R J Bio-Tech Limited
"Siddharth Arcade" Opp. Holiday Camp Station Road
Aurangabad - 431 005
01] Qualified Opinion
We have audited the accompanying financial statements of R J Bio-Tech Limited(the Company') which comprise the Balance Sheet as at 31 March 2020 the Statementof Profit and Loss the Cash Flow Statement for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as financial statements').
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid financial statements give the informationrequired by the Companies Act 2013 as amended (the Act') in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at 31 March 2020 its lossits cash flows for the year ended on that date.
02] Basis for Qualified Opinion
i) Following events or conditions indicate that a material uncertainty exists that maycast significant doubt on the Company's ability to continue as a going concern andtherefore it may be unable to realise its assets and discharge its liabilities in thenormal course of business. The financial statements (and notes thereto) do not disclosethis fact. However the financial statements of the Company have been prepared on a goingconcern basis.
We draw attention to the standalone financial statements which indicates that -
- The Company has incurred a net loss of Rs. 04.15 Crores during the year ended 31stMarch 2020 and also its current liabilities over current assets exceeded by Rs. 22.94Crores.
- The Company has accumulated losses and its Net Worth has been fully eroded.
- The Company's financing arrangements expired and the amount outstanding of Rs. 36.89Crores was payable on March 31 2020. The Company has been unable to re-negotiate orobtain replacement financing and is currently classified by bank as Non Performing Assets.
ii) As per the information & explanations given management has sent balanceconfirmations to outstanding debtors but we have not received the confirmations. In theabsence of unavailability of confirmations we are unable to confirm or verify byalternative means accounts receivable included in the Balance Sheet at a total amount ofRs.16.98 crores (before provision for bad & doubtful debts of Rs. 9.62 Crores) as atMarch 31 2020.
iii) Under the Micro Small fit Medium Enterprises Development Act 2006 which cameinto force from 2nd October 2006 certain disclosures are required to be made relating toMicro Small fit Medium Enterprises. According to the information fit explanation given tous and on the basis of our examination of the records of the company the company has sentnecessary communication to all the vendors to confirm their MSME Status however the sameconfirmation is awaited. Since the relevant information is not readily available nodisclosure have been made in the accounts.
iv) The company has not determined the liability towards the gratuity retirementbenefits leave encashment as per the accounting standard 15 - "EmployeeBenefits" prescribed under section 133 of the Companies Act 2013. The said provisionhas not been made in the books of accounts as per the acturial valuation report. Thefinancial statement do not disclose the financial impact of the above provisions. TheProfit in the statement of Profit fit Loss and Current Liabilities are understated /overstated to that extent. This constitutes a departure from the Accounting Standard -15"Employee Benefits".
As a result of the matters stated in Para (ii) Para (iii) and Para (iv) we wereunable to determine whether any adjustments might have been found necessary in respect ofrecorded receivables and payables in the Balance Sheet and the corresponding elementsmaking up the Statement of Profit and Loss and Cash Flow Statement.
v) As per Internal Audit Report dated 22nd June 2020 has given Disclaimer related tocirculation and use of its report because of which we cant rely on the same.
We conducted our audit in accordance with the Standards on Auditing (Sas) specifiedunder section 143(10) of the companies Act 2013. Our responsibilities under thoseStandards are further described in Auditor's Responsibilities for Audit of FinancialStatements section of our report. We are independent of the Company in accordance with thecode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAl's Code of Ethics Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our Qualified opinion.
03] Other Matters
As the company being a listed company it is mandatory to appoint whole time companysecretary but the company has not appointed new company secretary till the date of signingthe financials i.e. 29th June 2020. Previous Company Secretary has resigned on 13 April2020.
04] Key Audit Matters
Key audit matters are those matters that in our professional judgement 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 theron and we do not provide a seprate opinion an these matters.
These matters has been addressed in the Basis for Qualified Opinion paragraph of ourAudit Report.
05] Management's Responsibility for the Financial Statements
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 standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity) and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
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.
Those Board of Directors are also responsible for overseeing the company's financialreporting process.
06] Auditor's Responsibility
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 the .basis of these financial statements.
07] 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 ofthe Companies Act 2013 we give in the 'Annexure A'a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2) As required by section 143(3) of the Act we report that:
a) Except for the effects of the matters described in Basis for Qualified Opinionparagraph we have sought & obtained all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit;
b) Except the matters described in Basis for Qualified Opinion paragraph in ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books.
c) Except for the effects of the matters described in Basis for Qualified Opinionparagraph the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealtwith by this Report are in agreement with the books of account;
d) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) The matter described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company.
f) on the basis of written representations received from the directors as on March 312020 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.
g) 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 B'; and
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 in our opinionand to the best of our information and according to the explanations given to us:
i. The details of pending litigations amount involved contingent liability for theselitigations are given in Note No. 37 to the financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There are no such amounts which are required to be transferred to InvestorEducation and Protection Fund in accordance with the relevant provisions of the CompaniesAct 2013 and rules made there under.
ANNEXURE A' TO THE AUDITOR S REPORT
REFERRED TO IN PARAGRAPH 7 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF R J BIO-TECHLIMITED ON THE FINANCIAL STATEMENTS;
FOR THE YEAR ENDED AS ON 31.03.2020
(i) Property Plant & Equipments:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant & Equipments.
(b) All property plant and equipment have not been physically verified by themanagement during the year but there is a regular programme of verification designed tocover all items in a phased manner in our opinion it is reasonable having regard to thesize of the Company and the nature of its assets. No material discrepancies were noticedon such verification.
(C) Title deeds of immovable property has been held in the name of company for thispurpose we have relied on Title Investigation Report issued by advocate dated 30.06.2014.
According to the information & explanations given the annual physical verificationof inventory could not be conducted as on 31st March 2020 due to Government imposedlockdowns and travel restrictions because of COVID 19. As per the information giveninventory verification was conducted on a later date 22nd June 2020. The managementcarried out appropriate roll-back procedures to arrive at implied stock levels as on 31stMarch 2020 which was cross checked and reconciled with the inventory level as perCompany's inventory software.
As per information & explanations given to us no major discrepancies were noticedon such . physical count & verification of stock as compared .to book records.
During the year under review the company has not granted any loan secured or unsecuredto Companies Firms Limited Liability Partnership or other parties covered in registermaintained u/s 189 of the Companies Act 2013 hence clause (iii) (a) to (c) are notapplicable.
(iv) Loans Investment and Guarantees
As per the information and explanations given to us we are of the opinion that theCompany has complied the provisions of Section 185 and 186 of the Companies Act 2013
The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3 (v) of the Order are not applicable to the Company and hencenot commented upon.
(vi) Cost Records :
As explained to us Central Government has not prescribed for maintenance of costrecords under sub-section (1) of section 148 of Companies Act 2013.
(vii) Statutory Dues:
(a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employee's state insurance income-tax customsduty goods and service tax cess and other statutory dues applicable to it.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax customsduty goods and service tax cess and other statutory dues were outstanding at the yearend for a period of more than six months from the date they became payable except infollowing cases noticed during the period under review:
i) Income Tax demand reflected on Income Tax website of Rs.18825/- for the period fromA.Y. 2007-08 to 2014-15 for which rectification u/s 154 is pending.
ii) Undisputed demand for TDS defaults shown on TDS Traces website of Rs.632050.00/-which are not provided in books.
(c) According to the information and explanations given to us there are no materialdisputed dues in respect of Service Tax Duty of Customs and cess which have not beendeposited with the appropriate authorities on account of any dispute. However accordingto information and explanations given to us & on the basis of documents examined thefollowing dues of Income tax has not been deposited by the Company on account of disputes:
NAME OF THE STATUE ; THE INCOME TAX ACT 1961
|Period ||Income Tax Demand ||Details ||Forum |
|A. Y. 2013-2014 ||NIL (Refer Note) ||Income Tax Department Filed Appeal against the Order of Commissioner Of Income Tax (Appeals)-1 Aurangabad ||Income Tax Appellate Tribunal Pune |
|A. Y. 2014-2015 ||Rs. 8244360/- ||Income Tax Department Filed Appeal against the Order of Commissioner Of Income Tax (Appeals)-1 Aurangabad ||Income Tax Appellate Tribunal Pune |
Assessed income has been set off against the B/F Business Loss hence Tax Liability isNIL.
(viii) Default to FIS & Banks:
In our opinion & according to the information given to us the company hasdefaulted in repayment of dues to the financial institutions and bank details are asunder -
Details of defaults in repayment of Loans : (Amount in Rs.)
|Account No. ||Type of Loan ||Amount of Default as on respective date ||Date on Which Installment / Interest due ||Date on Which Installment / Interest Paid |
| || ||1295821.00 ||01.05.2016 ||Yet to be paid |
| || ||2320784.00 ||01.06.2016 ||Yet to be paid |
| || ||2864986.35 ||01.07.2016 ||Yet to be paid |
| || ||2596114.99 ||01.08.2016 ||Yet to be paid |
| || ||2619531.51 ||01.09.2016 ||Yet to be paid |
| || ||2525629.40 ||01.10.2016 ||Yet to be paid |
| || ||2617300.94 ||01.11.2016 ||Yet to be paid |
| || ||2535852.94 ||01.12.2016 ||Yet to be paid |
| || ||2619635.97 ||01.01.2017 ||Yet to be paid |
|32133824088 ||Cash Credit - SBI ||2597037.89 ||01.02.2017 ||Yet to be paid |
| || ||2365819.75 ||01.03.2017 ||Yet to be paid |
| || ||2601008.93 ||01.04.2017 ||Yet to be paid |
| || ||209940558.51 ||27.06.2016 ||Yet to be paid |
| || ||33069129.00 ||Accrued Int for the F. Y. 17-18 ||Yet to be paid |
| || ||34224161.54 ||Accrued Int for the F. Y. 18-19 ||Yet to be paid |
| || ||6766731.59 ||Accrued Int for the F. Y. 19-20 ||Yet to be paid |
| || ||354758.00 ||01.05.2016 ||Yet to be paid |
| || ||369877.00 ||01.06.2016 ||Yet to be paid |
| || ||397332.27 ||01.07.2016 ||Yet to be paid |
| || ||389613.97 ||01.08.2016 ||Yet to be paid |
| || ||392844.86 ||01.09.2016 ||Yet to be paid |
| || ||380205.77 ||01.10.2016 ||Yet to be paid |
| || ||392762.98 ||01.11.2016 ||Yet to be paid |
| || ||380204.93 ||01.12.2016 ||Yet to be paid |
| || ||392762.97 ||01.01.2017 ||Yet to be paid |
| 33686610896 ||SBI SLC ||392878.43 ||01.02.2017 ||Yet to be paid |
| || ||354859.05 ||01.03.2017 ||Yet to be paid |
| || ||392529.61 ||01.04.2017 ||Yet to be paid |
| || ||31500000.00 ||27.06.2016 ||Yet to be paid |
| || ||4981657.00 ||Accrued Int for the F. Y. 17-18 ||Yet to be paid |
| || ||6236307.16 ||Accrued Int for the F. Y. 18-19 ||Yet to be paid |
| || ||891694.65 ||Accrued Int for the F. Y. 19-20 ||Yet to be paid |
| || ||50963.72 ||01.07.2016 ||Yet to be paid |
| || ||52051.69 ||01.08.2016 ||Yet to be paid |
| || ||52489.92 ||01.09.2016 ||Yet to be paid |
| || ||50801.27 ||01.10.2016 ||Yet to be paid |
| || ||52478.90 ||01.11.2016 ||Yet to be paid |
| || ||50801.16 ||01.12.2016 ||Yet to be paid |
| || ||52478.89 ||01.01.2017 ||Yet to be paid |
| || ||52494.53 ||01.02.2017 ||Yet to be paid |
|32929483076 ||Term Loan - SBI ||47414.57 ||01.03.2017 ||Yet to be paid |
| || ||52447.29 ||01.04.2017 ||Yet to be paid |
| || ||4165405.00 ||27.06.2016 ||Yet to be paid |
| || ||664434.00 ||Accrued Int for the F. Y 17-18 ||Yet to be paid |
| || ||761613.00 ||Accrued Int for the F. Y. 18-19 ||Yet to be paid |
| || ||156605.10 ||Accrued Int for the F. Y. 19-20 ||Yet to be paid |
| || ||9094.69 ||01.07.2016 ||Yet to be paid |
| || ||10238.75 ||01.08.2016 ||Yet to be paid |
| || ||10324.95 ||01.09.2016 ||Yet to be paid |
| || ||9992.79 ||01.10.2016 ||Yet to be paid |
| || ||10244.93 ||01.11.2016 ||Yet to be paid |
| || ||9992.07 ||01.12.2016 ||Yet to be paid |
| || ||10322.78 ||01.01.2017 ||Yet to be paid |
| || ||10325.86 ||01.02.2017 ||Yet to be paid |
|321340917079 ||Term Loan - SBI ||9326.61 ||01.03.2017 ||Yet to be paid |
| || ||10316.57 ||01.04.2017 ||Yet to be paid |
| || ||626025.00 ||01.04.2016 ||Yet to be paid |
| || ||103105.00 ||Accrued Int for the F. Y. 17-18 ||Yet to be paid |
| || ||118186.00 ||Accrued Int for the F. Y. 18-19 ||Yet to be paid |
| || ||18919.07 ||Accrued Int for the F. Y. 19-20 ||Yet to be paid |
The company has defaulted in the repayment of loans as stated above. The State Bank ofIndia MIDC Waluj Aurangabad Branch (Currently shifted to Stressed Assets ManagementBranch -II Mumbai) has classified above accounts on 27th June 2016 as Non PerformingAsset in accordance with the directions/guidelines relating to asset classification issuedby the Reserve Bank of India.
Interest on Non Performing Asset has been booked on the basis of Balance Confirmationgiven by the State Bank Of India Stressed Assets Management Branch-ll Mumbai vide letterdated 16.06.2020.
(ix) Utilization of IPO Further Public Offer & Term Loan:
During the current financial year the company has not raised any public issue and anyfresh term loan hence not applicable.
During the course of our examinations of the books & records of the companycarried out in accordance with the generally accepted auditing practices in India &according to the information & explanations given to us we have neither come acrossany instances of material fraud on or by the Company noticed or reported during the yearnor have we been informed of such case by management.
(xi) Approval of Managerial Remuneration :
During the year company has not paid any Managerial Remuneration. Hence notapplicable.
(xii) Nidhi Company : Company is not a Nidhi Company. Hence Not Applicable.
(xiii) Related Party Transactions:
As per the information and explanation given to us all transactions with relatedparties are in compliance with section 177 and 188 of Companies Act 2013 and the detailshave been disclosed in the Financial Statements as required by AS- 18.
(xiv) Private Placement or Preferential Issues
The company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year under review.
(xv) Non Cash Transactions:
According to the information given to us the company has not entered into any non-cashtransactions with directors or person connected with him .
(xvi) Register under RBI Act 1934 :
The company is not required to be registered u/s 45-IA of Reserve Bank of India Act1934.
Annexure B to the 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 controls over financial reporting of 'R JBiotech Limited' (the Company') as of 31 March 2020 conjunction with our audit ofthe financial statements of the Company for the year ended on that date.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2020 based on theinternal financial 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 (hereinafter referred as"the guidance note") issued by the Institute of Chartered Accountants of India(hereinafter referred as "ICAI").
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 essential components of internal control statedin the Guidance Mote on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). 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 the Company's policies the safeguardingof its 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting 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 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 Mote require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting were 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 auditors' judgment 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 the 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.