THE MEMBERS OF
AUTOPAL INDUSTRIES LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying financial statements of Autopal Industries Limited(theCompany*)whichcomprise the Balance Sheet as at 31 March 2017 the Statement of Profit and Loss the CashFlow Statement for the year then ended and a summary of significant accounting policiesand other explanatory information.
Management's Responsibility for the Financial Statements and for Internal FinancialControls over Financial Reporting
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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India". 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 Act.
Our responsibility is to express an opinion on these financial statements based on ouraudit and to express an opinion on the Company's internal financial controls overfinancial reporting based 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 thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act and the guidance Note on Audit of Internal Financial Controlsover Financial Reporting. Those Standards andthe Guidance Noterequire that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement and whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements and adequacy of internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the 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 audit opinion on the Company's internal financial controls systemover financial reporting and the standalone financial statements.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial controls 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 financialcontrolover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Basis for Qualified opinion
A. The company has taken term loan on 30.04.2016 from Reliance Capital Limitedamounting to Rs. 17500000 for purchase of Machinery as per Sanction Letter and alsoshown as secured term loan.
B. The company has booked Purchase Return worth Rs. 9187674 due to line rejection ofwhich sufficient and appropriate audit evidence is not available.
C. The company has capitalized repairs and maintenance expense worth Rs. 577278;salary expense worth Rs. 3627600 and wages worth Rs. 682023 /- in respect of machineunder fabrication for which sufficient and appropriate audit evidence is not available.
D. We draw your attention to Note No. 39 for Deferred Tax Liability regarding nonrecognition of deferred tax liability amounting Rs. 6697197/-. The same is due to theestimate considered by the management of the company considering absence of reasonablecertainty in the near future that the same will be reversed.
E. The company has 30% partnership share in associate concern G.K. Autopal LightingSolution. However loss of Rs. 2506713 for F.Y. 2015-16 has not been consideredaccording to the total loss in the ratio of Fixed capital in the relevant period; and thecompany has also not considered the investment in and profit of M/s Om Sai Electronicswith 98% partnership share of Rs. 154996 for F.Y. 2015-16. The company has not preparedconsolidated financial statements. The company has also not considered profits/losses ofG.K. Autopal Lighting Solution and M/s Om Sai Electronics for F.Y. 2016-17 in its books ofaccounts for the year ended 31st March 2017. The company has acquired fixed assets worthRs. 8156471 from Om Sai Electronics at year end after closing their activities.
F. Statutory dues such as PF are pending for last eleven months ESI is pending forlast ten months Service Tax for the half year Oct 16 to March 17 has not been depositedyet and there is a late payment made of TDS for quarters 12 and 3 whereas TDS BasicExcise Duty and VAT for quarter 4 has not been deposited yet. Annual Return of Value Addedtax VAT 10A has not been filed by the company for F.Y. 2014-15 and F.Y. 2015-16. Alsoquarterly VAT Return for Quarter 4 is pending.
G. Bonus payable (carried forward from previous years) amounting to Rs 2088006waspaid in cashin the current year; but this payment could not be verified. The company alsohas many unadjusted sundry debtors sundry creditors security advances from dealers andloans advances and closing stock valuation are subject to verification and reconciliation.
H. The company has provided the Provision for Gratuity for the year ended on 31st March2017on the basis of valuation done by Company's own H.R. Dept and not as per ActuarialValuation prescribed by AS-15.
I. The company has not deducted TDS in case of payment of interest on the loans ofReliance Capital Limited and Intech Capital.
J. The company obtained unsecured loan from promoters M/s Surga International FineGems Exports Private Limited Lata Gupta S.E. Investors Ltd. Alfamax Consultancy DoonEngineering Solution on which no interest was provided in the books.
K. The company has not transferred an old outstanding amount of Rs. 204428 of unpaiddividend to the Investor Education and Protection Fund account.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect on the financial statements of the matter described inthe basis for qualified opinion paragraph 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 31 March 2017 and its profit and its cash flows for the yearended on that date.
Report on Other Legal and Regulatory Requirements
1. 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 the cash flow statement dealtwith 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 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Act; and
(0 In our opinion considering nature of business size of operation and organizationalstructure of the entity 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 31st 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.
(g) 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 in its financial statements - NIL
ii. the Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. the company has not transferred an amount of Rs. 204428 of unpaid dividend tothe Investor Education and Protection Fund account.
(h) The Companyhasprovided requisite disclosures in its financialstatements as toholdings as well as dealings in Specified BankNotes during the period from 8thNovember2016 to 30thDecember 2016 and these are in accordance with the books ofaccounts maintained by the Company.ReferNote 29to the Financial statements.
2. As required by "the Companies (Auditor's 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 inparagraphs 3 and 4 of the Order to the extent applicable.
For Rajvanshi & Associates
Firm Regn. No : 005069C
Membership No.: 073670
Place : Jaipur
Date :30"lMay 2017
Annexure-A to the Independent Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended 31 March 2017 we report that:
i) In respect of Fixed Assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
b) As explained to us fixed assets have been physically verified by the management ina phased periodical manner which in our opinion is reasonable having regard to the size ofthe Company and the nature of its assets. No material discrepancies were noticed on suchverification as per the explanations provided to us.
c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
ii) In respect of Inventories:
As explained to us the inventories have been physically verified by the managementduring the year. In our opinion the frequency of verification is reasonable having regardto the size of the company and the nature of its business. As explained to us no materialdiscrepancies were noticed on verification between the physical stocks and the bookrecords.
iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of the Act. Therefore the provisions of clause 3(iii)(a) (iii) (b) and (iii)(c) of the said Order are not applicable to the Company.
iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
v) As informed and explanation given to us the Company has not accepted any newdeposits from the public during the year. However company has made full payment of thedeposits as per order under SICA Act 1985.
v) As informed to us Company is maintaining the cost records pursuant to the Companies(Cost Records and Audit) Rules 2014 as amended and prescribed by the Central Governmentunder Section 148(1) of the Companies Act 2013 for the products of the Company. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
vii) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company in our opinion
a) The payment in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Service Tax Income Tax Tax deducted at sources Customsduty Value Added Fax Excise duty Cess and other material statutory dues applicable toit have been regularly deposited during the year by the Company with the appropriateauthorities though there has been a delay in a few cases. ESI amounting to Rs. 378157and PF amounting to Rs. 2300105 were outstanding as at 31 March 2017 for a period ofmore than six months from the date they became payable.
b) There were no disputed amounts payable in respect of Income-tax Custom Duty ExciseDuty Cess TDS and other material statutory dues in arrears were outstanding as at 31sMarch2017 except Sales lax dues of earlier years amounting to Rs. 1.52 crores due to mismatchin purchases and non - receipt of C Forms however company has filed rectification/amnesty application effect of which is still pending.
viii) According to the information and explanations given to us the Company has notdefaulted in repayment of dues to the financial institution during the year.
ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) but has takenterm loan on 30.04.2016 fromReliance Capital Limited amounting to Rs. 17500000 for purchase of Machinery as perSanction Letter.
x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Rajvanshi & Associates
Firm Regn. No.: 005069C
Vikas Rajvanshi Partner
Membership No.: 073670
Place : Jaipur
Date : 30th May 2017.