To the Members of CHOKHANI INTERNATIONAL LIMITED
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of CHOKHANI INTERNATIONALLIMITED("the Company") which comprise the Balance Sheet as at 31st March 2017the Statement of Profit and Loss and Cash Flow Statement for the period from 1st April2016 to 31st March 2017 then ended and a summary of significant accounting policies andother explanatory information.
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 of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments 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 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 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 issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.
Basis for Qualified Opinion
(i) Non-confirmation /reconciliation of certain debit & credit balances which onfinal confirmation/ reconciliation may affect certain financial disclosures and has alsoresulted in the balances being as per books of accounts only.(Refer Note no.23)
(ii) The company's ship repairing operations remained suspended since June 1998. Thecompany has suffered continued losses including in the current year and erosion of equitydue to many pending litigation with Govt./Autonomous bodies & financial institutionsand there is substantial doubt that the company will be able to continue as a goingconcern. We are accordingly unable to express our opinion on companies ability to continueas a going concern.(Refer note no. 24)
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of matter described in the Basis of Qualified OpinionParagraph the aforesaid financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2017 and its Loss and its cash flows for the period ended on that date.
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 inparagraphs 3 and 4 of the Order to the extent applicable.
As required by section 143(3) of the Act we
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 financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of the written representations received
from the directors as on 31st March 2017 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2017 from being appointed as adirector in terms of Section 164 (2) of the Act.
f) 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".
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
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses. - Refer Note No.5 and Note No. 21 to theFinancial statements.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
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 managementrepresentation we report
that the disclosed are in accordance with books of account maintained by the companyand as produced to us by the management - Refer note no.29 of the financial statements.
For B.K.Shroff & Co.
Firm Reg. No. : 302166E
|Place : New Delhi ||Partner |
|Date : 16.05.2017 ||Membership Number :90378 |
Annexure - A to the Auditors' Report
Annexure referred to in paragraph (1) under the
heading of "Report on Other Legal and Regulatory
requirements" of our report of even date
(i) (a) The company has maintained proper records
showing full particulars including quantitative details and situation of fixed assets.
(b) All the fixed assets have been physically verified by the management according to aregular program which in our opinion is reasonable having regard to the size of thecompany and the nature of its assets. No material discrepancies with respect to bookrecords were noticed on such verification. Discrepancies noticed have been properly dealtwith in the books of account.
(c) The title deeds of immovable properties are held in the name of the company.
(ii) There are no inventory in the company hence provisions of clause (ii) of the orderare not applicable to the company.
(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 Companies Act 2013 and as such clauses (iii) (a) (b) and (c) of theorder are not applicable to the company.
(iv) In our opinion and according to the information and explanations given to us noloans investments guarantees and security covered under section 185 and 186 of theCompanies Act 2013 has been given by the company.
(v) According to the information and explanation given to us the company has notaccepted any deposit from the public. Therefore the provisions of clause (v) of the orderare not applicable to the company.
(vi) As informed to us Company is not required to maintain any cost records asprescribed by the Central Government under section 148(1) of companies act 2013
(vii) (a) The company is generally regular in depositing
with the appropriate authorities undisputed statutory dues including provident fundemployees state insurance income tax sales tax service tax duty of custom duty ofexcise value added tax cess and any other statutory dues applicable to it. According tothe information and explanations given to us no undisputed amounts payable in respectthereof were outstanding as at 31st March2017 for a period of more than six months fromthe date they became payable except as under:
|Name of the ||Nature of || |
Period to which
|Statue ||Dues || |
|Madras Port ||Lease Rent || |
|Trust || || || |
(b) According to the records of the company dues of income-tax or Sales tax or servicetax or duty of custom or duty of excise or value added tax which have not been depositedon account of any dispute are as under :
(viii) As per information and explanations given by the management during the year weare of the opinion that the company has not repaid the installment of principal amount ofloan since 1993-94 aggregating to Rs 248714599 (in case of Rupee Loans) and Rs275593485 (in case of Foreign Currency Loans). The interest on such loans amounting toRs. 260546353 provided upto year 1998-99 is also not paid since1994-95. However companyhas not made provision for Interest penal interest and/or other charges from 1999-00. Asexplained and as per the documents produced before us for our examination the company hasdisputed the repayment of dues to Financial Institution and filed suit for counter claimsince the matter is subjudice the amount of liability on account of Interest penalinterest and/or other charges if any as on the balance sheet date is not ascertainableand will be accounted on the final settlement of dispute with the financialinstitution.(For details circumstances & sequence of events refer para 1 to 6 of noteno 6). Since there is a dispute between the company & the lender we are unable todetermine whether there is a default in repayment of dues to the concerned FinancialInstitution.
(ix) In our opinion during the year no money has been raised by way of initial publicoffer or further public offer (including debt instruments) or term loans hence provisionsof clause (ix) of the order are not applicable to the company.
(x) 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 theyear.
(xi) According to the information and explanations given to us no managerialremuneration has been paid or provided in the books during the year.
(xii) The company is not a nidhi company and hence provisions of clause (xii) of theorder are not applicable to the company.
(xiii) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards.
(xiv) During the year under review the company has not made any preferential allotmenton private placement of shares or fully or partly convertible debentures.
(xv) The company has not entered into any non cash transactions with directors orpersons connected with him.
(xvi) The Company is not required to be registered under section 45-1A of the ReserveBank of India Act 1934
For B.K.Shroff & Co. Chartered Accountants Reg. No. : 302166E
|Place : New Delhi || |
|Date : 16.05.2017 ||Partner |
| ||Membership Number: 90378 |
Annexure B to the Auditor's 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 ChokhaniInternational Limited ("the Company") as of March 31 2017 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate. 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI)". These responsibilities include the design implementation and maintenance ofadequate internal financial
controls that were operating effectively for ensuring the orderly and efficient conductof its business including adherence to company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial informationas 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 and the Standards on Auditing issued by ICAI and deemed to beprescribed 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 ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 judgement 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 my /our audit opinion on the Company's 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 financial reporting includes those policies and procedures that:
a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorisations of management and directors of the Company; and
c) 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.
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 2017 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by the ICAI".
For B.K.Shroff & Co.
Firm Reg. No. : 302166E
|Place : New Delhi ||Partner |
|Date : 16.05.2017 ||Membership Number |
| ||:90378 |