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Shree Rajasthan Syntex Ltd.

BSE: 503837 Sector: Industrials
NSE: SHRERAJSYN ISIN Code: INE796C01011
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NSE 05:30 | 01 Jan Shree Rajasthan Syntex Ltd
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OPEN 3.54
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VOLUME 500
52-Week high 4.06
52-Week low 1.77
P/E
Mkt Cap.(Rs cr) 5
Buy Price 0.00
Buy Qty 0.00
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Shree Rajasthan Syntex Ltd. (SHRERAJSYN) - Auditors Report

Company auditors report

To The Members of

Shree Rajasthan Syntex Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Shree Rajasthan Syntex Limited ("theCompany") which comprise the Balance Sheet as at 31 March 2020 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand the Statement of Cash Flows for the year then ended and notes to the financialstatements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 the loss and total comprehensiveloss changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note no. 41 to the financial statements in respect of preparationof financial statements of the Company on going concern. The Company has incurred lossesand as current liabilities exceed current assets. Further the Company has defaulted inrepayment of borrowings from the lenders and submitted a resolution plan to the consortiumlenders for the revival of its business and restructuring the repayment of borrowings.However Company has accounted interest liability as per restructuring plan in processsince April 2017 classified the term loan in current and non-current liabilityaccordingly. If the restructuring plan is not implemented there will be interestliability of Rs.10.56 Crores in addition to already provided in books of account. In viewof the management's expectations of the successful outcome in future years the financialstatements have been prepared on a going concern basis.

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements for the financial year ended March31 2020. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. In addition to the matter described in the"Material Uncertainty Related to Going Concern" section we have determined thematters described below to be the key audit matters to be communicated in our report. Foreach matter below our description of how our audit addressed the matter is provided inthat context.

We have fulfilled the responsibilities described in the Auditor's responsibilities forthe audit of the financial statements section of our report including in relation tothese matters. Accordingly our audit included the performance of procedures designed torespond to our assessment of the risks of material misstatement of the financialstatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our audit opinion on the accompanyingfinancial statements.

Key audit matters How our audit addressed the key audit matter
Litigation claims and other contingencies (as described in note 39 of the financial statements)
As indicated in Note 39 the Company is involved in various litigations and claims including court and arbitration proceedings. Our audit procedures included the following:
This risk of litigations and claims would have a significant financial impact if the potential exposures were to materialize. • Obtained an understanding of identification process relating to litigations and claims and contingent liabilities and evaluated the design and tested the operating effectiveness of controls in respect of process
The amounts of claims may be significant and estimates of the amounts of provisions or contingent liabilities are subject to significant management judgement. • Assessed the progress of all significant contingencies consideration of any evidence of legal disputes.
• Evaluated management's assessment of the likely outcome and potential exposures arising from significant contingencies subject to ongoing court and arbitration proceedings and considered the requirements for any provision.
This matter has been determined to be a key matter since the aforementioned cases requires significant judgements by management including that obtained from its legal advisors. • Inquired with both legal and finance personnel in respect of ongoing litigations or claims proceedings inspected relevant correspondence and requested a confirmation letter from the Company's in-house legal counsel. Also obtained legal confirmation letters on sample basis from external legal counsels.

We have determined that there are no other key audit matters to communicate in ourreport.

Information Other than the Financial Statements and Auditor's report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Company's annual report but doesnot include the financial statements and our auditors' report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Management's Responsibilities for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance (including othercomprehensive income) changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) 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 accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.

In preparing the financial statements the Company's management is responsible forassessing the ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless themanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the 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 auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis 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 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting 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 existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matter

Due to the COVID-19 related lockdown we were unable to observe the management's yearend physical verification of inventory we have performed alternate procedures to auditthe existence of inventory as per the guidance provided in SA 501 "Audit EvidenceSpecific Considerations for selected items" and have obtained sufficient appropriateaudit evidence to issue our unmodified opinion on these financial statements.

Our report on the Statement is not modified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein the "Annexure A" a statement on the matters specified in paragraphs 3 and 4of the Order to the extent applicable.

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;

b. 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;

c. The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;

d. In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014;

e. On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164(2) of the Act;

f. The going concern matter described in the "Material Uncertainty Related toGoing Concern" Section above in our opinion may have an adverse effect on thefunctioning of the Company.

g. With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to financial statements and the operatingeffectiveness of such controls refer to our separate Report in "Annexure B".Our report expresses an unmodified opinion on the adequacy and operating effectiveness ofthe Company's internal financial controls over financial reporting;

h. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197 of the act as amended. In our opinionthe managerial remuneration for the year ended March 31 2020 has been paid / provided bythe Company to its directors in accordance with the provisions of section 197 read withSchedule V to the Act;

i. With respect to the other matters to be included in the Auditors' 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 financial statements - Refer Note 39 to the financial statements.

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

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Doogar& Associates
Chartered Accountants
Firm Registration No.
000561N
Sd/-
Vardhman Doogar
Partner
Membership No. 517347
UDIN: 20517347AAAAHR9247
Place: New Delhi
Date: June 29 2020

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the members of Shree Rajasthan Syntex Limited ofeven date)

i. In respect of the Company's fixed assets: -

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such 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 areheld in the name of the Company.

ii. The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. The Company has maintainedproper records of inventory. The discrepancies noticed on verification between thephysical stock and the book records were not material.

iii. According to the information and explanations given to us the Company had grantedunsecured loans to a body corporate covered in the register maintained under Section 189of the Companies Act 2013 in respect of which:

a. The terms and conditions of the grant of such loan are in our opinion prima facienot prejudicial to the Company's interest.

b. The schedule of repayment of principal and payment of interest has been stipulatedand repayments of principal amount have been regular as per stipulations but default inpayment of interest;

c. There is an overdue interest amount of Rs. 5.77 Lakhs receivable as at the year-end.

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 within the meaning of Section 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable to the Company.

vi. The Central Government has not prescribed the maintenance of cost records underSection 148 of the Act for any of the services rendered by the Company.

vii. According to the information and explanations given to us in respect of statutorydues:

a. Undisputed statutory dues including provident fund employees' state insuranceincome-tax sales- tax service tax duty of custom value added tax goods and servicetax cess and other statutory dues have been deposited after due dates with theappropriate authorities.

b. There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-Tax Service Tax Sales Tax Goods and Services Tax Duty ofCustom Duty of Excise Value Added Tax Cess and Other Statutory Dues were outstandingat the year end for a period of more than six months from the date they become payable.

c. Details of the dues of Income Tax Duty of Custom Duty of excise goods &service tax and Value Added Tax which have not been deposited (along with amount depositedunder protest) by the Company on account of any dispute are given below

SI. No. Name of the Statue Nature of the dues Forum where dispute is pending Period to which the amount relates (F.Y.) Amount Gross (Rs. In lakhs) Deposited under protest
1 Rajasthan Stamp Act Stamp Duty Tax Board Ajmer 2012-13 2.70 0.90
2 Rajasthan Tax into entry of goods into local area Act1999 Entry tax and interest High Court 2001-02 to 2005-06 252.32 252.32
3 Rajasthan Tax into entry of goods into local area Act1999 Entry tax and interest High Court 2006-07 to 2014-15 231.06 231.06
4 Central Excise Act 1994 Excise Duty and Custom Duty Dy Commissioner / Asst. Commissioner 1997 & onwards 24.47 1.34
5 Central Excise Act 1994 Excise Duty and Custom Duty Commissioner Appeals 1994-95 & 1995-96 6.10 -
6 Service Tax Service Tax Dy Commissioner / Asst. Commissioner 1998-99 to 1999-2000 9.96 10.88
7 Service Tax Service Tax Commissioner Appeals 2007 & onwards 4.17 4.17
8 Service Tax Service Tax CESTAT 2007 & onwards 3.21 3.2
9 Rajasthan Value Added Tax 2003 Value added tax with RIPS High Court 2007-08 to 2011-12 373.31 72.54
10 Rajasthan Value Added Tax 2003 Value added tax with RIPS DC (A) 2012-13 to 2015-16 550.43 -

viii. The Company has made default in repayment of its bank loans and interest duethereon. There were overdue loans amounting to Rs 451.42 Lakhs and further interest amountof Rs. 2854.43 Lakhs on balance sheet date as per revised sanction letters but theimplementation of the package is under process.

Name of Lender Instalment Interest Period
IDBI 95.76 230.25 June18- March 20
BOB 225.00 983.52 April 17 - March 20
SBI 130.66 1640.66 June17- March 20
Total 451.42 2854.43

ix. On the basis of information and explanation given to us term loans have beenapplied for the purposes for which they were obtained. The Company did not raise any moneyby way of initial public offer or further public offer (including debt instruments)during the current year.

x. To the best of our knowledge and according to the information and explanations givento us no material fraud by the Company or on the Company by its officers or employees hasbeen noticed or reported during the course of our audit.

xi. In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theCARO 2016 is not applicable

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 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.

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. Accordingly paragraph 3(xiv) of the Order is notapplicable to the Company.

xv. According to the information and explanations given to us the Company has notentered into non- cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.

xvi. According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For Doogar& Associates
Chartered Accountants
Firm Registration No.
000561N
Sd/-
Vardhman Doogar
Partner
Membership No. 517347
UDIN: 20517347AAAAHR9247
Place: New Delhi
Date: June 29 2020

Annexure B to the Independent Auditors' Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the members of Shree Rajasthan Syntex Limited ofeven 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 have audited the internal financial controls over financial reporting of ShreeRajasthan Syntex Limited as of 31 March 2020 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors are responsible for establishing and maintaining internalfinancial controls based on the internal financial controls over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India ("the GuidanceNote"). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to the 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 Companies Act 2013(hereinafter referred to as "the Act").

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the financial statements based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing prescribed underSection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols. 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 with reference to financialstatements was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlsover financial reporting included obtaining an understanding of such internal financialcontrols over financial reporting assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withreference to financial statements.

Meaning of Internal Financial Controls over Financial Reporting with Reference toFinancial Statements

A company's internal financial controls over financial reporting with reference tofinancial statements are a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls over financial reporting with reference to financialstatements include 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 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 withReference to Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to financial statements including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the internalfinancial controls over financial reporting with reference to financial statements tofuture periods are subject to the risk that the internal financial controls may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For Doogar& Associates
Chartered Accountants
Firm Registration No.
000561N
Sd/-
Vardhman Doogar
Partner
Membership No. 517347
UDIN: 20517347AAAAHR9247
Place: New Delhi
Date: June 29 2020

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