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Modipon Ltd.

BSE: 503776 Sector: Industrials
NSE: MODIPON ISIN Code: INE170C01019
BSE 00:00 | 15 Sep Modipon Ltd
NSE 05:30 | 01 Jan Modipon Ltd
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PREVIOUS CLOSE 38.50
VOLUME 300
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Buy Price 38.85
Buy Qty 1044.00
Sell Price 37.00
Sell Qty 49.00
OPEN 36.85
CLOSE 38.50
VOLUME 300
52-Week high 38.85
52-Week low 8.48
P/E
Mkt Cap.(Rs cr) 45
Buy Price 38.85
Buy Qty 1044.00
Sell Price 37.00
Sell Qty 49.00

Modipon Ltd. (MODIPON) - Auditors Report

Company auditors report

To

The Members of

Modipon Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the accompanying Standalone financial statements of MODIPON LIMITED ('theCompany') which comprise the Balance Sheet as at 31st March 2019 the Statement of Profitand Loss (including Other Comprehensive Income) the Statement of Changes in Equity andthe Statement of Cash flows for the year ended on that date and a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the Standalone financial statements").

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 section of our report the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019the loss and total comprehensive loss changes in equity and its cash flows for the yearended on that date.

Basis for Qualified Opinion

I. Balance confirmation certificates were not obtained by the Company from creditorsloans and advances given/received house/shop security depositors in-operative currentaccounts with banks and loan account with Punjab National Bank (PNB). Consequentadjustments required if any has not been carried out in the financial results.

II. During the quarter ended 30th June 2018 the Company has transferred amount ofRs.2124011 to Statement of Profit or Loss which represents administration &consultancy expenses pertaining to the financial year ended as on 31 st March2018. The Company has not re-stated the comparative figures for prior periods items tocorrect the materiality of prior period errors retrospectively as required as per IND AS8 'Accounting Policies Changes in Accounting Estimates and Errors'. Due to the sameLoss of current financial year is being overstated by Rs 2124011/-.

III. (a) The Company has not provided interest of Rs. 1000.54 Lakhs up to March 312008 on overdue amounts payable to a supplier resulting in understatement of liabilitiesand debit balance of reserve and surplus by Rs. 1000.54 Lakhs each; and

(b) The amount of interest to be provided for in the books of account for the periodApril 1 2008 to March 31st 2019 has not been ascertained.

IV. The amount of interest to be provided for in the books of account if any for theperiod April 1 2007 to March 31st 2019 to Small and Micro Enterprise has notbeen ascertained.

V. During the year ended March 31 2009 the Company has sold 65743 sq.yds of itsvacant land at Modinagar for Rs. 1021.15 Lakhs (original cost Rs. 1.95 Lakhs) for whichthe approval of bank is pending.

VI. During the year 2011-12 the Company has given physical possession of its vacant 59(46 as on March 31 2015) houses located at Modinagar Uttar Pradesh to a lender i.e.Ashoka Mercantile Limited (AML) a related party (balance outstanding of loan taken fromAML as on March 31 2015 as per books of account: secured loan Rs. 882.29 Lakhs andunsecured loan Rs. 1125.57 Lakhs) for use without any charges/rent/security deposit and nolease rent agreement has been entered into with AML. The Company contends that thetemporary possession of houses for use without charges was given to AML as security onlyas the Company was unable to repay the loans taken from AML.

VII. The Punjab National Bank (PNB) had approved one time settlement of its outstandingdues of Rs. 1900 lakhs vide its approval letters dated April 02 2014 and April 12 2014respectively. In terms of the settlement OTS amount of Rs. 1710 lakhs (Net of upfrontpayment of Rs. 190 lakhs) was to be paid by the company in four quarterly installmentswith interest during financial year 2014-15. However the company was able to manage thepayment of Rs. 630 lakhs up to March 31 2015 and at the request of the Company PNBcondone the delay and revived the OTS vide its letter dated July 02 2015 requiring theCompany to make payment of residual OTS amount of Rs. 1270 lakhs by March 31 2016 andtotal interest on OTS payment @ 10.25% (simple) by June 30 2016. The Company has paid Rs.1270 lakhs upto December 31st 2018 along with interest of Rs 25962100/-. The companyhas already made provision of interest on account of delayed payment of OTS of Rs9443358/- in their books upto 30th September 2018 and booked balance amountof interest in the quarter ending 31st December 2018.

VIII. (a) The Punjab National Bank has initiated the proceeding against the companyunder section 7 of the Insolvency and Bankruptcy Code 2016 before the NCLT AllahabadBench and other Proceeding before DRT-II and recovery Officer DRT- II New Delhi due tonon-fulfillment of OTS Terms/conditions vide OTS letter dated July 02 2015 issued by PNB.

Further as per Debts Recovery Tribunal-II Delhi an order dated 30 July 2018 has beenpassed in favor of the company and directed PNB to accept Rs. 65 lakhs as outstandingprincipal of OTS plus Rs. 25962100/- as interest @10.25% as per revived OTS vide itsletter dated July 022015 on delayed payment upto 15 March 2018 which was later onaccepted and paid by the company in terms of the DRAT order.

During the pendency of the appeal PNB has encashed the said amount of Rs. 65 Lacstowards principal OTS and Rs. 25962100/- towards interest in term of the order of DebtsRecovery Appellate Tribunal (DRAT) New Delhi. Further the DRAT has reserved the order on27.12.2018 in the said matter and not pronounced till the date of our reporting as aresult the company has not considered any liability in its books in addition to the duesalready settled as per DRT order dated 30th July 2018.

During the pendency of order before DRAT the PNB has revived OTS vide letter dated25.03.2019 against payment of Rs. 459.62 lacs on the following terms & conditions:

Terms & conditions:

1) The proceeds of FDRs amounting to Rs. 65 lacs and Rs. 259.62 lacs kept with us willbe appropriated simultaneously on conveying approval of revival of OTS.

2) Rs. 135 lacs will be deposited within one week of receipt of this sanction letter.

3) The party to undertake to pay commercial tax liability as demanded by the CommercialTax Authority.

4) No Dues Certificate will be issued Bank's charge on the security/tittle deeds willbe released only after receipt of OTS amount in full and on clearance of commercial taxliability as stated above. (Satisfactory proof/letter from the competent authority in thisregard to be submitted).

The company has already deposited balance of OTS amount of Rs.65 lacs plus delayedperiod interest of Rs. 259.62 lacs with the bank in terms of DRT & DRAT orders andfurther Rs.135 lacs over and above original OTS amount deposited by the company in termsof revived OTS vide letter dated 25.03.2019 within one week of receipt of letter.

In respect of commercial tax liability the company has filed an appeal against theorder of Commissioner of Commercial Tax before Hon'able High Court of Allahabad throughPunjab National Bank and the Court has directed vide order dated 26.11.2018 that theoperation and effect of the impunged order dated 08.08.2018 passed by the Commercial TaxTribunal Ghaziabad in Appeal no 1353 of 2013 shall remain stayed subject to theapplicant depositing 50% of the commercial tax liability imposed on it and furnishsecurity for the balance amount other than cash or bank guarantee to the satisfaction ofthe tribunal within a period of three weeks from the date of direction.

The company deposited Commercial Tax of Rs 54.94 lacs out of Commercial Tax liabilityof Rs 183.90 lacs along with interest of Rs 3.07 lacs for the period starting from18.12.2018 to 02.05.2019 as on 03.05.2019 in compliance with order dated 26.11.2018 of theHon'able High Court of Allahabad.

(b) The outstanding liability in the books of the company is higher than the OTS amountby Rs. 183.90 lakhs and in the absence of any documentary evidences from the management aswell as PNB we are unable to quantify the amount of interest on the amount of Rs.183.90lakhs; the amount of Rs.183.90 lakhs is over and above the loan amount on account of thesales tax liability on PNB on account of the auction held by the bank for old plant andmachinery of the company.

The above matter is subjudice before Hon'able High Court of Allahabad for furtherhearing.

IX. The Commissioner Central Excise & Service Tax Kamla Neheru Nagar CGO Complex2 Ghaziabad vide its memorandum order No.31/COMM/CX/GZB/2017-18 dated 31.01.2018 hadordered for payment of

a. Amount of central excise duty of Rs. 4492663/-

b. Amount of interest of Rs. 656116/-

c. Amount of penalty of Rs. 656116/-

for the period from 1994 to 1997.

The company has not made provision of the said amount & further interest thereon inits books till 31st March2019 due to which profit is understated by Rs.5804895 plus interest.

Further the company has filed appeal against the order of Commissioner Central Excise& Service Tax Kamla Neheru Nagar CGO Complex 2 Ghaziabad before custom excise &service tax appellate tribunal Allahabad.

X. (a). The amounts paid by the Ashoka Mercantile Limited (AML) a related party toAbu Dhabi Commercial Bank (ADCB) on account of One Time Settlement (OTS) of dues of thebank was accounted for in the books of the Company to the extent of OTS amount paid to theADCB by AML and the balance amount of Rs. 153.92 Lakhs is still lying unallocated underunsecured loans in view of pending successful implementation of OTS of the dues of PNB asthe settlement of assigned dues with AML is linked to the OTS of dues with PNB.

(b) The amount paid to Karnataka Bank by Ashoka Mercantile Limited (AML) a relatedparty during the year ended March 31 2012 on account of OTS of dues of the bank wasaccounted for in the books of the Company to the extent of OTS amount paid to theKarnataka Bank by AML and the balance amount of Rs. 339.20 Lakhs is still lyingunallocated under unsecured loans in view of pending successful implementation of OTS ofthe dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.

(c) The part payment made to Bank of Baroda by Ashoka Mercantile Limited (AML) arelated party during the year ended March 31 2013 on account of OTS of dues of the bankwas accounted for in the books of the company to the extent of OTS amount paid to the Bankof Baroda by AML and the Company and the balance amount of Rs. 232.04 Lakhs is still lyingunallocated under unsecured loans in view of pending successful implementation of OTS ofthe dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.

The effect if any on the income/expenditure of the company on final OTS with PNBcannot be ascertained.

XI. The company has 15% redeemable cumulative preference shares of Rs 100 each.Preference share due for redemption since 31st March 1996.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the independence requirements thatare relevant to our audit of the standalone financial statements under the provisions ofthe Companies Act 2013 and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 35 in the standalone financial statements which indicatesthat the standalone financial statements of the Company for the year ended March 31 2019has not been prepared on a going concern basis since the Company has closed itsmanufacturing operations since May 19 2007 (closure of factory w.e.f. September 8 2007)on account of huge losses incurred and sale of entire plant & machinery during theyear ended March 31 2010. Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the standalone financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. In addition to the matters described in the Basis for Qualified Opinionsection and Material Uncertainty Related to Going Concern section we have determined thematters described below to be the key audit matters to be communicated in our report:

The key audit matters How our audit addressed the key audit matter
Evaluation of uncertain tax positions
The Company has material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. Refer Notes 2(i) 2(o)(ii) and 33 to the Standalone Financial Statements Our audit procedures include the following substantive procedures:
• Obtained understanding of key uncertain tax positions;
• Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management; and
• We along with our internal tax experts.
• Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and
• Assessed management's estimate of the possible outcome of the disputed cases.

Information Other than the Standalone Financial Statements and Auditor's Report thereon

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the standalone financial statements and our auditors'report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibilities for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 Standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors are responsible for overseeing the company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in theparagraph 3 and 4 of the order.

2. As required by section 143(3) of the Act based on our audit 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 it appears from our examination of those books.

c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and the Statement of Cash Flow dealt with bythis Report are in agreement with the books of account.

d. In our opinion the aforesaid financial statements comply with Accounting Standardsspecified 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 312019 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.

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 B".

g. With respect to the matter to be included in the Auditors' Report under section197(16) of the Act:

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act.

h. With respect to the other matters to be included in the Auditor's 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 standalone financial statements - Refer Note 33 to the Standalonefinancial statements;

ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material losses;

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the company.

For B. M. Chatrath & Co. LLP
Chartered Accountants
FRN: E300025
Sd/-
CA. Sunil Kumar Jha
Place : New Delhi Partner
Date : 23rd May 2019 Membership No.543805

ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report to the Members of Modipon Limited of even date)

i) In respect of the Company's fixed assets:

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified at periodic intervals. In accordance with this programmefor the year no material discrepancies were noticed on such verification. In our opinionsuch periodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.

c) On the basis of written representation received from the management of the Companythe title deeds of immovable properties held in the name of the Company are mortgaged withthe Banks for securing the long term borrowings and credit limits raised by the Company.Following title deeds have not been provided to us:

(Amount Rs. in Lakhs)

Net book value of immovable property as on March 31 2019 (A)

Title deeds available (B) Title deed not available (A-B)

17.44

14.78 2.66

ii) On the basis of information and explanation provided by the management the Companydoes not hold any inventory. Accordingly reporting under clause 3 (ii) of the Order isnot applicable to the Company.

iii) According to the information and explanation given to us the Company had notgranted loans secured or unsecured to any of the Companies firms or other partiescovered in the register maintained under section 189 of the Companies Act 2013.Accordingly reporting under clause 3 (iii) of the Order is not applicable to the Company.

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 given investments made guarantees and securities given.

v) The Company has not accepted any deposits from the public within the meaning of thedirectives issued by the Reserve Bank of India provisions of Section 73 to 76 of the Actany other relevant provisions of the Act and the relevant rules framed thereunder.Accordingly the provisions of clause 3(v) of the Order are not applicable to the Company.

vi) On the basis of available information and explanation provided to us the CentralGovernment has not prescribed maintenance of cost records under sub-section (1) of section148 of the Companies Act 2013 read with Companies (Cost Records and Audit) AmendmentRules 2014 dated December 31 2014 to the current operations carried out by the Company.Accordingly the provisions of clause 3(vi) of the Order are not applicable to theCompany.

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 Income tax Sales tax Servicetax duty of Customs duty of Excise Value Added Tax Cess and other material statutorydues have generally been regularly deposited during the year by the Company with theappropriate authorities.

According to the information and explanations given to us following undisputed amountspayable in respect of Income tax Sales tax Service tax duty of Customs duty of ExciseValue Added Tax Cess and other material statutory dues were in arrears as at 31st March2019 for a period of more than six months from the date they became payable:

Name of the Statute Nature of Dues Amount (Rs. in Lakhs)
Sales Tax Laws Sales Tax Payable-Branch 1.49
Sales Tax Laws 1% State Development Tax .01
Sales Tax Laws 12%U.P.Trade Tax 2.83
Sales Tax Laws 2.5%U.P.Trade Tax .01
Sales Tax Laws 3% Central Sales Tax .06
Sales Tax Laws Sales Tax .01
Sales Tax Laws 8% U.P.Trade Tax .01
Sales Tax Laws Turnover Tax .01
Sales Tax Laws Vat Collection 4% .02
Central Excise Laws Excise Duty From Amount Payable 82.60
Goods and Service Tax Laws Goods and Service tax 4.36
Income Tax Laws Income Tax Deducted At Source 69.82
Total 161.23

(b) According to the records of the Company examined by us and the information andexplanations given to us there were no dues of income tax or sales tax or service tax orduty of customs or duty of excise or value added tax except the following which have notbeen deposited on account of any dispute:

Name of the Statute Nature of Dues Amount (In Lacs Rs.) Period to which amount relates Forum where dispute is pending
Sales Tax Laws Sales Tax 94.22 2004- 05 Commissioner (Appeal)
1428.88 2005- 06
1010.75 2006- 07
Sales Tax 1.41 1991-92 High Court
Sales Tax 12.43 2007-08 Addl. Commissioner
Customs Law Custom Duty 74.66 1982-83 Asst. Commissioner
Custom Duty 19.39 2002-03 Appellate Tribunal
The Uttar Pradesh Water Supply and Sewerage (Amendment) Act 1999 Water Tax 7.11 1997- 98 & 1998- 99 Additional Civil Judge
Central Excise Excise Duty 115.75 1983-84 High Court
Law Excise Duty 44.93 1994-97
Interest 6.56
Penalty 6.56
Income tax Act 1961 Non - Deduction of TDS 107.71 2006-07 to 2008-09 High Court
109.84 ITAT/ Commissioner (A)
Civil Suit Trade payables 95.08 2008-09 Delhi High Court
Civil Suit Trade payables 18.13 2009-10 District Court Saket Delhi

viii) In our opinion and according to the information and explanation given to us thedetails of default in respect of dues to a bank are as under:

(a). The Punjab National Bank (PNB) had approved one time settlement of its outstandingdues of Rs. 1900 lakhs vide its approval letters dated April 02 2014 and April 12 2014respectively. In terms of the settlement OTS amount of Rs. 1710 lakhs (Net of upfrontpayment of Rs. 190 lakhs) was to be paid by the company in four quarterly installmentswith interest during financial year 2014-15. However the company was able to manage thepayment of Rs. 630 lakhs up to March 31 2015 and at the request of the Company PNBcondone the delay and revived the OTS vide its letter dated July 02 2015 requiring theCompany to make payment of residual OTS amount of Rs. 1270 lakhs by March 31 2016 andtotal interest on OTS payment @ 10.25% (simple) by June 30 2016. The Company has paid Rs.1270 lakhs upto December 31st 2018 along with interest of Rs 25962100/-. The companyhas already made provision of interest on account of delayed payment of OTS ofRs.9443358/- in their books upto 30th September 2018 and booked balanceamount of interest in the quarter ending 31st December 2018.

(b). The Punjab National Bank has initiated the proceeding against the company undersection 7 of the Insolvency and Bankruptcy Code 2016 before the NCLT Allahabad Bench andother Proceeding before DRT-II and recovery Officer DRT- II New Delhi due tonon-fulfillment of OTS Terms/ conditions vide OTS letter dated July 02 2015 issued byPNB.

Further as per Debts Recovery Tribunal-II Delhi an order dated 30 July 2018 has beenpassed in favor of the company and directed PNB to accept Rs. 65 lakhs as outstandingprincipal of OTS plus Rs. 25962100/- as interest @10.25% as per revived OTS vide itsletter dated July 022015 on delayed payment upto 15 March 2018 which was later onaccepted and paid by the company in terms of the DRAT order.

During the pendency of the appeal PNB has encashed the said amount of Rs. 65 Lacstowards principal OTS and Rs. 25962100/- towards interest in term of the order of DebtsRecovery Appellate Tribunal (DRAT) New Delhi. Further the DRAT has reserved the order on27.12.2018 in the said matter and not pronounced till the date of our reporting as aresult the company has not considered any liability in its books in addition to the duesalready settled as per DRT order dated 30th July 2018.

During the pendency of order before DRAT the PNB has revived OTS vide letter dated25.03.2019 against payment of Rs. 459.62 lacs on the following terms & conditions:

Terms & conditions:

1) The proceeds of FDRs amounting to Rs. 65 lacs and Rs. 259.62 lacs kept with us willbe appropriated simultaneously on conveying approval of revival of OTS.

2) Rs. 135 lacs will be deposited within one week of receipt of this sanction letter.

3) The party to undertake to pay commercial tax liability as demanded by the CommercialTax Authority.

4) No Dues Certificate will be issued Bank's charge on the security/tittle deeds willbe released only after receipt of OTS amount in full and on clearance of commercial taxliability as stated above. (Satisfactory proof/letter from the competent authority in thisregard to be submitted).

The company has already deposited balance of OTS amount of Rs.65 lacs plus delayedperiod interest of Rs. 259.62 lacs with the bank in terms of DRT & DRAT orders andfurther Rs.135 lacs over and above original OTS amount deposited by the company in termsof revived OTS vide letter dated 25.03.2019 within one week of receipt of letter.

In respect of commercial tax liability the company has filed an appeal against theorder of Commissioner of Commercial Tax before Hon'able High Court of Allahabad throughPunjab National Bank and the Court has directed vide order dated 26.11.2018 that theoperation and effect of the impunged order dated 08.08.2018 passed by the Commercial TaxTribunal Ghaziabad in Appeal no 1353 of 2013 shall remain stayed subject to theapplicant depositing 50% of the commercial tax liability imposed on it and furnishsecurity for the balance amount other than cash or bank guarantee to the satisfaction ofthe tribunal within a period of three weeks from the date of direction.

The company deposited Commercial Tax of Rs 54.94 lacs out of Commercial Tax liabilityof Rs 183.90 lacs along with interest of Rs 3.07 lacs for the period starting from18.12.2018 to 02.05.2019 as on 03.05.2019 in compliance with order dated 26.11.2018 of theHon'able High Court of Allahabad.

(c). The outstanding liability in the books of the company is higher than the OTSamount by Rs. 183.90 lakhs and in the absence of any documentary evidences from themanagement as well as PNB we are unable to quantify the amount of interest on the amountof Rs.183.90 lakhs; the amount of Rs.183.90 lakhs is over and above the loan amount onaccount of the sales tax liability on PNB on account of the auction held by the bank forold plant and machinery of the company.

The above matter is subjudice before Hon'able High Court of Allahabad for furtherhearing.

Further no debentures have been issued by the company during the year thereforeprovisions of this clause is not applicable to the company.

ix) The Company did not raise any money by way of initial public or further publicoffer (including debt instruments) during the year. However the term loans taken duringthe year were applied for the purpose for which the same has been raised.

x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.

xi) In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable to the Company.

xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions with the related parties arein compliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

xiv) According to the information and explanation given 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 under review. Accordingly the provisions of clause 3(xiv) of the Order are notapplicable to the Company.

xv) According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with its directors or persons connected to its directors during the year andhence provisions of section 192 of the Companies Act 2013 are not applicable to theCompany.

xvi) According to the information and explanation given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For B.M. Chatrath & Co. LLP
Chartered Accountants
FRN: E300025
Sd/-
CA. Sunil Kumar Jha
Place : New Delhi Partner
Date : 23rd May 2019 Membership No.543805

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Modipon Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ModiponLimited ("the Company") as of March 31 2019 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued 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.

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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. 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 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 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.

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

According to the information and explanation given to us the Company has notestablished its internal financial controls over financial reporting on criteria based onor considering the essential components of internal control stated in Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for our opinion whether the Company hasadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at March 31 2019.

We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the financial statements of the Company anddisclaimer does not affect our opinion on the financial statements of the Company.

For B.M. Chatrath & Co. LLP
Chartered Accountants
FRN: E300025
Sd/-
CA. Sunil Kumar Jha
Place : New Delhi Partner
Date : 23rd May 2019 Membership No.543805

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