To the Members of Mandhana Industries Limited
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Mandhana IndustriesLimited (the Company') which comprise the balance sheet as at 31 March 2017 thestatement of Profit and loss (including other comprehensive income) the statement of cashflows and the statement of changes in equity for the year then ended and a summary of thesignificant accounting policies and other explanatory information (herein after referredto as Ind AS financial statements).
Management's Responsibility for the Financial Statements
The Company's 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 Ind AS financial statements that 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 (Ind AS) prescribed underSection 133 of the Act read with relevant rules issued thereunder.
This responsibility also 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; 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 Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Ind AS financial statements basedon our audit.
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 thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 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 Ind AS financial statements are free from material misstatement. An audit involvesperforming procedures to obtain audit evidence about the amounts and the disclosures inthe Ind AS financial statements. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of the Ind ASfinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof 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.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the financialposition of the Company as at 31 March 2017 and its financial performance includingother comprehensive income its cash flows and the changes in equity for the year ended onthat date.
Emphasis of matter
We draw attention to the following matter in the notes to the Ind As financialstatements:
a) As explained in note no 31 (i) the Company has not made provision against doubtfuldebts amounting Rs 30501.29 lacs.Though the Company is under negotiation with customer torecover the same. Had this provision been made the Profit would have been reduced to theextent and the current assets would also be reduced to the extent of non-provision of thedoubtful debts.
b) As explained in note no 31 (ii)the Company has not made any provision againstnon-recoverable advances to vendors amounting Rs 7183.42 lacs.
Though the Company is under negotiation with vendor to recover the same. Had thisprovision been made the Profit would have been reduced to the extent and the currentassets would also be reduced to the extent of non-provision of the non-recoverableadvances.
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 section 143(11) of the Act we givein the Annexure A a statement on the matters specified in the paragraph 3 and 4 of theorder.
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 purposes of our audit.
(b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) the balance sheet the statement of Profit and loss the statement of cash flowsand the statement of changes in equity dealt with by this Report are in agreement with thebooks of account;
(d) in our opinion the aforesaid Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with relevant rule issuedthereunder;
(e) on the basis of the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Act; (f) with respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate report in Annexure B; and (g) with respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording to the explanations given to us:
i. The Company does not have any pending litigations which would impact its financialposition.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company; and iv. The Company hasprovided requisite disclosures in its Ind AS financial statements as to holdings as wellas dealings in Specified Bank Notes during the period from 8 November 2016 to 30December 2016 and these are in accordance with the books of accounts maintained by theCompany.
Disclosure on Specified Bank Notes (SBN's)
During the year the Company had specified bank notes or other denomination notes asdefined in the MCA noti_cation G.S.R 308(E) dated 31 March 2017 on the details ofSpecified Bank Notes (SBN) held and transacted during the period from November 8 2016 toDecember 30 2016 the denomination wise SBN's and other notes as per the noti_cationgiven below:
|Particulars ||SBN's ||Other denomination notes ||TOTAL |
|Closing cash in hand as on November 8 2016 ||1766550.00 ||2716517.00 ||4483067.00 |
|Transaction between 8thN ovember2016 to 30th December 2016 || || || |
|(+) Permitted Cash Receipts (Withdrawals) || ||4041000.00 ||4041000.00 |
|(+) Permitted Cash Receipts (Parties) || ||426915.00 ||426915.00 |
|(-) Permitted Payments ||86550.00 || ||86550.00 |
|(-) Other payments outgo || ||3674978.00 ||3674978.00 |
|(-) Amount deposited in Banks ||1680000.00 ||- ||1680000.00 |
|Closing cash in hand as on December 30 2016 ||- ||3509454.00 ||3509454.00 |
For KPND & Co.
FRN : 133861W
Membership No: 143172
Date : 26th May 2017
Place : Mumbai
Annexure - A to the Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the Ind AS financial statements for the year ended 31 March 2017 We report that: (i)(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) We are informed that the Company has formulated a program of physical verificationof all the fixed assets over a period of three years which in our opinion is reasonablehaving regard to the size of the Company and nature of its assets. Accordingly thephysical verification of the fixed assets has been carried out by management during theyear and no material discrepancies were noticed on such verification.
(c) We are informed that title deeds in respect of all the immovable properties eitherfree hold or lease hold are held in the name of the Company except for immovable propertyviz. factory building situated at Sewri Mumbai. Company has entered into Memorandum ofUnderstanding but registered title deed is not executed in favour of the Company. (ii) Asexplained to us
a) The inventories have been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable.
b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
c) The company is maintaining proper records of inventory for fabric weaving andshirting divisions and is in the process of further strengthening of inventory records forits garment division.
The discrepancies noticed on physical verification of stocks as compared to bookrecords were not material in relation to the operations of the Company and have beenproperly dealt with in the books of accounts.
(iii) The Company has not granted loans to any bodies corporate covered in the registermaintained under section 189 of the Companies Act 2013 (the Act').
(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.
(vi) We have broadly reviewed the books of account and records maintained by theCompany pursuant to the rules prescribed by the central government for the maintenance ofcost records under section 148(1) of the Companies Act 2013 and we are of the opinionthat prima facie the prescribed accounts and records have been made and maintained. Thecontents of these accounts and records have not been examined by us.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxsales tax value added tax duty of customs service tax cess and other materialstatutory dues have been regularly deposited during the year by the Company with theappropriate authorities. As explained to us the Company did not have any dues on accountof employees' state insurance and duty of excise.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund sales tax value added tax duty of customs servicetax cess and other material statutory dues were in arrears as at 31 March 2017 for aperiod of more than six months from the date they became payable except for income taxmention below.
|Name of the Statute ||Nature of the dues ||Amount ( Rs in crore) ||Period to which the amount relates ||Due Date |
|Income Tax Act 1961 ||Corporate Tax ||15.77 ||A.Y. 2015-16 ||30th November 2015 |
|Income Tax Act 1961 ||Corporate Tax ||27.66 ||A.Y. 2016-17 ||30th November 2016 |
(b) According to the information and explanations given to us and according to therecords of the Company there are no dues of income-tax or sales-tax or wealth tax orservice tax or duty of customs or duty of excise or value added tax or cess which have notbeen deposited with the appropriate authorities on account of any dispute except as givenbelow:
|Name of the Statute ||Nature of the disputed dues ||Amount ( Rs in crores) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act 1944 ||Excise Duty ||2.91 ||May'01 to May'03 ||Mumbai High Court & Settlement Commission |
(viii) According to the records of the Company examined by us and the information andexplanations given to us the Company has defaulted in repayment of dues to the banks anddebenture holders at the balance sheet date. The Details of all the defaults in repaymentof instalments are as below.
|Sr. No. Banks/Fis ||DueDate ||O verdue ||Facility |
|1 Bank of Baroda ||30-Sep-16 ||3750000 || |
| ||31-Dec-16 ||3750000 ||Term Loan |
| ||31-Mar-17 ||3750000 || |
|2 Bank of Baroda ||01-Oct-16 ||30000000 ||Term Loan |
| ||01-Jan-17 ||30000000 || |
|3 Indian Bank ||02-Aug-16 ||1061016 || |
| ||02-Nov-16 ||4687500 ||Term Loan |
| ||02-Feb-17 ||4687500 || |
|4 State Bank of India ||30-Sep-16 ||5625000 || |
| ||30-Dec-16 ||5625000 ||Term Loan |
| ||30-Mar-17 ||5625000 || |
|5 Punjab National Bank ||31-Aug-16 ||16875000 || |
| ||30-Nov-16 ||16875000 ||Term Loan |
| ||28-Feb-17 ||16875000 || |
|6 Axis Bank ||07-May-16 ||18750000 || |
| ||07-Aug-16 ||18750000 || |
| ||07-Nov-16 ||18750000 ||Term Loan |
| ||07-Feb-17 ||18750000 || |
|7 Axis Bank ||15-May-16 ||29700000 || |
| ||15-Aug-16 ||29700000 || |
| ||15-Nov-16 ||29700000 ||Term Loan |
| ||15-Feb-17 ||29700000 || |
|8 Allahabad Bank (SBoP Takeover) - II ||30-Jun-16 ||12900000 || |
| ||30-Sep-16 ||12900000 || |
| ||31-Dec-16 ||12900000 ||Term Loan |
| ||28-Mar-17 ||12900000 || |
|9 Allahabad Bank (SBoP Takeover) - III ||31-Mar-16 ||25782000 || |
| ||30-Jun-16 ||25782000 || |
| ||30-Sep-16 ||25782000 ||Term Loan |
| ||31-Dec-16 ||25782000 || |
| ||28-Mar-17 ||25782000 || |
|10 Allahabad Bank ||19-Mar-16 ||60531470 ||Term Loan |
|11 Allahabad Bank ||30-Jun-16 ||9000000 || |
| ||30-Sep-16 ||11250000 || |
| ||31-Dec-16 ||11250000 ||Term Loan |
| ||28-Mar-17 ||11250000 || |
|12 Corporation Bank ||02-Mar-17 ||9167500 ||Term Loan |
|13 Karur Vyasa Bank ||19-Dec-16 ||11573978 ||Term Loan |
| ||19-Mar-17 ||15625000 || |
|Total (A) || ||663143964 || |
|Sr. No. Banks/Fis ||DueDate ||O verdue ||Facility |
|1 L & T LTD. ||28-Sep-16 ||30000000 ||Non Convertible Debenture |
| ||28-Mar-17 ||30000000 || |
|2 CANARA BANK ||03-Oct-16 ||30000000 ||Non Convertible Debenture |
|3 ALLHABAD BANK ||28-Mar-17 ||15000000 ||Non Convertible Debenture |
|4 INDIAN OVERSEAS BANK ||15-Mar-17 ||60000000 ||Non Convertible Debenture |
|5 BANK OF INDIA ||28-Mar-17 ||75000000 ||Non Convertible Debenture |
|Total (B) || ||240000000 || |
|Grand Total (A+B) || ||903143964 || |
(ix) The term loans outstanding at the beginning of the year have been applied for thepurposes for which they were raised.
(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 information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
(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 Ind AS financial statements as required by theapplicable accounting standards.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Clauses 3(iii) (a) 3(iii) (b) 3(iii) (c) 3(v) 3(xii) 3(xiv)and 3(xv) of the Order are not applicable to the Company.
For KPND & Co.
FRN : 133861W
Membership No: 143172
Date : 26th May 2017
Place : Mumbai