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Greenearth Resources & Projects Ltd.

BSE: 533016 Sector: Metals & Mining
NSE: AUSTRAL ISIN Code: INE455J01027
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VOLUME 5000
52-Week high 0.48
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Mkt Cap.(Rs cr) 7
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Greenearth Resources & Projects Ltd. (AUSTRAL) - Auditors Report

Company auditors report

To

The Members of

Greenearth Resource & Projects Limited.

Report on the Financial Statements

We have audited the accompanying financial statements of M/s Greenearth Resource &Projects Limited (hereinafter referred to as 'the Company") comprising of the BalanceSheet as at 31st March 2017 the Statement of Profit and Loss and the Cash Flow Statementfor the year then ended and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as 'the financial statements').

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the preparation of these financialstatements in terms of the requirements of the Companies Act 2013 (hereinafter referredto as "the Act*) that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgeneraly accepted in India Including the Accounting Standards specified under Section 133of the Act read with Rule 7 of the Companies (Accounts) Rules. 2014.

This responsibility also 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; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit

While conducting the audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the previsions 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 but not for the purpose of expressing an opinionon whether the Company has an adequate internal financial controls system over financialreporting in place and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by tire Company's Board of Directors aswell as evaluating the overall 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 standalone financial statements.

Basis for Qualified Opinion

1. The Financial Statements of the company has been prepared on a going concern basisalthough Note: 28 in the financial statement which indicates that the Company hasaccumulated losses of Rs. 589.62 crores (Previous period: Loss Rs. 598.11 crores) and itsNet worth is negative Rs. 264.83 Crores (Previous period: Negative Rs. 277.72 crores) asat the end of the reporting period which indicates that the net worth has been fullyeroded. The Company has incurred Net Profit of Rs. 1280.45 Lacs due to the impact ofdeferred tax during the current financial year (Previous Year Rs. 1887.00 Lacs) and netcash loss during the current year of Rs. 11.38 Lacs (Previous year Loss Rs. 125.39 Lacs).Also the Company current liabilities exceeded its current assets as at the balance sheetdate. The Company can be termed as 'SICK* within the meaning of clause (O) of sub section(1) of section 3 of the Sick Industrial Companies (Special Provision) Act 1985.Theseconditions along with other matters indicate the existence of a material uncertainty thatcast significant doubt about the Company's ability to continue as a going concern.However the financial statements of the Company have been prepared on a going concernbasis for the reasons stated In the Note No. 23.

2. The company has defaulted on payment of dues to Banks & Financial Institutions.

3. Presently Invent Assets Securitisation & Reconstruction Private Limited is thesecured lender and all the rights title and interests of State Bank of India have vestedin Invent Assets Securitisation & Reconstruction Private Limited in respect of thefinancial assistances granted by State Bank of India and Bank of India.

Also M/s Simplex Coke and Refractory Private Limited is the beneficial owner of affpresent and future encumbered or unencumbered tangible assets receivables and advancesof company in lieu of settlement/payment to the secured creditor/lender being mM/sInvent Assets Securitisation & Reconstruction Private Limited" and "IDBIBank" (the secured creditor/secured lender).

M/s Simplex Coke and Refractory Private Limited is using the production faculty of theCompany on lease basis.

4. During the previous year the Securities and Exchange Board of India Mumbai issuednotices dated 26th March 2014 under Rule 4 of SEBI (Procedure for Holding Inquiry andImposing Penalties by Adjudication officer) Rules 1995. However the management hassubmitted is reply and outcome of the same is stB pending.

5. During the previous reporting period the proceeding of SFIO is pending for itsadjudication before the Company Law Board/Court at Kotkata. Since the SabMty is notmaterialized yet hence no provision regarding the same has been made in the books ofaccounts; however the management has Wed compounding appScathn.

6. During the previous year SFIO filed petitions before CLB Princ'pal Bench; NewDelhi/NCLT & CMM court Kolkata. The outcome of the same is pending & matter issubjudice.

7. In the absence of details of testing for impairment of certain assets viz.Production plants which were not operational during the period we are unable to statewhether provisions if any is required to be made in this regard.

8. Short term Loans & Advances includes advances given to suppliers which areoutstanding for more than one year. Relevant documents and confirmations of balances areyet to be obtained.

Qualified Opinion

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;

a) In the case of the Balance Sheet of the state of affairs of the Company as at March31 2017;

b) In the case of the Statement of Profit and Loss of the profit for the year ended onthat date and

c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.

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-secti'on (11) of Section 143 ofthe Act based on the comments in the auditors' reports of the Company we give in theAnnexure "A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. As required by section 143(3) of the Act we report that;

a. Except as stated in our comments under Basis of Qualified Opinion we have soughtand obtained all tee information and explanations which to the best of our knowledge andbelief 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 appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss and Cash Flow Statement dealtwith 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. The going concern matter described in Basis of Qualified Opinion paragraph above inour opinion may have an adverse effect on the functioning of the Company.

f. On the basis of written representations received from the directors as on 31 March2017 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2017 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 as Annexure -B.

h. With respect to the other matters included in the Auditor's Report and to our bestof our information and according to the explanations given to us we further report that

i) The Company has disclosed the impact of the pending litigations on its financialposition in its financial statements as referred to notes to the financial statements.

ii) The Company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses.

iii) There have been no amounts which are required to be transferred to the InvestorEducation and Protection Fund by the Company.

iv) The company has provided requisite disclosure in Financial Statements as regardsits holding and dealings in Specified Bank Notes as defined in Notification No S.O.3407(E)dated November 8 2016 of the Ministiy of Finance during the period from November 8 2016to December 30 2016.Based on audit procedures performed and representations provided tous by the management we report that the disclosures are in accordance with the books ofaccounts maintained by the company and as produced to us by the Management - Refer Note tothe financial statements

For and on behalf of
M/s K.M. Tapuriah & Co.
Chartered Accountants
Firm Regn. No.:314043E
Sd/-
CA Naveen Mohta
(Partner)
Membership no: 048111
Place: Mumbai
Date: August 23 2017

Annexure to the Independent Auditors' Report .

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2017 we reportthat

(i) (a) The Company has maintained proper records showing full particulars includingquantitative detals and situation of fixed assets.

(b) As explained to us. alt fixed assets have not been physically verified by themanagement during the period but there is a regular programme of verification which inour opinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such verification.

(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 freehold land are held inthe name of the Company.

(ii) (a) As explained to us inventories have been physically verified during thereporting period by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.

(c) In our opinion and on the basis of our examination of the records the Company isgenerally maintaining proper records of its inventories. No material discrepancy wasnoticed on physical verification of stocks by the management

(iii) As per the information and explanations given to us during the period underaudit the Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013 (The Act'). Accordingly Clause 3(iii) (a) (b) and (c) of the order are notapplicable fa the year.

(iv) In our opinion and according the information and explanation given to us. duringthe period under audit there are no loans guarantees and securities granted in respect ofwhich provisions of section 185 and 186 of the Companies Act 2013 are applicable and hencenot commented upon.

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable

(vi) To the best of our knowledge and belief the Central Government has not prescribedthe maintenance of cost records under section 148(1) of the Act 2013 for any of theservices rendered by the Company. Accordingly the provisions of clause 3(vi) of the Orderare not applicable.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including ' provident fund income taxsales tax. wealth tax service tax duty of customs value added tax cess aid othermaterial statutory dues have been regularly deposited during the yea by the Company withthe appropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of statutory dues were in arrears as at 31 March2017 for a period of more than six months from the date they became payable exceptProfessional tax. Sales tax and Income tax and the except the dues mentioned in point no.(vii) (b) below.

(b) According to information and explanations given to us some dues of income taxsales tax and service tax have not been deposited by toe Company on account of disputes.

Nature of Dues Amount Forum where dispute pending
Income tax
AY 2011-12 Rs. 9783201- CIT (Appeals)
AY 2012-13 Rs 7.5247740/- CIT (Appeals)
AY 2013-14 Rs 241233.65/- CIT (Appeals)
AY 2014-15 Rs 367845714/- CIT (Appeals)

(viii) The Accumulated losses of the Company is Rs. 589.62 Crores (Previous yea: LossRs.598.11 crcres) and its net worth is negative Rs. 264.83 Crores (Previous period:Negative Rs' 277.72 crores) at the end of the reporting period which indicates erosion ofNet worth of the Company. The Company can be termed as "SICK" within the meaningof clause (O) of sub section (1) of section 3 of the Sick Industrial Companies (SpecialProvision) Act 1985.

(ix) The Company is having outstanding dues to financial institutions or banks duringthe year as mentioned under the Qualified Opinion & Report on other Legal andRegulatory Requirements paragraph above. .

(x) According to the information and explanation given by the management the companyhas neither raised any monies by way of initial public offer or further public offer andterm loan during the year. Hence reporting under clause (ix) is not applicable.

(xi) According to the information aid explanation given by the management we reportthat the managerial remuneration has been paid/provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the companiesAct 2013.

(xii) in our opinion the company is not a Nidhi company. Therefore the provisions ofclause 3(i) of the order ae not applicable to the company and hence not commented upon.

(xiii) In our opinion during the period under review all transactions with the relatedparties are in compliance with section177 and 186 of Companies Act 2013 and the detailshave been disclosed in the Financial Statements as required by the applicable accountingstandards.

(xiv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.

(xv) Based upon the audit procedures performed and die information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.

(xvi) ln our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934.

For and on behalf of
M/s K.M. Tapuriah & Co.
Chartered Accountants
Firm Regn. No.:314043E
Sd /-
CA Naveen Mohta
(Partner)
Membership no: 048111
Place: Mumbai
Date: August 23 2017

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/sGreenearth Resources ft Projects Limited ("the Company") as of March 31 2017 inconjunction with our audit of the financial statements of tha Company for the year endedon that data

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 !ndia. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal controls overfinancial reporting based on our audit We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves peiforming 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 thedesign and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of the risksof material 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company

(2) 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 authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 inducing 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 contrds over financialreporting to future periods are subject to the risk that the internal financial contrdover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinandal contrds system over financial reporting and such internal financial contrds overfinancial reporting were operating effectively as at March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For and on behalf of
M/s K.M. Tapuriah & Co.
Chartered Accountants
Firm Regn. No.:314043E
Sd /-
CA Naveen Mohta
(Partner)
Membership no: 048111
Place: Mumbai
Date: August 23 2017