TO THE MEMBERS OF N.K INDUSTRIES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone Ind AS financial statementsof M/s N.K.INDUSTRIES LIMITED (''the Company") which comprise the balance sheet asat March 312020 and the statement of profit and loss (including other comprehensiveincome) statement of changes in equity and statement of cash flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to theexplanations given to us except for the effects of the matter described in the Basis forQualified Opinion Section of our report the aforesaid standalone Ind AS financialstatements give the information required by the Companies Act 2013 (the Act) in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including Indian Accounting standards (Ind AS)specified under section 133 of the Act of the state of affairs (financial Position )ofthe Company as at March 31 2020 and its losses (financial performance including othercomprehensive income) its Cash flows and changes in equity for the year ended on thatdate.
Basis for Qualified Opinion
1. The Company had entered into financial arrangement with NationalSpot Exchange Ltd (NSEL) through trading and Clearing Member N.K. Proteins Private Ltd(erstwhile N. K. Proteins Limited (NKPL) (Group Company) by way of purchase and sales ofvarious goods up to financial year 2012-13. The trade payables and trade receivablesarising out of the said transactions through National Spot Exchange Limited (NSEL) fromthe concerns other than the group concerns are subject to confirmations by the respectiveparties/NSEL and reconciliations/adjustments if any. Further NSEL has suspended thetrading on 31.07.2013 as per the directions issued by the Government of India Ministryof Consumer Affairs. NSEL has initiated recovery proceedings against the group companyNKPL and also against the company by filing a civil suit in the Hon'ble High Court ofMumbai for an alleged amount of around ' 937 crores plus interest .and the saidproceedings are pending as on date. Further the Home department Government ofMaharashtra has issued a notification under the Maharashtra Protection of Interest ofDepositors (in financial establishments)-Act 1999 (MPID Act) attaching the Land Building& Plant & Machinery of the company located at Kadi Gujarat. The company hadchallenged the notification issued by Home department of Maharashtra before Hon'bleGujarat High Court which was disposed off vides its order dated 29th March 2017. Thecompany preferred a Special Leave Petition before the Hon'ble Supreme Court of Indiaagainst the order of Hon'ble Gujarat High Court and The Hon'ble Supreme Court of India haddisposed off the Special Leave Petition on 17th April 2017 with a observation to file anapplication before Hon'ble Bombay High Court Mumbai and as informed by the managementthe company has filed petition before the Hon'ble Bombay High Court in June 2017 which ispending .Besides the above the company has also filed its objections against theattachment notification before the Designated Special MPID Court Mumbai.
In view of the above that the matter is subjudice and the allegedliability /claim are not accepted by the company we are unable to quantify the finalliability and its impact if any on the loss of the company for the Year ended on 31stMarch 2020.(Refer note No 35 of Standalone Ind AS financial statements)
2. The Directorate of Enforcement Government of India has initiatedproceedings against the company under section 5(1) of the prevention of Money LaunderingAct 2002 along with group company NKPL and by virtue of the provisional attachmentorder dated 10/03/2015 attached the assets of the company comprising of Land buildingplant and machinery situated at Survey Nos.719 720 721 732/1 732/2 733 741 743744 745 Kadi Thol Road Village Kadi Kasba taluka- Kadi District Mehsana-382715Gujarat. As explained to us The Company has preferred an appeal before the Hon'bleAppellate Tribunal under the Prevention of Money laundering Act 2002 against the order ofAdjudicating Authority.
Further.The Director of Enforcement (hereinafter referred to as ED)Government of India had initiated proceedings of search/seizure on 30.05.2018 on the groupcompany NKPL the promoters of the company Shri Nilesh Patel and Shri Nimish Patel one ofthe family member as well as on the company and thereafter on 29.06.2018 the EDGovernment of India had preferred an application u/s 17(4) of the Prevention of MoneyLaundering Act 2002 before the Adjudicating Authority New Delhi vide it's a ApplicationNo. OA/236 of 2018 against the company as well as group company NKPL and the promoters forretention of the seized properties and for continuation of order of freezing theproperties till finalization of the proceedings of the properties mentioned in theapplication u/s 17(4) of the PMLA Act 2002. The company along with Group Company andpromoters challenged the show cause notice issued by the adjudicating authority New Delhibefore the Hon'ble High Court of Delhi and the Hon'ble High Court has set aside the saidshow cause notice. The Director of Enforcement has attached assets of the company groupcompany NKPL and the promoters of the company by issuing a fresh show cause notice dated30/08/2018 and the company has filed an appeal before PMLA Appellate Tribunal Delhi .
In view of the above that the matter is subjudice and the allegedliability /claim are not accepted by the company we are unable to quantify the finalliability and its impact if any on the loss of the company for the Year ended on 31stMarch 2020.(Refer note No 36 of Standalone Ind AS financial statements)
3. The Government of Maharashtra (at the instance of Economic wingoffence Mumbai) has filed supplementary Charge sheet dated 25th December 2018 under thevarious sections of IPC AND MPID Act. against the company and its chairman Shri NimishPatel. Further MPID Court on the basis of above supplementary charge sheet has issuedsummons dated 19th March2019 against the company asking them to remain present on 26thApril 2019.The Company has complied with the said summons and the matter was adjourned to7th November2019 and further adjourned to 15th February2020. 7th March2020 30th April2020 and now adjourned to 21st May2020. Thus in view of the fact that the said criminalproceedings which have been initiated inter alia against the company and its ChairmanShri Nimish Patel are pending we are unable to ascertain/quantify the final liability ifany that may arise from the said criminal proceedings and therefore we are unable toquantify its impact if any on the loss of the company for the Year ended on 31st March 2020. (Refer note No 37 of Standalone Ind AS financial statements)
We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the standalone Ind ASFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 32 to the Standalone Ind AS FinancialStatements and according to the same the company is having accumulated losses (aftertaking into account the balance of reserves) of Rs 341.44 Crores as at 31.3.2020 and thenet worth of the company is negative However as per the business plan and future cashflow projections submitted by the management to us and accepted by us. The Company ismaking sincere efforts for the revival of the Business & the management is confidentto recover the losses through improved profitability in foreseeable future. Therefore noprovision for the impairment has been made and accounts for the year have been prepared on"going concern basis." Further the above projections also contains businessplan/ projected cash flow prepared by the management and accepted by us with respect tothe subsidiaries company the management is confident to also revive the operations of theloss making subsidiary companies hence no provision for impairment in the fair value ofthe investment made in the said subsidiary companies has been made in the books ofaccounts.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Key Audit Matter:
|Description of Key audit Matter ||Our response and results |
|Litigations and claims ||Our audit procedures inter alia included following: |
|(Refer note 27) to the standalone Ind AS financial statements) The cases are pending with multiple tax authorities like Income Tax Sales tax etc. and there are claims against the company which have not been acknowledged as debt by the company. ||- Discussed disputed litigation matters with the company's management. |
| ||- Evaluated the management's judgment of tax risks estimates of tax exposures other claims and contingencies. Past and current experience with the tax authorities and management's correspondence/response including on the claims lodged by customers were used to assess the appropriateness of management's best estimate of the most likely outcome of each uncertain contingent liability. |
|In normal course of business financial exposures may arise from pending proceedings and from claims of the customers not acknowledged as debt by the company. Whether a claim needs to be recognized as liability or disclosed as contingent liability in the standalone Ind AS financial statements is dependent on a number of significant assumptions and judgments. The amounts involved are potentially significant and determining the amount if any to be recognised or disclosed in the standalone Ind AS financial statements is inherently subjective. || |
| ||- Critically assessed the entity's assumptions and estimates in respect of claims included in the contingent liabilities disclosed in the financial statements. Also assessed the probability of negative result of litigation and the reliability of estimates of related obligations. |
|We have considered Litigations and claims a Key Audit Matter as it requires significant management judgement including accounting estimates that involves high estimation uncertainty. || |
| ||Conclusion: |
| ||Based on the procedures described above we did not find any material exceptions to the management's assertions and treatment presentation & disclosure of the subject matter in the standalone Ind AS financial statements. |
Emphasis of Matter
1. We draw attention to Note 32 to the Standalone Ind AS FinancialStatements and according to the same the company is having accumulated losses (aftertaking into account the balance of reserves) of Rs 341.44 Crores as at 31.3.2020 and thenet worth of the company is negative However as per the business plan and future cashflow projections submitted by the management to us and accepted by us. The Company ismaking sincere efforts for the revival of the Business & the management is confidentto recover the losses through improved profitability in foreseeable future. Therefore noprovision for the impairment has been made and accounts for the year have been prepared on"going concern basis." Further the above projections also contains businessplan/ projected cash flow prepared by the management and accepted by us with respect tothe subsidiaries company the management is confident to also revive the operations of theloss making subsidiary companies hence no provision for impairment in the fair value ofthe investment made in the said subsidiary companies has been made in the books ofaccounts.
2. Attention is invited to note 38 of the Standalone Ind AS FinancialStatements which states that the Income Tax Department had carried out survey u/s 133 ofthe Income tax Act 1961(the IT Act) on the company along with other group companiesduring FY 2013-14 and had ordered a special audit of the books of the company u/s 142(2A)of the IT Act 1961 for AY 2011-12 & A.Y 12-13. The department had raised a demand ofRs 133 Crores (Rs 6.63 Crores for A.Y 10-11 Rs57.07 crores for A.Y 11-12 Rs 60.33 Croresfor A.Y 12-13 Rs 7.97 Crores for A.Y 2013-14& ' 0.86 Crores for A.Y2014-15) on thecompany for the aforesaid assessment years and the said demand has been disputed by thecompany and the company has initiated appellate proceedings before appropriateauthorities. The said amount has been shown as contingent liability under Note No. 27 ofthe notes forming part of standalone financial statements. Further Income tax departmenthas passed an attachment order on 22.04.2015 & 14.08.15 by which it has attachedproperties of the company in pursuant to a demand the details of the properties attachedwhich are in the name of company is as under:
803 Manas Complex Opp Star Bazaar Nr Jodhpur Cross roadSatellite Ahmedabad 380015.
603 Manas Complex Opp Star Bazaar Nr Jodhpur Cross roadSatellite Ahmedabad 380015.
Land situated at Survey Nos.719 720 721 732/1 732/2 733741 743 744 745 Kadi Thol Road Village Kadi Kasba taluka- Kadi DistrictMehsana-382715.
Factory Building Situated at survey No 745 Kadi Thol RoadVillage Kadi Kasba taluka- Kadi District Mehsana-382715
3. Attention is invited to note 29 of the Standalone Ind AS FinancialStatements and according to which a Search & Seizure action U/S 132 of the Income TaxAct took place on 24.2.99. The Income Tax department had raised demand of ' 33.12 Croresvide the block assessment Order dt. 30.4.2001. In case of the company the Hon'ble IncomeTax Appellate Tribunal ( ITAT) Ahmedabad has subsequently given partial relief to theextent of ' 28.84 Crores. The company had preferred an appeal before the Hon'ble HighCourt of Gujarat against the order of Hon'ble ITAT Ahmedabad. The Hon'ble Gujarat HighCourt vide its order dated 20th June2016 had given partial relief on some of the groundsand had also dismissed some of the grounds of the company. Against the grounds dismissedby Hon'ble High Court of Gujarat the company had further preferred an appeal beforeHon'ble Supreme Court of India and the Hon'ble Supreme Court of India vide order dated16th January2017 had dismissed the appeal of the Company. The Company had alreadyprovided an amount of Rs 2.88 Crore against the grounds dismissed by Hon'ble ITATAhmedabad during F.Y 2002-03 as well as Rs 1.27 Crores was provided in the books ofaccounts for the Assessment year in question for the interest payable up to 31-03-2005during F.Y 2004-05. However in view of the management and on the basis of the Judgment ofthe Hon'ble Gujarat High Court the amount provided/paid by the company towards totaldemand shall result in refund to the company. Pending effect of the various orders ofadjudicating authorities by the Income Tax Department the Company is yet to provide finalentries in its books of accounts even during the year under review. In view of nonavailability of order of the appeal effects from the Income Tax Department we are unableto opine on the same.
4. Attention is invited to note 40 of the Standalone Ind AS FinancialStatements and according to which the Sales Tax Department has completed the assessmentproceedings for various assessment years and raised demand of ' 3314.22 lakhs (net ofrecovery) for the earlier financial years. The company has not made any provision for theabove demand raised by the sales tax authority in its books of accounts as in view of theManagement the said demand shall not withstand before the Appellate Authorities and thecompany has already preferred an appeal before the appellate authority which is stillpending. In view of the above the said amount has been shown as contingent liabilityunder Note No. 27 of the notes forming part of standalone financial statements..
5. Attention is invited to Note 44 of the Standalone Ind AS FinancialStatements which states that the balance confirmation from the suppliers customers aswell as to various loans or advances given have been called for but the same are awaitedtill the date of audit. Thus the balances of receivables capital advancestrade payablesas well as loans and advances and certain bank balances have been taken as per the booksof accounts submitted by the company and are subject to confirmation from the respectiveparties.
6. As per the information obtained from the website of the Ministry ofCorporate Affairs (MCA) a suit has been filed against the company and its officers u/s383A(1A) 372A(9) 58A(6)(A)(I) of the Companies Act 1956 for the year 2016. As informedby the management the company is having basic information about such suit filed asreflected on the website of the MCA. However the company does not have any communicationof such proceedings against the company and its officers. As the matter is stillsubjudice we are unable to quantify the final liability and its impact if any on thecompany and its officers. (Refer Note No 41 of the standalone Ind AS financial statements)
Our opinion is not modified on the above matters.
Information other than the Financial Statements and Auditor's Reportthereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport. but does not include the standalone Ind AS financial statements and our auditor'sreport thereon.
Our opinion on the Standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the standalone Ind ASfinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance forthe Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the state of affairs (financialposition)Profit or loss(financial performance including other comprehensive income)changes in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards ('IndAS') specified under section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due. to fraud orerror.
In preparing the standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are .free from material misstatementwhether due to fraud or error. and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if; individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone Ind AS financial statements
As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional skepticism throughout the audit.We also:
Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not. detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as. fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone Ind AS financial statement or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone Ind AS financial statementsincluding the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence; and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by section 197(16) of the Act we report that thecompany has paid remuneration to its directors during the year in accordance with theprovisions of and limits laid down under section 197 read with schedule V to the Act. Theremuneration paid to any director is not in excess of the limit laid down under section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details underSection 197(16) which are required to be commented upon by us.
2. As required by the Companies (Auditor's Report) Order 2016 (''theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
3. As required by Section 143(3) of the Act we report that:
a. We have sought and except for the matters described in the Basis forQualified opinion obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit
b. Except for the possible effects of the matter described in the Basisfor Qualified opinion paragraph above In our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books
c. The standalone Balance Sheet the standalone Statement of Profit andLoss including other Comprehensive Income standalone Statement of Changes in Equity andthe standalone Statement of Cash Flow dealt with by this Report are in agreement with the.books of account.
d. The matter described under the Emphasis of Matters paragraph abovein our opinion may have an adverse effect on the functioning of the Company
e. In our opinion the aforesaid standalone Ind AS financial statementscomply with the Indian Accounting Standards specified under section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
f. On the basis of written representations received from the directorsas on March 312020 taken on record by the Board of Directors none of the Directors isdisqualified as on March 312020 from being appointed as a director in terms of Section164(2) of the Act.
g. With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B".Our report express an unmodified opinionon the adequacy and operating effectiveness of the company's internal financial controlover financial reporting.
h. With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014asamended in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in the standalone Ind AS Financial Statements ( Refer Note No 27 to theStandalone Ind AS Financial Statements.)
ii The Company did not have any long term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by
| ||For Parikh & Majmudar |
| ||Chartered Accountants |
| ||FR No. 107525W |
| ||[C.A (Dr) Hiten M. Parikh] |
|Place : Ahmedabad ||PARTNER |
|Date : 01/06/2020 ||Membership No. 40230 |
| ||UDIN: 20040230AAAADZ9591 |
ANNEXURE A -TO THE INDEPENDENT AUDIT REPORT
OF EVEN DATE TO THE MEMBERS OF N.K.INDUSTRIES LIMITED ON THE STANDALONEFIANCIAL STATEMENTS FOR THE
YEAR ENDED 31st MARCH 2020
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of
Property Plant & Equipment with effect from 1st April 2008onwards.
(b) According to the information and explanations given to us theProperty Plant & Equipment are verified by the management during the year in aphased periodical manner which in our opinion is reasonable having regard to the size ofthe Company and nature of its assets. No material discrepancies were noticed on suchverification.
(c) According to the information and explanation given to us and therecords examined by us and based on the examination of the conveyance deeds provided tous we report that the title deeds comprising of the immovable properties of land andbuilding which are freehold are held in the name of the company as at the balance sheetdate except the following properties whose titles have not been still conveyed in the nameof the company having total carrying value of ' 18.86 lakhs as at 31st March2020.
|Sr. No. ||Description of the property ||Status of ownership ||Carrying value |
|1. ||Premises located at Thirthjal Complex Ahmedabad ||Title of the property is in the name of the director and yet not conveyed in the name of the company. As stated by the management as the cooperative society in which the property is held does not allow the company to hold the assets in its name. ||5.38 |
|2. ||Land situated at Sr. No. 719 Vil kadi Taluka Kadi Dist. Mehsana in the State of Gujarat ||In the subject land Registered power of attorney of the land in question is in the name of Shri Ashwin Patel CFO on behalf of the company and necessary stamp duty has been fully paid yet titles are to be conveyed in the name of the company. ||5.49 |
|3. ||Land situated at Sr. No. 720 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat ||Unregistered Agreement to sale in the name of the company. Competent authority has ordered for payment of premium which is yet to be paid. Titles are not conveyed in the name of the company. ||1.85 |
|4. ||Land situated at Sr. No. 721 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat ||In the subject land Registered power of attorney of the land in question is in the name of Shri Ashwin Patel CFO on behalf of the company and necessary stamp duty has been fully paid yet titles are to be conveyed in the name of the company. ||3.19 |
|5. ||Land situated at Sr. No. 741 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat ||In the subject land no agreement entered with the company. However unregistered power of attorney is in the name of Mr Kamlesh Patel on behalf of the company. The titles have not been conveyed in the name of the company. ||2.93 |
|6. ||Land situated at Sr. No. 742 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat ||In the subject land no agreement entered with the company. However unregistered power of attorney is in the name of Mr Kamlesh Patel on behalf of the company. The titles have not been conveyed in the name of the company. || |
(ii) As explained to us the inventories have been physically verifiedby the management at reasonable intervals during the year. The discrepancies noticed onverification between physical stocks and the books of accounts are not material.
(iii) During the year the company has granted loans secured orunsecured to Companies firms limited liability partnerships or other parties covered inthe register maintained under section 189 of the Companies Act 2013. (the Act).
a) During the year the Company has granted interest bearing loan to twosubsidiary companies covered in the register maintained u/s 189 of the CompaniesAct2013(the Act). The terms of arrangements do not stipulate any repayment schedule andthe loan is repayable on demand. Accordingly paragraph 3(iii)(b) of the Order is notapplicable to the company in respect of repayment of the principal amount.
b) In respect of the said loans there are no overdue amounts
(iv) . On the basis of Information and explanations given to us andalso In view of the legal opinion obtained from an expert
the company has broadly complied with the provisions of Section 185 and186 with respect to the investment made & Loans Given.(Please refer the note no.30b ofthe notes forming parts of the financial statements).
(v) The Company has not accepted any deposits from the public duringthe year.
(vi) . We have broadly reviewed the books of accounts maintained by thecompany in respect of products where pursuance
to the rules made by the Central Government of India the maintenanceof Cost records has been prescribed under sub section (1) of section 148 of Companies Act2013 and we are of the opinion that prima facie the prescribed accounts & recordshave been maintained. We have however not made a detailed examination of the records.
(vii) (a) According to the information and explanations given to us andon the basis of our examination of the records of
the Company amounts deducted/ accrued in the books of account inrespect of undisputed statutory dues including provident fund ESIC income-tax salestax Goods & Service tax value added tax duty of customs duty of excise servicetax cess and other material statutory dues have been generally regularly deposited duringthe year by the Company with the appropriate authorities.
According to the information and explanations given to us noundisputed amounts payable in respect of provident fund ESIC income tax sales taxGoods & Service tax value added tax duty of customs duty of excise service taxcess and other material statutory dues were in arrears as at 31 March 2020 for a period ofmore than six months from the date they became payable.
b) According to the information and explanations given to us there areno material due of duty of excise service tax Goods & Service Tax and duty ofcustoms which have not been deposited with the appropriate authorities on account of anydispute. However according to the information and explanations given to us the followingdues of income tax sales tax & value added tax have not been deposited by the companyon account of disputes.
|Name of the statue ||Nature of Dues ||Amount (?) (Net of payment) ||Financial year to which the amount relates ||From where the dispute is pending |
|Income Tax Act1961 ||Corporate Tax ||663.83 ||FY 2009-10 ||Commissioner of Income Tax(Appeals) -IX |
|Income Tax Act1961 ||Corporate Tax ||5543.00 ||FY 2010-11 ||Income Tax Appellate Tribunal Ahmedabad |
|Income Tax Act1961 ||Corporate Tax ||6033.00 ||FY 2011-12 ||Income Tax Appellate Tribunal Ahmedabad |
|Income Tax Act1961 ||Corporate Tax ||797.60 ||FY 2012-13 ||Commissioner of Income Tax(Appeals) -IX |
|Income Tax Act1961 ||Corporate Tax ||86.00 ||FY 2013-14 ||Commissioner of Income Tax(Appeals) -IX |
|Income Tax Act1961 ||Corporate Tax (Penalty) ||2625.03 ||FY 2010-11 ||Commissioner of Income Tax(Appeals) -IX |
|Guj. Sales Tax ||Sales Tax ||130.88 ||F.Y 2008-09 ||Joint. Commissioner of Commercial Tax Appeal-I Ahmedabad |
|Guj. Sales Tax ||Sales Tax ||3314.22 ||F.Y 1990-91 199798 to 2001-02 & 2006-07 ||Sales Tax Tribunal / Commercial Tax Officer |
|Guj. Sales Tax ||Sales Tax ||3080.51 ||FY 2013-14 ||Joint. Commissioner of Commercial Tax Appeal-I |
(viii) According to information & explanations given to us Thecompany does not have any borrowings from Banks Financial institutions Government ordebenture holders during the year Accordingly paragraph 3 (viii) of the Order is notapplicable.
(ix) The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loans during the year.Accordingly paragraph 3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to us no fraudby the Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.
(xi) According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid/provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.
(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.
(xiv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
| ||For Parikh & Majmudar |
| ||Chartered Accountants |
| ||FR No. 107525W |
| ||[C.A (Dr) Hiten M. Parikh] |
|Place : Ahmedabad ||PARTNER |
|Date : 01/06/2020 ||Membership No. 40230 |
| ||UDIN: 20040230AAAADZ9591 |
ANNEXURE B -TO THE INDEPENDENT AUDIT REPORT OF EVEN DATE TO THE MEMBERSOF N.K.INDUSTRIES LIMITED ON THE STANDALONE FIANCIAL STATEMENTS FOR THE YEAR ENDED 31stMARCH 2020
Independent Auditor's Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
In conjunction with our audit of the standalone Ind AS financialstatements of M/s N.K. INDUSTRIES LIMITED ("the Company") as at and for the yearended 31st March 2020 We have audited the internal financial controls over financialreporting of the company as of that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of the company's business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Standards on Auditing issued by ICAI and deemed to be prescribedunder section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls over financial reporting and the Guidance Note issued by ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting Meaning of Internal Financial Controls overFinancial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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. InherentLimitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2020 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by the ICAI.
| ||For Parikh & Majmudar |
| ||Chartered Accountants |
| ||FR No. 107525W |
| ||[C.A (Dr) Hiten M. Parikh] |
|Place : Ahmedabad ||PARTNER |
|Date : 01/06/2020 ||Membership No. 40230 |
| ||UDIN: 20040230AAAADZ9591 |