Uniworth Textiles Ltd.
|BSE: 500138||Sector: Industrials|
|NSE: FABWORTH||ISIN Code: INE486C01019|
|BSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
|NSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
|BSE: 500138||Sector: Industrials|
|NSE: FABWORTH||ISIN Code: INE486C01019|
|BSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
|NSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
TO THE MEMBERS OF UNIWORTH TEXTILES LIMITED
Report on the Financial Statements
We have audited the accompanying Financial Statements of UNIWORTH TEXTILES LIMITED("the Company") which comprise the Balance Sheet as at 31st March 2017 theStatement of Profit and Loss the Cash Flow Statement and a summary of the SignificantAccounting Policies 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 statements. The thefinancial 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 financialcontrol 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 but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial control systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of 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
(a) Footnote to Note No.23 regarding interest provision on borrowings from some of theinstitutions and banks made in the financial statements under simple interest method atthe prevailing / estimated rates applicable on such loans in absence of relevant documents/ confirmations as also the on-going matters of disputes between the Company and itsBankers / Creditors over the issue of charging interest as stated in the said Footnote.
(b) Note No.15 (ii)(a)(ii)(b) and (ii)(c) regarding non-provision of certain debtsamount to Rs.6237.86 lacs.
(c) Note No.17(ii)(b) regarding of Rs.547.50 lacs due from a party in respect of whichwe are unable to form any opinion as to the nature and purpose of making such advance asalso recoverability of the same.
(d) Note No.17 (ii)(c) regarding non-provision for advance of Rs.211.70 lacs paid to anOverseas Consultant due to reasons stated therein.
(e) Note No. 14 (iii) regarding non-receipt of confirmation for finished goods Rs.89.51 laces lying with a third party since long. In absence any confirmation as to thequantity and condition of such materials correctness of valuation of the same could notbe ascertained.
(f) Non-provision / non-compliance of Items indicated in (a) to (e) above constitute adeparture from the Accounting Standards referred to in Section 133 of the Act. Withoutconsidering Item Nos.(a)(c) and (e) above whose impact on the Company's Statement ofProfit and Loss is presently non-ascertainable had the provisions indicated in Item Nos.(b) to (d) been made
i) The Loss for the year would have increased by Rs.6997.06 lacs
ii) Short Term Loans & Advances would have decreased by Rs.759.20 lacs
iii) Trade Receivables would have decreased by Rs.6237.86 lacs
iv) The Shareholders' Fund would have been lower by Rs. 6997.06 lacs
In our opinion and to the best of our information and according to the explanationsgiven to us except for the like 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 indicated therein:
(a) Note No. 7 (ii) regarding application filed against the Company before DebtRecovery Tribunal for recovery of the dues by certain banks.
(b) Note No. 12 (i) regarding non-provision for investment amounting to Rs.14.05 lacsin Companies which have become Sick and referred to the erstwhile BIFR.
(c) Note No. 6 (Footnote) regarding estimated amount of Rs.1674.45 lacs having beenprovided during the year 2002-03 as sales claims and commission relating to earlier yearsfrom Overseas Customers of the Company which is pending for final settlement. Necessaryadjustment for such claims and commission will be made after final settlement andobtaining necessary approval from concerned regulatory.
(d) Note No 25 regarding demands for Excise Duty Income Tax and other mattersdisclosed under Contingent Liabilities which are contested by the Company and pendingbefore various forums / Authorities for final decisions.
2. Note No. 4(iv) Note No.7(iii) and Note No.16(i) regarding non-receipt ofconfirmations in respect of borrowings from Financial institutions / Banks and also debitbalances in certain Current Accounts with banks due to restructuring being in processbook balances thereof have been considered in these financial statements.
3. Note No. 31 (iii) regarding balances with a related party under reconciliation.
4. As indicated in the financial statements the Company has accumulated losses and itsnet worth has been fully eroded the Company has incurred net loss during the current andprevious years and the Company's current liabilities exceeded its current assets as atthe Balance Sheet date. These conditions along with other matters set forth in Notes toFinancial Statements indicate the existence of a material uncertainty that may castsignificantdoubt about the Company's ability to continue as a going concern.
However these Financial Statements of the Company have been prepared on a goingconcern basis due to reasons stated in Note No. 28.
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 saidOrder to the 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 as under as also in theBasis for Qualified Opinion paragraph obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit:
In respect of Trade Receivables particularly with regard to the disclosures made inNote Nos. 15 (ii) (a) (ii)(b) and (ii)(c).
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 required bylaw have been kept by the Company so far as 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) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the Balance Sheet Statement of Profit and Loss andCash Flow Statement comply with the Accounting Standards specified under Section 133 ofthe 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 2 &3) under the Emphasis of Mattersparagraph above in our opinion may have an adverse effect on the functioning of theCompany;
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 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 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 is not required to transfer any amount to Investor Education andProtection Fund
ANNEXURE A TO THE AUDITORS' REPORT
The Annexure referred to in our report to the members of Uniworth Textiles Limited theyear ended 31st March
We report that:
* Also refer to note no. 4 ** Refer to note no.7 (ii)
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 uniworthtextiles limited ("the Company") as of 31st March 2017 in conjunction withour audit 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 (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 company's policies the safeguarding ofits 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 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 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 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 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 company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 deficiencies have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31 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 for inventory particularly with regard totimely completion of physical verifications and reconciliation of discrepancies were notoperating effectively which could potentially result in material misstatements in theCompany's consumption and inventories.
3. The Company's internal financial controls over payment of advances to overseasconsultants and certain other parties particularly with regard to the terms and conditionsof making such advance payments by the Company were not operating effectively which couldpotentially result in materially affecting the
Company's working capital and expense account balances.
4. 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.