To the Members of
SEL Manufacturing Company Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of SELManufacturing Company Limited ("the Company") which comprise the Balance Sheetas at 31st March 2018 the Statement of Profit and Loss ( including other comprehensiveincome ) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of significant accounting policies and other explanatory information(hereinafter referred to as "Standalone Ind AS financial statements") in whichare incorporated the returns for the year ended on that date audited by the branchauditors of the company's overseas branch at Sharjah United Arab Emirates.
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matter stated in Section 134(5)of the Companies Act 2013 ("the Act") with respect to preparation of thesestandalone Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards(Ind AS) prescribed underSection 133 of the Act read with the relevant rules issued there under.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.
The Hon'ble National Company Law Tribunal Chandigarh ("NCLT") on April 11th2018 admitted the Corporate Insolvency Resolution Process ("CIRP") applicationfiled against the Company and appointed Mr. Navneet Kumar Gupta having IP Registration No.IBBI/IPA-001/IP-P00001/2016-17/10009 as Interim Resolution Professional ("IRP")in terms of the Insolvency and Bankruptcy Code 2016 ("Code")vide order dated25th April 2018 to manage the affairs business and assets of the company. The company haspreferred an appeal against the admission of petition and appointment of IRP with NationalCompany Law Appellate Tribunal (NCLAT).The CIRP has since been kept in abeyance vide orderdate 22nd June 2018 of Hon'ble High Court of Punjab & Haryana. In view of theabovesaid order of Hon'ble High Court of Punjab & Haryana the powers andresponsibilities to manage the affairs business and assets of the company is vested withthe Board of Directors of the company.
Our responsibility is to express an opinion on these Standalone Ind AS financialstatements based on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit of standalone Ind AS Financial Statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Standalone Ind AS financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the Standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the Standalone Ind ASfinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Ind AS financial statements
Basis for Qualified Opinion
We refer to:
1) Note No. 38 to the Standalone Ind AS financial statements in respect of nonprovision of interest on borrowings from banks (classified as NPA) amounting Rs.54084lakhs & Rs. 35901 lakhs (amount calculated after considering the rates and terms andconditions stipulated originally as per CDR package) for the year ended 31st March 2018& 31st March 2017respectively. The same is not in compliance with the requirements ofpara 27 of the Ind AS 1- Presentation of Financial Statements w.r.t. preparation offinancial statements on accrual basis. Consequently borrowings are not reflected at fairvalue in financial statements as required by Ind AS 109 Financial Instruments.
2) Note no. 13 (Other Financial Assets) to the Standalone Ind AS financial statementsincludes interest subsidy receivable amounting to Rs.26621 Lakhs which consists ofinterest subsidy (i) under TUFS from Ministry of Textiles and (ii) Subsidy under TextilePolicy of Government of Madhya Pradesh for the Financial years 2013-14 to 2016-17 forwhich no confirmation was available The company has not provided for any allowance underECL there against.
3) The company has not provided to us for our review any working regarding impairmenttesting being conducted to assess recoverable amount of Capital work in progress ofRs16986 lakhs outstanding as at 31st March 2018. We are unable to comment on whether thecompany needs to make a provision in respect of impairment losses on above as requiredunder Ind AS 36.
4) Note no. 40(c) to the Standalone Ind AS financial statements relating to write downof inventories of Raw materials Work in Progress Finished Goods identified asnon-moving slow moving obsolete and damaged inventory to net realizable value by Rs40710 lakhs for which the company has not provided to us any technical market/commercialevaluation for the same to justify its reasonableness. Being a technical matter we areunable to comment on the loss recognized by the company due to write down of inventoriesto net realizable value.
5) Note no.18 20 and 22 to the Standalone Ind AS financial statements in respect ofBorrowings (Non Current) Short Term Borrowings and other Financial Liabilities (Current)contains secured loans from banks. There is shortfall in the carrying value of thesecurity against the secured loans consequently the loans are not fully secured.
We further report that had the impact of our observations made in paragraph 1 of Basisfor qualified opinion paragraph been considered the net loss for the year ended 31stMarch 2018 would have been increased by Rs. 54084 lakhs and the borrowings for the yearended 31st March 2018 and 31st March 2017 would have been increased by Rs. 89985 lakhs& Rs. 35901 lakhs and Equity would have been reduced by the same amount for the yearsended 31.3.2018 and
31.3.2017 respectively. The financial impact of matters stated in paragraphs234&5 to the Basis for Qualified Opinion can't be measured reliably.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the above para of"Basis for Qualified Opinion" of our report that aforesaid Standalone Ind ASfinancial statements give the information required by 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 March 312018 and itsloss its cash flows and the changes in equity for the year ended on that date.
Material Uncertainty Related to Going Concern
Note no. 37 of the StandaloneInd AS financial statements stating thereto that theterms and conditions of the sanctioned CDR package w.r.t. interest and principal repaymentwere not complied with. Consequently State Bank of India in its capacity as financialcreditor had filed a petition under Insolvency and Bankruptcy Code 2016 (IBC) against thecompany with Hon'ble National Company Law Tribunal Chandigarh Bench (NCLT) which wasadmitted on 11th April 2018 and Corporate Insolvency Resolution Process (CIRP) has beeninitiated in terms of IBC. The company has preferred an appeal against the admission ofpetition and appointment of IRP with nClat. The CIRP has since been kept in abeyance videorder dated 22.06.2018 of Hon'ble High Court of Punjab and Haryana. The company hasincurred net loss of Rs.222643lakhs resulting into accumulated losses of Rs. 296335 lakhsleading to erosion of entire net worth and current liabilities have exceeded the currentassets of the company Further concerning the company's ability to realize the value ofinventories trade receivables and other financial assets meet its contractual/ financialobligations w.r.t. repayment of overdue principal and accrued interest on securedborrowings arranging working capital for ensuring normal operations further investmentsrequired towards ongoing projects under construction and the Corporate guarantee given onthe behalf of its subsidiary namely SEL Textiles Limited. Moreover the company hasderecognized Deferred Tax assets and MAT credit since availability of future taxableincome is not certain. Due to financial constraints the company has started job workoperations in major spinning plants instead of pursuing its own manufacturing activitiessince November 2017. These conditions indicate the existence of a material uncertaintythat may cast significant doubt on the company's ability to continue as going concern andtherefore company may be unable to realize its assets and discharge its liabilities in thenormal course of business.
Emphasis of Matter
We draw attention to the following matters:
(1) Note No. 37(c) of the Standalone Ind AS financial statements in respect ofContingency related to 'compensation payable in lieu of bank sacrifice' the outcome ofwhich is materially uncertain and cannot be determined currently.
(2) Note No. 34 A (iv) of the Standalone Ind AS financial statements in respect ofcontingency related to export incentives obligation refundable amounting Rs. 3855 lakhs inrespect of allowance for foreign trade receivables which is further subject to interestand penalties. the amount of such obligation cannot be determined currently.
(3) Note No. 34 A (iii) of the Standalone Ind AS financial statements in respect ofcontingency related to Income Tax demands raised by the Income Tax Authorities amountingRs. 27854 Lakhs for various matterswhich is further subject to interest and penaltiestheamount of such obligation cannot be measured with sufficient reliability.
(4) Note no. 39 to the Standalone Ind AS financial statements regarding the balanceconfirmations of Trade Receivables Capital/Trade Advances & Trade Payables. Duringthe course of preparation of Standalone Ind AS financial statements e-mails/letters havebeen sent to various parties by the company with a request to confirm their balances as on31st March 2018 out of which few parties have confirmed their balances direct to us or tothe company.
(5) As reported vide note 40(a) to the Standalone Ind AS financial statements thecompany has provided for allowance of Rs.88093 lakhs in respect of Trade Receivables dueto change in probability factor in estimating Expected credit losses (under ECL Model) asreported in para 3 to the financial statements. Further Note No. 40(b) to the StandaloneInd AS financial statements the company has provided for impairment loss of Rs. 3584Lakhs in respect of long outstanding Capital/Trade Advances given to suppliers.
(6) Note No. 34(B) to the Standalone Ind AS financial statements in respect of CapitalCommitments contains uncertainty regarding contracts yet to be executed escalation costsand other additions to the reported figures if any. Being a technical matter we areunable to comment on the total contingent capital commitment figure reported as the samecannot be measured with sufficient reliability.
Our opinion is not modified in respect of matters reported in para (1) to (6) ofEmphasis of Matter.
We did not audit the financial statements of Overseas branch included in the StandaloneInd AS financial statements of the Company whose financial statements reflect NIL totalassets as at 31st March 2018 and NIL revenues for the year ended on that date asconsidered in the Standalone Ind AS financial statements. The financial statements of thebranch has been audited by the branch auditors whose reports have been furnished to usand our opinion in so far as it relates to the amounts and disclosures included in respectof the branch is based solely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
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 Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the order.
2. As required by Section 143 (3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit;
b. In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books and proper returns adequatefor the purpose of our audit have been received from the company's overseas branch atUnited Arab Emirates not visited by us;
c. The reports on the accounts of the branch office of the Company audited underSection 143 (8) of the Act by branch auditors have been sent to us and have been properlydealt with by us in preparing this report.
d. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account and with the returns received from thecompany's overseas branch at United Arab Emirates audited by other auditors.
e. In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under section 133 of the Companies Act 2013 readwith relevant rules except noncompliance of provisions of para 42(b) of Ind AS8Accounting Policies Changes in Accounting Estimates and Errors which requiresdisclosure of restated opening balances of assets liabilities and equity for the earliestprior period presented which had not been made by the company in the Standalone Ind ASstatement of assets and liabilities.
f. In our opinion the matters described in the "basis of Qualified Opinion"and "emphasis of matter" paragraphs above may have an adverse impact on thefunctioning of the company.
g. On the basis of written representations received from the directors as on March 312018 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 312018 from being appointed as a director in terms of Section 164 (2) of theCompanies Act 2013;
h. 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
i. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
(I) The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements - Refer note no. 34 to thestandalone Ind AS financial statements.
(ii) The Company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the company.
| ||FOIR MALHOTRA MANIK & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||FRN. 015848N |
|PLACE: LUDHIANA ||(CA. MANIK MALHOTRA) |
|DATED: 05.07.2018 ||PROPRIETOR |
| ||M.No.:094604 |
Annexure-A to the Independent Auditor's Report
The Annexure referred to the Independent Auditors' Report to the members of the companyon the Standalone Ind AS financial statements for the year ended on 31st March 2018. Wereport that:
(1) (a)The Company has maintained proper records showing particulars includingquantitative details and situation of fixed assets except for certain items of fixedassets the quantitative details of which are in the process of being compiled. Asexplained to us the same will be compiled by the management in due course of time.
(b) According to the information and explanations given to us the Company has adopteda policy of physical verification of fixed assets once in every three years. However theCompany has not physically verified any of the fixed assets during the year under audit.
(c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) In our opinion and according to the information and explanation given to us thephysical verification of inventories has been conducted at reasonable interval by themanagement and no material discrepancy was noticed on physical verification as compared tothe book records.
(iii) In our opinion and according to the information and explanation given to us theCompany has not granted any loans secured or unsecured to Companies Firms and otherparties covered in the register maintained section 189 of the Companies Act 2013.
(iv) 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 Companies Act 2013in respect of loans investments guarantees and security.
(v) The Company has not accepted deposits from the public within the meaning ofprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under. No order under the aforesaid sections has beenpassed by the Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any court or any other Tribunal on the company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the Rules made by the Central Government for the maintenance of Cost records undersection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have however not madea detailed examination of such records with a view to determine whether they are accurateor complete.
(vii) (a) According to the information and explanations given to us and the books andrecords examined by us we state that the company is regular in depositing undisputedstatutory dues including income tax provident fund employees state insurance customduty Goods & services tax excise duty service tax value added taxcess and otherstatutory dues to the appropriate authorities. According to the information andexplanations given to us there were no undisputed amounts payable in respect of incometax provident fund employees state insurance custom duty Goods & services taxexcise duty service tax value added tax cess and other material statutory dues inarrears as at 31st March 2018 for a period of more than six months from the date theybecame payable.
(b) According to the information and explanations given to us there are no dues ofincome tax provident fund employees state insurance custom duty goods & servicestax excise duty service tax value added tax cess and other statutory dues which havenot been deposited on account of any dispute except disclosed as under:
|Name of the statute ||Nature of dues ||Amount (In Lakhs) ||Period to which the amount relates (Assesment Year) ||Forum where the dispute is pending |
|Income Tax Act 1961 ||Tax and Interest* ||27853.69 ||2010-11 2011-12 & 2013-14 ||ITAT Chandigarh |
|Income Tax Act 1961 ||Tax deducted at source ||3.92 ||2009-10 to 2015-16 ||CPC Bangalore |
*Interest calculated upto 31.01.2018 and subject to further interest & penaltyproceedings.
(viii) In our opinion and according to the information and explanations given to usthe company has defaulted in repayment of loans/borrowings and interest thereon to banksas given below:
|Bank Name ||Nature of Amount ||Amount ||Overdue |
|State Bank of India ||Interest ||2151273757 ||31.07.2016 |
| ||Principle ||270190825 ||30.06.2016 |
| ||Interest ||2665852542 ||30.04.2016 |
| ||Principle ||421276872 ||30.04.2016 |
| ||Interest ||1246880296 ||31.05.2015 |
| ||Principle ||359914069 ||31.08.2015 |
| ||Interest ||761825336 ||31.08.2015 |
| ||Principle ||264594581 ||31.10.2015 |
| ||Interest ||2603318721 ||31.01.2016 |
| ||Principle ||417758097 ||31.01.2016 |
|Punjab & Sind Bank ||Interest ||322345721 ||31.12.2015 |
| ||Principle ||133857937 ||31.12.2015 |
|Bank of Maharashtra ||Interest ||124760780 ||30.11.2015 |
| ||Principle ||194762373 ||30.09.2015 |
|Punjab National Bank ||Interest ||972982306 ||28.02.2016 |
| ||Principle ||368890523 ||31.01.2016 |
|Indian Bank ||Interest ||678847025 ||30.06.2015 |
| ||Principle ||146193757 ||31.07.2015 |
|Sber Bank ||Interest ||242158446 ||31.03.2016 |
|United Bank ||Interest |
|Union Bank of India ||Interest |
|UCO Bank ||Interest ||608386292 ||30.09.2015 |
| ||Principle ||272576919 ||31.08.2015 |
|Corporation Bank ||Interest ||2006917518 ||31.01.2016 |
| ||Principle ||266474022 ||31.03.2016 |
|Allahabad Bank ||Interest ||3209358134 ||31.10.2015 |
| ||Principle ||831217408 ||30.11.2015 |
|Dena Bank ||Interest ||177351067 ||31.10.2015 |
| ||Principle ||237793438 ||31.10.2015 |
|Indian Overseas Bank ||Interest ||1497875295 ||31.01.2016 |
| ||Principle ||67620190 ||31.03.2016 |
|Vijaya Bank ||Interest ||16081796 ||31.03.2016 |
| ||Principle ||17164076 ||31.03.2016 |
|Andhra Bank ||Interest ||1027795009 ||28.02.2016 |
| ||Principle ||54555840 ||31.03.2016 |
|EXIM Bank ||Interest ||8274928 ||31.05.2016 |
| ||Principle ||6471034 ||31.01.2016 |
(ix) In our opinion and according to the information and explanations given to us nomoney was raised by way of initial public offer or further public offer (including debtinstruments) and term loans during the year.
(x) To the best of our knowledge and belief and according to the information andexplanations given to us no material fraud on or by the Company by its officers oremployees has been noticed or reported during the year.
(xi) According to the information and explanations given to us and the audit proceduresconducted by us managerial remuneration has been paid or provided was in accordance withthe requisite approvals mandated by the provisions of Section 197 read with Schedule V tothe Companies Act 2013.
(xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the company all transactions with the related parties arein compliance with Section 177 and 188 of Companies Act 2013 where applicable and thedetails of the transactions have been disclosed in the standalone Ind AS financialstatements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review and therefore the provisions ofclause 3 (xiv) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has not entered into any non-cashtransactions with directors or persons connected with the directors and therefore theprovisions of clause 3 (xv) of the Companies (Auditor's Report) Order 2016 are notapplicable to the Company.
(xvi) In our opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.
| ||FOR MALHOTRA MANIK & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||FRN. 015848N |
|PLACE: LUDHIANA ||(CA. MANIK MALHOTRA) |
|DATED: 05.07.2018 ||PROPRIETOR |
| ||M.No. 094604 |
ANNEXURE- B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(h) under the "Report on other legal and regulatoryrequirements" of our report of even date)
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We were engaged to audit the Internal Financial Control over financial reporting of SELManufacturing Company Limited ("the Company") as of 31st March 2018 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended 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 Reporting('the Guidance Note') issued by the Institute of Chartered Accountants of India('theICAI'). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of the company's business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
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 to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate 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 control system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement 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 qualified audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial controls 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 controls 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 authorizations ofmanagement and directors of the company; and(3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 internal financial controls overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
Disclaimer of Opinion
The system of internal financial controls over reporting with regard to the companywere not made available to us to enable us to determine if the company has establishedadequate internal financial control over financial reporting and whether such internalfinancial controls operating effectively as on 31st March 2018.
Basis for Qualified Opinion
In our opinion and acc ort which came to our notice during the course of audit ofstandalone Ind AS financial statements indicates material weaknesses in the internalfinancial controls over financial reporting as at March 312018.
A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on timely basis.
In our opinion the matters disclosed in above paragraphs under "Basis ofQualified Opinion" indicates material weaknesses in the internal financial controlsover financial reporting.
We have considered the disclaimer of opinion as well as material weaknesses identifiedand reported in Qualified Opinion paragraph in determining the nature timing and extentof audit tests applied in our audit of the financial statements of the Company for theyear ended March 312018 and the disclaimer and material weaknesses do not affect ouropinion on the financial statements of the Company
| ||FOR MALHOTRA MANIK & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||FRN. 015848N |
| ||(CA. MANIK MALHOTRA) |
|PLACE: LUDHIANA ||PROPRIETOR |
|DATED: 05.07.2018 ||M.No.:094604 |