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Procal Electronics India Ltd.

BSE: 526009 Sector: Engineering
NSE: N.A. ISIN Code: INE700B01015
BSE 00:00 | 09 May Procal Electronics India Ltd
NSE 05:30 | 01 Jan Procal Electronics India Ltd
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VOLUME 499
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Procal Electronics India Ltd. (PROCALELECTRONI) - Auditors Report

Company auditors report

To the Members of

PROCAL ELECTRONICS INDIA LIMITED Report on the Financial Statements ADVERSE OPINION

We have audited the accompanying Ind AS financial statements of PROCAL ELECTRONICSINDIA LIMITED ("hereinafter referred to as the Company") which comprise ofthe Balance Sheet as at March 31 2021 the Statement of Profit and Loss including thestatement of Other Comprehensive Income the Cash Flow Statement and the Statement ofChanges in Equity for the year then ended and a summary of significant accountingpolicies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us because of the significance of the matter described in the basis for adverseopinion section of our report the accompanying IND As financial statements do not give atrue and fair view in conformity with the IND As and accounting principles generallyaccepted in India of the state of affairs of the company as at 31st March2021and its loss and total comprehensive income its cash flows and the changes in equity forthe year then ended on that date.

Basis for Adverse Opinion

1. Matters Related to Going Concern: The Company's net worth is erodedcompletely due continued operational losses incurred by the company and there are nobusiness activities in the company. Further borrowings from banks have been classified asnonperforming assets as per IRAC norms .

We were communicated by the management that the company is in process of settling thepending dues with bank and/or identifying the other alternative plans.

The above factors cast significant uncertainty on the Company's ability to continue asa going concern in our opinion . Pending the resolution of the above uncertainties thecompany has prepared these financial statement on a going concern basis.

2. Inventory of Raw Material & Finished goods: Inventory consists of RawMaterial & Finished goods which are lying at Silvassa Manufacturing unit of thecompany. The said unit is in the possession of Canara Bank (the lender) and hence themanagement express its inability to physically verify and ascertain the fair value of theinventory. View of the above the inventory carried at cost in the financial statements inour opinion is not reasonable since there must have been depletion in its value as it isin a lock out position for a prolonged period .

3. Fixed Assets : Since most of the fixed assets are under the control of Banks/Financial Institutions the physical verification of the assets could not be done by themanagement during the year. The plant and machinery and factory building is in a lockoutstate for a prolonged period as a result of which it is expected that the realizable valueof such assets shall be negligible.

4. Bank Account : During the year the bank account of the company wereinoperative pending KYC Compliances. All the payments on behalf of the company has beenmade from director bank accounts.

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 independence requirements that are relevant to our audit ofthe financial statements under the provisions of the Act and the Rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI's Code of Ethics. We believe that the audit evidence we haveobtained are sufficient and appropriate to provide a basis for our adverse audit opinionon the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of utmostsignificance in our audit of the financial statements for the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand in forming our opinion thereon and we do not provide a separate opinion on thesematters. We have determined the matters described below to be the key audit matters to becommunicated in our report.

Sr. No Key Audit Matters Auditor's Response
1 Accuracy of recognition measurement presentation and disclosures of Raw Material & Finished goods of Inventory as per IND As 2 We have assessed the Company's process to identify the impact of adoption of the inventory accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing are as follows:
Inventory consists of Raw Material & Finished goods which are lying at Silvassa Manufacturing unit of the company.
The said unit is in the possession of Canara Bank (the lender) and hence the management express its inability to physically verify and ascertain the fair value of the inventory. In View of the above the inventory are carried at cost in the financial statements
2 Recognition and Confirmation of Balances of Sundry Debtors Creditors and other current assets and liabilities We have assessed the Company's process to identify the balance of Sundry Debtors Creditors and other Current Asset and Liabilities in Books of Accounts. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
(i) We have relied on the accounting and figures as provided to us for audit in the absence of conformations received from parties.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's Board of Directors are responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the financial statements and our auditor's report thereon. Our opinion on thefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other information and in doing so consider whether theother information are materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors are responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givesa true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding 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 financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error. In preparing thefinancial statements management is responsible for assessing the Company's ability tocontinue as going concern disclosing as applicable matters related to going concern andusing the going concern basis of accounting unless management either intends to liquidatethe Company or to cease operations or has no realistic alternative but to do so. TheBoard of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Financial Statements

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

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

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

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

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

• Conclude on the appropriateness of management's adoption of the going concernbasis 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

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

Materiality is the magnitude of misstatement in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We haveconsidered quantitative materiality and qualitative factors in (i) planning the scope ofour audit work and in evaluating the results of our work; and (ii) to evaluate the effectof any identified misstatements in the financial statements.

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by section 143 (3) of the Act we report that:

a. we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit.

b. in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books except for the pointswhich are qualified in our audit report.

c. the Balance Sheet the Statement of Profit and Loss including the statement ofconsolidated Other Comprehensive income the Cash Flow Statement and statement of changesin Equity dealt with by this Report are in agreement with the books of account.

d. in our opinion the aforesaid Ind AS financial statements comply with the

Accounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 Companies (Indian Accounting Standards) Rules2015 asamended.

e. On the basis of written representations received from the directors of the holdingcompany as on March 31 2021 taken on record by the Board of Directors of the company noneof the directors of the company is disqualified as on March 31 2021 from being appointedas a director in terms of Section 164 (2) of the Act.

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A" to this report.

g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.

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

iii. There is no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Holding Company and its subsidiary Company.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

Place: Bhubaneswar
Date: 30/06/2021

"Annexure A" to the Independent Auditor's Report of even date on thestandalone Financial Statements of PROCAL ELECTRONICS INDIA LIMITED

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 controls over financial reporting of PROCALELECTRONICS INDIA LIMITED ("the Company") as of March 31 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the company are responsible for establishing and maintaininginternal financial controls based on "the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India". Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Group's internal financial controlsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. 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 about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) pertain to the maintenance 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) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".

Place: Bhubaneswar
Date: 30/06/2021

Annexure B

(Referred to in paragraph 2 of Report on Other Legal and Regulatory Requirements of ourreport of even date).

Referred to in paragraph 2 under the heading ‘Report on Other Legal &Regulatory Requirement' of our report of even date to the financial statements of theCompany for the year ended March 31 2021:

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

(b) Since most of the fixed assets were under the control of Banks/ FinancialInstitutions the physical verification of the assets could not be done by the managementduring the year.

(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings are held inthe name of the Company as at the balance sheet date.

2. (a) As explained to us the inventories have not been physically verified by themanagement of the company as the same are in control with financial institutions.

(b) In the absence of that we report relating to the non physical verificationinventories by the management during the period of audit .

(c) Since the Inventory under the control of the Financial Institution the companydoes not having proper records of the location of inventories and its current status.

3. According to the information and explanation provided to us the company has notgranted any loan secured or unsecured to parties covered in the register maintainedunder section 189 of the companies Act2013("the Act").Accordingly the provisionof clause 3(iii)(b)(c) of the order not applicable to the company and hence not commentedupon.

4. In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 and I86 of the Companies Act 2013In respect of loans investments guarantees and security.

5. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2021 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.

6. The Central Government has not prescribed maintenance of cost records undersubsection (1) of section 148 of the Act in respect of any activities of the Company.Therefore the provision of Clause 3(vi) of the said Order is not applicable to theCompany.

7. a)According to the information and explanations given to us and on the basis of ourexamination of the records the Company is generally regular in depositing undisputedapplicable statutory dues including provident fund employees' state insurance incometax GST cess and any other statutory dues to the appropriate authorities if theliability arises and there are no undisputed dues outstanding as on March 31 2021 for aperiod of more than six months from the date they become payable except the following : .

Central Excise Duty 444792/-
Tax Deducted At Source 25000/-
Income Tax 236160/-

b) In our opinion and according to the information and explanations given to us thereare no statutory dues as at the year-end which has not been deposited on account of adispute except the dues as discussed below:

Name of Status Nature of Dues Amount (Rs) Period to which it relates Forum where dispute pending
Duties Fine & Penalty Central Excise 16520069/- Up to March 2003 Customs Excise And Service Tax Appellate Tribunal ( CEAST)

8. In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of loans or borrowings to bank. The details of whichare given as under :

Name of the Lenders Amount outstanding as per Financial Statements Period of Default
Canara Bank 44560127/- Since 2003-2004
Gujrat State Finance 73538115/- Since 2003-2004
Corporation

The Company has not issued any debentures as at Balance Sheet Date.

9. During the year the Company has not raised moneys by way of initial public offer orfurther public offer (including debt instruments) or term loans and hence reporting underclause 3 (ix) of the Order is not applicable to the Company.

10. Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.

11. Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;

12. In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.

13. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

14. As per information and explanations given to us during the financial year thecompany has not made preferential allotment of shares which is duly disclosed in thefinancial statement of the company and has not issue any fully or partly convertibledebentures during the year.

15. Based upon the audit procedures performed and the information and explanationsgiven to us by the management the company has not entered into any non-cash transactionswith directors or persons connected with him. Accordingly the provisions of clause 3 (xv)of the Order are not applicable to the Company and hence not commented upon.

16. In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.

Place: Bhubaneswar
Date: 30/06/2021

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