To the Members of
Shekhawati Poly- Yarn Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Shekhawati Poly- Yarn Limited(the Company) which comprise the Balance Sheet as at March 31 2017 theStatement of Pro t and Loss and Cash Flow Statement for the year then ended and a summaryof 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 of thesefinancial statements that give a true and fair view of the financial position nancialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with rule 7 of Companies (Accounts) Rules 2014. This responsibilityincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that are operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the nancial statements that give a true and fair view andare 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 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.
Basis for Quali ed Opinion
a) The company has not provided for Interest Expenses amounting to `237372670 (derived on simple interest basis) which should have been provided as per theprinciple of prudence on the borrowings which have been classified as "Non-performingassets" (NPA) by the banks as referred in Note 42 of accompanying notes to financialstatement. Had these Interest Expenses been debited to the Statement of Pro t and LossAccount loss for the year ended and debit balance of reserves and surplus would have beenhigher by that aforesaid amount.
Quali ed Opinion
In our opinion and to the best of our information and according to the explanationsgiven to us except the possible effects of the matter described in the Basis for Quali edOpinion paragraph the aforesaid financial statements give the information required by theAct 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 loss and cash flow for the year ended on that date.
Emphasis of Matters
During the year the company has suffered heavy losses its net worth has beencompletely eroded. These conditions along with other matters set forth in Note 43 in theaccompanying nancials 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 Quali ed 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) Except for the possible effects of the matter described in the Basis for Quali edOpinion paragraph above in our opinion proper books of accounts as required by law havebeen kept by the Company so as far as it appears from our examination of those books.
c) The Balance Sheet Statement of Pro t and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
d) Except for the possible effects of the matter described in the Basis for Quali edOpinion paragraph above in our opinion the aforesaid financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with rule 7 of theCompanies (Accounts) Rules 2014.
e) The matters described under the Basis for Quali ed Opinion paragraph and theEmphasis of Matters paragraph above in our opinion may have an negative effect on thefunctioning of the Company.
f) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disquali edas on March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct
g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Quali ed Opinion paragraph above.
h) 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
i) 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 no pending litigations. ii. The Company did not have any long-termcontracts including derivative contracts for which there were any material foreseeablelosses; iii. The company is not required to transfer any amounts as required by the law toInvestor Education and Protection Fund. iv. The Company has provided requisite disclosuresin the financial statements as to holdings as well as dealings in Speci ed Bank Notesduring the period from 8 November 2016 to 30 December 2016. Based on audit proceduresand relying on the management representation we report that the disclosures are inaccordance with books of account maintained by the Company and as produced to us by theManagement Refer Note 47.
| ||For Ajay Shobha & Co. |
| ||Chartered Accountants |
| ||Firm's Reg. No. 317031E |
| ||Sd/- |
|Place: Mumbai ||Ajay kumar Gupta |
|Date: May 25 2017 ||Partner |
| ||Mem. No. 53071 |