TO THE MEMBERS OF PERMANENT MAGNETS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of PERMANENT MAGNETS LIMITED (theCompany') which comprise the Balance Sheet as at March 31 2017 the Statement ofProfitand Loss and the Cash Flow Statement for the year then ended 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 section 134(5) of the Companies Act 2013 ( "the Act") with respect to the preparation andpresentation of these financial statements that give a true and fair view 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 the Companies (Accounts)Rules 2014. This responsibility also includes the maintenance of adequate accountingrecords in accordance with the provisions of the act for safeguarding the assets of thecompany and for preventing and detecting the frauds and other irregularities; selectionand application of appropriate accounting policies; making judgment and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation offinancial 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 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 the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal control statementsrelevanttotheCompany'spreparation of thefinancial that give true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by companies' directors as well as evaluating the overallpresentation 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 aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2017 and its profit and its cash flows for the year ended on that date.
Emphasis of Matters
a. We draw attention to Note no. 3 of notes to accounts which states that HonorableBombay High Court has given interim stay order against the winding up order passed againstthe Company dated 15/04/2015. Honorable High Court of Bombay had passed winding up orderdated 15/04/2015 for Winding up of the company on petition filed by M/s. Savino Del BeneFreight Forwarders (I) Pvt. Ltd. and court had issued direction for appointment ofofficial liquidator in winding up order.
On the appeal against this order made by the company before Honorable Bombay HighCourt Honorable Bombay High Court has given interim stay order against the winding uporder passed (against the Company) dated 15/04/2015. Company has deposited Rs. 1905179/-Lac with interest as per direction of honorable Bombay High Court. Matter is pendingbefore Bombay High Court and next hearing in this matter shall come up as per listing ofthe court.
The financial statements of the company have been prepared on Going Concern Basis onreasons mentioned in the note no. 3 of notes to accounts.
b. We draw attention to Note no. 5 of notes to accounts of the financial statementregarding non receipts of confirmation in respect of balances due under Trade receivablesand Trade payables though company has issued letters to the debtors to that effectadjustments if any required upon such confirmation is not ascertainable.
Our opinion is not modified in respect of above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors report) Order 2017 ("The Order")issued by the central government of India in terms of sub-section 11 of section 143 of theAct We give in the Annexure A statement on the matters specified in paragraphs 3 & 4of the 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 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. in our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting
Standards referred to in section 133 of the Companies Act 2013 read with rule 7 ofthe Companies (Accounts) Rules 2014.
e. on the basis of written representations received from the directors as on March 312017 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct.
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 B'; and
g. with respect to the other matters to be included in the Auditors' 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. The company has disclosed the impact of pending litigation on its financial positionin its financial statements - Refer to Note 2 of notes to accounts II. The Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses.
III. The provisions relating to transferring any amounts to the investor's educationand protection fund is not applicable to the Company during the year.
IV. The company had provided requisite disclosures (Refer note no. 15) in its financialstatements as to holdings as well as dealings in SpecifiedBank Notes during the periodfrom 8 th November 2016 to 30th December 2016 and same are inaccordance with the books of accounts maintained by the company.
Annexure "A" to the Independent Auditor's Report
The referred to in Independent Auditors' Report to the members of the Company on thestandalone financial statements for the year ended 31 March 2017 we report that:
I. (a) The company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) Company has a regular programme of physical verification of its fixedassets bywhich fixed assets are verified in a phased manner over a period of two years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company Company did not have any immovable propertyexcept 15% share of Borivali (Mumbai) property sold to Builder.
II. According to the information and explanations given to us management hasconducted physical verification of inventory at reasonable intervals during the year. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification.
III. According to 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 the
Companies Act 2013 during the year. Accordingly clause 3 (iii) of the Order is notapplicable to the Company.
IV. According to information and explanations given to us the Company has compliedwith the provisions of section 185 and 186 of the Companies Act 2013 in respect of loansinvestments guarantees and security.
V. According to information and explanations given to us the company has notaccepted any deposits from the public in accordance with the provisions of section 73 to76 and rules framed thereunder during the year. Accordingly clause 3 (v) of the Order isnot applicable to the Company.
VI. According to the information and explanations given to us the CentralGovernment has not prescribed maintenance of cost records under sub-section (1) of section148 of the Companies Act 2013.
VII. According to the information and explanations given to us in respect ofstatutory dues: a. According to the information and explanations given to us and therecords of the Company examined by us in our opinion the Company is regular indepositing the undisputed statutory dues including provident fund employees stateinsurance income tax sales tax service tax duty of customs duty of excise valueadded tax cess professional tax and other material statutory dues as applicable withthe appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees state insurance income tax sales taxservice tax duty of customs duty of excise value added tax cess professional tax andother material statutory dues were in arrears as at 31 March 2017 for a period of morethan six months from the date they became payable except the following:
|Nature of Dues ||Amount (INR in Lakhs) ||Due date |
|Income Tax ||0.54 ||30th Oct 2007 |
|TDS ||9.36 ||- |
b. According to the information and explanations given to us there are no dues ofIncome tax Sales tax Value added tax Service tax duty of customs duty of excise whichhave not been deposited with the appropriate authorities on account of any dispute exceptthe following: c.
|Nature of Dues ||Amount (INR in Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Excise Duty ||63.18 ||F.Y. 2003-04 ||Commissioner of Central |
| || || ||Excise - Mumbai |
|Income Tax ||02.06 ||F.Y. 2006-07 ||CIT (A) Mumbai |
|Income Tax ||03.94 ||F.Y. 2008-09 ||CIT(A) 21 Mumbai |
|TDS ||0.89 ||F.Y. 2014-15 ||CIT (A) - Thane 2 |
VIII. According to the records of the Company examined by us and the informationand explanation given to us we are of the opinion that the company has not defaulted inrepayment of dues to Financial Institutions or Banks except following payments.
|Bank ||Nature ||Amount (INR in Lakhs) ||Due on ||Paid on |
|ICICI ||Central Excise Loan ||229.33* ||Between October 2002 to October 2004 ||Not yet paid |
*including simple interest @ 12%
IX. The Company has not raised any money by way of initial public offer furtherpublic offer (including debt instruments). The company has applied funds from term loansraised during the year only for the purpose for which those term loans were raised.
X. According to the information and explanations given to us no material fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.
XI. According to the information and explanations give to us and based on ourexamination of the records the Company has paid/ provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.
XII. In our opinion and according to the information and explanations given to usthe Company 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 ourexaminations of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Accounting Standard (AS) 18 Related Party Disclosures specified under Section 133of the Act read with Rule 7 of the Companies (Accounts) Rules2014.
XIV. According to the information and explanations give to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.
XV. According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable.
XVI. The Company is not required to be registered under Section 45-IA of theReserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable to the Company.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in Para 2(f) Report on Other Legal and Regulatory Requirements' inour Independent Auditor's Report of even date to the members of Company for theyear ended 31st March 2017]
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 PERMANENT MAGNETSLIMITED. ("The Company") as ofreporting March 31 2017 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.
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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe CompaniesAct 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 and the Standards on Auditing issued by the ICAI and deemed to beprescribed under section 143(10) of the Act 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 requirement and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting established and maintained and if such controls operatedfectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financial controlsover financial reporting assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of the internal controls based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the Standalone Financial Statementswhether due to fraud or error.
We believe that the audit evidence we have obtained is sufficientand appropriate toprovide a basis for our audit opinion on the Company's internal financial controls overfinancial reporting's.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide of financial reporting and the preparation of financial statements for externalpurposes in accordance principles. A company's internal financial control over financialmaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 Limitation of Internal Financial Controls over Financial Reporting
Because of the inherent limitation of Internal financial controls over financialreporting including the possibility of collision 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 financial overfinancial reportings may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedure may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial internal controls over financial reporting wereeffective as at March 312017 based on the established by the Company considering theessentials components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by " the Institute of CharteredAccountants of India".
| ||For Jayesh Sanghrajka & Co. LLP |
| ||Chartered Accountants |
| ||ICAI Firm Registration No. 104184W/ W100075 |
| ||Sd/- |
|Place: Mumbai ||Hemant Kumar Agrawal |
|Date: 29th May 2017 ||Designated Partner |
| ||M. No. 403143 |