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Pearl Engineering Polymers Ltd.

BSE: 526562 Sector: Industrials
NSE: PEPL ISIN Code: INE843A01023
BSE 05:30 | 01 Jan Pearl Engineering Polymers Ltd
NSE 05:30 | 01 Jan Pearl Engineering Polymers Ltd

Pearl Engineering Polymers Ltd. (PEPL) - Auditors Report

Company auditors report

To

THE MEMBERS OF

M/s PEARL ENGINEERING POLYMERS LTD.

703 ROHIT HOUSE 3 TOLSTOY MARG

NEW DELHI-110001

Dear Sir

We have audited the accompanying financial statements of M/S PEARL ENGINEERINGPOLYMERS LTD. ("the Company") which comprise the Balance Sheet as at March31 2017 the Statement of Profit and Loss Cash Flow Statement and a summary ofsignificant 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 the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these Financial Statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting 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.

Auditor’s Responsibility

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 there under.

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 theauditor’s 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 Company’s 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 bymanagement 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 statement.

Opinion

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 in conformity with the accountingprinciples generally accepted in India: i) In the case of Balance Sheet of the state ofaffairs of the Company as at 31st March 2017. ii) In the case of Profit & LossAccount of the loss of the Company for the year ended on that date. iii) In the case ofCash Flow Statement of the cash flows for the year ended on that date.

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) of section 143 of the Act we give inthe Annexure A a statement on the matters specified in the paragraph 3 and 4 of theorder.

2. As required by section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit; b) In our opinion proper books ofaccounts as required by law have been kept by the Company so far as appears from ourexamination of those books; c) The Balance Sheet Statement of Profit and Loss and cashflow statement dealt with by this Report are in agreement with the books of account;

d) Provision has not been made for interest after September 3rd 2009 in respect offoreign currency loan of Rs. 161924 thousands on the basis of legal advice obtained bythe company that the loan has become barred by limitation. In the absence of the evidenceas to confirmation and /or settlement of the liability we are unable to form an opinionon the claim of the company that the above loan of Rs. 161924 thousands from a foreignfinancial institution cannot be enforced. Further the effect on Profit/Loss of the Companycannot be quantified in view of the uncertainties about repayment obligation of theCompany.

e) Foreign Currency Loan and Interest Liability provided in the books have not beenreinstated as at March 31st 2013 as provided by Accounting Standards (AS) - 11 "Theeffects on the Changes in Foreign Exchange Rates" on the basis of legal adviceobtained by the company that the loan has become barred by limitation. In the absence ofthe evidence as to confirmation and/or settlement of the liability we are unable to forman opinion on the claim of the company that the loan cannot be enforced. Further theeffect on Profit/Loss of the Company cannot be quantified in view of the uncertaintiesabout repayment obligation of the Company.

f) In our opinion the Balance Sheet the Statement of Profit and Loss and the CashFlow Statement comply with the Accounting Standards notified under the Act which continueto be applicable in respect of Section 133 of the Companies Act 2013 read with Rule 7 ofthe Companies (Accounts) Rules 2014. g) 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. h) With respect to the adequacy of theinternal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls refer to our separate report in

"Annexure B"; and i) With respect to the other matters to be included in theAuditor’s Report in accordance with

Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest 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 24 to the financial statements; ii. The Company did not have anylong term contracts including derivative contracts for which there were any materialforeseeable losses. iii. There has been no delay in transferring amount required to betransferred to the

Investor Education and Protection Fund by the company. iv. The Company has providedrequisite disclosures in its standalone financial statement as to holdings as well asdealings in Specified Bank Notes during the period from 8th November 2016 to30th December 2016 and these are in accordance with the books of accountsmaintained by the Company. Refer Note 28 to the financial statements.

Place: New Delhi For Sehgal Mehta & Co.
Date: 30.05.2017 Chartered Accountants
FRN-003330N
(CA Naresh Khanna)
Partner
M.No. 081482

Annexure - A to the Auditors’ Report

The Annexure referred to in Independent Auditors’ Report to the members of theCompany on the financial statements for the year ended 31 March 2017 we report that:

i) (a) The Company has dismantled the main plant and has disposed off the entire Plantand Machinery (including stores and spares). The Company has maintained proper records ofother fixed assets showing full particulars including quantitative details and situationof fixed assets.

(b) As explained to us all the assets have not been physically verified by themanagement during the year but there is a regular programme of verification which in ouropinion is reasonable having regard to the size of the company and the nature of itsassets. No material discrepancies were noticed on such verification.

(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) There are no inventories in the company.

iii) As explained to us the company had not granted any loans secured or unsecuredto any companies firms Limited Liability Partnerships or other parties covered in theregister maintained under section 189 of the Act. iv) The company has not granted anyloan made any investments provided any guarantee and security within the meaning ofsection 185 and 186 of the Companies Act 2013.

v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits in contravention of Directives issued by ReserveBank of India and the provisions of section 73 to 76 or any other relevant provisions ofthe Act and the rules framed there under where applicable. No order has been passed bythe Company Law Board or National Company Law Tribunal or Reserve Bank of India or anycourt or any other tribunal.

vi) As explained to us The Central Government has not prescribed the maintenance ofcost records under section 148(1) of the Act for any of the activities such as engaged inthe production of goods or providing services by the Company.

vii) (a) According to the records of the company the company is generally regular indepositing with appropriate authorities undisputed statutory dues including providentfund investor education protection fund employees’ state insurance income taxsales tax wealth tax service tax custom duty excise duty Cess and other materialstatutory dues applicable to it. According to the information and explanations given tous no undisputed amounts payable in respect of income tax wealth tax Service Tax salestax custom duty excise duty and Cess were in arrears as at 31st March 2017for a period of more than six months from the date they became payable except the cases aslisted below:-

S.No. Particulars Amount(Rs.)
1. CST Payable 57454.00
2. VAT Payable 1007291.00
Total 1064745.00

(b) According to the information and explanations given to us the dues of sales taxincome tax excise duty and Cess that have not been deposited with appropriate authoritieson account of any dispute and the forum where the disputes are pending are given below:-

Name of the Statute Nature of the Dues Amount Period to which the amount relates Forum where the dispute is pending
(`In’Lakhs)
The Central Excise Act 1944 Custom Duty Demand on Technical Know- how Fee 36812 1993-1994 CESTAT
The Central Excise Act 1944 Custom Duty 3103 1994-1995 CESTAT

viii) According to the information and explanations given to us and the records of thecompanies examined by us the Company has not defaulted in repayment of loans orborrowings to a financial institution and banks.

ix) The Company has not raised any money by way of initial public offer or furtherpublic offer Order is not applicable. x) Based upon our audit procedures performed andaccording 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) No Managerial Remuneration has been paid or provided.

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.

xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

Place: New Delhi For Sehgal Mehta & Co.
Date: 30.05.2017 Chartered Accountants
FRN-003330N
Sd/-
(CA Naresh Khanna)
Partner
M.No. 081482