The Members of
Indo Gulf Industries Limited
We have audited the Financial Statements of Indo Gulf Industries Limited (the Company) which comprise the Balance Sheet at March 31st2019 the Statement of Profit and Loss the Statement of Cash Flows and the Statement of Changes in Equity for the year ended on that date and Notes to the Financial Statements including a summary of Significant Accounting Policies.
In our opinion and to the best of our information and according to the explanation given to us the accompanying Financial Statements give a true and fair view of the financial position of the entity as at March 31st 2019 and of its financial performance and its cash flows for the year then ended in accordance with the accounting standards specified under Section 133 of the Companies Act2013 (the Act) read with Rule 7 of the Companies(Accounts) Rules 2014 and accounting principles generally accepted in India.
Basis for qualified opinion
In our opinion and to the best of our information and according to the explanations given to us the company has not complied with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act 1952 and Employee's State Insurance Act 1948 by not creating liability in respect of employers contribution towards Employee Provident Fund and Employee State Insurance and discharging thereof thus leading to overstatement of profit and understatement of liability. Therefore the financial statements of the year ended 31st March 2019 do not give a true and fair view of the financial position of the company.
In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matter described in the basis for Qualified Opinion paragraph the financial statements give the information required by the Companies Act 2013 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in case of the Balance Sheet of the state of affairs of the Company as at March 312019.
(b) in case of the Statement of Profit and Loss of the loss for the year ended on that date; and
(c) in case of the Cash Flow Statement of the cash flows for the year ended on that date.
The income tax portal of the company displays a tax deducted at source defaults which is aggregating to INR 346 lakhs. However company's management is of the opinion that these defaults can be removed by rectifying TDS returns. Therefore the company is still in the process of revising subject TDS returns. Our opinion is not qualified in respect of these matters.
Emphasis of matters
Without qualifying our report we draw attention to fact that the accumulated losses of the company are more than its net worth. However financial statements are prepared on going concern basis as the management anticipates profit from operation in future years and will result in positive net worth.
Our opinion is not modified in respect of these matters.
Key audit matters
Key audit matters are those matters that in our professional judgement were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.
|The key audit matters||How the matter was addressed in our audit|
|Significant estimates and judgements involved|
|Recognition of provisions in respect of ongoing litigations involved management's assessment of existence of probable loss.||Our audit procedure included the following substantive procedures:|
|We had identified recognition of provisions as a key audit matter as there was an inherent lack of precision in its measurement mainly on account of key change in management. The perceptibility of the pos-||We evaluated and obtained the understanding of the matters in respect of which accounting estimates were made.|
|sible outcomes of the litigations by the new management is complex.||We evaluated based on our audit evidence whether the methods applied for making accounting estimates are reasonable and appropriate in the circumstances to recognise provisions.|
|Reviewed the prior period accounting estimates.|
|Obtained an understanding of the assumptions underlying the accounting estimates.|
|Evaluation of appropriateness of management's assessment of classification of future obligations between contingent liabilities and provisions.|
Responsibilities of Management and Those charged with Governance for the Financial Statements
The Company's Board of Director's is responsible for the matters in Section 134(5) of the Act with respect to the preparation of the Financial Statements that give a true and fair view of the financial position financial performance and cash flows of the Company in accordance with the accounting Standards specified under Section 133 of the Act and accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the Financial Statements that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the Financial Statements Board of Directors is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless Board of Directors either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reporting process.
Auditor's responsibility for the audit of financial statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Financial Statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Financial Statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order2016 (the Order) issued by the Central Government of India in term of sub-section (11) of section 143 of the Companies Act 2013 we give in the Annexure A a statement on the matters specified in the paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by section 143(3) of the Act we report to the extent applicable that:
a) We have sought and obtained all the information and explanations which to the best of 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 the Company so far as appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including other comprehensive income Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.
e) On the basis of written representations received from the directors as on 31 March 2019 taken on record by the Board of Directors none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164(2) of the Act.
f) With respect to the internal financial controls with reference to Financial Statements of the company and the operating effectiveness of such controlsrefer to our separate report in Annexure B. Our report expresses an unmodified opinion on the effectiveness of the Company's internal financial controls with reference to financial statements.
g) With respect to the other matters included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014as amended in our opinion and 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 financial position in its Ind AS financial Statements in accordance with generally accepted accounting practices(Refer Note No-19 (4) (iii)).
ii. The Company doesn't have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.
iii. There were no amounts which required to be transferred to the Investor Education and Protection Fund by the Company.
|For HEMANT ARORA & Co.LLP|
|FIRM REG. NO. 002141C|
|DATE : 29.05.2019||PARTNER|
(Referred to in paragraph 2 under `Report on Other Legal and Regulatory Requirements' section of our report to the Members of Indo Gulf Industries Limited of even date).
i. In respect of its fixed assets:
(a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.
(b) As explained to us all the fixed assets have been physically verified by the management in a phased periodical manner which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.
(c) The lease deeds of leasehold land at village Prithivipura Jhansi Kanpur is being executed in the name of the company. However the title deeds of freehold land have not been produced before us for verification.
ii. According to the information and explanations given to us and based on the audit procedures conducted by us the Company's inventory was physically verified during the year and as on 31.03.2019.
iii. According to the information and explanations given to us and based on the audit procedures conducted by us the Company has not granted any loan secured or unsecured to the companies firms Limited Liability partnership firms or other parties covered under Section 189 of the Companies Act 2013 during the year. Therefore the provisions of clause (iii) of the Order is not applicable to the Company.
iv. According to the information and explanations given to us and based on the audit procedures conducted by us the Company has not granted any loan made any investments given any guarantees and security where provisions of Section 185 and Section 186 are to be complied with. Therefore the provisions of clause (iv) of the Order are not applicable to the Company.
v. According to the information and explanations given to us andon the basis of our examination of the books of accounts the Company has not accepted any deposit from the public covered under Section 73 to 76 or other relevant provisions of the Companies Act 2013. Therefore the provisions of Clause (v) of paragraph 3 of the Order are not applicable to the Company.
vi. According to the information and explanations given to us the company is not required to maintain cost record as prescribed by Central Government under section 148(1) of the Companies Act 2013. Therefore the provisions of Clause (vi) of paragraph 3 of the Order are not applicable to the Company.
vii. According to information and explanation given to us and on the basis of our examination of the books of accounts in respect of statutory dues:
a) Undisputed statutory dues including Provident Fund Employees State Insurance Income Tax Sales Tax Service Tax Custom Duty Excise Duty Value Added Tax Cess and other material statutory dues have not been regularly deposited with the appropriate authorities.The details of undisputed statutory dues outstanding as at 31st March 2019 for the period of more than six months is as follows:
(Amount in INR)
|S. No.||Nature of Dues||Date of becoming payable||Amount outstanding as at 31.03.2019|
|1.||Tax Deduction at Source||31/03/2018||703791/-|
b) The Company has received various notices and recovery certificates amounting to Rs.57198248/- pertaining to the demand of sales tax of Rs.53710942/- and central excise of Rs.3487306/-(Refer Note No. 19 (4) (iii) of the financial statement).The above notices mainly received before the sanction of Rehabilitation Scheme.
The company has made provision for contingencies in the books of accounts for Rs.4345144/- against the demand of sales tax of Rs.27549995/- and central excise of Rs.1417634/- considering the relief and concession of Rehabilitation Scheme sanctioned by Hon'ble BIFR on 24th June2010.
However the status of the balance demand of sales tax of Rs. 26160947/- and central excise of Rs.2069672/- is uncertain because of the following :
The notices and recovery certificates are issued prior to the date of rehabilitation Scheme sanctioned by the Hon'ble BIFR.
The reliefs and concessions (re-assessment of demand waiver of interest waiver of penalty etc.) as directed by the Rehabilitation Scheme sanctioned by the Hon'ble BIFR have not been considered.
viii. In our opinion and according to the information & explanations given to us the Company was not required to repay any loan or borrowings from financial institutions banks and Government or dues to debenture holders.
ix. In our opinion and according to the information and explanations given to us and on the basis of examination of books of accounts the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) but for unsecured term loans from related parties during the year. The company has duly applied funds for which the term loan was raised.
x. In our opinion and according to the information and explanations given to us no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
xi. In our opinion and according to the information and explanations give to us the Company has paid/provided for managerial remuneration in accordance with the provisions of Section 197.
xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of Paragraph 3 of the Order is not applicable.
xiii. In our opinion and according to the information and explanations given to us and based on our examination of the records of the Company transactions with the related parties are in compliance with sections 177 and 188 of the Companies Act 2013 where applicable and details of related party transactions have been disclosed in the Ind AS standalone financial statements as required by the Indian accounting standards.
xiv. In our opinion and according to the information and explanations give to us the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
xv. In our opinion and according to the information and explanations given to us and based on our examination of the records of the Company the Company has not entered into non-cash transactions with directors or persons connected with him and hence Section 192 of the Companies Act 2013 is not applicable to the company.
xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
|For HEMANT ARORA & Co.LLP|
|FIRM REG. NO. 002141C|
|DATE : 29.05.2019||PARTNER|
To the Independent Auditor's Report of even date on the Financial Statements of Indo Gulf Industries Limited being report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of Indo Gulf Industries Limited (the Company) as of March 31st 2019 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internal financial controls based the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design implementation and maintenance of internal financial controls with reference to Financial Statements that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment including the assessment of the risks of 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 to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company'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 financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to explanations given to us the Company has in all material respects an internal financial controls with reference to financial statements and such internal financial controls over financial reporting were operating effectively as at March 31 2018 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
|For HEMANT ARORA & Co.LLP|
|FIRM REG. NO. 002141C|
|DATE : 29.05.2019||PARTNER|