Kanco Enterprises Ltd.
|BSE: 590084||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE248D01011|
|BSE 00:00 | 04 Mar||Kanco Enterprises Ltd|
|NSE 05:30 | 01 Jan||Kanco Enterprises Ltd|
|BSE: 590084||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE248D01011|
|BSE 00:00 | 04 Mar||Kanco Enterprises Ltd|
|NSE 05:30 | 01 Jan||Kanco Enterprises Ltd|
Independent Auditors Report
To the Members of Kanco Enterprises Limited
Report on the Indian Accounting Standards (Ind AS) Financial Statements
We have audited the accompanying financial statements of Kanco Enterprises Limited("the Company") which comprise the Balance Sheet as at March 31 2018 theStatement of Profit and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.
Managements Responsibility for the Ind AS Financial Statements
The Companys 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 Ind AS financial statements to give a true and fair view of the financialposition financial performance (including other comprehensive income) cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards specified in the Companies(Indian Accounting Standards) Rules 2015 (as amended) under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.
We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act and other applicableauthoritative pronouncements issued by the Institute of Chartered Accountants of India.Those Standards and pronouncements require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the standalone IndAS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe Ind AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCompanys preparation of the Ind AS financial statements that give a true and fairview in order to design audit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Companys Directors as wellas evaluating the overall presentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Ind AS financial statements.
Basis of Qualified Opinion
We report the following observations:
(a) As referred to in note no. 19.1 (a) (ii) of financial statements during the yearended September 30 2012 the Company has not accounted for Foreign Exchange loss of Rs.117881338/- arising out of Cancellation of Forward Contract and disclosed the same ascontingent liability. On account of this accumulated loss as at March 31 2018 is lowerby the said amount. The loss above does not include interest if any.
(b) As referred in note no. 10 (iv) & (v) Company has stopped repaying Secured loanand interest thereon to State Bank of India and IDBI bank since 2011-2012. Till March 312017 Interest charged on borrowing from State Bank of India has been accounted as perlast agreed rate of 2011-2012 and actual interest debited by IDBI has been accounted. Wehave been explained that the Company has no information about any change in the rate ofinterest so impact if any of the same in statement of profit and loss and Reserve andSurplus is not determinable. The company has not booked i.nterest on the said loan of Rs.109446574 for the year 2017-18 on account of acceptance of OTS proposal of the companyby bankers.
(c) As referred in note no. 10(i) (D) balance of secured loan and Interest thereon fromState bank of India and IDBI Bank are as per books of accounts and subject to confirmationby lenders.
(d) As referred in note no. 13 the Company has not made provision for interest fordelay in payment to vendors during the previous periods as per agreed terms with vendors.Also trade Payables are subject to confirmations. Consequently we were unable todetermine whether any adjustments to these amounts were necessary.
(e) As referred in note no. 10 (1) (F)the company has not provided interest onunsecured inter-corporate loan of Rs. 135642766 from related party and unsecured loanof Rs. 15000000/- received from non-related party. Amount of the Interest for thecurrent year on the said loan as per last agreed rate with the parties is Rs.12357927/- (PY Rs. 11117238/-)
(f) As referred in note no. 2 The company has not provided depreciation of Rs.6192397/- on building and plant & equipment in absence of active use of premises atfactory location.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid Ind AS financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2018 and its loss (including other comprehensiveincome) its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
Without qualifying our opinion we draw attention to Note 19 (14) in the financialstatements which indicates that Company net worth as at March 31 2018 has been completelyeroded on account of accumulated losses of Rs. 1115869081/-. Further due to operationaldifficulties and curtail the loss company has suspended its manufacturing operation fromSeptember 30 2015. The financial statements as at 31-03-2016 and onwards have beentherefore been prepared on non going concern basis and assets are stated at lower ofcarrying value or net realisable value.
The financial information of the Company for the year ended March 31 2017 and thetransition date opening balance sheet as at April 1 2016 included in these standalone IndAS financial statements are based on the previously issued statutory financial statementsfor the years ended March 31 2017 and March 31 2016 prepared in accordance with theCompanies (Accounting Standards) Rules 2006 (as amended) which were audited by us onwhich we expressed an qualified opinion dated May 29 2017 and May 30 2016 respectively.The adjustments to those financial statements for the differences in accounting principlesadopted by the Company on transition to the Ind AS have been audited by us.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors 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 and on the basis of such checks of thebooks and records of the Company as we considered appropriate and according to theinformation and explanations given to us 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) We have sought and except for possible effects of the matter described in theBasis for Qualified Opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purpose of our audit;
(b) Except for the possible effects of the matter described in the basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen 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 comprehensiveincome) the Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account;
(d) Except for possible effects of the matter described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid standalone Ind AS financial statementscomply 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 March 312018 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2018 from being appointed as a director in terms of Section 164 (2) ofthe Act.
(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 A".
(g) With respect to the other matters to be included in the Auditors 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 19.1 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended March 31 2018.
Referred to in Annexure referred to in paragraph 2 (f) under the heading "Reporton other legal and regulatory requirements" of our report of even date to the membersof Kanco Enterprises Limited on the financial statements as of and for the year endedMarch 31 2018 Report on the Internal Financial Controls under Clause (i) of Sub-section 3of Section 143 of the Companies Act 2013
We have audited the internal financial controls over financial reporting of KancoEnterprises Limited ("the Company") as of March 31 2018 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to companys policies the safeguarding of its assetsthe prevention 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 deemed to be prescribedunder section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects. Our audit involves performing procedures toobtain audit evidence about the adequacy of the internal financial controls system overfinancial reporting and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditorsjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Companys 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 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.
Qualified of Opinion
According to information and explanation given to us and based on our audit thefollowing material weakness have been identified as at 31 March 2018.
a) The companys internal financial controls over balance confirmation proceduresas on March 31 2018 of vendor loans and advances and unsecured and secured loan were notoperating effectively.
b) The Company has during the year not carried out physical verification of its fixedassets as defined in their internal control policy.
In our opinion except for the effects of the material weakness describe above on theachievement of the objective of the control criteria the Company has maintained in allmaterial respects an adequate internal financial controls system over financial reportingand such internal financial controls over financial reporting were operating effectivelyas at March 31 2018 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.
We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the financialstatements of the Company and this material weakness does not affect our opinion on thefinancial statements of the Company.
Annexure B to the Independent Auditors Report
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have not been physically verified by the management. In theabsence of physical verification we are not in a position to comment on thediscrepancies if any between physical and book balances and the impact thereof.
(c) Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to information and explanations givenby the management the title deeds of immovable properties are held in the name of thecompany.
ii. Physical verification of inventory has been conducted by Management at reasonableintervals. In our opinion the frequency of verification is reasonable. On the basis ofour examination of the inventory records in our opinion the Company is maintainingproper records of inventory. The discrepancies noticed on physical verification ofinventory as compared to book records were not material.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Accordingly the provisions of clause 3(iii) (a) (b) and (c) of theOrder are not applicable to the Company and hence not commented upon
iv. In our opinion and according to the information and explanations given to us thereare no loans investments guarantees and securities granted in respect of whichprovisions of section 185 and 186 of the Companies Act 2013 are applicable and hence notcommented upon.
v. The Company has not accepted any deposits from the public.
vi. Manufacturing activities of the Company are under suspension since 30th September2015. The Company has not maintained the cost records as prescribed under sub-section (1)of Section 148 of the Act.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the Company is regular in depositingundisputed statutory dues including tax deducted at source income tax Goods and Servicetax sales tax service tax duty of custom value added tax goods and cesses and otherstatutory dues as applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of income tax sales-tax service-tax duty ofcustoms duty of excise and value added tax which have not been deposited on account ofany dispute.
viii. According to the records of the Company examined by us and the information andexplanation given to us during the year the Company has no debentures and loan fromfinancial institution or government. The Company has defaulted in repayment of dues tobanks as detailed below:
ix. The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) any term loans during the year. Accordingly theprovisions of Clause 3(ix) of the Order are not applicable to the Company.
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyfraud by the company or any fraud on the company by its officers or employees has beennoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. Based on our audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that the managerial remuneration has been paid /provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.
xii. The company is not a Nidhi Company. Accordingly the provisions of Clause 3(xii)of the Order are not applicable to the Company.
xiii. All transaction with the related parties are in compliance with section 177 and188 of Companies Act 2013 and the details have been disclosed in the FinancialsStatements as required by the applicable accounting standards
xiv. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review.
xv. According to the information and explanations given to us and the records of theCompany examined by us the company has not entered into any non-cash transactions withdirectors or any person connected to him.
xvi. The company is not required to be registered under sections 45-IA of the ReserveBank of India Act 1934.