TO THE MEMBERS OF
Monica Electronics Limited
Report on the financial statements
We have audited the accompanying financial statements of Monica Electronics Limited("the Company") which comprise the Balance Sheet as at 31st March 2017 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
Management's responsibility for the financial statements
Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards specified under Section 133 of theAct read with Rule 7 of the Companies (Accounts) Rules 2014. This responsibilityincludes the design implementation and maintenance of internal control relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on 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 but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement as 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.
Basis for Qualified Opinion
Reference is invited to Note 2.8(a) to the financial statements advances recoverableincludes
Rs 228.95 Lacs (previous year Rs 231.40 Lacs) from corporate companies for which noprovision has been made as the confirmation of balances from the parties are on record.However as per analysis of their net worth based on the financial statements availablethe recovery of the amount is doubtful.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:
a) in the case of the Balance Sheet of the state of affairs of the Company as at March31 2017; b) in the case of the statement of Profit and Loss of the loss for the yearended on that date; and c) in the case of the Cash Flow Statement of the cash flows forthe year ended on that date.
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 Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the 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 and proper returns adequatefor the purposes of our audit have been received from branches not visited by us.
c. the report on the accounts of the branch offices audited under section 143(8) by aperson other than the company's auditor has been sent to us as required by proviso toclause (8) of section 143 and have been dealt with in preparing our report in the mannerconsidered necessary by us- Not applicable
d. the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account [and with the returns receivedfrom branches not visited by us;
e. in our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014;
f. Observation or the comments on financial transaction on matters having adverseeffect on the functioning of company :-
i) Reference is invited to Note 2.8(a) to the financial statements advancesrecoverable includes Rs. 228.95Lacs (previous year Rs. 231.40Lacs) to corporate companiesfor which no provision has been made as the confirmation of balances from the parties arenot on record. However as per analysis of their net worth based on the financialstatements available the recovery of the amount is doubtful.
ii) We draw attention to Note 2.8(b) to the financial statements on other loan andadvances include a sum of Rs. 3 lacs (previous year Rs. 3 lacs) being fixed deposit withbank held in the names of ex-employee of the company and are pledged with District courtNew Delhi. Interest accrued on above has not been provided in view of uncertaintyregarding its realization.
iii) We draw attention to Note 2.13 to the financial statements on balances groupedunder advanced received from Customers and advances recoverable are under reconciliationand subject to confirmation from respective parties.
The final adjustment if any shall be made on reconciliation of the same. The impactif any on the loss for the year cannot be ascertained at this stage.
iv) We draw attention to Note 2.16 to the financial statements on the accounts whichhave been prepared as a going concern inspite of the fact that due to labour problem thecompany has close down its manufacturing operations and its entire net worth has beeneroded.
v) Trading of shares of the company has been suspended by the stock exchanges becauseof penal reasons.
g. on the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of sub-section (2) ofsection164 of the Companies Act 2013.
h. In our opinion proper books of account as required by law have been maintained bythe Company so far as appears from our examination of those books.
i. In our opinion and according to the information and explanations given to us thereis generally an adequate internal control systems in place and operative effectiveness ofsuch controls commensurate with the size of the company and the nature of its business.
j. Report on Other matters prescribed in clause no 11 of The Companies (Audit &Auditors) Rules
a) No provision have been made for the following disputed dues on account of exciseduty which has not been deposited. This liability will impact adversely on the financialsof the company:-
|Name of Statue ||Nature of dues ||Amount (Rs in Lacs) ||Financ ial year to which relates ||Forum where pending |
|Central Excise Laws ||Excise duty - Differenti al Duty Interest and Penalty ||101.70 lacs ||1998-99 ||CESTAT |
b) As per the books of accounts & as explained to us there are no materialforeseeable losses on long term contracts including derivatives contract.
c) The amount required to be transferred to investor education and protection fund inaccordance with the relevant provisions of the Companies Act 2013 and rules made thereunder has been transferred to such fund within time.
d) The company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016 and these are in accordance with the books of accountsmaintained by the company.
FOR AGARWAL SETH CO.
Membership No:- 090508
Place : New Delhi
Dated : 29th May 2017
The Annexure referred to in paragraph 1 of the Our Report of even date to the membersof
Monica Electronics Limited. on the accounts of the company for the year ended 31stMarch 2017.
On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:
1. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) As explained to us fixed assets have been physically verified by the management atreasonable intervals except for Land for which provision for loss on impairment havebeen made in accounts.
(c) The title deeds of immovable properties are held in the name of the company.
2. The company does not have any inventory at the end of the year.
3. According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not taken any loans any loan from /to companies or firm covered in the register maintained under section 189 of the CompaniesAct 2013 during the year.
The company had granted loans to associate company amounting to Rs.22894856/-(Previous year Rs.23139856/-)which is outstanding in the books of accounts as AdvancesRecoverable from corporate companies. In our view the recovery of these loans is doubtfulbut no provision has been made in the books of accounts .
(a) The confirmation of balances from the parties is not made available for ourverification & as per analysis of their net worth based on the financial statementsavailable the recovery of the amount is doubtful. (b) The schedule of repayment ofprincipal and payment of interest has not been stipulated.
(c) Due to lack of information we are not able to comment on whether reasonable stepshave been taken by the company for recovery of the principal and interest (d)The said loanis prejudicial to the interest of the company being interest free & non recoverable.
4. In respect of loans investments guarantees and security provisions of section 185and 186 of the Companies Act 2013 have been complied with.
5 The company has not accepted any deposits from the public covered under section 73 to76 of the Companies Act 2013.
6. The company has not maintaining any cost records under section 148(1) of theCompanies Act 2013 as no manufacturing activities have been carried out during the year.
7. (a) According to the records of the company undisputed statutory dues includingProvident Fund Investor Education and Protection Fund Employees' State InsuranceIncome-tax Sales-tax Wealth Tax Custom Duty Excise Duty cess to the extent applicableand any other statutory dues have generally been regularly deposited with the appropriateauthorities.
According to the information and explanations given to us there were no outstandingstatutory dues as on 31st of March 2017 for a period of more than six months from thedate they became payable.
(b) According to the information and explanations given to us there is no dues ofsales tax income tax custom duty wealth tax and cess which have not been deposited onaccounts of any dispute. However according to the records of the company and theinformation and explanations given to us the following are the particulars of disputeddues on account of excise duty which has not been deposited.
|Name of Statue ||Nature of dues ||Amount (Rs. in Lacs) ||Financial year to which relates ||Forum where pending |
|Central Excise Laws ||Excise duty - Differential Duty Interest and Penalty ||101.70 lacs ||1998-99 ||CESTAT |
8. Based on our audit procedures and on the information and explanations given by themanagement we are of the opinion that the Company has not defaulted in repayment of duesto a financial institution bank government or dues to debenture holders.
However the company had filed a petition u/s 391 in the Delhi High Court for sanctionof Scheme of Arrangement with debenture holders. The Delhi High Court vide its order dated14.12.2004 approved the said scheme of Arrangement. The company paid off to all thedebenture holders as per the terms of Scheme by depositing the outstanding amount in a nolien account with ICICI Bank Ltd. and out of total payment a sum of Rs.1785750/- has notbeen encashed by the debenture holders & as explained to us unpaid balance have beentransferred to Investor education and protection fund as per section 204C of the CompaniesAct 1956 in previous years
9. Moneys raised by way of initial public offer or further public offer (including debtinstruments) and term loans were applied for the purposes for which those were raised.
10. Based on the audit procedures performed and the information and explanations givento us we report that no fraud by the Company or any fraud on the company by its officersor employees has been noticed or reported during the year nor have we been informed ofsuch case by the management.
11. Managerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
12. The Company is not a Nidhi Company.
13. The company does not have constituted Audit Committee so the provisions of Section177 of the
Companies Act 2013 have not been complied .
All the transactions covered under section 188 of Companies Act 2013 are in compliancewhere applicable and details have been disclosed in the Financial Statements etc. asrequired by the applicable accounting standards;
14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year.
15. The company has not entered into any non-cash transactions with directors orpersons connected with him.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
FOR AGARWAL SETH & CO.
Membership No. : 090508
Place: New Delhi