To The Members of Sudal Industries Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Sudal IndustriesLimited (the Company) which comprise the Balance Sheet as at 31 March 2016the Statement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
Managements Responsibility for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the Act) with respect to the preparation ofthese standalone 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 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.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
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 andthe disclosures in the financial statements. The procedures selected depend on theauditors 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 financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Companys Directors as well as evaluating theoverall 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 standalone 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 2016 and its loss and its cash flows for the year ended on that date.
Emphasis of Matter:
Without qualifying we draw attention to Note No. 29 regarding inventory ofStores & Spares includes specialized Dies of Rs 285799500 as at 31March 2016 (Previous year Rs 269910000). The Valuation of these dies is based on areport of the Registered Government Valuer and Chartered Engineer considering its residualuseful life and relied upon by us being a technical matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 (theOrder) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure A a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
2. In terms of section of 143(3) of the Act with respect to the adequacy of theinternal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls we give in Annexure B- a separate Report onthe same.
3. 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 purposes 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 the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164 (2) of the Act.
(f) 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 litigations on its financialposition in its financial statements - Refer Note 26 to the financial statements;
(ii) The Company did not have any long-term contracts including derivative contractsfor which there are any material foreseeable losses.
(iii) There were no amounts which were required to be transferred to the investorEducation and Protection Fund by the Company.
Annexureto the Independent Auditors'Report
ANNEXURE A REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF THE SUDALINDUSTRIES LIMITED.
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we state that:
1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) All the fixed assets have been physically verified by the management in a phasedmanner which is reasonable considering the size of the Company and nature of its fixedassets. No material discrepancies were noticed on such verification.
c) The title deeds of immovable properties are held in the name of the Company.
2. The inventory has been physically verified by the management at reasonable intervalsduring the year. Inventory lying with third parties and in-transit have been verified bythe management with reference to the confirmations received from them and/or subsequentreceipt of goods. No material discrepancies were noticed on such verification.
3. During the year the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability partnerships or other parties covered in the registermaintained under section 189 of the Act. Therefore Para 3 (iii) of the Order is notapplicable to the Company.
4. In our opinion and according to the information and explanations given to us theCompany has not granted any loans or made investments or provided any guarantees orsecurity under section 185 and 186 of the Act. Therefore Para 3 (iii) of the Order is notapplicable to the Company.
5. No deposits within the meaning of directives issued by RBI (Reserve Bank of India)and Sections 73 to 76 or any other relevant provisions of the Act and rules framed thereunder have been accepted by the Company. Therefore Para 3 (v) of the Order is notapplicable to the Company.
6. We have broadly reviewed the cost records maintained by the Company pursuant to theorder of the Central Government under sub section (1) of Section 148 of the Act and are ofthe opinion that prima facie the prescribed records have been made and maintained. Weare however not required to make a detailed examination of the records with a view todetermine whether they are accurate or complete.
7. a) The Company is generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income tax sales-tax service taxduty of customs duty of excise value added tax cess and any other material statutorydues applicable to the Company with the appropriate authorities. No undisputed amountspayable in respect of the aforesaid statutory dues were outstanding as at the last day ofthe financial year for a period of more than six months from the date they became payable.
b) According to the records of the Company there are no dues of income tax or salestax or service tax or duty of customs or duty of excise or value added tax which have notbeen deposited on account of any dispute except income tax demand for Assessment Year2013-14 amounting to Rs 24728640 and the matter is pending before Commissioner ofIncome-tax (Appeals) Mumbai.
8. According to the information and explanations given to us the Company has defaultedin repayment of principal amount of Rs 111341258 and interest amount of Rs 60840951from period September 2014 to March 2016 to syndicate bank.
9. During the year the Company has not raised any money by way of initial public offeror further public offer during the year or in the recent past and has not taken any termloan and hence the provisions of Para 3 (ix) of the Order is not applicable.
10. According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.
11. 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.
12. In our opinion the Company is not Nidhi Company. Therefore Para 3 (xii) of theOrder is not applicable to the Company.
13. According to the information and explanations given to us and based on ourexamination of the records transactions with the related parties are in compliance withsections 177 and 188 of the Act where applicable and details of such transactions havebeen disclosed in the financial statements (Refer Note No.38) as required by theapplicable accounting standards.
14. 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.
15. 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 in terms of Section 192 of the Act. Accordinglyparagraph 3(xv) of the Order is not applicable.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE B REFERRED TO IN PARAGRAPH 2 UNDER THE HEADING REPORT ON OTHER LEGAL ANDREGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF THE SUDALINDUSTRIES LIMITED.
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 SudalIndustries Limited (the Company) as of 31 March 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Managements Responsibility for Internal Financial Controls
The Companys 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 (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to companys policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
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 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 requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 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 sufficient and appropriate toprovide a basis for our audit opinion on the Companys internal financial controlssystem over 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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India except internal audit system which needs to be strengthened in termsof scope and extent of verification.
| ||For LODHA & CO. |
| ||Chartered Accountants |
| ||Firm Registration Number :301051E |
| ||R.P. Baradiya |
|Place : Mumbai ||Partner |
|Date : 14th May 2016 ||Membership No. 44101 |