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Sejal Glass Ltd.

BSE: 532993 Sector: Industrials
NSE: SEZAL ISIN Code: INE955I01036
BSE 00:00 | 06 May Sejal Glass Ltd
NSE 05:30 | 01 Jan Sejal Glass Ltd
OPEN 3.87
52-Week high 6.89
52-Week low 2.24
Mkt Cap.(Rs cr) 13
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3.87
CLOSE 3.87
52-Week high 6.89
52-Week low 2.24
Mkt Cap.(Rs cr) 13
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sejal Glass Ltd. (SEZAL) - Auditors Report

Company auditors report

To the Members of SEJAL GLASS LIMITED Report on the Standalone Ind AS FinancialStatements

Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code 2016 (IBC)

The Honourable National Company Law Tribunal Mumbai ("NCLT") by order dated13th February 2019 admitted the Corporate Insolvency Resolution Process("CIRP") application filed against Sejal Glass Limited on petition filed byEdelweiss Asset Reconstruction Company (EARC) a financial creditor and appointed ShriRajendra Kumar Girdhar Registration Number [IBBI/IPA-003/IP-N00048/2017-18/10396] asInterim Resolution Professional to carry out functions as mentioned under Insolvency &Bankruptcy Code 2016.

The appointment was made Petition filed u/s 7 of Insolvency & Bankruptcy Code 2016(I&B Code) by Edelweiss Asset Reconstruction Co. Limited Financial Creditor orPetitioner against Sejal Glass Ltd. (earlier known as Sezal Glass Limited) CorporateDebtor to initiate Corporate Insolvency Resolution Process (CIRP) against the CorporateDebtor on the ground that as onlO.05.2018 the Corporate Debtor has defaulted in repayingthe debt amount i.e. Rs 404972485/-. The date of default in repayment of the debt bythe Corporate Debtor as stated by the petitioner is 13.10.2016.

The Petitioner as Trustee of the Edelweiss Asset Reconstruction Company Trust SC- 42entered into an assignment agreement with State Bank of Patiala on 26.06.2014 wherein itgot assigned the impugned loans disbursed by the assignor to the Corporate Debtor. Thesaid assignment agreement is annexed with the petition.

In response to application number MA 1324/2019 filed by the Committee of CreditorsNCLT Mumbai vide its order dated 23rd April 2019 has accepted the proposal toappoint Mr Prashant Jain as Resolution Professional.

In view of the ongoing CIRP and suspension of powers of Board of Directors on 13thFebruary 2019 and as explained to us the powers adoption of this standalonefinancial results vests with the RP under provisions of IBC 2016.

As per Section 134 of the Companies Act 2013 the financial statements of a Companyare required to be authenticated by the Chairperson of the Board of Directors whereauthorized by the Board or at least two directors of which one shall be the managingdirector or CEO (being a Director) the CFO and the Company Secretary where they areappointed. Under IBC 2016 such powers shall vest the Resolution Professional Mr PrashantJain.

Qualified Opinion

We have audited the accompanying standalone Ind AS financial statements of SEJAL GLASSLIMITED ("the Company") which comprise the Balance Sheet as at 31st March 2019and the statement of Profit and Loss (including Other Comprehensive Income) Statement ofchanges in equity and statement of cash flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information

In our opinion and to the best of our information and according to the explanationsgiven to us except for the matters mentioned in Para Basis for Qualified Opinionthe aforesaid standalone financial statements give the information required by theCompanies Act2013 "the Act' in the manner so required and give a true and fair viewin conformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules2015 as amended "IndAS" and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and loss including total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

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 the Auditor's Responsibilities for the Audit of theFinancial 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

1. The Financial Results/Statements have been prepared in accordance with the BasicFundamental Accounting Assumption of going concern. The National Company Law on 13thFebruary 2019 admitted petition u/s 7 of the Insolvency & Bankruptcy Code 2016 filedby Financial Creditor/Petitioner against Sejal Glass Limited. In case outcome of theResolution Process is not favorable and the Company goes into Liquidation impact on theFinancials cannot be ascertained.

2. Standalone Financial Statements as per the insolvency and bankruptcy code 2016("Insolvency Code") the Resolution Professional (RP) has to receive collectadmit all the claim submitted by the creditor (Operational and Financial) employee andwork men of the Company. Such claim can be submitted to the RP during the CIRP till theapproval of a resolution plan by Committee of Creditors (COC). The RP is in the process ofreceiving collating and verifying such claim and shall subsequently admit verifiedclaims as per the insolvency code. Therefore the impact of such claim if any which mayarise subsequently has not been considered in preparation of the Standalone FinancialStatements.

3. Non Compliance of IND AS 19-Employee Benefits provision for retirement benefitsrelating to actuarial valuation of Gratuity and Leave Encashment

4. Balances in ledgers of Sundry Receivables (Debtors) Sundry Payables (Creditors)Loans/Advances/Inter Corporate Deposits (other than Group Companies)/Security Depositsaccepted and madg/given are subject to confirmation and reconciliation.

5. Interest Expense payable on statutory dues has not been provided for in theFinancial Statements from 01.04.2017 to 31.03.2019 amount of which cannot be ascertained.

6. The Company has not provided for Interest Payable to Edelweiss for the FY 2017-18and FY 2018-19. Edelweiss Asset Reconstruction Company Ltd (EARC) has lodged claim for Rs44.63 crores which is the same as admissible amount as per Annexure "A" List ofCreditors -claims as on 13th February 2019 received upto 7th March2019. Amount payable to EARC as on 31st March 2019 as per Books of Accounts isRs 29.96 crores.

The difference of Rs 14.67 crores represents the amount of Interest not provided by theCompany and Interest provided by the Company at a lower rate of Interest and Concessions& Waiver withdrawn by EARC due to default in fulfilling the terms and conditions ofthe restructuring proposal.

Emphasis of Matter

1. Corporate Insolvency Resolution Process ("CIRP") has been initiated incase of the Company vide order dated 13th February of Honorable NationalCompany Law Tribunal Mumbai under provisions of the Insolvency and Bankruptcy Code2016."The Code". Pursuant to the order the management of the affairs of the Companyand powers of the Board of Directors of the Company are now vested with the RP who isappointed by Committee of Creditors (COC). These standalone financial statements have beenprepared by the management of the Company and considered by RP.

2. Bank of Maharashtra has served a show cause notice for declaring the Company aswillful defaulter which the Company has objected to. On enquiry of the current status withthe Company we were informed there is no change and the matter has not gone ahead.

3. Punjab National Bank vide corrigendum in Free Press Journal on 30th May2019 has withdrawn the Public notice in New paper Free Press Journal on 22ndMay 2019 declaring the Company and Directors & Guarantors Willful Defaultersclarifying that is was inadvertently issued and hence stands withdrawn.

4. The Company needs to take steps for recovery of amounts due to it including Amountsdue from Group Companies and Inter Corporate Deposits giveryhiade.

5. The Company has not been charging Interest to Group Companies citing poor health ofthose Companies.

6. The Company has not deposited statutory liabilities with Concerned Governmentauthorities and failed to comply by filing necessary returns under various Acts beforecommencement of CIRP during FY 2018-19. It has also not provided for interest/penalty forsuch default.

7. Statutory liabilities like Staff Provident Fund Income Tax (TDS) Service TaxCentral Sales Tax Dadra VAT Maharashtra VAT Gujarat VAT Goods and Service Tax (GST)ESIC Property Tax Duty Liability under Advance License and Export Promotion CapitalGoods Scheme (EPCG) for not meeting export obligations etc are in arrears along withInterest and Penalty (if any) thereon. Unpaid Statutory Dues as per Books of accounts ason 31.03.2019 are Rs 39.12 crores.

8. GST Payment and GST Return of Dadra Factory has been made upto the month of June2018. Income Tax (TDS) and other taxes are in arrears for the last few years.

9. Balances in Inoperative Bank Accounts which are attached by various revenueauthorities were not verified.

10. Unpaid Dividend of Rs 96523 is outstanding in the Books of Accounts. It needs tobe paid into Investor Education and Protection Fund as unpaid for more than 7 years.

11. Rs 100063 is lying in SBP DIVIDEND BANK A/C 65042962182 which has been seized bythe revenue authorities

12. The Company not paid its ex-employees dues in respect of Salary Leave Encashmentand Gratuity amounting to Rs 89.16 lacs as on 31.03.2019

Information Other than the Standalone Ind AS Financial Statements and Auditor's ReportThereon

The Company's Board of Directors is 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 standalone financial statements and our auditor's report thereon. As thepowers of the Board of Directors stand suspended the financials and other informationhave been prepared by the Company under supervision of the Resolution Professional.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.

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 except that consolidated financials have not beenprepared and hence not published.

Responsibility of Management for the Standalone Ind AS 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.

The Board of Directors are also responsible for overseeing the company's financialreporting process.

In view of the ongoing CIRP and suspension of powers of Board of Directors on 13thFebruary 2019 and as explained to us the powers adoption of this standalonefinancial results vests with the RP under provisions of IBC 2016.

As per Section 134 of the Companies Act 2013 the financial statements of a Companyare required to be authenticated by the Chairperson of the Board of Directors whereauthorized by the Board or at least two directors of which one shall be the managingdirector or CEO (being a Director) the CFO and the Company Secretary where they areappointed. Under Insolvency & Bankruptcy Code (IBC) 2016 such powers shall vest theResolution Professional (RP) Mr Prashant Jain.

Financials prepared by the Company have been signed by the Resolution Professional MrPrashant Jain imder power vested in him under IBC2016 along with the Amrut Gada andMitesh Gada both members the suspended Board of Directors and Mr Ashwin Shetty CompanySecretary and Vice President (Operations) Auditor's Responsibility for the Audit of theStandalone Ind AS 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 auditor7s report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis 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 standalone 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 in orderto 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 reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern.

If we conclude that a material uncertainty exists we are required to draw attention inour auditor's report to the related disclosures in the standalone financial statements orif such disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified 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 standalone financial statementsof the current period. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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 B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

As required by Section 143(3) of the Act we report that:

We have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purposes of our audit except for mattersmentioned under Basis of Opinion para.

a. 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.

b. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

c. In our opinion the aforesaid standalone financial statements comply with the IND ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 EXCEPT as otherwise in the Basis of Opinion Para of this report with regard topreparation of Financials in accordance with the Going Concern Principle Short Provisionof amount due to Edelweiss Asset Reconstruction Company to the extent of Rs 14.67 croresNon Compliance of Ind AS-19 -Employee Benefits provision for retirement benefits relatingto actuarial valuation of Gratuity and Leave Encashment Balances in ledgers of SundryReceivables (Debtors) Sundry Payables (Creditors) Loans/Advances/Inter CorporateDeposits (other than Group Companies)/Security Deposits accepted and made/given aresubject to confirmation and reconciliation and uncertainty with respect to liabilitiesthat may arise due amounts claimed by Creditors both Operational and Financial Workmenand Employees and Non Provision of Interest on Statutory dues.

d. All the Directors of the Company are disqualified as on 31st March 2019 from beingappointed as a director in terms of Section 164 (2) of the Act.

e With respect to other matters to be included in the auditor's report in accordancewith the requirement of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the Company has not paid remuneration to its Directors and hence provisionsof section 197 of the Act are not applicable.

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".

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:

1 The Company is currently under Corporate Insolvency Resolution Process (CIRP) underInsolvency and Bankruptcy Code 2016. Impact of the CIRP Process on financials of theCompany cannot be ascertained now. Refer to Contingent Liabilities disclosed in Note 28.2to the Financial Statements.

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

3. The Company has failed to transfer amount of unpaid dividend to the InvestorEducation and Protection Fund.

Chartered Accountants
Firm Regn.Nol04723W


CA Sanjay Shah
M. No. 116251
Place: Mumbai
Date: 30th May 2019