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Shekhawati Poly-Yarn Ltd.

BSE: 533301 Sector: Industrials
NSE: SPYL ISIN Code: INE268L01020
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VOLUME 71921
52-Week high 2.19
52-Week low 0.22
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.22
Buy Qty 116984.00
Sell Price 0.24
Sell Qty 297001.00
OPEN 0.22
CLOSE 0.23
VOLUME 71921
52-Week high 2.19
52-Week low 0.22
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.22
Buy Qty 116984.00
Sell Price 0.24
Sell Qty 297001.00

Shekhawati Poly-Yarn Ltd. (SPYL) - Auditors Report

Company auditors report

To the Members of Shekhawati Poly-Yarn Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Shekhawati Poly- YarnLimited ("the Company") which comprise the Balance Sheet as at March312016 the Statement of Profit and Loss and Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 (‘the act') with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with rule 7 of Companies (Accounts) Rules 2014. Thisresponsibility includes maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing anddetecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that areoperating 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.

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 thereunder.

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'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's management and Board of Directors as well as evaluatingthe 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.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March312016 and its loss and its cash flows for the year ended on that date

Emphasis of Matters

During the year the company has suffered heavy losses its net worth has beensubstantially eroded. These conditions along with other matters set forth in Note 42 inthe accompanying financials statements indicate the existence of an uncertainty on theCompany's ability to continue as a going concern. However the financial statements of theCompany have been prepared on a going concern basis for the reasons stated in theaforesaid Note. Our opinion is not Qualified in respect of these matter.

Report on Other Legal and Regulatory Requirements

1. 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 section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the order.

2. As required by section 143(3) of the Act we further 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 accounts as required by law have been kept by theCompany so as 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 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) The going concern matter described under the Emphasis of Matters paragraph above inour opinion may have an negative effect on the functioning of the Company.

f) on the basis of written representations received from the directors as on March312016 and taken on record by the Board of Directors none of the directors isdisqualified as on March 312016 from being appointed as a director in terms of Section164(2) of the Act

g) 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

h) with respect to the other matters to be included in the Auditor's 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 litigations on its financialposition in its financial Statements - Refer Note 41 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii. The company is not required to transfer any amounts as required by the law toInvestor Education and Protection Fund.

For Ajay Shobha & Co.
Chartered Accountants
Firm's Reg. No. 317031E
Sd/-
Ajaykumar Gupta
Place: Mumbai Partner
Date: May 26 2016 Mem. No. 053071

Annexure "A" to the Independent Auditors Report

Annexure referred to in Paragraph 1 of "Report on Other Legal and RegulatoryRequirements" of our Report of even date on the accounts of Shekhawati Poly-YarnLimited for the year ended March 312016.

As required by the Companies (Auditors Report) Order 2016 and according to theinformation and explanations given to us during the course of the audit and on the basisof such checks of the books and records as were considered appropriate we report that:

(i) a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.

b) As explained to us the fixed assets have been physically verified by the managementin accordance with a phased programme of verification which in our opinion is reasonableconsidering the size of the company and the nature of its assets. In accordance with thisprogram certain fixed assets were verified during the year. The frequency of verificationis reasonable and no discrepancies have been noticed on such physical 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) The inventories have been physically verified by the management during the year atreasonable intervals. Discrepancies noticed on physical verification of inventories ascompared to book records were not material and have been properly dealt with in the booksof account.

(iii) a) During the year the Company has not granted any Loan secured or unsecured toany party covered in the registered maintained under section 189 of the Companies Act2013

b) In view of our comments in para (iii) (a) above clauses 3 (iii) (a) (b) and (c) ofthe said Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanation given to ussection 185 and section 186 of the Companies Act 2013 is not applicable since theCompany has not granted any loan nor made any investments during the year.

(v) Based on our scrutiny of the company's and according to the information andexplanation provided by the management in our opinion the company has not accepted anyloan or deposits which are "Deposits" within the meaning of rule 2 (b) of theCompanies (Acceptance of the deposits) rules 2014.

(vi) The Central Government has prescribed the maintenance of cost record under Section148(1) of the Act. We have not reviewed the cost records maintained by the Company butbased on the information submitted by the Company we are of the view that such accountsand records have been made and duly maintained.

(vii) a) According to the records of the Company amount deducted/accrued in the booksof accounts in respect of the undisputed statutory dues including Provident FundEmployee's State Insurance Income tax Sales tax Service tax Duty of Customs Duty ofExcise Value Added Tax Cess and other Statutory Dues to the extent applicable to theCompany have been regularly deposited with the appropriate authorities except in fewcases of Provident Fund Profession Tax tDs and Service tax. According to the informationand explanations given to us there are no undisputed amount payable in respect of suchstatutory dues which have remained outstanding as at March 31 2016 for a period more thansix months from the date they became payable.

b) There are no dues of Income Tax Sales Tax Service Tax Duty of Custom Duty ofExcise and Value Added Tax which have not been deposited on account of any dispute withthe appropriate authorities

(viii) Based on our audit procedure and as per the information and explanation given bythe management the Company has defaulted in repayment of its dues to Banks. As on31.03.2016 the bank accounts of the company have been classified as "Non-Performingasset" by State bank of India Union Bank of India and Allahabad Bank with totalprincipal outstanding of ' 17586.19 Lakhs and Interest Outstanding of ' 1073.34 Lakhs(includes estimated unpaid interest). The details of defaults with banks other than thoseclassified as "Non-Performing asset" are as under:

Period of Delay Principal Amount* Principal amount outstanding as on 31 March 2016 Interest Amount Interest amount outstanding as on 31 March 2016
Upto 30 days 506.23 333.07 47.64 -
31 to 90 days 1476.38 593.29 64.51 34.36
91 to 180 days 76.79 69.00 23.25 23.12

*The above defaults do not include Principal overdue of cash credit facilities andother short term facilities amounting to ' 506.29 Lakhs.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(x) According to the information & 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 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 made private placement ofequity shares by conversion share warrants on equity shares. The company has complied withthe requirements of section 42 of the Companies Act 2013 and also the amount raised havebeen used for the purposes for which the funds were raised.

(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.

For Ajay Shobha & Co.
Chartered Accountants
Firm's Reg. No. 317031E
Sd/-
Ajaykumar Gupta
Place: Mumbai Partner
Date: May 26 2016 Mem. No. 053071

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

Annexure "B" to the Independent Auditor's Report of even date on thefinancial statements of Shekhawati PolyYarn Limited Private Limited for the year endedMarch 312016.

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 ShekhawatiPoly- Yarn Limited ("the Company") as of March 312016 in conjunction with ouraudit of the financial statements of the Company for the year 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. 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 Companies Act 2013.

Auditors' Responsibility

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 judgement 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 unauthorised 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.

Qualified Opinion

According to the information and explanation given to us and based on our audit thefollowing material weakness has been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 312016:

The documentation in respect of specific policies and procedures and the IT Controlspertaining to internal financial controls over financial reporting are not adequate andneeds to be further strengthened.

A "material weakness" is a deficiency or a combination of deficiencies ininternal control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the Company's annual or interim financial statements willnot be prevented or detected on a timely basis.

In our opinion except for the possible effect of the material weakness described aboveon the achievement of the objectives of the control Criteria the Company has maintained in all material respects an adequate internal financial controls system over financialreporting and such internal financial controls over financial reporting were operatingeffectively as at March 31 2016 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and audit tests applied in our audit of the financial statements of theCompany and these material weaknesses above does not affect our opinion on the financialstatements of the Company.

For Ajay Shobha & Co.
Chartered Accountants
Firm's Reg. No. 317031E
Sd/-
Ajaykumar Gupta
Place: Mumbai Partner
Date: May 26 2016 Mem. No. 053071