Provogue (India) Ltd.
|BSE: 532647||Sector: Industrials|
|NSE: PROVOGE||ISIN Code: INE968G01033|
|BSE 00:00 | 14 Nov||Provogue (India) Ltd|
|NSE 05:30 | 01 Jan||Provogue (India) Ltd|
|BSE: 532647||Sector: Industrials|
|NSE: PROVOGE||ISIN Code: INE968G01033|
|BSE 00:00 | 14 Nov||Provogue (India) Ltd|
|NSE 05:30 | 01 Jan||Provogue (India) Ltd|
The Members Provogue (India) Limited
Report on the Audit of the Standalone Ind AS Financial StatementsQualified Opinion
We have audited the Standalone Ind AS financial statements of Provogue(India) Limited ("the Company") which comprise the balance sheet as at 31stMarch 2019 and the statement of Profit and Loss (Including Other Comprehensive Income)statement of cash flows and statement of changes in equity for the year then ended andnotes to the Standalone financial statements including a summary of significantaccounting policies and other explanatory information. In our opinion and to the best ofour information and according to the explanations given to us except for the possibleeffects of the matter described in the Basis for Qualified Opinion paragraph theaforesaid standalone Ind AS financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including the Ind AS of the financial position ofthe Company as at 31st March 2019 and its financial performance including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Material Uncertainty Related to Going Concern
Attention is invited to Note No. 47 in the standalone financialstatements which indicate that the Company has incurred losses during the current andprevious years the Company has accumulated losses and its net worth has been fullyeroded. Further the credit facilities of the Company have also been classified assubstandard (Non Performing Assets) as per RBI guidelines and the lenders have filed apetition under Insolvency and Bankruptcy Code 2016 (IBC) with the Hon'ble NationalCompany Law Tribunal Mumbai Bench (NCLT). These conditions indicate the existence of amaterial uncertainty that may cast significant doubt about the Company's ability tocontinue as a going concern. However the financial statements of the Company have beenprepared on a going concern basis for the reasons stated in the said note in respect ofinitiation of Corporate Insolvency Resolution Process (CRIP).
Basis for Qualified Opinion
As explained in Note 46 to the Ind AS financial standalone statementsregarding the Company's financial involvement aggregating Rs. 11256.31 Lacs invarious subsidiaries / step-down subsidiaries and Joint Ventures. These Subsidiaries havemade heavy losses and have uncertainty regards to realisation of assets and the net worthof few subsidiaries have substantially eroded. The Company has not provided any provisionregards to impairment of these assets as stated in the note. Accordingly we are unable tocomment upon the resultant effect of same on the Assets Liability and Loss of the company
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the Standalone financial statements under the provisions of the Companies Act 2013 andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance 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
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 Standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. During the course of our audit we have determinedthat there are no key audit matters to be communicated in our report except for thematters prescribed in Basis of Qualified Opinion & Material Uncertainty Related toGoing Concern section.
Information Other than the Financial Statements and Auditor'sReport Thereon
The Company's Board of Directors / Management is responsible forthe other information. The other information comprises the information included in theBoard / Management Report Report on Corporate governance and Business Responsibilityreport but does not included in the Standalone financial statements and our auditor'sreport thereon.
Our opinion on the Standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone financial statements orour knowledge obtained during the course of our 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 Financial Statements
In accordance with the applicable provisions of the Insolvency andBankruptcy Code 2016 (IBC) The Andhra Bank in its capacity as financial creditor hasfiled a petition under IBC with the Honorable National Company Law Tribunal Mumbai Bench(NCLT). The NCLT vide its order dated 25th July 2018 admitted the Corporate InsolvencyResolution Process (CIRP) in respect of the Company and appointed Mr. Jitendra R Yadav asthe Interim Resolution Professional (IRP) in terms of the IBC. However the committee ofcreditors in the first meeting held on 24th August 2018 decided to appoint Mr. AmitGupta as the Resolution Professional (RP') of the Company. The appointment ofMr. Amit Gupta was confirmed by NCLT order dated 26th September 2018. On appointment ofthe RP under the Code the powers of the Board of Directors of the Company were suspended.
The Company's Board of Directors / Management is responsible forthe matters stated in section 134(5) of the Companies Act 2013 ("the Act") withrespect to the preparation of these Standalone Ind AS financial statements that give atrue and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe Ind AS and accounting principles generally accepted in India including the IND ASspecified under section 133 of the Act. 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; 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 the Standalone 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. The management is alsoresponsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the FinancialStatements
1. Our objectives are to obtain reasonable assurance about whether theStandalone financial statements as a whole are free from material misstatement whetherdue 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 SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone financial statements.
2. As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also :
Identify and assess the risks of material misstatement of theStandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate 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 Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls system in placeand the operating 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate 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 conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of theStandalone financial statements including the disclosures and whether the financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
3. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant defficiencies in internal control that we identify during ouraudit.
4. We also provide those charged with governance with a statement thatwe have 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.
5. From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the Standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Emphasis of Matter
We draw attention to the following matter in the Notes to theStandalone financial statements: i) We draw attention to Note 47 of the standalonefinancial statements in respect of initiation of Corporate Insolvency Resolution Process(CRIP) and the preparation of standalone financial results on going concern basis for thereasons stated therein. ii) Note 39 (e) to the Standalone financial statements regardingnon provision of service tax for the period from 1st June 2007 to 30th September 2011 onrent on immovable properties taken for commercial use by the Company aggregating Rs.279.47 Lacs pending final disposal of the appeal filed before the Hon'ble SupremeCourt. The matter is contingent upon the final outcome of litigation.
Our opinion is not qualified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
1 As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central
Government of India in terms of sub-section (11) of section 143 of theCompanies Act 2013 we give in the Annexure A statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2 As required by Section 143(3) of the Act we report that: a) We havesought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.
(b) Except the possible effects of the matter described in the Basisfor Qualified Opinion paragraph in our opinion proper books of account as required bylaw have been kept by the Company so far as it appears from our examination of thosebooks.
(c) The Standalone Ind AS financial statements dealt with by thisReport are in agreement with the books of account.
(d) Except the possible effects of the matter described in the Basisfor Qualified Opinion paragraph in our opinion the aforesaid Standalone financialstatements comply with the IND AS as specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.
(e) The matter described in the Basis for Qualified Opinion Emphasisof Matters and Material uncertainty relating to going concern assumption paragraph abovein our opinion may have an adverse effect on the functioning of the Company; (f) On thebasis of the written representations received from the directors as on 31st March 2019none of the directors is disqualified as on 31st March 2019 from being appointed as adirector in terms of Section 164 (2) of the Act. However this was not taken on record bythe Board of Directors as Corporate Insolvency Resolution process (CIRP) is initiatedagainst the Company and the powers of the Board are suspended during the CIRP.
(g) The Qualification relating the maintenance of accounts and othermatters connected therewith are as stated in the basis of Qualified opinion paragraph.
(h) With respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in
(i) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 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 if anyon its financial position in its Standalone financial statements (Refer Note 39 of the IndAS Financial Statements);
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses. iii. There havebeen no delays in transferring amounts which were required to be transferred to theInvestor Education and Protection Fund by the company.
3. In our opinion and according to the information and explanationsgiven to us the remuneration paid by the Company to its directors during the current yearis in accordance with the provisions of Section 197 of the Act. The remuneration paid toany director is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
The Annexure referred to in Paragraph 1 under the heading "Reporton Other Legal and Regulatory Requirements" in our Independent Auditor's Reportto the members of Provogue (India) Limited for the year ended 31st March 2019.
As required by the Companies (Auditors Report) Order 2016 andaccording to the information and explanations given to us during the course of the auditand on the basis of such checks of the books and records as were considered appropriate wereport that:
(i) a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of its fixed assets.
b) As explained to us the fixed assets have been physically verifiedby the management in accordance with a phased program of verification which in ouropinion is reasonable considering the size of the Company and the nature of its assets.In accordance with this program certain fixed assets were verified during the year. Thefrequency of verification is reasonable and no discrepancies have been noticed on suchphysical verification.
c) According to the information and explanations given to us and on thebasis of our examination of records of the Company the title deeds of immovableproperties are held in the name of the Company.
(ii) The inventories have been physically verified by the managementduring the year at reasonable intervals. Discrepancies noticed on physical verification ofinventories as compared to book records were not material and have been properly dealtwith in the books of account.
(iii) During the earlier years the company has granted unsecured loansto the companies covered in the register maintained under section 189 of the CompaniesAct 2013.
a) According to the information and explanations given to us in ouropinion the terms and conditions on which the unsecured loans have been granted to thecompanies covered in the register maintained under Section 189 of the Act were not primafacie prejudicial to the interest of the Company;
b) The terms of arrangements do not stipulate any repayment scheduleand the loans are repayable on demand. Accordingly paragraph 3(iii)(b) of the Order isnot applicable to the Company in respect of repayment of the principal amount;
c) There are no overdue amounts in respect of such loans
(iv) In our opinion and according to the information and explanationgiven to us in respect of loans investments guarantees and security the Company hascomplied with the provisions of section 185 and 186 of the Companies Act 2013.
(v) The Company has not accepted any deposits from the public inaccordance with the provisions of sections 73 to 76 of the Act and the rules framed thereunder.
(vi) The Central Government has prescribed the maintenance of costrecord under Section 148(1) of the Act. We have not reviewed the cost records maintainedby the Company but based on the information submitted by the Company we are of the viewthat such accounts and records have been made and duly maintained.
(vii) (a) Accordingly to the records of the Company the undisputedstatutory dues including Provident Fund Employees' State Insurance Income TaxSales Tax Service Tax duty of Customs duty of Excise Value Added Tax Cess Goods andService Tax and other statutory dues wherever applicable have regularly been depositedwith the appropriate authorities. There are no undisputed amount payable in respect ofsuch statutory dues which have remained outstanding as at 31st March 2019 for a periodmore than six months from the date they became payable.
(b) According to the information and explanations given to us dues ofincome tax sales tax value added tax service tax duty of customs duty of exciseGoods and Service Tax which have not been deposited on account of any dispute with therelevant authorities are as under:
(viii) In our opinion and according to the information and explanationsgiven to us the Company has defaulted in the repayment of borrowings to banks since thecredit facilities were classified as sub standard (Non Performing Assets) due to expiry ofstipulated time for SDR and further Corporate insolvency resolution process("CIRP") under the IBC Code 2016 ("IBC") was initiated against thecompany vide an order of Mumbai bench of National company Law Tribunal ("NCLT")dated 25th July 2018.
The amount outstanding at the end of the year are as under :
The company does not have any loans or borrowing from financialinstitution or Government and has not issued any debentures.
(ix) The Company has not raised any money by way of initial publicoffer further public offer (including debt instruments) and term loans during the year.Accordingly the provisions of Clause 3(ix) of the Order are not applicable to theCompany.
(x) According to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the course of our audit.
(xi) According to the information and explanation given to us and basedon our examination of the records of the Company the Company has paid / provided formanagerial remuneration in accordance with requisite approvals mandated by the provisionsof 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 examinations of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable. Thedetails of such related party transactions have been disclosed in the Standalone Ind ASfinancial statements as required by applicable accounting standards.
(xiv) According to the information and explanations given to us andbased on our examination of the records the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us andbased on our examination of the records 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-IAof the Reserve Bank of India Act 1934. Accordingly the provisions of Clause 3(xvi) ofthe Order are not applicable to the Company.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
of even date on the Standalone Ind AS financial statements of Provogue(India) Limited for the year ended 31st March 2019.
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the ("the Act")
We have audited the internal financial controls over financialreporting of Provogue (India) Limited ("the Company") as of 31st March 2019 inconjunction with our audit of the Ind AS standalone financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal controls over financialreporting criteria established by the Company considering the essential components ofinternal controls stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") 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 ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013 ("the Act").
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Act to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
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 controls based on the assessed risk.The procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the Standalone Ind AS financial statements whetherdue to fraud or error. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial control system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial controls over financial reportingis a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of Ind AS financial statements for externalpurposes in accordance with generally accepted accounting principles. A company'sinternal financial controls over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of Ind AS financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a materialeffect on the Ind AS standalone financial statements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
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 financialcontrols 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 to the best of our information and according to theexplanations given to us 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 31st March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over
Financial Reporting issued by the Institute of Chartered Accountants ofIndia..