INDEPENDENT AUDITORS' REPORT
To The Members Of UNIWORTH LIMITED
Report on the Financial Statements
We have audited the accompanying Financial Statements of UNIWORTH LIMITED ("theCompany") which comprise the Balance Sheet as at 31st March 2017 the Statement ofProfit and Loss the Cash Flow Statement and a summary of the Significant AccountingPolicies and other explanatory information for the year then ended.
Management's Responsibility for the Financial Statements
The Company's 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 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 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 preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating 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.
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 andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgement including assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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 the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Financial Statements.
Basis for Qualified Opinion
1. Footnote (1) to Note No. 24 regarding interest provision on borrowings from someof the institutions and banks which has been made in the financial statements under simpleinterest method at the prevailing / estimated rates applicable on such loans in absence ofrelevant documents/confirmations as a result of which impact of compound interest/penalcharges wherever applicable having not been ascertained as well as the note thereinregarding the matter of dispute between the Company and the Bankers/Creditors inconnection with charging of interest payment and payment of principal.
2. Footnote No (2) to Note No. 24 regarding non-provision of Interest on certainloans and the impact of the non-provision is not presently ascertainable.
3. Footnote No.1 and 4 (i) (ii) and (Hi) of Note No. 15 regarding overdue ExportBills amounting to Rs 47708.53 lacs outstanding for long which in our opinion aredoubtful of recovery against which adequate provision has not been made in the financialstatements.
4. Footnote 1 of 17 regarding Claims Receivable amounting to Rs. 689 36 lacs duefrom various banks outstanding for long which in our opinion are doubtful of recoveryagainst which adequate provision has not been made in the financial statements.
5. Footnote 3 of Note No. 17 regarding advance of Rs. 2916.99 lacs due from certainparties which in our opinion are considered doubtful of recovery against which adequateprovision has not been made.
6. Footnote 3 of Note No. 16 relating to non-accounting of withdrawals / othertransactions from certain Bank accounts due to reasons stated on the said Note 16 (3).
7. In absence of any workings for impairment of assets as per Accounting Standard(AS) 28 Impairment of Assets the impact of such impairment is not ascertainable.
8. Non-provision / non-compliance of items indicated in (1) to (7) above constitutea departure from the Accounting Standards referred to in Section 133 of the Act. Withoutconsidering item Nos (1)(2) (6) and (7) above whose impact on the Company's Statementof Profit and Loss is presently non-ascertainable had the provisions indicated in itemNos. (3) to (5) been made
(i) the loss for the year would have increased by Rs. 51314.88 lacs
(ii) Trade Receivables would have been decreased by Rs. 47708.53 lacs
(iii) Short Term Loans and Advances would decreased by Rs. 3606.35. lacs
(iv) The Shareholders' Fund would have been lower by 51314.88 lacs QualifiedOpinion
In our opinion and to the best of our information and according to the explanationsgiven to us except for the tike effects of the matters described in the Basis forQualified Opinion paragraph above the aforesaid Financial Statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2017 and its loss and its cash flows for the yearended on that date.
Emphasis of Matters
We draw your attention to the following matters in the notes to the financialstatements:
1. Following notes to the financial statements describe the uncertainty related to theoutcome of the lawsuits /other legal matters and matters under settlements indicatedtherein:
(a) Footnote (2) of Note No. 15 regarding pending adjustments of Sundry Debtors againstsupplies and other liabilities etc. due to the buyers. In absence of final settlement withthe parties and non-receipt of necessary approval from concerned regulatory authorityextent of the amount of adjustments so required could not be ascertained.
(b) Footnote to Note No. 6 regarding estimated amount of Rs. 8722.28 lacs providedduring the year 2002-03 as sales claims and commissions relating to earlier years fromoverseas customers of the Company which is pending for final settlement. Necessaryadjustments for such claims and commissions will be made after final settlement andobtaining necessary approval from the concerned regulatory authority.
(c) Footnote 1 of Note No 15 and Footnote 2 of Note No. 17 regarding Debtors andAdvances amounting to Rs 3959.75 lacs and Rs.1453.03 lacs respectively relating toCompanies which have become Sick for which no provision has been made as the quantum tobe provided is not ascertainable at this stage .
(d) Note No. 33 regarding legal recourse taken by certain banks and financialinstitutions for recovery of their dues and the matter is sub-judice as stated in the saidNote.
(e) Note No. 34 regarding non-compliance of certain technical formalities due to whichtransfer of certain borrowing facilities to a body corporate could not be made.
(f) Note No. 35 regarding applications made by the Company with the Reserve Bank ofIndia from time to time for extension / setting off of certain overdue bills.
(g) Note No. 36 regarding Debit Note sent by a body corporate in an earlier year forunilateral transfer back of all assets not taken into cognizance by the Company inpreparing these Financial Statements as stated in the said Note.
(h) Note No. 39 regarding claims filed by a body corporate for Rs. 21625 lacs fornon-fulfilment of clauses of the agreement relating to transfer of Nagpur Unit to themoutcome of which would eventually arise on finalisation of suit.
(i) Matters disclosed in Note No. 19 relating to Entry Tax Central/Commercial SalesTax Demands Customs Demands Professional Tax/Labour Cases/Water Cess Electricity Dutyetc. disclosed under Contingent Liabilities which are contested by the Company andpending before various forums / authorities for final decisions.
(j) Note No. 7(1) regarding application filed against the company before Debt RecoveryTribunal for recovery of the dues by certain banks.
2. Note No. 4 (Footnote 3) Note No. 7 (Footnote 2) and Note No. 16 (Footnote 1 and 4)to the financial statements regarding non-receipt of confirmations in respect ofborrowings from banks/Financial Institutions and also debit balances in certain currentaccounts with banks due to restructuring being in progress book balances thereof havebeen relied upon.
3. Note No 28 regarding balance with a related party under reconciliation
4. Footnote 2 of Note No. 4 to the financial statements regarding preparation of thesefinancial statements on Going Concern basis for the reasons stated therein as also thefact that the Company has accumulated losses and its net worth has been fully erodedFurther the Company has incurred net loss during the current and previous years and theCompany's current liabilities exceeded its current assets as at the Balance Sheet date.These conditions along with other matters set forth in Notes to Financial Statementsindicate the existence of a material uncertainty that may cast significant doubt about theCompany's ability to continue as a going concern.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
i) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central' Government in terms of Sub-section (11) of Section 143 of the Actwe enclose in the Annexure - A a statement on the matters specified in the said Order tothe extent applicable to the Company.
ii) As required by Section 143(3) of the Act we report that
a) We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purpose of our audit;
b) Except for the possible effects of the matters described in the Basis forQualified Opinion paragraph above in our opinion proper books of account as requiredby law have been kept by the Company so far as appears from our examination of thosebooks.
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) Except for the possible effects of the matters described in the Basis forQualified Opinion paragraph in our opinion the Balance Sheet Statement of Profitand Loss and Cash Flow Statement comply with the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
e) The matters described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;
f) The matters described in sub-paragraph (1) underthe Emphasis of Matters paragraphabove in our opinion may have an adverse effect on the functioning of the Company;
g) On the basis of written representations received from the Directors as on 31stMarch 2017 taken on record by the Board of Directors none of the Director isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164(2) of the Act.
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.
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 read with Rule11(d) of the Companies (Audit and Auditors) Amendment Rules 2017 in our opinion and tothe 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 wherever ascertainable.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable loss
iii. The Company has not transferred any amount to Investor Education and ProtectionFund (Refer to Footnote No. 1 to Note No.4)
iv. The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016. Based on audit procedures and relying on the managementrepresentations we report that subject to Footnote of Note No.1 regardingdenominations-wise details of the payments of non-permitted transactions in SBN currencydisclosures are in accordance with books of account maintained by the Company and asproduced to us by the Management - Refer Note .
| ||ForS. S. KOTHARI & CO. |
| ||Chartered Accountants |
| ||Firm Registration. No. 302034E |
| ||(CA P. K. Bhattacharya) |
|Place: Kolkata ||Partner |
|Date: 30th May 2017. ||Membership No. 015899 |
ANNEXURE - A TO THE AUDITORS' REPORT
The Annexure referred to in our report to the members of UNIWORTH LIMITED for the yearended 31st March 2017.
We report that:
|(i) (a) Whether the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets; ||(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. |
|(b) Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so whether the same have been properly dealt with in the books of account; ||(b) The physical verification of fixed assets as stated by the management has been conducted by the Management during the year wherever practicable and the discrepancies which were not material have been adjusted in books. |
|(c) Whether the title deeds of immovable properties are held in the name of the company. If not provide the details thereof; ||(c) Title Deeds for Freehold and Leasehold Immovable Properties are held in the name of the Company |
|(ii) Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so whether they have been properly dealt with in the books of account; ||(ii) (a) Inventories of Raw Materials Finished Goods Work in Progress and Stores & Spares have been physically verified at reasonable intervals by the Company except Finished Goods of Rs.162.07 Lacs and RM of Rs 42.31 Lacs lying with third parties which have been confirmed by them. |
|(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 section 189 of the Companies Act 2013. If so ||(iii) The Company has not granted any loan secured or unsecured during the year to any company firm or other party covered in the register maintained under section 189 of the Companies Act 2013. |
|(a) whether the terms and conditions of the grant of such loans are not prejudicial to the company's interest; ||In this regard we have relied upon the entries recorded in the register maintained under section 189 of the Act |
|(b) whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are 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 section 185 and 186 of the Companies Act 2013 have been complied with If not provide the details thereof. (iv) In our opinion and according to the information and explanations given to us the company has complied with the provisions of Sections 185 and 186 of the Act with regard to loans and investments made || |
|(v) In case the company has accepted deposits whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under where applicable have been complied with Rs. if not the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with or not Rs. (v) The Company has not accepted any deposit within the meaning of Section 73 of the Companies Act. || |
|(Vi) Where maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act2013 and whether such accounts and records have been so made and maintained (Vi) The Central Government has specified maintenance of cost records under Section 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 examination of such records in order to ascertain whether those are complete and accurate || |
|(vii) (a) (a) Whether the company is regular in depositing 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 authorities 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 of the Company the Company has been generally regular in depositing during the year with appropriate authorities undisputed statutory dues including provident fund employees' state insurance income tax sales tax wealth tax service tax customs duty excise duty value added tax cess and any other statutory dues where applicable except in the following cases which are outstanding for a period of more than six months from the date they became payable: VAT Rs. 5.98 lacs Central Sales Tax Rs. 27.76 lacs Service tax Rs. 11.16 lacs || |
|(viii) Whether the company has defaulted in repayment of loans or borrowing to a financial institution bank Government or dues to debenture holders Rs. If yes the period and the amount of default to be reported (in case of defaults to banks financial institutions and Government lender wise details to be provided). ||The Company has defaulted in repayment of dues to financial institutions banks and debenture holders as under: As per Original Agreement all the following Term Loans have become due for repayments. However the Company's negotiations with the term lenders for rescheduling / restructuring is in process: |
|Nature of Financial ||Amount ||Period of Default |
|Assistance ||(Rs in Lacs) || |
|Term Loan ||=* || |
|Financial Institution || ||Not Ascertainable |
|Principal ||21245 33 || |
|Interest ||11954.11 || |
|Bank || ||Not Ascertainable |
|Principal ||905219 || |
|Interest ||1348.34 || |
|Debenture || || |
|Nov-convertible Part C Redeemable Debenture || || |
|Principal ||1900.24 || |
|Interest ||196.89 || |
|Loan Repayble on Demand (Short Term Borrowing) || || |
| ||' Refer Note No. 4 " Refer Note No. 7(i) |
|(ix) Whether moneys raised by way of initial public offer or further public offer (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 rectification if any as may be applicable be reported; ||(ix) The Company did not raise any money by way of initial public offer of further public offer (including debt instruments) during the year. According to the information and explanations 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 officers or employees has been noticed 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 information and explanation given by the Company we report that no fraud on or by the Company has been noticed or reported during the year that causes the financial statements materially misstated. |
|(xi) Whether managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act Rs. If not state the amount involved and steps taken by the company for securing refund of the same; ||(xi) According to the information and explanations given to us and based on our examination of the records of the Company the Company has paid/provided for managerial remuneration in accordance with the requisite approval mandated by the provisions of Section 197 read with Schedule V of the Act |
|(xii) Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio 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; ||(xii) In our opinion and according to the information and explanations given to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable. |
|(xiii) Whether all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act 2013 where applicable and the details have been disclosed in the Financial Statements etc. as required by the applicable accounting standards; ||(xiii) According to the information and explanations given to us and based on our examination of the records of the Company transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards. |
|(xiv) Whether the company has made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and if so as to whether the requirement of section 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 information and explanations given to us and based on our examination of the records of the Company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible 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 section 192 of Companies Act 2013 have been complied with; ||(xv) According to the information and explanations given to us and based on our examination 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 section 45-IA of the Reserve Bank of India Act 1934 and if so whether the registration has been obtained. ||(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934. |
| ||ForS. S. KOTHARI & CO. |
| ||Chartered Accountants |
| ||Firm Registration. No 302034E |
| ||(CA P. K. Bhattacharya) |
|Place: Kolkata ||Partner |
|Date: 30th May 2017. ||Membership No 015899 |
Annexure - B to the Auditors' Report
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 UniworthLimited ("the Company") as of 31st March 2017 in conjunction with our audit ofthe 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 ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 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 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 overfinancial reporting includedobtaining an understanding of internal financial controls overfinancial 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 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 Company's internal financial controls systemoverfinancial 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.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31st 2017:
1. The Company's internal financial controls over customer acceptance creditevaluation and establishing credit limits for sales in respect of certain very old debtswere not operating effectively which could potentially result in the Company's recognisingrevenue without establishing reasonable certainty of ultimate collection;
2. The Company's internal financial controls over payment of certain long outstandingadvances to parties particularly with regard to the terms and conditions of making suchadvance payments by the Company were not operating effectively which could potentiallyresult in materially affecting the Company's working capital and expense account balances.
3. The Company's internal financial controls over certain long outstanding creditorsfor expenses particularly with regard to the adequacy for such expenses as also obtainingconfirmations from the creditors were not operating effectively which could potentiallyresult in materially affecting the Company's working capital and expense account balances.
| ||ForS. S. KOTHARI & CO. |
| ||Chartered Accountants |
| ||FR. No. 302034E |
| ||(CA P. K. Bhattacharya) |
|Place: Kolkata ||Partner |
|Date: 30th May 2017 ||Membership No. 015899 |