To the Members of Shalimar Wires Industries Limited
Report on the Financial Statements
We have audited the accompanying Financial Statements of SHALIMAR WIRES INDUSTRIESLIMITED ("the Company") which comprise the Balance Sheet as at 31st March2016 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the Significant Accounting Policies and other explanatory informaon.
Managements Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the ma ers stated in Sec on134(5) of the Companies act 2013 ("the Act") with respect to the prepara on ofthese Financial Statements that give a true and fair view of the financial posi onfinancial performance and cash flows of the Company in accordance with the Accountingprinciples generally accepted in India including the Accounting Standards specified underSec on 133 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 preven ng anddetec ng frauds and other irregulari es; selec on and applica on of appropriate Accountingpolicies; making judgements and es mates that are reasonable and prudent; and designimplementa on and maintenance of adequate internal financial controls that were operatinge ec vely for ensuring the accuracy and completeness of the Accounting records relevantto the prepara on and presenta on of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
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 audi ngstandards and ma ers 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 Audi ng specified under Secon 143(10) of the Act. Those Standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement. An audit involves performing procedures toobtain audit evidence about the amounts and the disclosures in the financial statements.The procedures selected depend on the auditors judgement including assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal financial controlrelevant to the Companys prepara on of the financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.An audit also includes evalua ng the appropriateness of the Accounting policies used andthe reasonableness of the Accounting es mates made by the Companys Directors aswell as evalua ng the overall presenta on of the financial statements.
We believe that the audit evidence we have obtained is su cient and appropriate toprovide a basis for our qualified audit opinion on the Financial Statements.
Basis for Qualified Opinion
(a) No provision has been made against Long Term and Short Term Loans and Advancesgiven by the Company which remained unrealised for long amoun ng to Rs. 40617747 andRs. 16094626 respec vely (Refer Footnote - (i) of Note No. 14 & Note No. 19)
(b) No provision has been made for Claims Receivable remaining outstanding for longamoun ng to Rs. 2697618. (Refer Note No. 15)
(c) No provision has been made for Trade Receivables remaining outstanding for longamoun ng to Rs. 20 021029. (Refer Note No. 17)
(d) No provision has been made for Interest on Debentures and Interest on Term Loanpayable to IDBI for Rs. 15113502 and Rs. 26298992 respec vely due to reasons stated inFootnote No (b) (ii) to Note No. 4.
(e) The Accounting Standard on Con ngent Liabilies have not been fully complied with asdisclosed in Footnote No. 2 to 4 of Note No. 29 the quantum of non-provision in respectwhereof is not ascertained pending se lement / disposal of disputes.
(f) Refer Note No. 31 regarding non adjustment for sale of proper es due to statedtherein. The e ect of which is not readily ascertainable.
(g) Non-provision of Items indicated in (a) to (f) above cons tute a departure from theAccounting Standards referred to in Sec on 133 of the Act. Without considering Item Nos.(e) & (f) above whose impact on the Companys Statement of Profit and Loss ispresently non-ascertainable had the provisions indicated in Item Nos. (a) to (d) beenmade
(i) The Loss for the year would have increased by Rs. 120843514
(ii) Long Term and Short Term Loans & Advances would have decreased by Rs.40617747 and Rs. 16094626 respec vely
(iii) Other Non-Current Assets would have decreased by Rs. 2697618
(iv) Trade Receivables would have decreased by Rs. 20021029
(vi) Other Current Liabilies would have increased by Rs. 41412494 and
(vii) The Shareholders Fund would have been lower by Rs. 120843514
In our opinion and to the best of our informa on and according to the explana ons givento us except for the e ects of the ma ers described in the Basis for Qualified Opinionparagraph above the aforesaid Financial Statements give the informa on by the Act in themanner so required and give a true and fair view in conformity with the Accountingprinciples generally accepted in India of the state of a airs of the Company as at 31stMarch 2016 and its loss and its cash flows for the year ended on that date.
Emphasis of Ma ers
We draw your a en on to the following ma ers in the Notes to the Financial Statements:
1. Note No. 29 to the financial statements which describe the uncertainty related tothe outcome of the lawsuits indicated therein.
2. Note No. 36 in the financial statements which indicates that the Company hasaccumulated losses and its net worth has been fully eroded the Company has incurred netloss during the current and previous years and the Companys current Liabiliesexceeded its current assets as at the Balance Sheet date. These condi ons along withother ma ers set forth in Notes to Financial Statements indicate the existence of amaterial uncertainty that may cast significant doubt about the Companys ability tocon nue as a going concern. However these Financial Statements of the Company have beenprepared on a going concern basis for the reasons stated in the said Note.
Our opinion is not modified in respect of these ma ers.
Report on Other Legal and Regulatory Requirements
i) As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government in terms of Sub-sec on (11) of Sec on 143 ofthe Act we enclose in the Annexure A a statement on the ma ers specified in thesaid Order to the extent applicable to the Company.
ii) As required by Sec on 143(3) of the Act we report that
a) We have sought and except for the ma ers described in the Basis for QualifiedOpinion paragraph obtained all the informa on and explana ons which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b) Except for the possible e ects of the ma ers described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as appears from our examina on 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) Except for the possible e ects of the ma ers described in the Basis for QualifiedOpinion paragraph in our opinion the Balance Sheet the Statement of Profit and Loss andthe Cash Flow Statement comply with the Accounting Standards specified under Sec on 133 ofthe Act read with Rule 7 of the Companies(Accounts) Rules 2014;
e) The ma ers described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse e ect on the func oning of the Company;
f) The going concern ma er described in sub-paragraph (3) under the Emphasis of Ma ersparagraph above in our opinion may have an adverse e ect on the func oning of theCompany;
g) On the basis of written representa ons received from the Directors as on 31st March2016 taken on record by the Board of Directors none of the Director is disqualified as on31st March 2016 from being appointed as a director in terms of Sec on 164(2) of the Act.
h) With respect to the adequacy of the Internal Financial Controls over Financial Reporng of the Company and the operating e ec veness of such controls refer to our separateReport in Annexure B. i) With respect to the other ma ers to be included in theAuditors Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our informa on and according to the explanaons given to us :
i. The Company has disclosed the impact of pending li ga ons on its financial posi onwherever ascertainable Refer Note No. 29
ii. The Company did not have any long-term contracts including deriva ve contracts forwhich there were any material foreseeable loss.
iii. The Board for Industrial and Financial Reconstruc on vide its Order dated 10thJune 2010 has exempted the Company from transferring any amount to the Investor Educa onand Protec on Fund.
Annexure to the Auditors Report
The Annexure referred to in our report to the members of M/S Shalimar Wires IndustriesLimited for the year ended 31st March 2016.
We report that :
|(i) (a) Whether the company is maintaining proper records showing full par culars including quan ta ve details and situa on of fixed assets; ||(i) (a) The Company has maintained proper records showing full par culars including quan ta ve details and situa on of its fixed assets. |
|(b) Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were no ced on such verifica on and if so whether the same have been properly dealt with in the books of account; ||(b) The fixed assets except those at the Strip & Wire Unit at Nasik which is under closure have been physically verified under a phased program of physical verifica on. To the best of our knowledge no material discrepancies were no ced on such verifica on. |
|(c) Whether the tle deeds of immovable proper es are held in the name of the company. If not provide the details thereof; ||(c) According to the informa on and explana ons given to us and on the basis of our examina on of the records of the Company the tle deeds of immovable proper es which remain deposited with the ICICI Bank are held in the name of the Company subject to charges created in favour of the lenders of the Company. |
|(ii) Whether physical verifica on of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were no ced and if so whether they have been properly dealt with in the books of account; ||(ii) The Inventories have been physically verified by the management at reasonable intervals during the year and discrepancies no ced on such physical verifica on which were not material have been properly dealt with in the books of account. |
|(iii) Whether the company has granted any loans secured or unsecured to companies firms Limited Liability Partnerships or other parties covered in the register maintained under sec on 189 of the Companies Act 2013. If so ||(iii) The Company has granted Unsecured Loans to two companies covered in the register maintained under Sec on 189 of the Companies Act 2013. |
|(a) whether the terms and condi ons of the grant of such loans are not prejudicial to the companys interest; ||(a) The Company in earlier years had granted Unsecured Loans to two companies covered in the register maintained under Sec on 189 of the Companies Act 2013 and the terms and condi ons of such loans are not prejudicial to the interest of the Company |
|(b) whether the schedule of repayment of principal and payment of interest has been s pulated and whether the repayments or receipts are regular; ||(b) Receipt of principal amount and interest are not regular. |
|(c) if the amount is overdue state the total amount overdue for more than ninety days and whether reasonable steps have been taken by the company for recovery of the principal and interest; (iv) In respect of loans investments guarantees and security whether provisions of sec on 185 and 186 of the Companies Act 2013 have been complied with. If not provide the details thereof. ||(c) The aforesaid loans to Related parties Rs.16094626 have become overdue and are doub ul of recovery. As explained to us legal ac on has been ini ated by the Company in these regards. |
| ||(iv) In our opinion and according to the informa on and explana ons given to us the company has complied with the provisions of Sec ons 185 and 186 of the Act with regard to loans and investments made. |
|(v) In case the company has accepted deposits whether the direc ves issued by the Reserve Bank of India and the provisions of sec ons 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under where applicable have been complied with? if not the nature of such contraven ons be stated; If an order has been passed by Company Law Board or Na onal Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with or not? ||(v) The Company has not accepted any deposit within the meaning of Sec on 73 of the Companies Act. |
|(vi) Where maintenance of cost records has been specified by the Central Government under sub- sec on (1) of sec on 148 of the Companies Act 2013 and whether such accounts and records have been so made and maintained. ||(vi) The Central Government has specified maintenance of cost records under Sec on 148 (1) of the Companies Act 2013 for Metal Wire Cloth manufactured by the Company. We have broadly reviewed such accounts and records and we are of the opinion that the accounts and records have been made and maintained by the Company. However we have not made any detailed examina on of such records in order to ascertain whether those are complete and accurate. |
|(vii) (a) Whether the company is regular in deposi ng undisputed statutory dues including provident fund employees state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax cess and any other statutory dues to the appropriate authori es and if not the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated; ||(vii) (a) According to the records the Company is generally regular in deposi ng undisputed statutory dues including Provident Fund Employees State Insurance Income Tax Sales Tax Custom Duty Excise Duty and other statutory dues with appropriate authori es except the following amounts relating to Discon nued operation which are outstanding as on 31st March 2015 for a period of more than six months from the date of becoming payable : |
| ||Name of Act Nature of Dues ||Years ||Amount (Rs) in Lacs) |
| ||CST ACT 1958 Sales Tax ||2003-04 ||0.72 |
| ||Bombay Stamp Stamp Duty Act 1958. and interest thereon ||2001-10 ||210.32 |
| ||As explained to us the Company does not have any dues in respect of Wealth Tax Service Tax and Cess. |
|(b) Where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute then the amounts involved and the forum where dispute is pending shall be men oned. (A mere representa on to the concerned Department shall not be treated as a dispute) ||(b) The disputed statutory dues aggrega ng to Rs 1233.82 Lacs (inclusive of amounts not provided in financial statement) that have not been deposited on account of ma ers pending before appropriate authori es are as under: |
|Nature of dues ||Amount ||Year which it relates ||Forum |
| ||(Rs in Lacs) || || |
|Vat & Penalty ||0.34 ||1980-81 ||The Addi onal Commissioner of Commercial Taxes Kolkata |
|Vat ||0.54 ||1993-94 ||The Addi onal Commissioner of Commercial Taxes Kolkata |
|Tax Penalty & Interest ||1.22 ||1988-89 ||The West Bengal Commercial Taxes Appellate & Revision Board Kolkata |
|Tax & Penalty ||20.88 ||2000-01 2006-07 ||The West Bengal |
| || || ||Taxa on Tribunal |
|Tax & Penalty ||12.58 ||2011-12 ||The West Bengal Commercial Taxes Appellate & Revision Board Kolkata |
|CST Interest & Penalty ||156.02 ||1995-96 to 2012-13 ||The Sr. Joint Commissioner of Commercial Taxes |
|Tax & Penalty ||162.58 ||1992 to 2014 ||Commissioner (Appeals) Central Excise Kolkata-IV |
|Tax ||50.92 ||2005 to 2014 ||Commissioner (Appeals) Central Excise Kolkata-IV |
|Tax ||11.23 ||1989-90 2005-06 ||Honble High Court Mumbai |
|Tax & Penalty ||4.34 ||2003-04 ||Commissioner (Appeals) Nashik |
|Tax & Penalty ||1.73 ||2002-03 ||CESTAT Mumbai |
|Tax ||0.62 ||1999-2002 ||The Asst. |
| || || ||Commissioner |
| || || ||Sales Tax Delhi |
|Tax & Penalty ||219.00 ||1999-00 2002-03 ||The Asst. Commissioner Sales Tax Ahmedabad |
|Tax ||573.25 ||2000-03 ||Commissioner Customs Nasik & Mumbai |
|Tax ||11.69 ||1989-90 &1991-92 ||Honble High Court Mumbai |
|Tax & Penalty ||6.88 ||2007-08 2008-09 ||Honble High Court Mumbai |
|(viii) Whether the company has defaulted in repayment of loans or borrowing to a financial ins tu on bank Government or dues to debenture holders? If yes the period and the amount of default to be reported (in case of defaults to banks financial ins tu ons and Government lender wise details to be provided). ||(viii) The Company has made following defaults in repayment of dues to Financial Ins tu on and Debenture Holders : |
| ||Financial Ins tu on ||Amount (Rs in lacs) ||Period of default |
| ||Term Loan || || |
| ||IDBI-Term Loan ||1422.30 ||Sept 13 to Jan 16 |
| ||SICOM ||47.58 ||Mar 10 to Mar 14 |
| ||Sale Tax Loan (Under Sales Tax Deferral Scheme) ||269.06 ||Mar 10 to Mar 14 |
| ||Debenture : || || |
| ||Non Conver ble Debenture ||160.44 ||Feb 99 to Feb 01 |
| ||Finance Lease: || || |
| ||IDBI ||107.60 ||2006-07 to 2015-16 |
| ||Also Refer to Footnotes No (a) to (c) of Note No 4 and Note No 6 to Financial Statements. |
|(ix) Whether moneys raised by way of ini al public o er or further public o er (including debt instruments) and term loans were applied for the purposes for which those are raised. If not the details together with delays or default and subsequent rec fica on if any as may be applicable be reported; ||(ix) The Company did not raise any money by way of ini al public o er of further public o er (including debt instruments) during the year. According to the informa on and explana ons given to us the Term Loan raised during the year had been applied for the purposes for which the same was raised. |
|(x) Whether any fraud by the company or any fraud on the Company by its o cers or employees has been no ced or reported during the year; If yes the nature and the amount involved is to be indicated; ||(x) Based upon the audit procedure performed and the informa on and explana on given by the Company we report that no fraud on or by the Company has been no ced or reported during the year that causes the financial statements materially misstated. |
|(xii) Whether managerial remunera on has been paid or provided in accordance with the requisite approvals mandated by the provisions of sec on 197 read with Schedule V to the Companies Act? If not state the amount involved and steps taken by the company for securing refund of the same; ||(xii) According to the informa on and explana ons given to us and based on our examina on of the records of the Company the Company has paid/provided for managerial remunera on in accordance with the requisite approval mandated by the provisions of Sec on 197 read with Schedule V of the Act. |
|(xiii) Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ra o of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules 2014 to meet out the liability; ||(xiii) In our opinion and according to the informa on and explana ons given to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable. |
|(xiv) Whether the company has made any preferen al allotment or private placement of shares or fully or partly conver ble debentures during the year under review and if so as to whether the requirement of sec on 42 of the Companies Act 2013 have been complied with and the amount raised have been used for the purposes for which the funds were raised. If not provide the details in respect of the amount involved and nature of non-compliance; ||(xiv) According to the informa on and explana ons given to us and based on our examina on of the records of the Company the Company has not made any preferen al allotment or private placement of shares or fully or partly conver ble debentures during the year. |
|(xv) Whether the company has entered into any non-cash Transactions with directors or persons connected with him and if so whether the provisions of sec on 192 of Companies Act 2013 have been complied with; ||(xv) According to the informa on and explana ons given to us and based on our examina on of the records of the Company the Company has not entered into non-cash Transactions with directors or persons connected with him. Accordingly paragraph 3(xv) of the Order is not applicable. |
|(xvi) Whether the company is required to be registered under sec on 45-IA of the Reserve Bank of India Act 1934 and if so whether the registra on has been obtained. ||(xvi) The Company is not required to be registered under Sec on 45-IA of the Reserve Bank of India Act 1934. |
Annexure - B to the Auditors Report
Report on the Internal Financial Controls under Clause (i) of Sub-sec on 3 of Sec on143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial repor ng of ShalimarWires Industries Limited ("the Company") as of 31 March 2016 in conjunc on withour audit of the Financial Statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial repor ng criteriaestablished by the Company considering the essen al components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Repor ngissued by the Ins tute of Chartered Accountants of India (ICAI). Theseresponsibili es include the design implementa on and maintenance of adequate internalfinancial controls that were operating e ec vely for ensuring the orderly and e cientconduct of its business including adherence to companys policies the safeguardingof its assets the preven on and detec on of frauds and errors the accuracy andcompleteness of the Accounting records and the mely prepara on of reliable financialinforma on as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys internal financialcontrols over financial repor ng based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Repor ng(the "Guidance Note") and the Standards on Audi ng issued by ICAI and deemed tobe prescribed under sec on 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Ins tute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial repor ng was established and maintained and if suchcontrols operated e ec vely in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial repor ng and their operating e ecveness. Our audit of internal financial controls over financial repor ng includedobtaining an understanding of internal financial controls over financial repor ngassessing the risk that a material weakness exists and tes ng and evalua ng the designand operating e ec veness 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 su cient and appropriate toprovide a basis for our audit opinion on the Companys internal financial controlssystem over financial repor ng.
Meaning of Internal Financial Controls over Financial Repor ng
A companys internal financial control over financial repor ng is a processdesigned to provide reasonable assurance regarding the reliability of financial repor ngand the prepara on of financial statements for external purposes in accordance withgenerally accepted Accounting principles. A companys internal financial control overfinancial repor ng includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect theTransactions and disposi ons of the assets of the company; (2) provide reasonableassurance that Transactions are recorded as necessary to permit prepara on of financialstatements in accordance with generally accepted Accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisa ons ofmanagement and directors of the company; and (3) provide reasonable assurance regardingpreven on or mely detec on of unauthorised acquisi on use or disposi on of thecompanys assets that could have a material e ect on the financial statements.
Inherent Limita ons of Internal Financial Controlstiover Financial Repor ng
Because of the inherent limita ons of internal financial controls over financial reporng including the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Also projecons of any evalua on of the internal financial controls over financial repor ng to futureperiods are subject to the risk that the internal financial control over financial reporng may become inadequate because of changes in condi ons or that the degree of compliancewith the policies or procedures may deteriorate.
According to the informa on and explana ons given to us and based on our audit thefollowing material weakness has been iden fied as at 31 March 2016 : a) TheCompanys internal control system for customer acceptance credit evalua on andestablishing customer credit limits for sales need to be strengthened adequately so as tonegate the poten al possibility of recognising revenue without establishing reasonablecertainty of ul mate collec on.
A material weakness is a deficiency or a combina on of deficiencies ininternal financial control over financial repor ng such that there is a reasonablepossibility that a material misstatement on the Companys annual or interim financialstatements will not be prevented or detected on a mely basis.
In our opinion except for the possible e ects of the material weakness described aboveon the achievement of the objec ves of the control criteria the Company has maintainedin all material respects adequate internal financial controls over financial repor ng andsuch internal financial controls over financial repor ng were operating e ec vely as ofMarch 31 2016 based on the internal control over financial repor ng criteria establishedby the Company considering the essen al components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Repor ng issued bythe Ins tute of Chartered Accountants of India. We have considered the material weaknessiden fied and reported above in determining the nature ming and extent of audit testsapplied in our audit of the March 31 2016 Financial Statements of the Company and thematerial weakness does not a ect our opinion on the Financial Statements of the Company.
| ||For S. S. KOTHARI & CO. |
| ||Chartered Accountants |
| ||FR No. 302034E |
| ||P. K. BHATTACHARYA |
|Place : Kolkata ||Partner |
|Date : 21st May 2016 ||(Membership No. 015899) |