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JBF Industries Ltd.

BSE: 514034 Sector: Industrials
NSE: JBFIND ISIN Code: INE187A01017
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OPEN 15.75
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VOLUME 861
52-Week high 29.40
52-Week low 6.43
P/E
Mkt Cap.(Rs cr) 130
Buy Price 63.00
Buy Qty 72676.00
Sell Price 60.00
Sell Qty 400.00

JBF Industries Ltd. (JBFIND) - Auditors Report

Company auditors report

To The Members of JBF Industries Limited

Report on the Audit of the Standalone Financial Statements

Qualified opinion

We have audited the accompanying standalone financial statements of JBF IndustriesLimited ("the Company") which comprise the Balance Sheet as at 31st March 2019the statement of Profit and Loss (including Other Comprehensive Income) the statement ofchanges in equity and the statement of cash flows for the year then ended and notes tothe standalone financial statements including a summary of significant accountingpolicies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us excepts for the effects of the matters described in the Basis for QualifiedOpinion section of our report the aforesaid standalone financial statements give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2019 and its loss including othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

Basis for Qualified opinion

(i) As mentioned in the Note 33.2 to the standalone financial statements Company hasprovided interest @ 9% p.a. on borrowings aggregating to X 2431.06 Crore for the periodfrom 1st April 2018 to 31st March 2019 as against the documented rates resulting intolower provision of finance cost for the year ended 31st March 2019 by X103.16 Crorewhich is not in compliance with IND AS -23 "Borrowings Costs" read with INDAS-109 on "Financial Instruments".

Had the interest been recognized at the documented rate finance cost net loss aftertax total other comprehensive income and EPS for the year ended would have been X 354.77Crore X (861.25) Crore X (861.40) Crore and X (105.19) Crore respectively as against therepor ted figure of X 251.61Crore Rs (758.09) Crore X (758.24) Crore and X (92.59) Crorerespectively in the above standalone financial statements. Further current financialliabilities-others and other equity as at 31st March 2019 would have been X 1088.09Crore and X 518.66 Crore respectively as against reported figure of X 984.93 Crore and Rs621.82 Crore respectively in the above standalone financial statements.

(ii) As mentioned in the Note 45 to the standalone financial statements Company hasexposure in subsidiaries by way of investments loans and other receivables aggregating toX 1508.24 Crore (as at 31st March 2018 X 1458.04 Crore) in respect of which theCompany could not carry out impairment assessments due to the reasons mentioned therein.We are unable to obtain sufficient appropriate audit evidence about the recoverable amountof the Company's exposure. Consequently we are unable to determine whether any adjustmentsto these amounts are necessary and consequential impacts on the standalone financialstatements of the Company.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Companies Act 2013("the Act"). Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the standalone financial statements.

Emphasis of matters

We draw your attention to the:-

(i) Note 37.2 to the standalone financial statements regarding invocation of corporateguarantee given by the Company to the lenders of JBF Petrochemical Limited("JPL"). The Company has denied above invocation and is of the view that aboveinvocation is not legally tenable for the reasons explained therein and hence no provisionagainst the claims under the invoked corporate guarantee is considered necessary.

(ii) Note 32.2 to the standalone financial statements regarding managerialremuneration of X 0.60 Crore paid to whole time directors is subject to approvals ofshareholders.

(iii) Note 50 to the standalone financial statements regarding non- preparation ofconsolidated financial statements due to the reasons mentioned therein."

(iv) Note 20.9 to the standalone financial statements regarding non- receipt ofbalance confirmation as at 31st March 2019 from one of the financial institutions withrespect to borrowings of X 50.68 Crore.

our opinion is not modified in respect of these matters. material Uncertainty relatedto Going concern

Note 46 to the standalone financial statements regarding preparation of financialstatements on going concern basis not withstanding the fact that the Company has incurredthe losses defaulted in repayment of principle and interest to its lenders lenders haveclassified the Company's borrowings as NPA some of the lenders have even called back theloans one of the secured lenders has applied before NCLT under Insolvency and BankruptcyCode 2016. These conditions along with other matters as set forth in above note indicatethe existence of material uncertainty that may cast significant doubt about Company'sability to continue as a going concern. The appropriateness of assumption of going concernis critically dependent upon the Company's ability to raise finance and generate cashflows in future to meet it's obligations. Our opinion is not modified in respect of thismatter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current year.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. In addition to the matter described in the Basis forQualified Opinion Emphasis of matters & Material Uncertainty Related to Going Concernsection we have determined the matters described below to be key audit matters to becommunicated in our report.

(i) Carrying Value of Trade Receivables

Key audit matters How our audit addressed the key audit matter
As mentioned in note no. 11 to the standalone financial statements total trade receivable were aggregating to X 816.01 Crore as on 31st March 2019 out of above X 497.26 Crore were provided.

The collectability of the Company's trade receivables and the valuation of allowance for impairment of trade receivables is required a significant management judgment. Management considers Specific factors including the age of the balance location of customers existence of disputes recent historical payment patterns and any other available information concerning the credit worthiness of counterparties. Management uses this information to determine whether a provision for impairment is required either for a specific transaction or for a customer's balance overall.

Accordingly it has been determined as a key audit matter.

Our audit procedures included the following:

• We selected a sample of the larger trade receivable balances where a provision for impairment of trade receivables was recognized and understood the rationale behind management's judgment.

• Assessing the ageing of trade receivables the customer's historical payment patterns and whether any post year-end payments had been received up to the date of completing our audit procedures.

• Reviewing the available evidence including correspondences if any legal notices related to disputes where applicable & credit status of significant counterparties as available.

• Assessing the Company's provisioning policy and evaluating with reference to applicable accounting standards.

• Considered the completeness and accuracy of the disclosures.

(ii) impairment of Property Plant & Equipment

Key Audit Matters How our audit addressed the key audit matter
As at 31st March 2019 value of property plant and equipment is X 1340.41 Crore. Management's assessment of the valuation of property plant and equipment was significant to our audit because this process is complex and requires significant management judgment. Furthermore there is an increased risk of impairment due to the recently deteriorated market outlook and losses incurred by the Company. Accordingly the management identified impairment indications in one of its plant and management's assessment results an impairment loss of Rs 5.00 Crore.

Determining the recoverable amounts of the assets requires a number of significant judgments and estimates especially in respect of the amounts of future cash flows and the applied discount rate.

Accordingly it has been determined as a key audit matter.

We carried out procedures to understand management's process for identifying impairment triggers and considered management's assessment of impairment in the above mentioned areas. Our audit procedures included the following:

• Evaluating the appropriateness of the Company's judgment regarding identification of assets which may be impaired.

• Assessing the appropriateness of the Company's valuation methodology applied in determining the recoverable amount including key assumptions used

• Testing the arithmetical accuracy of the recoverable amount calculated by the management.

• Considered the completeness and accuracy of the disclosures which are included in note 5 of the standalone financial statements.

(iii) inventories

Key Audit Matters How our audit addressed the key audit matter
As of 31st March 2019 inventories appear on the standalone financial statements for an amount of X 305.16 Crore which constitutes 17.28% of the total current assets. As indicated in Note no. 10 to the standalone financial statements inventories are valued at the lower of cost and net realizable value.

The Company may recognize an inventory allowance if inventory items are damaged if the selling price has declined or if the estimated costs to completion or to be incurred to make the sale have increased.

We focused on this matter because of the:

• Significance of the inventory balance.

• Complexity involved in determining inventory quantities on hand due to the number and diversity of inventory storage locations.

• Valuation procedure including of obsolete inventories.

Our audit procedures included the following:

• Reviewing the Company's process and procedures for physical verification of inventories at year end.

• Assessing the methods used to value inventories and ensuring ourselves of the consistency of accounting methods.

• Reviewing of the reported acquisition cost on a sample basis.

• Analysing of the Company's assessment of net realizable value as well as reviewing the assumptions and calculations for stock obsolescence.

• Assessing the appropriateness of disclosures provided in the standalone financial statements.

(iv) Accuracy of recognition measurement presentation and disclosures of revenues andother related balances in view of adoption of ind AS 115 "Revenue from Contracts withCustomers" (new revenue accounting)

Key Audit Matters How our audit addressed the key audit matter
Revenue is recognized net of discounts & rebates earned by the customers on the Company's sales. The discounts & rebates recognized based on sales made during the year.

Revenue is recognized when control of the underlying products have been transferred along with satisfaction of performance obligation.

The application of the new revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations and determination of transaction price of the identified performance obligations.

Additionally new revenue accounting standard contains disclosures which involve collection of information in respect of disaggregated revenue.

Accordingly it has been determined as a key audit matter.

We assessed the Company's processes and controls for recognizing revenue as

part of our audit. Our audit procedures included the following :

• Assessing the environment of the IT systems related to invoicing and measurement as well as other relevant systems supporting the accounting of revenue.

• Examining customer invoices and receipts of payment on a test basis.

With regard to the expected impact of the initial application of Ind AS 115 from the financial year 2018 onward our audit approach included among other items:

• Assessing the Company's process to identify the impact of adoption of the new revenue accounting standards.

• Verifying the completeness of disclosure in the financial statements as per Ind AS 115.

Other information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the management discussion & analysis and director's reportincluded in the annual report but does not include the standalone financial statements andour auditor's report thereon. The above information is expected to be made available to usafter the date of this auditor's report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

When we read the above other information if we conclude that there is materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone 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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• 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 ability ofthe Company to continue as a going concern. If we conclude that a material uncertaintyexists we are required to draw attention in our auditor's report to the relateddisclosures in the standalone financial statements or if such disclosures are inadequateto modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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.

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 of

the Companies Act 2013 we give in the "Annexure B" a statement on thematters specified 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. Except for the effects of matters described in the Basis for Qualified Opinionparagraph above we have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purposes of our audit.

b. Except for the effects of matters described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the statement of change in equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d. Except for the effects of matters described in the Basis for Qualified Opinionparagraph above in our opinion the aforesaid standalone financial statements comply withthe Indian Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounting Standards) Rules 2015 as amended.

e. The matters described in paragraph "Basis for Qualified Opinion" and"Material Uncertainty Related to Going Concern" may have an adverse effect onthe functioning of the Company.

f. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

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 A" to this report.

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 opinionand to the best of our information and according to the explanations given to us theremuneration paid or provided by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act except remuneration paid to twoof the whole time directors amounting to Rs 0.60 Crore which is subject to theshareholder's approval.

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 as at 31st March 2019 onits financial position in its standalone financial statements as referred in Note 37 tothe standalone financial statements.

ii) Except for the effects of matters described in the Basis for Qualified Opinionparagraph above the Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts.

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 31stMarch 2019.

For pathak H.D. & associates

Chartered Accountants Firm Reg. No. 107783W

Gopal chaturvedi

Place: Mumbai Partner

Date: 30th May 2019 Membership No.: 090903

ANNEXURE - "A" TO THE iNDEPENDENT AUDiTORS' REPORT

(Referred to in paragraph 2 (g) under 'Report on Other Legal and RegulatoryRequirements' of our report of even date on the standalone financial statements of JBFIndustries Limited for the year ended 31st March 2019)

Report on the Internal Financial Controls Over Financial Reporting 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 JBFIndustries Limited ("the Company") as of 31st March 2019 in conjunction withour audit of the standalone financial statements of the Company for the year ended on thatdate.

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 Reporting("the Guidance Note) issued by the Institute of Chartered Accountants of India. 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.

Auditor's Responsibility

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 and the Standards on Auditing prescribed under Section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols. 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 judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system over 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 that

transactions 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified in the operating effectiveness of theCompany's internal financial control over financial reporting as on 31st March 2019 TheCompany did not have an appropriate internal control system for customer settlementthrough credit note credit evaluation pricing authorization and establishing customercredit limits for some of the export transactions without any advances/ letter of creditswhich may result in the Company recognizing revenue without establishing reasonablecertainty of ultimate collection.

The Company has exposures of Rs 1508.24 Crore as at 31st March 2019 in itssubsidiaries by way of investment in equity shares loans including interest thereon andother receivables. The Company does not have any adequate MIS system from them and in theabsence thereof the Company could not carried out impairment testing as referred inparagraph (ii) of Basis for qualified opinion.

A material weakness is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the Company's annual financial statements will not beprevented or detected on a timely basis.

In our opinion except for the effects/possible effects of above material weaknessdescribed above on the achievement of the objectives of the control criteria the Companyhas in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at 31st March 2019 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of standalone financialstatements of the Company for the year ended 31st March 2019 and these material weaknessdo not affect our opinion on the standalone financial statements of the Company.

For Pathak H.D. & Associates

Chartered Accountants Firm Reg. No. 107783W Gopal Chaturvedi

Place: Mumbai Partner

Dated: 30th May 2019 Membership No.:-090903

ANNEXURE - "B" TO INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date on the standalone financialstatements to the members of JBF Industries Limited for the year ended 31st March 2019)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.

b. As explained to us the fixed assets have been physically verified by the managementin accordance with the programme of verification which in our opinion is reasonableconsidering the size of the Company and nature of its assets. No material discrepancieswere noticed on such physical verification as compared with the available records.

c. According to the information and explanations given to us and based on theexamination of the registered sale deeds and other relevant records

evidencing title provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name of theCompany as at the balance sheet date except the following:-

Particulars of land Cost of the Property as at 31st Net Block as at 31st
and building March 2019 (Rs In Crore) March 2019 (Rs In Crore)
Building in Mumbai 0.09 0.07
( No. of property1)
Land at Silvassa 0.54 0.54
( No. of properties 7)

In respect of 9 immovable properties having the aggregate cost of Rs 39.56 Crore theoriginal documents have been deposited with the lenders we have been produced photocopyof documents for those immovable properties and based on such documents the title deedsare held in the name of the Company.

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as fixed asset in the financial statements the lease agreements are in thename of the Company.

ii. As explained to us inventories have been physically verified during the year bythe management except material in transit and in our opinion the frequency of verificationis reasonable. Discrepancies noticed on physical verification of the inventories betweenthe physical inventories and book records were not material having regard to the size ofthe operations of the Company and the same have been properly dealt with.

iii. In respect of loans secured or unsecured granted by the Company to Companiesfirms Limited liability partnerships or other parties covered in the register maintainedunder section 189 of the Act. According to the information and explanation given to us:

a. The Company has granted unsecured loans to two such Companies and in our opinionthe rate of interest as applicable and other terms and conditions on which the loans hadbeen granted were not prima facie prejudicial to the interest of the Company.

b. The schedule of repayment of principal and payment of interest were stipulated atthe time of granting of loan. The Company discontinued to recognize the interest on loanto one of the subsidiary companies w. e. f. 1st April 2018. The repayments of principalamounts and payment of interest were overdue as on the balance sheet date.

c. Principal amount of X 772.30 Crore and interest thereon of X 110.68 Crore areoverdue from one of the subsidiary companies for more than 90 days. As per the informationand explanation given to us no steps have been taken by the Company to recover ofprincipal and interest (refer note 45 to the standalone financial statements).

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of sections 185 & 186 of the Act asapplicable in respect of grant of loansexcept discontinuance of interest recognition onthe loans granted to one of the subsidiary companies. During the year Company has not madeany investmentsnot provided any security or given any guarantee.

v. According to the information and explanations given to us the Company has notaccepted any deposit from the public. Therefore the provisions of clause (v) of paragraph3 of the Order are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant toCompanies ( Cost Records & Audit ) Rules 2014 prescribed by Central Government undersection 148 (1) (d) of the Act as applicable and are of the opinion that prima-facie theprescribed accounts and records have been made and maintained. We have not however made adetailed examination of the records with a view to determine whether they are accurate andcomplete

vii. According to the information and explanations given to us in respect of statutorydues:

a. The Company has been generally regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income tax goods and services taxduty of customs cess and any other statutory dues with the appropriate authorities asapplicable during the year. According to the information and explanations given to us noundisputed amounts payable in respect of such statutory dues were outstanding as at 31stMarch 2019 for a period of more than six months from the date they became payable

b. According to the information and explanations given to us the disputed statutorydues aggregating to X 1.76 Crore that have not been deposited on account of matterspending before appropriate authorities are as under:

Name of the statute Nature of the dues In

Crore

Period to which the amount relates Forum where dispute is pending
Central Excise Act1944 Excise Duty 0.64 2005-06 Supreme Court
1.12 2005-06 Custom Excise & Service Tax Appellate Tribunal
Income Tax Act 1961 Income Tax 0.00# 2008-09 Income Tax Appellate Tribunal
0.00# 2008-09 Income Tax Appellate Tribunal
0.00# 2009-10 Income Tax Appellate Tribunal
0.00# 2009-10 Income Tax Appellate Tribunal
0.00# 2010-11 Income Tax Appellate Tribunal
0.00# 2011-12 Commissioner Of Income Tax (Appeals)
Total 1.76

(#)Net of Rs 29.99 Crore adjusted against refund.

viii. Based on our audit procedures and according to the information and explanationsgiven by the management we are of the opinion that the Company has defaulted in repaymentof dues to banks and financial institutions aggregating to X 2109.85 Crore. Lender wisedetails of such default is as under:-

(*Rs* in Crore)

Bank/Financial Institution Total

Default

Below 90 days Above 90 days
1 Andhra Bank 142.40 5.05 137.35
2 Axis Bank Ltd. 72.18 1.28 70.89
3 Bank of Baroda 245.96 10.45 235.51
4 Bank of India 306.95 15.69 291.26
5 Canara Bank 88.41 24.80 63.60
6 ICICI Bank 124.58 6.90 117.68
7 IDBI Bank 220.70 7.00 213.71
8 IFCI Limited 27.43 0.83 26.60
9 Indian Overseas Bank 90.85 3.23 87.62
10 Lakshmi Vilas Bank 28.25 6.21 22.04
11 South Indian Bank 23.56 11.16 12.40
12 Standard Chartered Bank 119.00 6.01 112.99
13 State Bank of India 379.75 0.67 379.08
14 Syndicate Bank 37.89 6.22 31.67
15 Tamilnad Mercantile Bank Limited 16.45 2.61 13.84
16 ECL Finance Limited 45.98 12.83 33.15
17 Union Bank of India 139.54 2.98 136.56
total 2109.85 123.90 1985.95

Further lenders of the Company have classified all the credit facilities given to theCompany as at 31stMarch 2019 as Non-Performing Asset (NPA) in their books of account.

ix. According to the information and explanations given to us the Company did notraise any money by way of initial public offer or further public offer (including debtinstruments) and no term loan was raised and therefore the provisions of clause (ix) ofparagraph 3 of the Order are not applicable to the Company.

x. Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and on the basis of information and explanationsgiven by the management no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.

xi. In our opinion and according to the information and explanations give to us andbased on our examination of the records the Company has paid/ provided managerialremuneration (net of recovery) in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V to the Act except remuneration paid to twoof the whole time directors amounting to X 0.60 Crore which is subject to theshareholder's approval.

xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Therefore the provisions of clause (xii) paragraph 3 ofthe Order are not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company Company's transactions with therelated parties are in compliance with sections 177 and 188 of the Act as applicable anddetails of such transactions have been disclosed in the standalone financial statements asrequired by the applicable Indian Accounting Standards.

xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentof shares during the year under audit.

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. Therefore the provisions ofclause (xv) paragraph 3 of the Order are not applicable to the Company.

xvi. In our opinion and according to information and explanations provided to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.

For Pathak H.D. & Associates

Chartered Accountants Firm Reg. No. 107783W

Gopal Chaturvedi

Place: Mumbai Partner

Dated: 30th May 2019