Neo Corp International Ltd.
|BSE: 523820||Sector: Industrials|
|NSE: NEOCORP||ISIN Code: INE851C01014|
|BSE 00:00 | 03 Sep||Neo Corp International Ltd|
|NSE 05:30 | 01 Jan||Neo Corp International Ltd|
|BSE: 523820||Sector: Industrials|
|NSE: NEOCORP||ISIN Code: INE851C01014|
|BSE 00:00 | 03 Sep||Neo Corp International Ltd|
|NSE 05:30 | 01 Jan||Neo Corp International Ltd|
M/s NEO CORP INTERNATIONAL LIMTED
Report on the Standalone financial Statements
1. We have audited the accompanying standalone financial statements of M/s. NEO CORPINTERNATIONAL LIMITED ("the Company") which comprises the Balance Sheet asat March 31 2016 the Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounng policies and other explanatoryinformaon.
Management's Responsibility for the financial Statements
2 . The company's Board of Directors are responsible for the ma ers stated in Secon134(5) of the Companies Act 2013 (the Act') with respect to the preparaon andpresentaon of these standalone financial statements that give a true and fair view of thefinancial posion financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounng StandardsSpecified under Secon 133 of the Act read with Rule 7 of Companies (Accounts) Rules2014. This responsibility includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor prevenng and detecng frauds and other irregulari es; selec on and applica on ofappropriate accounting policies; making judgments and es mates that are reasonable andprudent; design implementa on and maintenance of adequate internal financial controlsthat are operang effetively for ensuring the accuracy and completeness of the accounngrecords relevant to the preparaon and presentaon of the standalone financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.
3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accounng andauding standards and ma ers which are required to be included in the audit report underthe provisions of the Act and the Rules made there under and the order under secon 143(11)of the Act.. We conducted our audit in accordance with the Standards on Auding Specifiedunder Secon 143(11) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amountsand disclosure in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparaon of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operang e ecv eness of such controls. An audit alsoincludes evaluang the appropriateness of accounng policies used and the reasonableness ofthe accounng estimates made by the Company's management and Board of Directors as well asevaluang the overall presentaon of the financial statements.
5. We believe that the audit evidence we have obtained is su cient and appropriate toprovide a basis for our audit opinion on the standalone financial statements exceptreported by us in paragraph 8(a) of the report.
Emphasis of Ma er
We draw a enon to the:
6. a. The Note no. 9(f) regarding other current liabili es amounng to Rs. 4567.69lacs includes 3110.92 lacs liability towards statutory dues and expenses having Rs.2364.54lacs payable for more than one year indicated high liquidity problem in the company. Thecompany has incurred cash losses of Rs. 8724.13 lacs which sizably e ecng the Net worth ofthe company. These condions along with other ma ers set forth in the said note indicatesthe existence of a material uncertainty creates doubt about the company ability to connueas a going concern. However the financial statements of the company have been prepared ongoing concern basis for the reasons stated in the said note. b. The Note no. 12(b)regarding other investments in equity shares of subsidiary companies amounng to Rs.8776.51lacs. There is no audited balance sheet of the concerned companies made available for theyear ended 31.03.2016 hence the realizable value or status of companies as on date isbeing uncertain as they are also fall in same line of business where company incurred hugeloss in current year and loan accounts are classi ed into NPA by the banks/ financialinstuons. Therefore the carrying investment at cost price without any provision fordiminuon in value is doubul and incorrect. c. The Note no. 14 regarding non current assetsshown recoverable amount from insurance company of Rs. 4.88 Crore is under arbitraon since long but considered good for the reason menoned therein.
Our opinion is not modified in respect of these ma ers.
7. In our opinion and to the best of our informaon and according to the explanaonsgiven to us and except comment given by us in point 8(a) to 8(k) below by us theaforesaid standalone financial statements give the informaon required by the Act in themanner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India of the state ofa airs of the Company as at 31 March 2016 its Profit and its cash flows for the yearended on that date.
Report on Other Legal and Regulatory Requirements
8. As required by secon 143(3) of the Act we further report that:
a. The Company has maintained its account on a highly integrated computerized sowaresystem namely "SAP" but the books of accounts generated through the sowaresystem di ers from the Indian tradi onal formats of the books of accounts. However on thebasis of viewing the data and report generated in the computerized form we conducted ouraudit. We are of the view that the appropriate feeding of the primary data from thecorresponding source documents their processing on SAP and resultant trial balancegenerated by the system provide a reasonable basis for us in expressing our opinion on thestandalone financial statements under reference to this report.
b. The disclosure made by the company of Segment Informaon in note no. 31 is not fullyin accordance with requirement of AS-17 of the ICAI issued on Segment Reporng.
c. It is observed that the company is receiving regular noc es in compliance ofStatutory and Regulatory requirements but there is no register or transparent system isadopted to ensure the correct posion hence we are unable to comment on the effect of thesame in the financial statement.
d. The company is not complied of furnished Tax Audit Report to Income Tax Departmentfor the financial year 14-15 as per provision of sec on 44AB of Income Tax Act 1961 andconsequently not led Income Tax Return for the said year. In absence of informaon we areunable to determine the effect of the same in financial statement.
e. The company is failed in compliance of furnished report of pricing policy to theIncome Tax Department in accordance with the provision of secon 92E of the Income Tax Act1961 for the year 2014-15. In absence of informaon we are unable to determine the effectof the same in financial statement.
f. As per our veri ca on and the explana on given by the management we are of theopinion that TUFF Subsidy Receivable for amounng to Rs 53335441/- as on 31.03.2016grouped under note no. 19 "Other Current Assets" of the Balance sheet is doubtfull. Hence the loss of the company is understated and Current Assets is overstated byRs.53335441/-.
g. The company is unable to give any evidence for FDR receivables of Rs 3227366/- ason 31.03.2016 shown under note 17 "Cash and Bank Balance" of balance sheethence in our view Cash and Bank balances is over stated and loss is understated by Rs.3227366/-.
h. The company has not paid/provide for any interest liability towards unsecured loantaken from directors their relaves and body corporate for the year. In absence ofinformaon we are unable to quanf y the amount of interest expenses liability of unsecuredloan and consequently the losses of the company are under stated as on date of BalanceSheet.
i. The company has wri en back Capital Reserve of Rs.2607829/-in Profit & LossAccount but it should be required to be wri en back in proporon of depreciaon charged toProfit & Loss Account of respecve assets but same has not been done. In absence ofinformaon we are unable to determine the effect of the same in financial statement.
j. Company has shown exchange di erence income of Rs. 120095398/- in note no. 21 ofOther Income. But as per our veri ca on and explana on given by the company it is exceponal in nature therefore should be classi ed in
Exceponal and Extraordinary Items instead of grouped in other income. Hence OtherIncome is overstated and Exceponal and Extraordinary Item understated by Rs.120095398/-.
k. The disclosure given by the company in note 32 ( financial and Derivave Instruments)regarding un-hedged poron of foreign exposure by derivaves instruments is not inaccordance with the provision and rules of the Companies Act 2013.
l. Subject to our comments in 8 (a) to 8 (k) above we have sought and obtained all theinformaon and explanaons which to the best of our knowledge and belief were necessary forthe purpose of our audit;
m. In our opinion proper books of accounts as required by the law have been kept by thecompany except reported by us in point 8(a) above so far as it appears from our examinaonof the reports generated by the Computerized So ware System namely SAP';
n. Subject to our comments in 8(a) above the Balance Sheet Statement of Profitand Loss and Cash Flow Statement dealt with by this Report are in agreement with thebooks of accounts.
o. Subject to our comments in 8(b) above in our opinion the aforesaidstandalone financial statements comply with the applicable Accounng Standards Specifiedunder Secon 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
p. On the basis of wri en representaons received from the directors as on March 312016 and taken on record by the Board of Directors none of the directors is disquali edas on March 31 2016 from being appointed as a director in terms of Secon 164(2) of theAct.
q. With respect to adequacy of the internal financial controls over financial reportingof the company and the opera ng e ecv eness of such controls refer to our separate reportin
r. In our opinion and to the best of our informaon and according to the explanaonsgiven to us we report as under with respect to other ma ers to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 :
i. The Company has disclosed the impact of pending lig aons on its financial posion inits financial statements.
ii. The Company did not have any on long-term contracts including derivav es contractsfor which there were any material foreseeable losses;
iii.The company has failed to comply the provision in regards to the transfer ofunpaid dividend to the Investor Educaon and Protecon Fund and did not transferred sum ofRs.333104/- to aforesaid fund relang to financial year 2006-07.
9. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-secon (11) of secon 143 of theAct we give in the "Annexure B" a statement on the ma ers Specified inparagraphs 3 and 4 of the Order.
ANNNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT (Annexure referred to inparagraph 7 (q) under "Report on Other Legal and Regulatory Requirements" of ourIndependent Auditors'
Report to the members of M/s. Neo Corp Interna onal Limited on the stand alonefinancial statement for the year ended 31 March 2016) Report on the Internal financialControls under Clause (i) of Sub-secon 3 of Secon 143 of the Companies Act 2013("the Act")
We have audited the internal financial controls over financial reporng of M/s. Neo CorpInternational Ltd. ("the Company") as of March 31 2016 in conjuncon with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essenal components of internal control statedin the Guidance Note on Audit of Internal financial Controls over financial Reporng issuedby the Institute of Chartered Accountants of India. These responsibilies include thedesign implementaon and maintenance of adequate internal financial controls that wereoperang effetively for ensuring the orderly and e cient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetecon of frauds and errors the accuracy and completeness of the accounng records andthe mely preparaon of reliable financial informaon as required under the Companies Act2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporng based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal financial Controls Over financial Reporting(the "Guidance Note") and the Standards on Auding to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporng was established andmaintained and if such controls operated effetively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporng and their operang e ecveness. Our audit of internal financial controls over financial reporng included obtainingan understanding of internal financial controls over financial reporng assessing therisk that a material weakness exists and tesng and evaluang the design and operang e ecveness of internal control based on the assessed risk. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. We believe that the auditevidence we have obtained is su cient and appropriate to provide a basis for my / ourquali ed / adverse audit opinion on the Company's internal financial controls system overfinancial reporng.
Meaning of Internal financial Controls Over financial Reporng
A company's internal financial control over financial reporng is a process designed toprovide reasonable assurance regarding the reliability of financial reporng and thepreparaon 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 reffect the transactions anddisposions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparaon of financial statements inaccordance with generally accepted accounng principles and that receipts and expendituresof the company are being made only in accordance with authorisaons of management anddirectors of the company; and (3) provide reasonable assurance regarding preven on or melydetecon of unauthorised acquision use or disposion of the company's assets that couldhave a material effect on the financial statements.
Inherent Limitaons of Internal financial Controls Over Fi financial Reporng
Because of the inherent limitaons of internal financial controls over financial reporng including the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojecons of any evaluaon of the internal financial controls over financial reporng tofuture periods are subject to the risk that the internal financial control over financialreporng may become inadequate because of changes in condions or that the degree ofcompliance with the policies or procedures may deteriorate.
According to the informaon and explanaon given to us the Company has establishedits internal financial control over financial reporting on criteria based on orconsidering the essen al components of internal control stated in the Guidance Note onAudit of Internal financial Controls Over financial Reporng issued by the Institute ofChartered Accountants of India in except the following area: a. There is no proper systemexist in the company for iden c aon of common and specific expenses incurred unit wise.However there is no overall impact on the pro tability of the company. b. There is no welldefined scope of work designed for internal audit as per the size and nature of company.There should have been proper guidelines and scope under which internal auditor shouldperform their work and shall serve the purpose of e ecve use of same. c. There is nosystem exist in the company for con rmaon once in the year or other basis from Debtors /Creditors / Loans & Advances or any balances appearing either in debit or credit ofany party. Hence our opinion on the financial statement is subject to con rmaon fromcaponed pares. d. There are weaknesses in internal control system of the company in payingthe statutory dues like Income Tax TDS PF ESIC etc. This causes either delay or nonepayment on due dates. The company has not established proper mechanism or control systemfor checking of transactions f or deducng TDS and there are many transactions during theyear where TDS has not been deducted. e. There is weakness in the authorisaon and controlsystem of the company resulng into large number of entries with material amount enteredand reversed on subsequent dates. This pracc e is going on in the books friendly in dierent dates mostly at the end of month/quarter and corrected entries are also missing.There are entries inter debtor's / creditor's observed without proper authority leer/communicaon but no sasf actory reason given by the company in these respect. becauseof above these reasons we are unable to obtain su cient appropriate audit evidence toprovide a basis for our opinion whether the Company had adequate internal financialcontrols over financial reporng and whether such internal financial controls were operangeffetively as at March 31 2016. We have considered the disclaimer reported above indetermining the nature ming and extent of audit tests applied in our audit of thestandalone financial statements of the Company and the disclaimer does not affect ouropinion on the standalone financial statements of the Company.
ANNNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT (Annexure referred to inparagraph 9 under "Report on Other Legal and Regulatory Requirements" of ourIndependent Auditors' Report to the members of M/s. Neo Corp International Limited on thestand alone financial statement for the year ended 31 March
1) a. The Company has maintained proper records showing full Particulars includingquant av e details. However the Fixed Assets register shown to us for our verification isnot shflows complete details of the respective asset as required by law.
b. The fixed assets of the company were physically veri ed by the management during theyear in a phased periodical manner which in our opinion is reasonable having regard tothe size of the company and the nature of its assets. According to the informaon andexplanaon given to us no material discrepancies were noced on such physical veri caon.
c. According to the informaon and explanaons given to us and records examined by us andbased on the examinaon of the registered sale deeds transfer deeds etc. of the immovableproperty provided to us for verification are held in the name of the company as at thebalance sheet date.
In respect of immovable properes of land and buildings that have been taken on leaseand disclosed as fixed assets in the financial statement the lease agreements are in thename of the company where the company is the lessee in the agreement.
2) a. As per informaon and explanaon given to us inventories (except stocks in transitand stock lying with third pares con rma on for which has been obtained) have beenphysically veri ed by the management at reasonable intervals during the year. In ouropinion the procedures of physical verification of inventories followed by the managementwere reasonable and adequate in rela on to the size of the company and the nature of itsbusiness.
b. As per informaon and explanaon given and verification made by us the discrepanciesnoced on physical verification of the inventory as compared to books records which hasbeen properly dealt with in the books of account were not material.
3) As per the informaon and explanaon given to us the company has granted loanssecured or unsecured to Companies Firms Limited Liability Partnerships or other parescovered in the register maintained u/s 189 of the Companies Act 2013 and the year endhence this clause not applicable.
4) In our opinion and according to the informaon and explanaons given to us thecompany has complied with the provisions of secon 185 and I86 of the Companies Act 2013In respect of grants of loans making investments and providing guarantees and securies.
5) According to the informaon and explanaon given to us the Company has not acceptedany deposit during the year from the public within the meaning of the provision of Secon73 to 76 of the Companies Act 2013 or any other relevant provisions of the Act and therule made there under.
6) The maintenance of cost records as Specified by the Central Government under subsec on (1) of sec on 148 of the Companies Act 2013 is applicable to the Company and asper informa on and explana on given to us the company has maintained proper cost recordsin accordance with such rules. However the cost records and the compliance reports ascontemplated under these rule have not been produced for our veri caon.
7) a. According to the informaon and explanaons given to us and records examined by usin our opinion the Company is not regular in deposing undisputed statutory dues inrespect of Provident Fund Investor Educaon and Protecon Fund Dividend Employees StateInsurance Income Tax VAT/Sales Tax Wealth Tax Customs duty Excise duty Service TaxCess and other material statutory dues as applicable with appropriate authories. There areoutstanding of Rs. 2982.57 lacs (including interest there on) pertains to undisputedarrears of statutory dues as on 31.03.2016 and out of which Rs.2428.24 Lacs (includinginterest there on) pertaining to undisputed arrears of statutory dues which have remainedoutstanding as at 31st March 2016 for a period of more than six months from the date ofits payable.
The Company has also not deposited the unpaid dividend declared for the year2013-14 amounng t o Rs. 7541450/- in the separate bank account as per the provision ofsecon 124 of the Companies Act 2013 and transferred amounng t o Rs. 333104/- to InvestorEducaon and Prot econ F und within me in ac cordance with the relevant provisions of secon125 of the Companies Act 2013 and rules made there under related to financial year2006-07.
More over the company has paid dividend amount to Rs.
152541/- out of Rs. 7604440/- declared for the year 2013-
14. It is also observed that this dividend has been paid directly to its Specifiedshareholders instead of all shareholders and rou ng through separate account as requiredby the Companies Act 2013 and norms of SEBI. b. According to the informaon and explanaongiven to us the following statutory dues which have not been deposited on account ofdispute pending before appropriate authories are reported as under:
8) In our opinion and according to the informaon and explanaon given to us thecompany has defaulted in the repayment of principal and interest on loans and borrowingsto the financial instuons and banks. Resulng which they classi ed under NPA category dueto failure of the company to meet interest and principal repayment obligaons in due meexcept the IDBI Bank and Punjab Naonal Bank as on the date of signing the report.
9) In our opinion and according to the informaon and explanaon given to us the companyhas not taken any Term Loan during the year hence reporng under this clause notapplicable. 10) In our opinion and to the best of our knowledge and according to theinformaon and explanaons given to us no fraud by the Company and no material fraud on theCompany by its employees has been noced or reported during the year. 11) In our opinionand according to the informa on and explanaons given to us the company has paid /provided managerial remuneraon in accordance with the requisite approvals mandated by theprovision of secon 197 r ead with schedule V of the Companies Act 2013.
12) The company is not a Nidhi Company as per the meaning of Companies Act 2013 hencethis clause not applicable.
13) In our opinion and according to the informa on and explanaons given to us thecompany is in compliance with secon 177 and secon 188 of the Companies Act 2013 whereapplicable for all transactions with the related pares and the detail of related parttransactions have been disclosed in the financial statements as required by the applicableaccounng standards.
14) During the year the company has not made any preferenal allotment or privateplacement of shares or fully or partly converble debentures and hence reporng under thisclause not applicable. 15) In our opinion and according to the informa on and explanaonsgiven to us the company has not entered in to any non-cash transactions with itsdirectors or relav e of directors or its holding subsidiary or associate company orperson connected with them and hence provision of secon 192 of the Companies Act 2013 arenot applicable.
16) The Company is not required to be registered under secon 45-IA of the Reserve Bankof India Act 1934.