The Members of Facor Steels Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Facor Steels Limited("the Company") which comprise the Balance Sheet as at 31st March 2016 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys Board of Directors are 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 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 theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Companys Directors as well as evaluating theoverall presentation of 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 financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the 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 2016 and its loss and its cash flows for the year ended on that date.
Emphasis of Matter
Without qualifying our opinion we draw our attention to Note 1 (b) of the financialstatement. The companys operating results have been materially affected due tovarious factors and as on 31st March 2016 the companys accumulated losses havefully eroded the net worth of the company. The appropriateness of the going concernassumption is dependent on the companys ability to establish consistent profitableoperations as well as raising adequate finance to meet it short term and long termobligations. Based on the mitigation factors discussed in the said note managementbelieves going concern assumption is appropriate and no adjustment have been made in thefinancial statement for the year ended 31st March 2016.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of Section 143 (11) of theAct we give in the Annexure a statement on the matters specified in the paragraph 3 and4 of the Order to the extent applicable.
2. 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 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 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164 (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 ourreport in "Annexure A"; and
(g) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to be 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 financial statements refer note 44 (b) to the financial statements;
ii) the Company did not have any long term contracts including the derivative contractsfor which there were any material foreseeable losses;
iii) there was no amount required to be transferred to the Investor Education andProtection Fund by the Company.
Annexure to the Independent Auditors Report
The Annexure referred to in our report to the members of Facor Steels Limited(the Company) for the year ended 31st March 2016.
We report that:
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The companys plant operations have been suspended with effect from 30/05/2014.The company is operating with very few skeleton staff and hence has not carried thephysical verification of the fixed assets in the current year.
c) The company does not own any immovable property in its name.
ii) The companys plant operations have been suspended with effect from30/05/2014. The company is operating with a very few skeleton staff and hence not carriedthe physical verification of inventories in the current year. The company has maintainedproper records of inventory.
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.
iv) Company has not granted any loans investments guarantees or securities.
v) The Company has not accepted any deposits from the public.
vi) The Companies Act has prescribed cost records for this industry under Section 148of the Companies Act. Company has maintained the records and the same have been audited bythe Cost Auditor for the financial year ended 31st March 2015.
However in the current financial year 2015-16 no manufacturing activity has beencarried out by the company and there was no requirement for maintaining records and assuch no audit has been carried out.
vii) (a) According to the information and explanation give to us the company isdepositing the undisputed statutory dues including provident fund employees stateinsurance income-tax sales-tax service tax duty of customs duty of excise valueadded tax cess and any other statutory dues with the appropriate authorities with somedelay not exceeding six months.
(b) On the basis of our examination of the documents and records there are no dues ofSales Tax Income Tax Wealth Tax Service Tax Excise Duty Value Added Tax Customs Dutyand Cess which have not been deposited on account of any dispute except the following:
|Name of the Statute ||Nature of dues ||Rs./Lacs ||Forum where the dispute is pending ||Period to which the amount related (various Years covering the period) |
|Central Excise Act 1944 ||Excise Duty ||30.67 ||Honble High court Mumbai. ||Jan 1996 to Feb 2000 |
|Central Excise Act 1944 ||Excise Duty ||185.41 ||Honble High court Mumbai. ||Sep 2001 to Nov2003 |
|Central Excise Act 1944 ||Service Tax ||50.83 ||CESTAT Mumbai ||Mar 2007 to Mar2012 |
|Central Excise Act 1944 ||Excise Duty ||18.45 ||Commissioner (Appeals) Nagpur ||Dec2012 |
viii) According to the information and explanation given to us in our opinion companyhas delayed the repayment of its dues to Banks as per details given below:
|Name of Banks ||Term Loan (Rs. Lacs) ||Working Capital Term Loan (Rs. Lacs) ||Funded Interest Term Loan (Rs. Lacs) ||Remark |
|Bank of India Visakhapatnam ||13.31 ||258.76 ||224.90 ||Installments due from June 2015 to March 2016 remains unpaid |
|Indian Overseas Bank Visakhapatnam ||7.42 ||76.24 ||69.03 ||Installments due from June 2015 to March 2016 remains unpaid |
| ||20.73 ||335.00 ||293.93 || |
ix) Company has not raised any funds by way of public offer (including debtinstruments) and term loans.
x) According to the information and explanation given to us no material fraud by thecompany or any material fraud on the company by its officers or employees has been noticedor reported during the year.
xi) No managerial remuneration has been paid or provided.
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 explanation given to us the transactions withthe related parties are in compliance with Section 177 and 188 of the Companies Act 2013and the details have been disclosed in the financial statements as required by theapplicable accounting standards.
xiv) Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year under review.
xv) Company has not entered into any non-cash transactions with directors or personsconnected with him
. xvi) Company is not required to be registered under Section 45-IA of the Reserve Bankof India Act 1934.
Annexure A 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 FacorSteels Ltd. ("the Company") as of 31st March 2016 in conjunction withour audit of the financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 companys policies the safeguardingof its 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 Companys 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 auditors 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 Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditure 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 thecompanys 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.
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 31st March 2016based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.
| ||For SALVE & Co. |
| ||Chartered Accountants |
| ||(Firms Registration No.109003W) |
| ||C.A. K.P. SAHASRABUDHE |
|Place : Nagpur ||Partner |
|Date : 6th May 2016 ||(Membership No. 07021) |