To the Members of Shree Ganesh Forgings Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Shree Ganesh Forgings Limitedwhich comprise the Balance Sheet as at 31st March 2017 the Statement of Profit and Lossthe Cash Flow Statement for the year then ended and a summary of the significantaccounting policies and other explanatory information for the year then ended
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the preparation of these financialstatements in terms of the requirements of the Companies Act 2013 (hereinafter referredto as "the Act")thatgive financialposition financial performancetrueandfairviewofthe and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Therespective Board of Directors of the companies are responsible for maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Group and for preventing and detecting frauds and other irregularities; theselection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and the design implementation and maintenanceof adequateinternalfinancialcontrolsthatwereoperatingeffectivelyfor ensuring the accuracyand completeness of the accounting records relevant to the preparation and presentationof the financial statements that give a material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit. While into account the provisions of the Act the accounting and auditing standardsand matters which are required to be included in the audit report under the provisions ofthe Act and the Rules made thereunder. We conducted our audit 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 financial statements are free from materialmisstatement. An audit involves performing procedures to obtain audit evidence about theamounts and the disclosures in the financial procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing an opinionon whether the Company has an adequate internal financial system over financial reportingin place and the operating effectiveness of such controls.
An audit also includes evaluating the appropriateness of the accounting policies usedand the reasonableness of the accounting estimates made by the Company's Board ofDirectors as well as evaluating the overall presentation of the financial statements. Webelieve that the audit evidence obtained by us is sufficient and appropriate to financialstatements.
Basis for Qualified Opinion
a) The company was not able to produce the fixed deposit receipts The banks arenot cooperating to provide any conformations of balances as the matter is pending with DEBTSRECOVERY TRIBUNAL COURT MUMBAI. Thus we are not able to comment on the actualbalances.
b) Impairment of assets not done as per Accounting Standard (AS) 28 Impairment ofAssets the impact of such impairment is not ascertainable.
c) Bank balance conformations have not been provided to us during the audithence we are unable to comment on the actual balances and the consequent impact on theloss & reserve of the company. The banks are not cooperating to provide anyconformations of balances as the matter is pending with DEBTS RECOVERY TRIBUNAL COURTMUMBAI.
d) Advances due from certain parties which in our opinion are considered doubtfulof recovery against which adequate provision has not been made.
e) The Company has failed to provide necessary information and data and has notdisclosed the impact of pending litigation as on 31st March 2017 on itsfinancial position in its financial statement.
f) Balance conformation for Trade receivable (Debtors) and other receivable(Advance to creditors) have not been provided as no suppliers are showing their interestto cooperate us during the audit hence we are not able to comment on the actual balance& the consequent impact on the loss & reserve of the company.
g) Depreciation as per the new schedule III of Company act 2013 has not been calculatedan accounted due to non-availability of passed data of addition of fixed assets.
h) Wholly owned subsidiary SGFL - international B.V. has been wound up and accordinglyinvestment have been W/off and loss charged to P/L account.
Our opinion is qualified in this matter.
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 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 of the state of affairs of the companyas at 31st March 2017 and profit and loss and cash flows for the year ended on thatdate.
Emphasis of Matters
We draw your attention to the following matters in the Notes to the financialstatements: a) The financial statements indicate that the company has accumulatedlosses and its net worth has been substantially eroded; the company has incurred net lossduring the current and previous year. These conditions along with other matters set forthin note indicate the existence of a material uncertainty that may cast significant doubtabout the company's ability to continue as a going concern. However the financialstatements of the Company have been prepared on a going concern basis. Our opinion is notmodified in respect of these matters. b) Last year the Loan of State Bank of Hyderabadand State Bank of Patiala have been transferred by the bank to Asset reconstructioncompany. This ARC has assigned the liability of payment of these loans to the Guarantor ofShree Ganesh Forgings Ltd at a reconstructed amount. This does not have any impact oradjustment to the financial statement during the year.
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 theparagraph 3 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 purposes of our audit except forthe possible effect of the matter described in Basis for Qualified Opinion above.
(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 Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
(d) In our opinion except for the effect of the matters described in the Basis forQualified Opinion paragraph above 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 matters described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on functioning of the Company.
(f) The matters described in sub-paragraph (1) under the Emphasis of Matters paragraphabove in our opinion may have an adverse effect on the functioning of the Company.
(g) ) On the basis of written representations received from the Directors as on 31stMarch 2017 taken on record by the Board of Directors none of the Director isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164(2) of the Act.
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"
(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 Company has failed to provide the necessary information & data and has notdisclosed the impact of pending litigations as on March 31 2017 on its financial positionin its financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. The Company has Failed to transferred Unpaid /Unclaimed Dividend and ShareApplication Money of RS. 183956.60 and 93586 to Investor Education and Protection Fund.
ANNEXURE-A to the Audit Report
With reference to the Annexure referred in the Auditors' Report to the members of thecompany on the financial statements for the year ended on March 31 2017 we report that:
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management at reasonableintervals; and no material discrepancies were noticed on such verification. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets.
(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 areheld in the name of the Company.
(ii) The physical verification of inventory was conducted at year end by the managementand no material discrepancies were noticed.
(iii) The company has not produced the register required to be maintained undersection 189 of the Companies Act 2013 for our verification.
(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 Act with respectto the loans and investments made.
(v) The company has not accepted any deposits from public during the year.
(vi) The Central Government has not prescribed the maintenance of cost records undersection 148(1) of the Act for any of the services rendered by the Company.
(vii) The company is not regular in depositing undisputed statutory duesincluding Sales-tax Value added tax CST TCS Gratuity
Income Tax Professional tax ESIC and any other statutory dues to the appropriateauthorities. (Dues pending from more than 6 months)
|Head ||Assessment Year ||Amount ( in`) |
|NMMC CESS ||2012-13 ||1050184.00 |
|Property Tax ||2012-13 ||4468088.00 |
|Property Tax ||2013-14 ||2980392.00 |
|Property Tax ||2014-15 ||3394170.00 |
|Property Tax ||2015-16 ||16005747.00 |
|Property Tax ||2016-17 ||7640045.00 |
|Property Tax ||2017-18 ||8457912 |
|CST ||2013-14 ||156580.00 |
|CST ||2017-18 ||112655 |
|VAT ||2015-16 ||4844942.21 |
|VAT ||2016-17 ||132202.00 |
|TCS ||2017-18 ||50569 |
|Gratuity ||2014-15 ||967844.00 |
|TDS ||2016-17 ||801918 |
|Income Tax ||2006-07 ||18525222.00 |
|Professional Tax ||2015-16 ||78146.00 |
|ESIC ||2016-17 ||5417.00 |
(viii) The company has defaulted in repayment of loans or borrowing toBanks Amount `1384346580.58/- Detail are as follow:
|(A) Bank cash credit ||Amount |
|State bank of Hyderabad ||76221407.00 |
|State bank of Indore ||82720860.22 |
|State bank of Patiala ||166316769.63 |
|Total (A) ||325259036.85 |
|(B) Packing Credit Loan || |
|State bank of Hyderabad ||81687165.00 |
|State bank of Indore ||130918300.00 |
|Total (B) ||212605456.00 |
|(C) Bank Term Loan || |
|State bank of Hyderabad ||189306226.00 |
|State bank of Indore ||242700230.09 |
|State bank of Patiala ||359239999.64 |
|Total (C) ||845816609.73 |
|(D) Bill Discounting Export Invoice ||665469.00 |
|Grand Total (A+B+C+D) ||1384346580.58 |
Note :- The Company has settled all type of loan State Bank of Patiala & State Bankof Hyderabad with ARC Companies.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers employees has been noticed or reported duringthe course of our audit.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
(xii) We observed that inventory include (Stores and spares and loose tools)arenon-moving Items because that value shown in balance sheet is more than 3 year old.
(xiii) In our opinion and according to the information and explanations given to usthe Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiv) All transactions with the related parties are in compliance with sections 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in theFinancial Statements etc. as required by the applicable accounting standards.
(xv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xvi) 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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvii) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For BATLIBOI & PUROHIT
Firm's Registration Number: 101048W
Membership Number: 30615
Date: 25 -05- 2017
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 internalfinancial controls over financial 2017 in conjunction with our audit of the financialstatements of the Company 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 financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India (ICAI'). These responsibilities include the designimplementation and maintenance of adequateinternalfinancialcontrols that were operatingeffectively for ensuring the orderly and efficient conduct of its business its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the CompaniesAct 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 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financialcontrols 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 financialstatements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficientand appropriate tointernal financial controls system over 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 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 statements .materialeffect onthe financial
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 overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.
In our opinionoperating procedures but during the course of the company does not havedefined audit we found reasonable control in the operating areas of the company.
Our Opinion is qualified in this matter.
In our opinion the Company does not have the standard operating procedures in allmaterial respects an adequate internal financial controls system over financial reportingand such internal financial controls over financial reporting operating effectively as at31 March 2017 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India.
for BATLIBOI & PUROHIT
Firm's Registration Number: 101048W
Membership Number: 30615
Date: 25-5- 2017