MAHA RASHTRA APEX CORPORATION LTD
Report on the Financial Statements
1 We have audited the accompanying financial statements of MAHA RASHTRA APEXCORPORATION LTD. ("the Company") which comprise the Balance Sheet as atMarch 312017 the Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
2 The management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ('the act') with respect to thepreparation of these financial statements that give a true and fairview 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 Companies (Accounts) Rules2014. This responsibility includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat are operating effectively for ensuring the accuracy and completeness of theaccounting 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.
3 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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder. We conducted our audit inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the standalone financial statements arefree from material misstatement
4 An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's management and Board of Directors aswell as evaluating the overall presentation of the standalone financial statements
5 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.
Basis for qualified Opinion:
In terms of directions issued by RBI we state that:
The RBI has cancelled the certificate of registration granted to the company to act asNon-Banking Financial Company with effect from 13.06.2002.
Accrued interest on deposits and bonds were provided up to 31.03.2002 only inaccordance with the scheme of restructure of the debts as sanctioned by the Honorable HighCourt of Karnataka. (Refer Note No. 3 (3.1).
The company has stopped the repayment of deposits/debentures on maturity dates till thesanction of the scheme of restructure by the Honourable High Court of Karnataka on 8th ofOctober 2004.Now the company has started repayment under the sanctioned scheme.(Refer NoteNo. 3 (3.1).
Though the management is of the opinion that it will be able to monitor effectively thedeficit of Operation we are unable to comment on the ultimate reliability of the assets ofthe company.
All the installment of repayments of deposits/bonds as per the scheme of High Court ofKarnataka are due for payment on 15th September 2009 and 15th June 2009.The companystopped repayment of deposits/bonds on maturity dates till the sanction of restructure bythe Honorable High Court of Karnataka on 8th October 2004.Now the company has startedrepayment of deposits/bonds under the sanctioned scheme and shortfall in repaymentamounted to '4222.85 lakhs.
Provision has not been made in the accounts as required under RBI prudential Normssince 2000.The effect of non-provision is overstatement of assets by Rs.1455.19 lakhsandUnderstatement of loss by Rs.1455.19 lakhs.
In terms of direction issued by RBI
i. The company has not obtained Credit Rating.
ii. The Capital adequacy is negative.
iii. In view of negative net worth all lending and investments are in excess of creditconcentration limit stipulated by Reserve Bank of India.
iv. The company has encased all the approved securities and utilized for repayment ofdeposits/bonds. Emphasis on Matters:
Your kind attention is drawn to the following matters:
i. Note 3.5 on Notes to accounts the company is incurring losses since 2001 and itsfunds are blocked in non-performing assets. The assets of the company is completely erodedand net worth of the company is negative. The company has prepared its financial statementof accounts on a going concern basis as the management is of the view that it will be ableto recover the dues from the borrowers/debtors and monitor the deficit in operation but weare unable to comment on the ultimate reliability of company's assets. Theseconditionsindicate the existence of material uncertainty that may cast significant doubtabout the companies ability to continue as a going concern.
ii. Note 3.6 to Notes on Accounts Provision has not been made in the accounts asrequired under RBI prudential Norms since 2000. The effect of non-provision isoverstatement of assets by '.1455.19 Lakhs and Understatement of loss by '1455.19 lakhs.
iii. Note 3.7 to Notes on Accounts Investment in shares includes 750000 equity sharesof '10 each in
Bhooma Automobiles Ltd. sent for transfer in June 2012 is still pending for transferin the name of the company. These shares were initially held by the company shown underinvestment and included in the list submitted to Honorable High Court of Karnataka inCP/37/2003. Subsequently these shares were sold but ROC Karnataka objected for sale ofthese shares for not obtaining prior permission from Honorable High Court of Karnataka.Therefore the company repurchased these shares during 2012 and sent for transfer in thecompanies name. These shares are not available for physical verification. And company hasinvested 50000 shares of Rs.10/- each in Eldorado Investment Company Pvt. Ltd.. asubsidiary company for a consideration of Rs.950000/- share certificate not producedfor verification.
iv. No provision for Income tax liability against the order of the AO u/s 143(3)amounting to Rs.264.82 Lakhs in respect of following assessment years.
I. A.Y 1998 - 99 Rs.52.44 lakhs against disallowance of depreciation on leased assetand not giving credit for Tax
ii. A.Y 1999 - 2000 Rs.85.80 Lakhs against disallowance of depreciation on Leasedassets and Bad debts.
iii. A.Y2000 - 01 Rs.126.58 lakhs against disallowance of depreciation on Leased assetsand Bad debts.
These appeals are pending before CIT (A) for disposal.
iv. Disputed sales tax amounting to Rs.17.54 lakhs in Andhra Pradesh pending fordisposal Sales Tax Appellate Tribunal.
v. Note No 3.11 of Notes on account Un En-cashed cheques amounting to Rs.508.68 lakhsbeing unencashed DD/Multi city cheques issued for repayment of deposits/Bonds in terms ofthe scheme which is included under other current liabilities.
6 In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect/possible effect of the matters included in para theBasis for Qualified Opinion Paragraph and under Emphasis on matters reported above tothis report referred to in the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true andfair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2017 its loss and its cash flows for the year ended on thatdate.
Report on Other Legal and Regulatory Requirements
7 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 section143 ofthe Act we give in the Annexure "A" statement on the matters Specified inparagraphs 3 and 4 of the Order to the extent applicable.
8 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 Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are In agreement with the books of account;
d. in our opinion except the matters in para on emphasis matter reported above andBasis for Qualified Opinion may have adverse effect on the functioning on the companyaforesaid financial statements comply with the applicable Accounting Standards specifiedunder 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 March312017 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312017 from being appointed as a director in terms of Section164(2) of the Act.
f. With Respect to the adequacy of Internal financial controls over financial reportingof Company and the Operating effectiveness of such controls refer to our separate reportin "Annexure B"; and
g. Company has not appointed Internal auditor as per the requirement of companies act2013
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 th e Companies (Audit and Auditors) Rules2014:
(i) The Company has disclosed the impact of pending litigations which would impact itsfinancial position - refer to Note No 3.13 Notes to accounts.
(ii) The Company did not have any long-term contracts including derivative contracts;assuch the question of commenting on any material foreseeable losses thereon does notarise.
(iii) As the entire deposit liability is covered under the scheme of arrangementtransfer of unclaimed deposit and remaining unpaid for a period of exceeding 7 years toInvestor Education and Protection Fund the question of delay in transferring such sumsdoes not arise.
(iv) The company has provided requisite disclosures in the financial statements as toholdings as well as dealings in specified Bank notes during the period from 8th November2016 to 30th December 2016. However as stated in note No 3.19 to the financial statementsamounts aggregating to Rs. 1500/- as represented to us by the management have beenutilized for other than Permitted Transactions.
i. An amount of Rs.440268/- provided in the accounts towards delayed payment ofinterest under section 194 A of IT Act 1961 on repayment of deposits / bonds is liablefor disallowance under 40 (a) (ia).
| ||For RAO AND SWAMI |
| ||Chartered Accountants |
| ||Firm Registration No. 003105S |
|Place : Manipal. || |
|Date : 26/05/2017 ||P V Shenoy |
| ||(M.No.020205) |
| ||Partner |
Annexure "A" tothe Independent Auditor'sReport to the members of Company forthe year ended 31st March 2017
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the financial statements for the year ended 31st March 2017 we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets ;
(b) i. Fixed assets have been physically verified by the management at reasonableintervals; no material discrepancies were noticed on such verification; ii. Assets onlease have not been physically verified by the Management as most of the assets are underlegal proceedings. Material discrepancies noticed on such verification have been properlydealt with in the books of account.
(c) The title deeds of the immovable properties are in the name of the Company.
(ii) The nature of business of the Company does not require it to have any inventory.Hence the requirement of clause (ii) of paragraph 3 of the said Order is not applicableto the Company
(iii) The company has not granted any loans during the year secured or unsecured tocompanies firms Limited liability Partnership or other parties covered in the registermaintained under section189 of the Act.
In respect of loans granted in earlier years the repayment of loans is not regular butthe company has taken proper steps for recovery.
(iv) The Company has not made any Loans requiring compliance of section 185 of theCompanies Act 2013 during the year.In respect of an Investment of 50000 equity sharesof'.10/- each in M/s Eldorado Investments Company (P) Ltd. a subsidiary company for a saleconsideration of '. 950000/-compliance of Section 186 of the Companies Act 2013 ispending.
(v) The Company has not accepted any deposits from the public covered under Section 73to 76 of the Companies Act 2013
(vi) As informed to us the Central Government has not prescribed maintenance of costrecords under sub-section (1) of Section 148 of the Act
(vii) (a) Based on the records of the company examined by us the company is regular indepositing the undisputed statutory dues including Provident Fund Employees' StateInsurance Income- tax Sales-tax Service Tax Custom Duty Excise Duty and othermaterial statutory dues as applicable with the appropriate authorities in India ;
(b) According to the information and explanations given to us and based on the recordsof the company examined by us there are no dues of Income Tax Service Tax Sales TaxCustoms Duty and Excise Duty which have not been deposited on account of any disputes.Disputed income tax liability amounting to '264.82 lakhs for the Assessment years 1998-99to 2000-01 are pending before CIT (A) for disposal.This demand has raised on account ofdisallowance of depreciation on leased assets and bad debts.The said demand is adjustedagainst refund due to the company.Disputed sales tax amounting to '17.54 lakhs in AndhraPradesh pending for disposal Sales Tax Appellate T ribunal.
viii) The company has not borrowed loans from Banks financial institution governmentauthorities. In respect of Debenture interest accrued thereon up to 31.03.2002 thecompany is in the process repayment as per the scheme of compromise and arrangementsanctioned by the Honorable High Court of Karnataka dated 8th October 2004.
(ix) The company has not raised money by way of Initial public offer /Further PublicOffer (including debt Instrument) during the year.
(x) No fraud on or by the Company was noticed or reported during the year under report
(xi) The Managerial Remuneration paid to its Managing Director is within the limitsspecified under Section 197 read with Schedule V of the Companies Act.
(xii) The Company is Not a Nidhi company and Nidhi rules 2015 is not applicable.
(xiii) The Company has disclosed all transaction with the related parties are incompliance with section 177 and 188 of Companies Act 2013 were applicable and the detailshave been disclosed in the financial statements etc. as required by applicable accountingstandards. However in respect of Two Associate companies i.e Mangala Investment Limitedand Rajmahal Hotels Ltd in-absence of documentary evidence we are unable to comment uponrelated party transactions entered inrespect of arm's length price.
(xiv) No private placement or preferential allotment of the shares or debentures weremade during the year.
(xv) The company has not entered into any non-cash transactions with directors orpersons connected with him.
(xvi) The certificate of registration granted to the company to act as Non-BankingFinancial Company as per Section 45-IA of Reserve Bank of India Act 1934 has beencancelled by an order dated 13th June 2002.
| ||For RAO AND SWAMI |
| ||Chartered Accountants |
| ||Firm Registration No 003105S |
| ||P V Shenoy |
|Place : Manipal. ||(M.No.020205) |
|Date : 26/05/2017. ||Partner |
Annexure 'B' to the 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 MAHARASHTRA APEX CORPORATION LIMITED ("the Company") as of 31 March 2017 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 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 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 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 un-authorised 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 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 31 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 RAO AND SWAMI |
| ||Chartered Accountants |
| ||Firm's Registration Number: 003105S |
| ||P V Shenoy |
|Place: Manipal. ||Partner |
|Date : 26/05/2017 ||Membership Number: 020205 |