The Members of ROYAL CUSION VINYL PRODUCTS LTD
Report on the Financial Statements
1. We have audited the accompanying standalone financial statements of ROYAL CUSIONVINYL PRODUCTS LTD ("the company") which comprise the Balance Sheet as at31st March 2017 the Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
Management's Responsibility for the Financial Statements
2. The Management and Company's Board of Directors is responsible for the mattersstated in section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes the maintenance of adequate accountingrecords in accordance with the provision of the Act for safeguarding of the assets of theCompany and for preventing and detecting the frauds and other irregularities; selectionand application of appropriate accounting policies; making judgments and estimates thatare reasonable and prudent; and design implementation and maintenance of internalfinancial control that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based onour audit. We have taken into account the provisions of the Act the accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the Rules made there under. We conducted our audit inaccordance with the Standards on Auditing specified under section 143(10) of the Act.Those Standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give true and fair view in order to design audit procedures thatare appropriate in the circumstances but not for the purpose of expressing an opinion onwhether the Company has in place an adequate internal financial control system overfinancial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by Company's Board of Directors as well as evaluatingthe overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
6. (a). Basis for qualified opinion.
As in the past in current year also the company has not received bank statement/ bankadvise / balance certificate from the financial instaurations /banks. Banks entriespertaining to banks and financial institutions and transactions are not reconciled. Inabsence of non reconciliation & non availability of such details of information amountpayable to financial institution /Banks are not ascertained /yet to be reconciled.
(b). Under the micro small and medium enterprises development Act 2006 certaindisclosure relating to amounts due to micro small and medium enterprises and remainedunpaid principal or interest due there on interest paid are required to be made. Thecompany has not made such disclosure.
7. In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matters described on the basis for qualifiedopinion paragraph above. the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India;
(a) In the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2017;
(b) in the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and
(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.
8. Emphasis of Matters
We draw attention to the following matters in the notes to the financial statements:
a) The company has suffered substantial losses and due to this its entire net worth hasbeen fully eroded.
The company has incurred a net loss during the current and previous year (s) and thecompany's current liabilities exceeded its current assets as at the balance sheet date.These conditions along with other matters. Indicate the existence of a materialuncertainty that may cast significant doubt about the company's ability to continue as agoing concern. However since operation are continued the financial statements of thecompany have been prepared on a going concern basis for the reasons stated in the saidnote.(refer note no. 27)
Report on other Legal and Regulatory Requirements
9. 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 statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
10. As required by section 143(3) of the Act we report that:
(a) We have sought and except for matters described in the basis for qualified opinionparagraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.
(b) Except for the possible effects of the matters described in the basis for qualifiedopinion paragraph above in our opinion proper books of account as required by law havebeen kept by the company so far as appears from our examination of those books.
(c) The Balance Sheet the 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 matter described in the basis for qualifiedopinion paragraph in our opinion the balance sheet statement of profit and loss andcash flow statement comply with the accounting standards specified under section 133 ofthe act rule 7 of the companies (Account) Rules 2013 ;
(e) On the basis of written representations received from the directors as on 31 March2017 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31 March 2017 from being appointed as a director in terms of Section 164(2) of theAct.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls referred to ourseparate report in " Annexure B".and
(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) Rule 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 statement (Refer Note 26 to the financial statements);
(ii) The Company did not have any material foreseeable losses in respect of long termcontracts including derivative contracts.
(iii) There is no delay in transferring the amount required to be transferred to theInvestor Education and Protection Fund.
(iv) The Company had provided requisite disclosure in its Financial Statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016 and these are in accordance with the books of accountsmaintained by the Company.
| ||FOR CHANDRAKANT & SEVANTILAL & J. K. SHAH & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||Firm Registration No. 101676W |
|Place: Vadodara ||(H.B.SHAH) |
|Date: 30/05/2017 ||PARTNER |
| ||Membership No. 016642 |
ANNEXURE TO INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ROYAL CUSION VINYL PRODUCTSLTD ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2017.
(Referred to in paragraph 9 under the heading of "Report on other legal andregulatory requirements" of our report of even date)
1- a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
b) Major portion of fixed assets has been physically verified during the year by themanagement in accordance with a programme of verification which in our opinion providesfor physical verification of all the fixed assets at reasonable interval having regards tothe size of the Company and nature of its business. No material discripancies were noticedon such physical 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 of landare held in the name of the Company.
2) As explained to us the inventories were physically verified by the management atreasonable intervals during the year and no material discripancies were noticed on suchverification.
3) The Company has not granted any loan secured or unsecured to Companies /firms orother parties covered in the register maintained under section 189 of the Companies Act.2013..
4) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
5) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from public during the year. Accordingly theprovisions of clause (v) of the Companies (Auditor's Report) order 2016 are notapplicable to the Company.
6) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the product manufactured by the Company.
7- a) According to the records of the Company the Company is generally not regular indepositing undisputed statutory dues including Provident Fund Employees' State InsuranceIncome Tax Sales Tax Service Tax Duty of Custom Duty of Excise Valued Added Tax andCess and other statutory dues with the appropriate authorities.
According to the information and explanations given to us the undisputed statutory duewhich have remained outstanding as at 31st March 2017 for a period of more than sixmonths from the day they become payable are as under.
|NAME OF THE STATUTE ||NATURE OF THE DUE ||AMOUNT |
|Custom Act ||Custom Duty ||769234686.00 |
b) The disputed statutory dues that have not been deposited on account of disputedmatters pending before appropriate authorities are as under.
|Sr. No. ||Nature of the Status ||Nature of the due ||Amount ||Period to which the amount relate ||Forum where dispute is Pending |
|1. ||The Central Excise Act ||Custom Duty ||2105053 ||Various year ||Commissioner Vadodara |
|2. ||The FERA Act ||Penalty ||10000000 ||2002-03 ||Appellate Authority FERA new delhi |
|3 ||The Income Tax Act ||Penalty ||4243390 ||AY 2005-06 ||Commissioner Mumbai |
8). The Company has defaulted in repayment of dues to financial institution and Banksthe Company has been registered with the board for industrial and financialreconstructions (BIFR) since Sep 2002. The loan amount is payable after the final decisionof BIFR.
Total amount payable as on 31/03/17 to various Banks & Financial Institutions areas under as per Books of Account (subject to reconciliation in absence of bank statements)
|NAME ||AMOUNT Rs. |
|Bank of India ||281769387 |
|Exim Bank ||18272560 |
|Global Trust Bank ||32561049 |
|IDBI ||1256630654 |
|Saraswat Co-op Bank Ltd ||177138264 |
|Swaminarayan Co-op Bank Ltd ||2214671 |
|Baroda Peoples Co-op Bank Ltd ||1944225 |
|Panchmahal Dist. Co-op Bank Ltd ||8200934 |
|Baroda City Co-op Bank Ltd ||3268089 |
|Mandvi Co-op Bank Ltd ||49095 |
|G.S.F.C. ||11518041 |
|BHFBank ||458664195 |
9) The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly paragraph3(ix) of the order is not applicable.
10) According to the information and explanation given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
11) According to the information and explanation 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 ofsection 197 read with schedule V to the Act.
12) 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.
13) According to the information and explanation given to us and based on ourexamination of the records of the Company transaction 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.
14) According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentduring the year.
15) According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered in to non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
16) The Company is not required to be registered under section 45 -IA of the ReserveBank of India Act 1934.
| ||FOR CHANDRAKANT & SEVANTILAL & J.K. SHAH & CO. |
| ||Chartered Accountants |
| ||Firm Registration No. 101676W |
|Place: Vadodara ||(H.B. SHAH) |
|DATE : 30/05/2017 ||PARTNER |
| ||MEMBERSHIP NO. 016642 |
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 RoyalCushion Vinyl Products Ltd as of March 31 2017 in conjunction with our audit of thefinancial statements for the year ended on that date.
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 Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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 deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance 168 Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls 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. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material 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.
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 2017 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 CharteredAccountants of India.
For CHANDRAKANT & SEVANTILAL & J.K. SHAH & Co.
CHARTERED ACCOUNTANTS FRN: 101676W
CA. H.B. Shah M.No.: 016642
Date: 30 / 05 /2017