ourbest of our information and according to the explanations given to us: i. The Company hasdisclosed the impact of pending litigations on its FINANCIAL position in its financialstatements Refer note 27 Part B (1) to the financial statements.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection FUND by the Company.
ANNEXURE - A TO THE AUDITORSf REPORT
ANNEXURE REFERRED TO IN OUR AUDIT REPORT OF EVEN DATE OF M/S MAGNUM VENTURES LIMITEDPURSUANT TO THE COMPANIES (AUDITORSf REPORT) ORDER 2016 ON THE ACCOUNTS FOR THE YEARENDED MARCH 31 2016
i. (a) The Company has updated its records of fixed assets showing full particularsincluding quantitative details and situation of Fixed Assets.
(b) As explained to us most of the fixed assets have been physically verified by themanagement during the year and as per the explanations and information given to us thereis a regular program of verification which in our opinion is reasonable having regard tothe size of the company and the nature of its assets. As explained to us discrepanciesnoticed on physical verification were not significant and have been properly dealt with inthe books of accounts.
(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. According to the information and explanations given to us the inventory has beenphysically verified during the year by the management. In our opinion the frequency ofverification is reasonable. As explained to us discrepancies noticed on physicalverification were not significant and have been properly dealt with in the books ofaccounts.
iii. As explained to us the Company has not granted any loan secured or unsecured tocompanies firms or other parties covered in the Register maintained under section 189 ofthe Companies Act. 2013.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
v. In our opinion and according to the information and explanation given to us thecompany has not accepted any deposits from the public.
vi. The Company has prepared and maintained cost records as prescribed by the CentralGovernment under sub-section (1) of section 148 of the companies Act 2013.
vii (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund investor education protection fundemployees state insurance income tax sales tax wealth tax custom dutyexcise-duty cess and other statutory dues applicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax cess and other material statutory dues were in arrears as at 31March 2016 for a period of more than six months from the date they became payable.
(b) According to the records of the Company there are following dues of Central ExciseDepartment as on March 31 2016 which have not been deposited on account of disputes : -
|Name of the Statue ||Name of the Dues ||Amount(Rs.) ||Period to which the amount relate ||Status/Forum where Dispute is Pending |
|Custom & Central Excise ||Excise Duty on Production loss ||2097503/- ||2005-06 ||Addl. Commissioner of Excise show cause notice pending |
|Excise Law ||Duty on Waste ||31599/-(Plus Interest+ Penalty) ||Mar 12 to Feb 13 ||Matter pending before Hon'ble HC |
|Excise Law ||Duty on Waste ||46545/- ( Plus Interest and Penalty) ||April 14 to March 15 ||Reply filed no hearing fixed yet |
|DEPB Case ||Redemption Case ||1023246/- (Plus Penalty) || ||Reply submitted order not yet passed |
|Excise Law ||SCN for Duty of excise on paper board ||146296594/- +(Interest and Penalty) || ||Letter sent to Commissioner GZB to refer withdrawal of SCN |
|Service Tax Law ||SCN for Service Tax from Hotel ||16400749/- +(Interest & penalty) ||2010-2011 ||Stay granted and awaited for hearing of appeal |
|Excise Law ||Departmental Appeal against refund order of Newsprint ||3080824/- || ||Tribunal Delhi Next Hearing Date yet to be notified |
|Excise Law ||Paper Division- Newsprint- SCN ||132843130/- ( + Interest +Penalty) || ||The company is under preparation of Reply |
|Excise Law ||Paper Division Newsprint- ||58368368/- (Interest+ Penalty) || ||The company is under preparation of Reply |
| ||SCN || |
|EPCG Obligations ||Total Export Obligation under EPCG (in INR) ||Rs. 503114020/-# |
| ||Earning in Foreign Currency/Export Turnover up to 31-03-2016 ||Rs. 442367154/- |
#The Company availed EPCG Scheme for import of assets and the Export Obligation (inINR) is Rs. 503114020. The Company submitted applications for redemption of EPCGLicences for Rs. 175575916 which is pending at the DGFT New Delhi.
Hence the Contingencies for EPCG Obligation as on 31.03.16 is of Rs. 503114020 asthe redemption of EPCG Licenses is pending.
viii. The company has defaulted in repayment of loans and borrowing to a financialinstitutions and bank. In February 2016 the CDR EG meeting held the minutes of whichwere confirmed at CDR EG meeting held March 21 2016. Decision was taken by CDR EG thatthe proposal for exit of Magnum Ventures Ltd. From CDR mechanism on account of the failureof the approved restructuring package stands approved. And Also according to theinformation and explanations given to us Company received a notice from Oriental Bank ofCommerce and Allahabad Bank that Bank has decided to sell/assign your debts and underlyingsecurities to eligible ARCs. And these accounts are NPAs and quantum of amount isnot possible because of company have not received any formal letter of the debt withaccrued interest upon these debts.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments). And term loans raised during the year wereapplied for the purposes for which those are raised.
x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations give 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 debentures duringthe year.
xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE - B TO THE AUDITORSf 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 MagnumVentures Limited ("the Company") as of 31 March 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management' Responsibility for Internal Financial Controls
The Companys 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
Reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to companys policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required 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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 auditors 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 Companys internal financial controlssystem 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 authorizations 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.
In our opinion and according to the information and explanations given to us thecompany does not have an adequate internal control system commensurate with the size ofcompany and the nature of its business with regard to purchase of inventory fixed assetsand with regard to the sale of goods as they are unable to collect their sale proceeds andalso not able to recover their claims against their rejection in purchase of inventory.
For Aggarwal & Rampal
Place: New Delhi
Date: May 30 2016