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Labh Construction and Industries Ltd.

BSE: 530339 Sector: Infrastructure
NSE: LABHCONST ISIN Code: INE962A01013
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Labh Construction and Industries Ltd. (LABHCONST) - Auditors Report

Company auditors report

To the Members of

LABH CONSTRUCTION AND INDUSTRIES LIMITED

Ahmedabad

1. REPORT ON THE FINANCIAL STATEMENT

We have audited the accompanying financial statement of LABH CONSTRUCTION ANDINDUSTRIES LIMITED ("the company") which comprise the Balance Sheet as at31st March 2017 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.

2. MANAGEMENT RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company’s Board of Directors is responsible for the matters in Section 134(5)of the Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

3. AUDITOR’S RESPONSIBILITY

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

We have taken into account the provisions of the Act the accounting and accountingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We have conducted our audit in accordance with the Standards on Auditing specifiedunder Section 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 theauditor’s judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCompany’s preparation of the financial statements that give true and fair view inorder to design audit procedures that are appropriate in the circumstances. An auditincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by Company’s Directors as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.

4. OPINION

We invite attention to the following: a. Note 15 regarding non-provision ofRs.6.50 lacs (PY Rs. 6.50 lacs) out of Cash balance looted in the year 1995-96 and notrecovered so far due to which profit for the year and other non- current assets both areoverstated by the amount An amount of Rs.6.50 lacs was looted on 14th August 1995. Acomplaint was lodged on 14th August 1995 vide FIR No.I-246/95 with Vejalpur PoliceStation Ahmedabad for the same. The amount has since been recovered by Police and handedover to Income Tax authorities through court of law but not yet handed over to theassessee. The assessee has filed case in ITAI and succeeded against the department but thedepartment has not given any effect for the same and hence no effect has been provided inbooks. Further Rs. 61.80 lacs has been written off against one of the trade receivable asit will not be realizable in future as per the opinion of the management. The account hasbeen matched with the trade receivable as informed by the management.

b. Note 19 regarding other income company has received previous dues fromincome tax department along with interest. The dues have been set off against balancescarried forward and interest of refund has been recognized as other income in statement ofprofit and loss. There is not business activity in the company during full previous year2016-17.

c. Note 25 regarding non provision of certain liabilities in the accounts. Inview of the non-availability of the relevant information consequential impact thereof onthe state of affairs of the company remains to be ascertained.

d. Note 25 regarding financial as well as other impact on the state ofaffairs of the company due to delayed payment of statutory dues and those to Securedlenders. In view of the non- availability of the relevant information consequentialimpact thereof on the state of affairs of the company remains to be ascertained.Subject to above

In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

a) In the case of the Balance Sheet of the state of affairs of the company as at March312017;

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

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

5. EMPHASIS OF MATTERS

We draw specific attention to the following:

a) Proceedings under Securitization and Reconstruction of Financial Assets andEnforcement of Security Interest Act 2002 Being initiated against the company by itssecured creditors the liability under which may exceed the amount provided by thecompany.

b) Various Recovery and other suits filed by secured and unsecured creditors pendingagainst the company in various courts the liability under which may exceed the amountprovided by the company on that account.

c) Violation of provisions of section 73 of Companies Act 2013 in respect of PublicDeposits accepted by the Company

d) Violation regarding made to associate companies and other entities as per CompaniesAct 2013.

Our opinion is not modified in respect of these matters.

Report on other Legal and Regulatory Requirements

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 appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss and Cash Flow Statement dealtwith by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms the Companies Act 2013.

f) With respect to the other matters included in the Auditor’s Report and to ourbest of our information and according to the explanations given to us :

I. The Company has partially disclosed the impact of pending litigations on itsfinancial position in its financial statements – Refer Note 5 14 & 25 to thefinancial statements ;

II. The Company has not made provision as required under the applicable law oraccounting standards for material foreseeable losses if any – Refer Note 5 14& 25 to the financial statements;

For Darshil Shah & Associates

Chartered Accountants

FRN No. 133590W

Partner

Darshil Shah

Place : Ahmedabad

Date : 30/05/2017

Reports under The Companies (Auditor's Report) Order 2016 (CARO 2016) for the yearended on 31st March 2017

To

The Members

LABH CONSTRUCTION & INDUSTRIES LIMITED

(1) In Respect of Fixed Assets

(a) Secured loans as per note 5 have been secured by way of equitable mortgage ofimmovable properties belonging to the principals of the company as per note 12. GSFC hasalready sold the said property for recovery of loan hence entire fixed assets have beenwritten off in current financial year. No depreciation has been provided as per company'sact 2013 as there is no business in the financial year. (See Note No. 12)

(b) Secured loans as per note 5 have been secured by way of equitable mortgage ofimmovable properties belonging to the principals of the company as per note 12. GSFC hasalready sold the said property for recovery of loan hence entire fixed assets have beenwritten off in current financial year. No depreciation has been provided as per company'sact 2013 as there is no business in the financial year. (See Note No. 12)

(c) N.A. as there are no immovable properties held in the name of the company.

(2) In Respect of Inventories N.A. as there is no inventory.

(3) Compliance under section 189 of The Companies Act 2013

The company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained u/s 189 of the companies Act-2013 incurrent F.Y..

(a) On the basis of records examined by us and information provided by the managementwe are of the opinion that the company has not given guarantees for loans taken by otherfrom banks or financial institutions.

(b) The loans granted are re-payable on demand. As informed the company has notdemanded repayment of any such loan during the year thus there has been no default onthe part of the parties to whom the money has been lent. The payment of interest has beenregular. (See Note No. 14 )

(c) There is no overdue amount of loans granted to companies firms or other partieslisted in the register maintained under section 189 of the companies Act 2013. (SeeNote No. 12)

(4) Compliance under section 185 and 186 of The Companies Act 2013

While doing transaction for loans investments guarantees and security provisions ofsection 185 and 186 of the Companies Act 2013 have been complied with.

(5) Compliance under section 73 to 76 of The Companies Act 2013 and Rulesframed there under while accepting Deposits

According to the information and explanation given to us the company has not accepteddeposits in FY 2016-17 except accepted years before from public in previous years henceprovision of section 73 to 76 and / or any other rules framed there under are applicable.The company has contravened the provisions and no orders have been passed by Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any court or any othertribunal.

(6) Maintenance of cost records

The Company is not required to maintain cost records pursuant to the Rules made by theCentral Government for the maintenance of cost records under Section 148 (1) of the Act.

(7) Deposit of Statutory Dues

(a) According to the records of the company undisputed statutory dues includingprovident fund investor education and protection fund employees state insurance incometax sales tax wealth tax service tax customs duty excise duty cess have not beenregularly deposited with the appropriate authorities. Final dues to or from areunascertainable as on balance sheet date.

(b) According to the information and explanations given to us disputed dues in respectof provident fund investor education and protection fund employees state insuranceincome tax sales tax wealth tax service tax customs duty excise duty cess and otherstatutory dues which were outstanding at the yearend for a period of more than six monthsfrom the date they became payable are not ascertainable by the management as the disputesare quit old and cases are pending with various revenue authorities. Final dues to or fromare unascertainable as on balance sheet date.

(8) Repayment of Loans and Borrowings

Based on our audit procedures and as per the information and explanations given by themanagement we are of the opinion that the company has defaulted in repayment of dues to afinancial institution & banks and the lenders have already initiated actions againstthe company as disclosed in notes to audited balance sheet. Company doesn't have anyoutstanding towards debenture holders. (See Note No. 5)

(9) Utilization of Money Raised by Public Offers and Term Loan For which theyRaised

The company has not raised any money by way of initial public offer or further publicoffer {including debt instruments) and term loans. Hence this clause is not applicable.

(10) Reporting of Fraud During the Year

Based on our audit procedures and the information and explanation made available to usno such fraud noticed or reported during the year.

(11) Managerial Remuneration

No managerial remuneration has been provided during the financial year hence thisclause is not applicable.

(12) Compliance by Nidhi Company Regarding Net Owned Fund to Deposits RatioAs per information and records available with us The company is not Nidhi Company.

(13) Related party compliance with Section 177 and 188 of companies Act –2013

Yes. All transactions with the related parties are in compliance with section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in theFinancial Statements etc. as required by the applicable accounting standards. (SeeNote No. 31)

(14) Compliance under section 42 of Companies Act - 2013 regarding Privateplacement of Shares or Debentures

No Preferential allotment or private placement of shares etc have been issued hencethis clause is not applicable.

(15) Compliance under section 192 of Companies Act – 2013

The company has not entered into any non-cash transactions with directors or personsconnected with him.

(16) Requirement of Registration under 45-IA of Reserve Bank of India Act 1934

The company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act.

For Darshil Shah & Associates

Chartered Accountants

FRN No. 133590W

Partner

Darshil Shah

Place : Ahmedabad

Date : 30/05/2017

ANNEXURE TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONEFINANCIAL STATEMENTS OF LABH CONSTRUCTION & INDUSTRIES LIMITED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ('theCompany') as of 31-Mar-2017 in conjunction with our audit of the standalone financialstatements 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 internalfinancial controls. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany’s policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors’ 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 on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor’s judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence I/we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company’s internal financial controls system over financialreporting.

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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

Opinion

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 31-Mar-2017.

For Darshil Shah & Associates

Chartered Accountants

FRN No. 133590W

Partner

Darshil Shah

Place : Ahmedabad

Date : 30/05/2017