TO THE MEMBERS'OF
M/S MAGNUM VENTURES LIMITED
We have audited the accompanying financial statements of M/s MAGNUM VENTURESLIMITED("The Company")which comprise the Balance Sheet as at March 31 2017and the Statement of Profit and Loss and the Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information.
The Company's Board of Directors is responsible for the matters in section 134(5) ofthe 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.
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 auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under. We conducted our audit in accordancewith the Standards on Auditing specified under section 143(10) of the Act. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by the managementas well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the financial statements.
BASIS FOR QUALIFIED OPINION
a) The Company has received communication from M/s Alchemist Assets ReconstructionCompany Ltd. (AARC) that following Banks have assigned their dues to M/s Alchemist AssetsReconstruction Company Ltd. (AARC) as per details mentioned below:
|Name of the Bank ||Month of Assignment |
|1. Oriental Bank of Commerce ||December 2015 |
|2. Allahabad Bank ||December 2015 |
|3. Punjab National Bank ||December 2016 |
|4. Indian Overseas Bank ||March 2017 |
The provision for notional interest for the above mentioned loans of Rs. 111.56 Crorewhich was provided for in previous years is reversed during the year. And the interestfor the current year for the above mentioned loans is not booked (Refer Note No. 17 underother notes in Notes to Accounts annexed with the financial statements for the year endedMarch 31 2017). However the company has not received any communication from AARCregarding fixation of liability of the company or waiver of interest amount on theabovementioned. The consequential effect (if any) on the financial statement remainsunascertained. b) Refer Note No. 8 under other notes in Notes to Accounts annexed with thefinancial statements for the year ended March 31 2017 wherein the total outstandingDebtors for the year ended March 312017 include Rs. 2662.41 lakhs which are due for morethan six months out of which Debtors of Rs. 7.65 lakhs are under litigations. The companyhas not made any provision for debtors outstanding for more than six months. The companyhad made a provision of Rs.1796 lakhs for the year ended March 31 2016. The managementhas reversed the provision in spite Rs. 932 lakhs are still outstanding from the debtorsfor whom provision was made. c) The Company's 5 (Five) Star License for Hotel Businessissued from The Ministry of Tourism Govt. of India expired on 28th July 2015which is yet to be renewed. Any effect on the Going Concern of the hotel business of thecompany can't be ascertained at the moment. However the accounts of the company areprepared on the going concern basis. The management informed us that the company is inprocess for applying for 4 (four) star license. d) The company has received advance fromcustomers Rs.216967 against supply of goods outstanding from more than 365 days which iscovered under the definition of "deposits" as per Rule 2(c) (xii) (a) of TheCompanies (Acceptance of Deposits) Rules2014. This deposit is in contravention of themanner or the condition prescribed u/s 73 of The Companies Act 2013. However no provision/contingent liability for any penalty/ interest has been booked by the company.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the financial statements give the information required by the Actin the manner so required and give a true and fair view (subject to the matters ofemphasis mentioned below) in conformity with the accounting principlesgenerally accepted in India;
i) In the case of Balance Sheet of the state of affairs of the Company as at March 312017;
ii) In the case of the Statement of Profit and Loss for the year ended on that date;and
iii) In the case of the Cash Flow Statement of the Cash Flows for the year ended onthat date.
EMPHASIS OF MATTERS
We draw attention to the following observations:
a) The number of non-executive director is not in accordance with the minimumrequirement as per Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and the number of independent directors is also less than the minimumrequirement as per section 149(4) of the Companies Act 2013. However no provision for anypenalty/ interest has been booked by the company.
b) Internal audit of the company was not conducted for 4th quarter of FY2016-17. As per the information and explanation provided by the management the InternalAuditor of the Company resigned w.e.f. January 01 2017.
c) Balances of Debtors & Creditors are subject to confirmation and reconciliationconsequential effect (if any) on the financial statement remains unascertained.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS:
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")as required by Companies Act2013 and on the basis of such checks of the books and recordsof the Company as we considered appropriate and according to the information andexplanations given to us we annex heretoa statement (Annexure-A)on the matters specifiedin said Order.
2. 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 the Cash Flow Statementdealt with by this report are in agreement with the books of account. d) In our opinionthe aforesaid financial statements comply with the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
d) On the basis of written representations received from the directors as on 31 March2017 taken on record by the Board of Directors none of the directors is disqualified ason 31March 2017 from being appointed as a director in terms of Section 164(2) of theAct.
e) 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 B"; and
g) With respect to the other matters included in the Auditor's Report and to our bestof 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 27 Part B (1) to the financialstatements.
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection FUND by the Company.
iv. The Company has provided requisite disclosures in its financial statements asto holdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the Company. (Refer note 16 under Notes to Accounts annexed with thefinancial statements for the year ended March 31 2017).
For Aggarwal &Rampal
Place: New Delhi
Date: May 29 2017
ANNEXURE - A TO THE AUDITORS' REPORT
ANNEXURE REFERRED TO IN OUR AUDIT REPORT OF EVEN DATE OF M/S MAGNUM VENTURES LIMITEDPURSUANT TO THE COMPANIES (AUDITORS' REPORT) ORDER 2016 ON THE ACCOUNTS FOR THE YEAR ENDEDMARCH 31 2017
i. (a) The Company has updated its records of fixed assets showing full particularsincluding quantitative details and situation of Fixed Assets.
(b) As explained to us most of the fixed assets have been physically verified by themanagement during the year and as per the explanations and information given to us thereis a regular program of verification which in our opinion is reasonable having regard tothe size of the company and the nature of its assets. As explained to us discrepanciesnoticed on physical verification were not significant and have been properly dealt with inthe books of accounts.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
ii. According to the information and explanations given to us the inventory has beenphysically verified during the year by the management. In our opinion the frequency ofverification is reasonable. As explained to us discrepancies noticed on physicalverification were not significant and have been properly dealt with in the books ofaccounts.
iii. As explained to us the Company has not granted any loan secured or unsecured tocompanies firms or other parties covered in the Register maintained under section 189 ofthe Companies Act. 2013.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
v. According to the information and explanation given to us the company has receivedadvance from customers against supply of goods outstanding more than 365 days which iscovered under the definition of deposits as per section 73 of Companies Act 2013.
vi. The Company has prepared and maintained cost records as prescribed by the CentralGovernment under sub-section (1) of section 148 of the companies Act 2013.
vii. (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund investor education protection fundemployee's state insurance income tax sales tax wealth tax custom duty excise-dutycess and other statutory dues applicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax cess and other material statutory dues were in arrears as at 31
March 2017 for a period of more than six months from the date they became payable.
(b) According to the records of the Company there are following dues of Central ExciseDepartment as on March 31 2017 which have not been deposited on account of disputes : -
|Name of the ||Name of the ||Amount(Rs.) ||Period to ||Status/Forum |
|Statue ||Dues || ||which the ||where Dispute is |
| || || ||amount ||Pending |
| || || ||relate || |
|Excise Law ||Duty on Waste ||31599/-(Plus Interest+ Penalty) ||Mar 12 to Feb 13 ||Matter pending before Hon'ble Allahabad HC |
|Excise Law ||Duty on Waste ||46545/- ( Plus Interest and Penalty) ||April 14 to Oct 14 ||Reply filed to commissioner appeal Ghaziabad no hearing fixed yet |
|Excise Law ||Duty on Waste ||16364/- ( Plus Interest and Penalty) ||Nov 14 to Feb 15 ||Reply filed to commissioner appeal Ghaziabad hearing fixed yet |
|Excise Law ||Departmental Appeal against refund order of Newsprint ||3080824/- || ||Tribunal Delhi Next Hearing Date yet to be notified |
|DEPB Case ||Redemption Case ||1023246/- (Plus Penalty) || ||Reply submitted to DRI (Directorate of Revenue intelligence) Delhi order not yet passed |
|Service Tax Law ||SCN for Service Tax from Hotel ||16400749/- +(Interest & penalty) ||2010-2011 ||Stay granted and awaited for hearing of appeal Tribunal Delhi |
|Contingent Liabilities in respect for EPCG Obligation || || |
|EPCG ||Total Export Obligation under EPCG (in USD) ||USD 10503222# |
|Obligations ||Earning in Foreign Currency/ Export Turnover up to ||USD ||8969681 |
| ||31-03-2017 (in USD) || || |
| ||Balance Export Obligation under EPCG (in USD) ||USD ||1533541 |
# The Company availed EPCG Scheme for import of assets and the companysubmitted applications for redemption of EPCG Licenses for USD 8969681 which is pendingat the DGFT New Delhi. Further Company has also applied for extension of one EPCGAuthorization of which 40% of obligation has already been fulfilled.
viii. The company had defaulted in repayment of loans and borrowing from financialinstitutions and banks. The Company has received communication from M/s AlchemistAssets Reconstruction Company Ltd. (AARC) that
Oriental Bank of Commerce Allahabad Bank Punjab National Bank and Indian OverseasBank that these banks have assigned their dues to M/s Alchemist Assets ReconstructionCompany Ltd. (AARC).
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 also no term loans were raised during the year.
x. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
xi. According to the written representation provided by the management the Company haspaid/provided for managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting 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 any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
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. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Aggarwal &Rampal
Place: New Delhi
Date: May 29 2017
ANNEXURE - B TO THE AUDITORS' REPORT
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUBSECTION 3 OF SECTION143 OF THE COMPANIES ACT 2013 ("THE ACT")
We have audited the internal financial controls over financial reporting of InfosysLimited ("the Company") as of 31 March 2017 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining 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'). 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.
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 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover 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 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.
In our opinion and according to the information and explanations given to us thecompany has internal financial control system to commensurate with the size of company andthe nature of its business. It is required to be further strengthened.
For Aggarwal &Rampal
Place: New Delhi
Date: May 29 2017