To the Members of Amit Spinning Industries Limited Report on the Financial Statements
We have audited the accompanying financial statements of Amit Spinning IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 312017the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ('the act') with respect to thepreparation of these 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 Companies (Accounts) Rules2014. This responsibility includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat are operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue 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 accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement
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 procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by the Company'smanagement and Board of Directors as well as evaluating the overall presentation of thefinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion Basis for Qualified Opinion We draw attentionto:
(a) Note No. 30 of the financial statements wherein the company has not chargedinterest amounting to Rs.69832251. Further the company has also not charged penalinterest and other charges if any in respect of delay in repayment of borrowings frombanks to the statement of profit and loss account from the date of declaration of accountsas non performing assets (NPA). Therefore we are unable to comment on the adequacy ofinterest and other charges provided for in the statement of profit & loss.
We report that had the Company decided to provide the amount as mentioned above theloss for the year would have been greater by Rs.69832251 and would have amounted toRs.202075593 (as against the reported figure of Rs.132243342) with a consequentialeffect on Accumulated losses and Loans from Banks.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid 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 st March 2017 its loss and its cash flows for the year ended on that date
Emphasis of Matters
Without qualifying our opinion we draw attention to the following matters in the Notesto the financial statements:
(a) Note No. 29 of the financial statements which indicates that the Company hasaccumulated losses and its net worth has been fully eroded the Company has incurred a netcash loss during the current and previous year(s) and the Company's current liabilitiesexceeded its current assets as at the balance sheet date. Further majority of the bankshave categorized borrowing of the company as Non performing Assets (NPA) and have sentrecall notices u/s 13(2) of Securitization and Reconstruction of Financial Assets andEnforcement of Security Interest Act (SARFAESI) 2002 to the company. Pending approval ofDRS by OA/ BIFR SICA has been repealed w.e.f 1/ 12/2016 and 6 months window has beenprovided to the Company to approach to National Company Law Tribunal (NCLT) as persection 4(b) of the SICA repeal act read with Sec252 of the Insolvency and BankruptcyCode 2016 to initiate Corporate Resolution Process under the code. Company is in theprocess of moving NCLT for resolution of its liabilities. In the meanwhile Axis Bank hasinitiated recovery proceedings before DRT against the Company however the same is beingcontested by the company. These conditions along with other matters set forth in Note 30indicate the existence of a material uncertainty that may cast significant doubt about 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 the saidNote.
(b) Note No. 28 of the financial statements regarding balances of parties under thehead trade payables and loans & advances which are subject to confirmationreconciliation and consequential adjustments if any.
(c) Note No.31 of the financial statements regarding an amount of Rs.277723608 underthe head "Long Term Loans and Advances" which has been considered good by themanagement in view of the reasons stated therein. We have relied upon the assertions givenby the management as to the recoverability of the said amounts.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
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 paragraphs 3and 4 of the Order.
As required by section 143(3) of the Act we further 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 of ourknowledge and belief were necessary for the purpose of our audit;
b. Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen 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 matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid financial statements comply with theapplicable Accounting Standards specified under Section 133 of the Act read with Rule 7of the Companies (Accounts) Rules 2014;
e. The going concern matter described in sub-paragraph (a) under the Emphasis ofMatters paragraph above in our opinion may have an adverse effect on the functioning ofthe Company;
f. on the basis of written representations received from the directors as on March312017 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 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. In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014:
(i) the Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 25 to the financial statements;
(ii) the Company did not have any long-term contracts including derivative contracts;as such the question of commenting on any material foreseeable losses thereon does notarise;
(iii) there has not been an occasion in case of the Company during the year underreport to transfer any sums to the Investor Education and Protection Fund; as such thequestion of delay in transferring such sums does not arise.
(iv) the Company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the Company - Refer Note 39 to the financial statements.
| ||For Sunil Jain & Co. |
| ||Chartered Accountants |
| ||(Registration No. 003855N) |
| ||Sd/- |
| ||Sanchit Jain |
|Place: New Delhi ||Partner |
|Date : May 27 2017 ||Membership No. 511714 |