GB Global Ltd.
|BSE: 533204||Sector: Industrials|
|NSE: GBGLOBAL||ISIN Code: INE087J01028|
|BSE 00:00 | 31 May||GB Global Ltd|
|NSE 05:30 | 01 Jan||GB Global Ltd|
|BSE: 533204||Sector: Industrials|
|NSE: GBGLOBAL||ISIN Code: INE087J01028|
|BSE 00:00 | 31 May||GB Global Ltd|
|NSE 05:30 | 01 Jan||GB Global Ltd|
To the Members of
M/s. GB Global Limited
(Formerly known as Mandhana Industries Limited)
Report on the Audit of the Financial Statements
We have audited the financial statements of M/s. GB Global Limited (Formerly knownas Mandhana Industries Limited) ("the Company") which comprise the BalanceSheet as at March 31 2020 and the statement of Profit and Loss (including othercomprehensive income) statement of changes in equity and statement of cash flows for theyear then ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
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 theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 the loss and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.
Material Uncertainty Related to Going Concern
We draw attention to Note No 48 of the financial statements which indicates thatNational Company Law Tribunal ("NCLT") vide its order delivered on February 52020 has allowed the Resolution Professional ("RP") to invite fresh resolutionplan from the prospective resolution applicants and complete the process of rebiddingwithin 70 days from the date of the order. The events/ conditions as mentioned in the saidnote indicate that until the time this process is completed successfully or on failure ofthe resolution plan chances of NCLT ordering liquidation of the Company remains. Thisindicates that a material uncertainty exists that may cast a significant doubt on theCompany's ability to continue as a going concern.
Emphasis of Matter
1) We draw attention to Note No. 48 of the financial statement relating to pendingoutcome of certain reliefs and modification in the Resolution Plan with NCLT and itspending accounting effects with respect to the same. Attention is also drawn to Note No 21of the financial statement which states that the Company has stopped providing interest onborrowings from lenders/banks with effect from April 1 2018 pending final resolution ofthe matter in Hon'ble NCLT.
2) We also draw attention to Note No. 9 of the financial statement relating to theaccounting treatment and presentation of the amount of Rs 50 crore fixed Deposit lyingwith Bank of Baroda in the name of the Company which was forfeited by Committee ofCreditor (COC) from the amount of Rs 93 crore brought in by the erstwhile resolutionApplicant and to.
Our opinion is not modified in respect of the above matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Inaddition to the matters described in the Material uncertainty Related to Going Concernsection we have determined the matter described below to be key audit matters to becommunicated in our report.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Management / Resolution Professional ("RP") is responsible forthe preparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report including Annexures toBoard's Report Corporate Governance and Shareholder's Information but does not includethe financial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we do not express any form ofassurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact.
When we read the above reports if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
Responsibilities of Management/RP and Those Charged with Governance for the FinancialStatements
The Company's Management/RP is responsible for the matters stated in section 134(5) ofthe Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the accounting Standards specified under section133 of the Act. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements the Company's management/RP is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Management/RP either intends to liquidate the Company or to cease operations or hasno realistic alternative but to do so.
Those Company's Management/RP are also responsible for overseeing the company'sfinancial reporting process.
As the Corporate Insolvency Resolution Process ("CIRP") has been reinitiatedin respect of the Company under the provisions of "The Insolvency and BankruptcyCode2016" (IBC/ the Code') by the National Company Law Tribunal("NCLT")Mumbai Bench vide its order dated December 05 2019 the powers of theBoard of Directors of the Company stand suspended as per Section 17 of the Code and suchpowers are being exercised by the Resolution Professional appointed by the NationalCompany Law Tribunal by the said order under the provisions of the Code.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
1) The audited financial statement for the year ended March 31 2019 included in thesefinancial statement are based on the previously issued financial statement of the Companyprepared in accordance with the Indian Accounting Standards ("Ind AS")prescribed under Section 133 of Companies Act 2013. Those audited financial statementprepared under Ind AS were audited by the predecessor auditor whose audit report datedMay 23 2019 expressed an unmodified opinion on those financial statement respectively.
2) The Ministry of home affairs vide order No.40-3/2020 dated 24.03.2020 notifiednationwide lockdown in India to contain the outbreak of COVID 19 due to which we werenot able to attend the physical verification of inventory carried out by the managementsubsequent to the year end. Consequently we have performed alternate procedures to auditthe existence of inventory as per the guidance provided in SA 501 "Audit Evidence -Specific considerations for selected items" and have obtained sufficient appropriateaudit evidence to issue our unmodified opinion on these financial statements.
Report on Other Legal and Regulatory Requirements
1. 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 Companies Act 2013 we give in the Annexure - A a statement on the mattersspecified in paragraphs 3 and 4 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 (including other comprehensiveincome) Statement of Change in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
d. In our opinion the aforesaid financial statements comply with the Indian AccountingStandards specified under Section 133 of the Act.
e. The Going Concern matter described under the "Material Uncertainty Relatedto Going Concern" paragraphs above in our opinion may have an adverse effect onthe functioning of the Company;
f. On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.
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".
h. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
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 in its financial statements - (Refer Note 43 to the financial Statements)
ii. The Company did not have any long-term contracts including derivative for whichthere were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended March312020.
For C N K & Associates LLP
Firm Registration No.: 101961
Membership No. 101684
Date: July 7 2020
Annexure - A to the Independent Auditors' Report
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
(i) (a) At the time of takeover by the Resolution Professional physical verificationof material assets had been carried out by an independent agency. However the Company hasnot updated records to show full particulars including quantitative details andsituation of fixed assets in its Fixed Asset Register;
(b) As explained to us and referring to clause (i) (a) above the material fixed assetshave been physically verified by the management during the year and there were no materialdiscrepancies noticed during this verification. We are informed that the Company hasformulated a program of physical verification of all the fixed assets over a period oftime which in our opinion is reasonable having regard to the size of the Company andnature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records the title deeds of the immovable properties are in the name ofthe Company except factory building situated at Sewri Mumbai having a carrying value ofRs.882.52 lacs in the financial statement and with respect to freehold land at Dodballpurproperty near Bengaluru having a carrying value of Rs.220.57 lacs.
(ii) As informed to us the inventory has been physically verified by the Management atreasonable intervals during the year discrepancies noticed on verification between thephysical stocks and the book records were not material in relation to the size of theCompany and the same have been properly dealt with in the books of accounts.
(iii) According to the information and explanations provided to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered inregister maintained under section 189 of the Act. Accordingly the provisions of clause3(iii) are not applicable to the Company.
(iv) According to the information and explanations provided to us the company notgranted any loan given any guarantee or provided any security in connection with anyloan therefore reporting on the provisions of Section 185 & 186 of the Companies Act2013 in respect of loans investments guarantees and securities is not applicable.
(v) According to the information and explanations provided to us the Company has notaccepted any deposits within the meaning of Sections 73 to 76 of the Act and the rulesframed there under to the extent notified.
(vi) We have broadly reviewed the records maintained by the Company pursuant to therules prescribed by Central Government for maintenance of cost records under section148(1) of the Act and are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe record. We have been informed that the cost audit for FY 2017-18 and FY 18-19 has notbeen carried out as required under Section 148 of the Companies Act 2013.
(vii) (a) According to the information and explanation given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositingundisputed statutory dues including provident fund employees' state insurance professiontax income-tax duty of customs goods and service tax cess and other statutory dues asapplicable. There were no undisputed amounts payable with respect to employees' providentfund employees' state insurance income-tax sales-tax goods and service tax servicetax duty of customs duty of excise value added tax cess and any other statutory duesin arrears as at March 31 2020 for a period of six months from the date they becamepayable except GST (reverse charge mechanism) CGST and SGST amounting to Rs 8825 each.
(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of income tax and sales tax at March 312020 which have not been deposited on account of a dispute are as follows:
(viii) According to the information and explanations given to us the Outstanding loansrepayable to the financial creditors shown in the financial statement is Rs 126459.54lac of which the lender wise details are disclosed as below
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) during the year. The term loans availed by the Company havebeen applied for the purposes for which they were obtained.
(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 thecourse of our audit.
(xi) According to the records of the Company examined by us and the information andexplanations given to us the company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Companies Act 2013.
(xii) The Company is not a Nidhi company and therefore the provisions of clause 3 (xii)of the Order are not applicable to the company.
(xiii) According to the records of the Company examined by us and the information andexplanation given to us all transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the details thereof havebeen disclosed in the Financial Statements etc. as required by the applicable accountingstandards.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review. Thereforeclause 3(xiv) of the Order is not applicable to the Company.
(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 clause 3(xv) ofthe Order is not applicable to the Company.
(xvi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder section 45- IA of the Reserve Bank of India Act 1934.
For C N K & Associates LLP
Membership number: 101684
Date : July 7 2020
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 M/s. GBGlobal Limited (Formerly known as Mandhana Industries Limited) as of March 31 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
In our opinion except in case of Inventory where controls need to be strengthened andFixed assets where the register of fixed assets is not updated the Company has anadequate internal financial controls with reference to financial statements and suchinternal financial controls with reference to financial statements were operatingeffectively as at March 31 2020 based on the internal control with reference tofinancial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia ("Guidance Note").
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 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 financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
For C N K & Associates LLP
Membership number: 101684
UDIN : 20101684AAAACW6972
Date: July 7 2020.