To the Members of -
Lakhotia Polyesters (India) Limited
Report on the Financial Statements
1 We have audited the accompanying financial statements of Lakhotia Polyesters (India)Limited ("the Company") which comprise the Balance Sheet as at March 31 2017the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
2 The management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 (the act') with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with rule 7 of Companies (Accounts) Rules2014. This responsibility includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat are operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
3 Our responsibility is to express an opinion on these financial statements based onour audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the Rules made there under. We conducted our audit inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
4 An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's management and Board of Directors aswell as evaluating the overall presentation of the financial statements.
5 We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
6. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2017 its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
7 As required by the Companies (Auditor's Report) Order 2015 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section143 ofthe Act we give in the Annexure a statement on the matters Specified in paragraphs 3 and4 of the Order.
8 As required by section 143(3) of the Act we further report that:
a. we have sought and obtained all the information and explanations which to thebest of 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 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 applicableAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e. on the basis of written representations received from the directors as on March31 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2017 from being appointed as a director in terms of Section164(2) of the Act;
f. In our opinion and to the best of our information and according to theexplanations given to us we report as under with respect to other matters to be includedin the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014:
(i) The Company has following pending litigations which would impact its financialposition.
The company promoters directors and certain group promoted entities are a party tolitigation with the customs departments for import of certain materials based upon alleged"misleading information". The matter is pending in Appeal before the CentralExcise and Customs Appellate Tribunal Mumbai and before the High Court Mumbai. The totaldemand in the matter raised by the adjudicating authorities is to the tune of ' 220.91Lakhs against company and ' 42.00 Lakhs against Shri M.S. Lakhotia the Managing Directorof the company. The amounts as stated are ex interest thereon.
(ii) The Company did not have any long-term contracts including derivativecontracts; as such the question of commenting on any material foreseeable losses thereondoes not arise.
(iii) There has not been an occasion in case of the Company during the year underreport to transfer any sums to the Investor Education and Protection Fund. The question ofdelay in transferring such sums does not arise.
For SABADRA & SABADRA
Firm Registration No 108921W
ANANT N SABADRA FCA
Membership No. 033683
ANNEXURE TO AUDITOR'S REPORT
Annexure referred to in paragraph 7 Our Report of even date to the members of LakhotiaPolyesters
India Limited on the accounts of the company for the year ended 31st March 2017.
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that -
(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) As explained to us fixed assets have been physically verified by the management atregular intervals; as informed to us no material discrepancies were noticed on suchverification;
(c) The title deeds of the immovable properties are held in the name of the company.
(ii) The inventories at all business places have been physically verified by themanagement from time to time. In our opinion the frequency of verification is reasonable.As explained to us there were no material discrepancies noticed on physical verificationof inventories as compared to the books of accounts.
(iii) (a) The company has granted loans to the other parties covered in the registermaintained under section 189 of the Companies Act 2013. Based upon the managementrepresentations as made to us we report that these advances are towards businesstransactions and in the normal course of business activity of the company.
(b) These loans are repayable on demand and hence no schedule of repayment isprepared. Interest has been charged on these loans regularly.
(c) The loan amounts are not overdue.
(iv) The company has complied with the provisions of section 185 and 186 of the Act.
(v) The Company has accepted deposits from its members and has complied with theprovisions of the Companies Act 2013.
(vi) As informed to us the Central Government has not prescribed maintenance of costrecords under sub-section (1) of Section 148 of the Act.
(vii) (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is not regular in depositing theundisputed statutory dues including Provident Fund Employees' State Insurance Income-tax(TDS) VAT Service Tax Profession Tax as applicable with the appropriate authoritiesin India. However no amount is due for more than six months as on Balance Sheet date;
(b) According to the information and explanations given to us and based on the recordsof the company examined by us there are following disputed unpaid amounts -
|Particulars ||Amount ' in Lacs ||Forum where dispute is pending |
|Customs Duty ||220.91 ||CESTAT Mumbai |
|M VAT ||8.80 ||Joint Commissioner of Sales Tax (Appeals) Nashik |
(viii) According to the records of the company examined by us and as per theinformation and explanations given to us the company has not defaulted in repayment ofdues to the banks. No debentures have been issued by the company and hence compliancewith the said clause is not applicable.
(ix) In our opinion and according to the information and explanations given to us thecompany has neither raised any term loan nor collected money by way of initial or furtherpublic offer during the financial year.
(x) During the course of our examination of the books and records of the companycarried in accordance with the auditing standards generally accepted in India we haveneither come across any instance of fraud on or by the Company noticed or reported duringthe course of our audit nor have we been informed of any such instance by the Management.
(xi) The company has paid managerial remuneration in accordance with the provisions ofsection 197 of the Act.
(xii) The company is not a nidhi company.
(xiii) All transactions with the related parties are in compliance with sections 177and 178 of the Act and the details have been disclosed in the Financial Statements asrequired by the applicable Accounting Standards.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
(xv) The company has not entered into non - cash transactions with directors or personsrelated to them in the nature prescribed under section 192 of the Act.
(xvi) The company is not required to be registered under section 45 - IA of the ReserveBank of India Act 1934.
For SABADRA & SABADRA
Firm Registration No 108921W
ANANT N SABADRA FCA
Membership No. 033683