To the Members of Ind-Swift Laboratories Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Ind-SwiftLaboratories Limited ("the Company") which comprises the Balance Sheet asat March 31 2017 the Statement of profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
Management's Responsibility for the Standalone Financial
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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance withaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial control 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.
Our responsibility is to express an opinion on these standalone financial statementsbased 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. 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 anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 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 standalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2017 its loss and its cash flows for the year ended on that date.
Emphasis of Matters
Without qualifying our opinion we draw attention to the following matters in the Notesto the standalone financial statements:
a) The Provisions of the Companies Act 1956 (Further amended to Companies act 2013)where the company has got its fixed Deposit Scheme restructured vide order No. C.P27/01/2013 dated 30.09.2013 of Company Law Board. The Company has been granted extensionof time of repayment of those deposits. Few of the FD holders have however approached thecourts for the repayment of their Fixed Deposits (Refer Note. No. IV of FinancialStatements).
b) Refer Note No. III of Financial Statements in regard to Following:
As on 31.03.2017 six Banks/ Financial Institutions have transferred their entireLoan Portfolio to their respective Assets Reconstruction Companies.
During the year in pursuance of AS-9 " Revenue Recognition " issued byICAI the company has not provided impact in the books of accounts on account of waiver ofliability resulting from the bilateral restructuring of loans of SIDBI and Mahindra &Mahindra services limited.
During the year in pursuance of AS-10" Accounting for Fixed Assets"issued by ICAI the company had adjusted the waiver of loan liability of Rs. 2841.81 Lacspertaining to Catholic Syrian Bank due to settlement of loan with Phoenix ARC PrivateLimited against its Fixed assets as the loan was taken earlier for the Purchase of FixedAssets.
As on 31.03.2017 three banks have declared the accounts of the company as NPA.
c) Regarding payment of Managerial Remuneration of Rs. 407.67 Lacs for the financialyear ended 31 march 2017 which is same since 2012 a sum of Rs. 371.67 Lacs has beendisallowed in terms of limits prescribed under section 196197 & 198 read with Part IIof Schedule V of Companies Act 2013. Further the company has led necessary application toCentral Government which is pending approval as on date. Pending the ultimate outcome ofthe above said matter which is presently unascertainable no adjustments have beenrecorded in the statement (Refer Note No. XIV of Financial Statements).
d) During the year a re incidence had occurred in one of the plant in Derabassi unitof the company However the loss assessment has not been completed yet resultant noaccounting impact of the same has not been provided in the books.(Refer Note no. XLI toFinancial Statements).
e) During the year on account of failure of approved Restructuring Scheme (CDR) theaccount of Company stands exited from the CDR system as confirmed by CDR cell vide itsletter dated 01.03.2017.(Refer Note XXXVIII to 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 subsection (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.
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 purpose 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 Statement of profit and Loss and Cash Flow Statement dealt withby 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 written representations received from the directors as on March 312017 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2017 from being appointed as a director in terms of section 164 (2) of theAct;
(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" ;and
(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 - Refer Note XVIII to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there 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;
iv. The Company has provided requisite disclosures in its Financial Statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016 and also they are in accordance with books of accountsmaintained by the company. Refer Note XXXIX to the Financial Statements.
| ||For JAIN & ASSOCIATES |
| ||Chartered Accountants |
| ||(Regd No.:001361N) |
| ||S.C. Pathak |
|Place : Chandigarh ||Partner |
|Date: 23.05.2017 ||Membership No.: 010194 |
"Annexure A" to the Auditor's Report
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) According to information and explanations given by the management the company hasa system of physical verification of all its fixed assets over a period of four years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) According to information and explanations given by the management the title deedsof immovable properties included in fixed assets are held in the name of the Company.Except in case of the following immovable properties where the title deeds are not in thename of the company:
In case of land:
|No. of cases ||Leasehold/ Freehold ||Gross Block as at 31st March 2017 ||Net Block as at 31st March 2017 ||Remarks |
|2 ||Freehold ||Rs. 13.79 Crores ||Rs. 13.79 Crores ||The cost of land amouting to Rs. 13.78 Crores includes the following : |
| || || || || land measuring 29 kanals & 3 Marlas amounting to Rs. 9.75 crores was purchased on Power of Attorney from Fortune (India) constructions Ltd. |
| || || || || land measuring 20 kanals & 17 Marlas amounting to Rs. 4.03 crores was purchased on Power of Attorney from Essix Biosciences Limited |
|1 ||Leasehold ||Rs.171.89 Lakhs ||Rs.151.46 Lakhs ||Lease hold land Jammu Plant Samba |
(ii) As explained to us the inventories excluding stocks with some of the thirdparties were physically verified during the year by the management at reasonableintervals and no material discrepancies were noticed on physical verification. In respectof inventories lying with third parties these have substantially been confirmed by them.
(iii) According to information and explanations given to us the Company has not grantedloans secured or unsecured during the year to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013 and hence reporting under Accordingly paragraph 3 (iii) of the Orderis not applicable.
(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 in respect ofloans investments guarantees and security made.
(v) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of sections 73 to 76 of the Companies Act 2013and the rules framed thereunder and the directives issued by The Reserve Bank of Indiawith regards to the deposits accepted from the public .
(vi) The maintenance of cost records has been specified by the Central Government Undersub section (1) of section 148 of the act. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the companies(Cost records and audit) Rules 2014 asamended prescribed by the Central Government under sub-section (1) of section 148 of theact and are of the opinion that prima facie the prescribed cost records have been madeand maintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or not.
(vii) According to information and explanations given to us in respect of StatutoryDues;
(a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees' state insurance income-taxsales-tax service tax customs duty excise duty value added tax cess and othermaterial statutory dues applicable to it though there have been slight delays in fewcases.
(b) There were no undisputed amounts payable in respect of provident fund employees'state insurance income-tax service tax sales-tax duty of custom duty of excise valueadded tax cess and other material statutory dues were outstanding at the year end for aperiod of more than six months from the date they became payable.
(c) the dues outstanding of income-tax sales-tax service tax duty of custom dutyof excise value added tax and cess on account of any dispute are as follows:
|Name of the Statute ||Nature of Dues ||Amount (In Rs Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act1961 ||Demand Amount as per Order ||0.22 ||AY 2006-07 ||No appeals |
|Income Tax Act1961 ||Demand Amount as per Order ||31.08 ||AY 2007-08 ||CIT(A) |
|Income Tax Act1961 ||Demand Amount as per Order ||11.09 ||AY 2009-10 ||ITAT |
|Income Tax Act1961 ||Demand Amount as per Order ||24.65 ||AY 2010-11 ||ITAT |
|Income Tax Act1961 ||Demand Amount as per Order ||37.00 ||AY 2011-12 ||ITAT |
|Income Tax Act1961 ||Demand Amount as per Order ||145.04 ||AY 2012-13 ||CIT (A) |
|The Punjab Vat Act2005 ||Sale tax Penalty & Interest ||31.94 ||April 2006 to March 2007 ||Appellate Tribunal |
|The Punjab Vat Act2005 ||Sale tax Penalty & Interest ||46.40 ||April 2007 to March 2008 ||DETC (Appeals) |
|The Punjab Vat Act2005 ||Sale tax Penalty & Interest ||48.46 ||April 2012 to March 2013 ||DETC (Appeals) |
|Jammu Vat Act ||Sale tax Penalty & Interest ||1.35 ||April 2012 to March 2013 ||Commissioner Appeals |
|Jammu Vat Act ||Sale tax Penalty & Interest ||32.20 ||April 2013 to March 2014 ||ETC (Appeal) |
|The Custom Act 1962 ||Differential CD ||23.06 ||2012-13 ||CESTAT Ahmedabad |
|The Central Excise Act 1944 ||Penalty under Excise Rules ||8.10 ||2009-10 ||CESTAT Chandigarh |
|The Central Excise Act 1944 ||Interest & Penalty under Excise Rules ||4.70 ||2007-08 ||CESTAT Chandigarh |
|The Central Excise Act 1944 ||Service Tax & Penalty Thereon ||192.32 ||2012-13 & 2013-14 ||CESTAT Chandigarh |
|The Central Excise Act 1944 ||Service Tax & Penalty Thereon ||82.28 ||2009-10 & 2010-11 ||Commissioner (Appeal) Chandigarh |
|The Central Excise Act 1944 ||Disallowed Self Credit Refund ||6.00 ||2005-10 ||CESTAT Chandigarh |
(viii) In our opinion and according to the information and explanations given to usthe Company has defaulted in repayment of dues to the financial institution bank ordebenture holders. The details of such default are as follows:
|Particulars ||Amount of default as at 31st March 2017 ||Period of default ||Remarks if any |
|i) Name of the lenders in case of: || || || |
|Financial Institution: || || || |
|1. DEG ||4652.18 ||More than 2 years ||- |
|2. IFCI Limited ||- ||- ||Entire Loan Portfolio transferred to ARC. Hence period and amount of default is unascertained. |
|Banks: || || || |
|1. State Bank Of India ||3475.64 ||More than 3 years ||Declared NPA by the Bank |
|2. Canara Bank ||1070.41 ||More than 3 years ||Declared NPA by the Bank |
|3. Central Bank Of India ||- ||- ||Entire Loan Portfolio transferred to ARC. Hence period and amount of default is unascertained. |
|4. State Bank Of Patiala ||976.02 ||9 Months ||Declared NPA during the year 2016-17 |
|5. Exim Bank ||- ||- ||Entire Loan Portfolio transferred to ARC. Hence period and amount of default is unascertained. |
|6. State Bank Of Hyderabad ||- ||- ||Entire Loan Portfolio transferred to ARC. Hence period and amount of default is unascertained. |
|7. Bank of Baroda ||11354.09 ||More than 2 years ||- |
|8. Allahabad Bank ||- ||- ||Entire Loan Portfolio transferred to ARC. Hence period and amount of default is unascertained. |
|9. State Bank Of Travancore ||- ||- ||Entire Loan Portfolio transferred to ARC. Hence period and amount of default is unascertained. |
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(x) According to the information and explanations given by the management we reportthat no fraud by the Company or no fraud on the Company by the Officers and employees ofthe Company has been noticed or reported during the year.
(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 the followingamounts for managerial remuneration which will not be allowed as mandated under section197 read with Schedule V to the Act and the approval granted by the Central Government onapplication by the company.
|Payment made to: || || || || |
|Director/ WTD/ MD/ Manager ||Amount approved by Central Government ||Amount due for recovery as at 31st March 2017 ||Steps taken to secure the recovery of the amount ||Remarks if any |
|407.67 Lacs ||36.00 Lacs ||371.67 Lacs ||The company has applied to the Central Government for the requisite approval. ||Approval is still pending as on 31.03.2017. |
(xii) In our opinion the Company is not a Nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.
(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 given to us and on an overallexamination of the balance sheet the Company has complied with the provisions of the Actwith respect to shares issued under preferential allotment during the 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 and accordingly the provisions of clause 3 (xvi) of the Order arenot applicable to the Company
For JAIN & ASSOCIATES
Membership No.: 010194
Place : Chandigarh
"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")
To the Members of Ind-Swift Laboratories Limited
We have audited the internal financial controls over financial reporting of Ind-SwiftLaboratories Limited ("the Company") as of March 31 2017 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
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. 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 the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 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 our audit opinion on the internal financial controls system overfinancial 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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.
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 March 31 2017 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.
For JAIN & ASSOCIATES
Membership No.: 010194
Place : Chandigarh