To the Members of Patspin India Ltd.
Report on the Standalone Financial Statements
1. We have audited the accompanying financialstatements of Patspin India Ltd (the"Company") which comprise the Balance Sheet as at 31st March 2019 theStatement of Profit and Loss (including Other Comprehensive Income) Statement of Changesin Equity and the Statement of cashflows for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory referred to as "Standalone financial statements").
2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone statements for the year ended 31st March 2019 givethe information required by the Act in the manner IndASfinancial so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the company as at 31st March 2019 and loss changes inequity and its cash flows for the year ended on that date.Basis for Opinion:
Basis for Opinion:
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the
Companies Act 2013. Our responsibilities under those Standards are further describedin the Auditor's Responsibilities for the Audit of the Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat under the provisions of the arerelevanttoourauditofthe Companies Act 2013 andthe Rules financial thereunder and we have fulfilled our other ethical responsibilitiesin accordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Key Audit Matters
4. 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 financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Key Audit Matters || ||Auditor's Response |
|1 Sale of Property || ||Our audit procedures on sale of property include |
|The company has sold property comprising of Land and building of 5.31 acres for a consideration of Rs.281.43 lacs || ||(i) Obtaining land valuation report for Rs.293.4 Lacs valued by taking an average of Central Bank of India and State Bank of India's valuation reports. |
| ||(Rs. In Lakhs) ||(ii) Identification of asset being sold at competitive price by verifying the steps taken by the company for selling the assets to other wilful individual buyers where it was observed that the quotes received were less than the values mentioned in valuation reports. |
|(i) Land ||- 256.43 || |
|(ii) Building ||- 25.00 || |
|TOTAL ||281.43 || |
|Less: || || |
|Brokerage & selling exp ||- (13.72) ||(iii) Analysed the transaction in the purview of Section 180 of Companies Act 2013 Restriction on powers of Board. |
|Net Sale Consideration ||- 267.71 ||(iv) Obtaining Non objection certificate bank of India (lead bank for consortium loan) for sale of property. |
Responsibility of Management and Those Charged with Governance for the Ind AS FinancialStatements
5. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards(Standalone) specified under section 133 of the Act read with Companies (Indian AccountingStandards) Rules 2015 as amended. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgements 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 accounting records relevant to the preparationand presentation of the AS financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.
6. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
7. The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements:
8. 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.
9. As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
(i) Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
(ii) 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.
(iii) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
(iv) Conclude on the appropriateness of management's use of the ecern basis ofaccounting 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.
(v) 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.
10. Materiality is the magnitude of misstatements in the Standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the financial statements.
11. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control our audit.
12. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements:
13 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 "Annexure - A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
14 As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss (Including Other ComprehensiveIncome) Statement of
Changes in Equity and the Statement of Cash Flow dealt with by this Report are inagreement with the books of account. d) In our opinion the aforesaid Standalone financialstatements comply with the Indian Accounting Standards specified under Section 133 of theAct read with the Companies (Indian Accounting Standards) Rules 2015 as amended.
e) On the basis of written representations received from the directors as on 31st March2019 taken on record by the board of directors none of the directors are disqualified ason 31st March 2019 from being appointed as directors in terms of section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialscontrols with reference to financial statements.
g) In our opinion According to the information and explanations given to us and basedon our examination of the records of the company the Company has paid/provided formanagerial remuneration for the year ended on March 31 2019 has paid/provided by theCompany to its directors in accordance with the provisions of the section 197 of the Actread with Schedule V to 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone financial statements .
ii. The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
Annexure - A to the Independent Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the Standalone financial statements for the year ended 31 March 2019 we report that:
(i) In respect of the Company's fixed assets
(a) The company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
(b) The Property Plant and Equipment have been physically verified by the Managementat reasonable intervals in accordance with regular programme of verification. According tothe information and explanations given to us no material discrepancies were noticed onsuch verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) During this year Inventories has been physically verified by the Management andthere were no material discrepancies were noticed during such verification.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to any company firm Limited LiabilityPartnership or other parties listed in the register maintained under section 189 of theCompanies Act 2013 (the Act'). Accordingly clauses from (iii) (a) to (iii) (c) ofparagraph 3 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 no loans investments guarantee and security which meets the requirements ofsection 185 and 186 of the Act.
(v) According to the information and explanations given to us the Company has notaccepted deposits and does not have any unclaimed deposits within the meaning of Section73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of the clause 3 (v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the company pursuantto rules prescribed by the Government of India for maintenance of cost records undersub-section (1) of section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the records.
(vii) a) According to the information and explanations given to us and according to therecords as produced and examined by us in our opinion the Company is regular indepositing with appropriate authorities the undisputed statutory dues including incometax sales tax service tax value added tax goods and service tax customs duty exciseduty cess and other material statutory dues applicable to it and there are no arrears ofoutstanding statutory dues as at 31st March 2019 for a period of more than six monthsform date they become payable.
b) According to the information and explanations given to us there are following duesin respect of income tax sales tax service tax value added tax goods and service taxcustoms duty excise duty cess and other material statutory dues which have not beendeposited on account of dispute and the same being contested by the Company:
|Name of the statute ||Nature of dues ||Amount in lakhs ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act1944 ||Excise Duty ||72.99 ||August 2014 to May 2016 ||AC Central Excise Pollachi. |
|CST Act1956 ||Differential VAT on Interstate billings with local delivery at job work premises of customer as per the instruction of the customer ||146.45 ||April 2009 to March 2012 ||DC (Appeals) Pollachi. |
|TANGEDCO ||Electricity tax on Maximum demand charges ||39.72 ||January 2016 to March 2019 ||TANGEDCO. |
|TANGEDCO ||Deemed demand benefit available for use of self generated Power. ||189.72 ||April 2015 to March 2019 ||TANGEDCO. |
(viii) According to the information and explanations given by the management we are ofthe opinion that the Company has defaulted in repayment of dues to a financialinstitution bank and government.
| || |
Term Loan Interest due but not paid as on 31.03.19
Term Loan Repayment due but not paid as on 31.03.19
|Particulars ||Rs. in Lacs ||Period of defaults ||As on date of Report ||Rs. in Lacs ||Period of defaults ||As on date of Report |
|State Bank of India ||17.02 ||3 Days ||Paid ||98.50 ||51 Days ||Unpaid |
|State Bank of India ||22.12 ||51 Days ||Unpaid ||- ||- ||- |
|Central Bank of India ||21.80 ||2 Days ||Paid ||102.75 ||51 Days ||Unpaid |
|EXIM Bank ||11.59 ||51 Days ||Unpaid ||65.92 ||51 Days ||Unpaid |
|Karur Vysya Bank ||0.65 ||51 Days ||Unpaid ||22.51 ||51 Days ||Unpaid |
|Bank of Maharashtra ||9.90 ||51 Days ||Unpaid ||48.48 ||51 Days ||Unpaid |
|Canara Bank ||104.83 ||51 Days ||Unpaid ||77.56 ||51 Days ||Unpaid |
|Oriental Bank of Commerce ||16.17 ||51 Days ||Unpaid ||73.34 ||51 Days ||Unpaid |
(The default is calculated from 31.3.2019 to payment date or Audit Report date.)
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(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 ouraudit.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions of thesection 197 of the Act read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations 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 of fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure - B to the Independent Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controlswithreferenceto financialstatements of PatspinIndia Ltd ("the Company") as at 31st March 2019 in conjunction with ouraudit of the financial statements of the Company for the year ended and as at on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the control with reference to financial statements criteriaestablished by the Company of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India (ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for conduct of its business including adherence to company's policies thesafeguarding 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. Companies Act 2013
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financialcontrols and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. 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. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on theCompany's internal financial controls system with reference to financial statements.
Meaning of Internal Financial Controls with reference to financial statements reporting
A company's internal financial control with reference to financial statements 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 withreference to financial statements includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company's assets that could have a material effect on thefinancial statements.
Inherent Limitations of Internal Financial Controls with reference to financialstatements reporting
Because of the inherent limitations of internal financial controls with reference tofinancial statements 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 withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancialcontrols with reference to financial statements were operating effectively as at31st March 2019 based on the internal control with reference to financial statementscriteria 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.
| ||For L. U. Krishnan & Co. |
| ||Chartered Accountants |
| ||FRN 001527S |
| ||P. K. Manoj |
|Place: Kochi ||Partner |
|Date: May 21 2019 ||Membership No.207550 |