TO THE MEMBERS OF SHESHADRI INDUSTRIESLIMITEDSECUNDERABAD.
Report on the Financial Statements
We have audited the accompanying financial statements of SHESHADRI INDUSTRIES LIMITED("the Company") which comprise the Balance Sheet as at 31st March 2017 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance 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. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on 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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2017 and its Loss and its cash flows for the year ended on that date.
Emphasis of Matter:
We draw attention to the following matters in the Notes to the financial statements:
a. Note No. 26 to the financial statements regarding preparation of the financialstatements on a going concern basis despite complete erosion of the net worth and currentliabilities exceeding current assets as at 31st March 2017. Also there werelower cash inflows from existing business activities and default in payment of dues tobanks/financial institutions.
b. Note No. 36 to the financial statements relating to non-provision of interest fordelay in payments to MSME suppliers. Our opinion is not qualified in respect of thesematters.
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 sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in paragraphs 3and 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.
(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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under 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 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect of 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".
(g) 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 25 (c) to (h)to financial statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich 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.
iv The Company has provided requisite disclosures in the financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8thNovember 2016 to 30th December 2016. Based on audit procedures and relying onthe management representation we report that the disclosures are in accordance with thebooks of account maintained by the Company and as produced to us by the Management - ReferNote 35 to the Financial Statements.
for BRAHMAYYA & CO.
Chartered Accountants Firm's Regn No. 0005I3S
Place : Hyderabad (K.SHRAVAN)
Date : 27.5.2017 Membership No.215798
Annexure - A to the Auditors' Report:
The Annexure referred to in Para 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of SHESHADRIINDUSTRIES LIMITED SECUNDERABAD for the year ended March 312017.
1. a. The Company has maintained proper records showing full particulars includingquantitative details and situation
of fixed assets.
b. As explained to us the management has physically verified the fixed assets duringthe year and there is a regular programme of physical verification which in our opinionis reasonable having regard to the size of the Company and the nature of the assets. Nodiscrepancies were noticed on such verification.
c. According to the information and explanation given to us and on the basis of ourexamination of the records of the Companythe immovable properties have been transferredto Sheshadri Industries Limited (resulting company 2) as per the scheme of demergerapproved by Hon'ble High Court at Hyderabad.
2. The inventory has been physically verified during the year by the management. In ouropinion the frequency of verification is reasonable. No material discrepancies werenoticed on such verification between the physical stocks and book records.
3. a. During the year the Company has not granted any loans secured or unsecured toCompanies firms limited li
ability partnerships or other parties covered in the register maintained under Section189 of the Companies Act 2013.
b. In view of our comments in para (a) above Clause (III) (a) (b) and (c) ofparagraph 3 of the aforesaid order are not applicable to the Company.
4. In our opinion and according to the information and explanation given to us theCompany has not advanced any loan to any Director and no investments were made during theyear as referred to in sections 185 and 186 of the Act. Therefore the provisions ofParagraph 3(iv) of the Companies (Auditors' Report) Order 2016 are not applicable to theCompany.
5. The Company has not accepted any deposits from the public. Hence the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under do not apply to this Company.
6. We have broadly reviewed the cost records maintained by the Company pursuant tosub-section (1) of section 148 of the Companies Act 2013 and are of the opinion thatprime facie the prescribed accounts and records have been made and maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or Complete.
7. a. According to the records the company is not regular in depositing undisputedstatutory dues including provident
fund employees state insurance Income-tax Sales-tax Service tax Value addedtax Cess and all other statutory dues with the appropriate authorities. However theextent of the arrears of outstanding statutory dues as at March 312017 for a period ofmore than six months from the date they became payable are as follows:
|Name of statute ||Nature of the dues ||Amount |
|Period to which the amount relates ||Due Since ||Date of Payment |
|Employees Provident Fund Act ||Provident Fund Contribution ||72.32 ||2016-17 ||Since June20l6 ||Not yet paid |
|Employee State Insurance Act ||Employee state Insurance ||4.41 ||2016-17 ||Since July20l6 ||Not yet paid |
|Professional Tax ||Professional Tax ||1.05 ||2016-17 ||Since Sep'2016 ||Not yet paid |
|Income Tax Act ||TDS ||34.40 ||2016-17 ||Since Aug'2016 ||Not yet paid |
|Finance Act ||Service Tax ||1.99 ||2016-17 ||Since Aug'2016 ||Not yet paid |
b. According to the records of the Company and the information and explanations givento us there are no dues to Income Tax or Sales Tax or Service Tax or Duty of Customs orDuty of Excise or Value Added Tax have not been deposited on account of any dispute exceptas follows:
|Nature of the Statute ||Nature of Dues ||Amount |
(Rs in Lakhs)
|Period to which the amount relates (Financial year) ||Forum where dispute is pending |
|M.P Sales Tax Act ||Sales Tax dues ||2.44 ||2003-2004 ||Deputy Commissioner (Appeal) Sales Tax Bhopal Madhya Pradesh |
|M.P Sales Tax Act ||Sales Tax dues ||5.20 ||2004-2005 ||Deputy Commissioner (Appeal) Sales Tax Bhopal Madhya Pradesh |
|Customs Act 1962 ||nterest on Customs Duty ||20.32 ||2003-2004 ||Hon'ble High Court Jabalpur Madhya Pradesh |
|M.P. Sales Tax Act ||Sales Tax(Entry tax) dues ||22.48 ||2012-2013 ||M.P Commercial Tax Appellate Board Bhopal Madhya Pradesh |
|M.P. Sales Tax Act ||Sales Tax(Entry tax) dues ||1.96 ||2013-2014 ||Additional Commissioner of Commercial Tax (Appeal) Jabalpur Madhya Pradesh |
8. In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of loans to financial institutions and Banks.
|Name of the Bank ||Amount of due as at the Balance Sheet date (Rs in Lakhs)* ||Period of default |
|i) Andhra Bank - I ||14.87 ||From Sep'2016 |
|ii) Andhra Bank - II ||213.00 ||From Sep'2016 |
|iii) Andhra Bank - III ||45.00 ||From Sep'2016 |
|iv) Andhra Bank - Corp ||39.00 ||From Sep'2016 |
|v) SBH - Corp ||16.50 ||From Sep'2016 |
*Principal dues excluding interest
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instrument) during the year. In our opinion and according to theinformation and explanations given to us the term loans have been applied for thepurposes for which they were obtained.
10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
11. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Companies (Auditors'Report) Order 2016 is not applicable.
13. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
15. 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 Companies (Auditors' Report) Order 2016 is not applicable.
16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
for BRAHMAYYA & CO;
Chartered Accountants Firm's Regn No. 000513S
Place : Hyderabad Partner
Date : 27.05.2017 Membership No.215798
Annexure - B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SHESHADRIINDUSTRIES LIMITED SECUNDERABAD ("the Company") as of 31st March2017 in conjunction with our audit of the 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 Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the designimplementation and maintenance of adequate internalfinancial controls that were operatingeffectively for ensuring the orderly and efficientconduct of its business including adherence tocompany's policies the safeguarding of itsassets the prevention and detection of frauds anderrors the accuracy and completeness ofthe accounting records and the timely preparation ofreliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material aspects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud and error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion. Meaning of Internal Financial Controls overFinancial 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
2. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditure of the Company are being made only inaccordance with authorisations of management and directors of the Company; and
3. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
for BRAHMAYYA & CO.
Chartered Accountants Firm's Regn No. 000513S
Place : Hyderabad Partner
Date : 27.05.2017