To the Members of
SHESHADRI INDUSTRIES LIMITED
Report on the Audit of the Financial Statements
We have audited the financial statements of SHESHADRI INDUSTRIES LIMITED (the company) which comprise the Balance Sheet as at March 31 2019 the Statement of Profit and Loss (including other comprehensive income) the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and a summary of the significant accounting policies and other explanatory information (herein after referred to as the financial statements)
In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matter described in the basis for qualified opinion para the afore said Ind As financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standard) Rules 2015 as amended (Ind AS) and other accounting principles generally accepted in India of the state of affairs of the Company as at March 312019 the loss (including other comprehensive income) changes in equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
i) The company did not provide interest on working capital loans and term loans with SBI and Andhra Bank amounting to Rs.846.94 Lakhs for the year under review and Rs. 1569.17Lakhsup to 31st March 2019 from the date of account became NPA in the absence of statement of account the above amount has been arrived at as per calculation made by the company.
ii) Substantial amount of statutory dues related to Income tax Employee's provident fund Employee state insurance act and professional tax amounting to Rs.19696571/- have become overdue and remain unpaid interest penalty if any in respect of the same has remained unascertained and unaccounted for.
Consequent to the above loss for the year and Liabilities as at 31st March 2019 was understated and Shareholders funds are overstated to this extent.
We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors responsibility for the Audit of Financial Statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of financial statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our Qualified audit opinion on the financial statements.
Material Uncertainty Related to Going Concern
We draw attention to note no. 42of the financial statementswith regard to the Company has recorded accumulated losses of Rs. 4125.37lakhs as at 31st March 2019resulting in complete erosion of net worth and current liabilities exceed current assets by Rs. 4627.44Lakhs. Further there were lower cash inflows from existing business activities andthe Company has defaulted in payment of dues to banks/ Financial Institutions and could not comply with the terms of sanction and / or repayment schedule of the lending institutions and banks. Banks have issued notices under SARFAESI Act. These conditions indicate the existence of material uncertainty that may cast significant doubt about the Company's ability to continue as a Going Concern. However the accompanying financial have been prepared on Going Concern basis for the reasons stated in the said note.
Our opinion is not modified in respect of this matter.
Emphasis of Matter
We draw attention to the following matters in the notes to the financial statements
i) Note No 40of the financial statements relating to non-provision of interest for delay in payment to MSME suppliers.
ii) Note No. 44of financial statements relating to confirmation of balances in respect of trade receivables and trade payables.
Our opinion is not qualified in respect of these matters.
Key Audit Matters
Key Audit matters are those matters that in our professional judgment were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section and Material Uncertainty Related to Going concern section of our report we have determined the matters described below to be the key audit matters to be communicated in our report.
|Key Audit Matters||Auditor's Response|
|Evaluation of uncertain tax positions||Principal audit procedures|
|The Company has material uncertain tax posi- tions including matters under dispute which in- volves significant judgment to determine the pos- sible outcome of these disputes||Our audit procedures include the following substantive procedures:|
| Obtained understanding of key uncertain tax positions; and|
| We along with our internal tax experts -|
|Refer to Notes: no 39 (d) to the Financial Statements|| evaluated the Design and tested the operating effectiveness of controls around the assessment of the matter;|
| Read and analyzed select key correspondences external legal opinions / consultations by management for key uncertain tax positions;|
| Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and|
| Assessed management's estimate of the possible outcome of the disputed cases;|
|Assessed the appropriateness of disclosures made under the head `Contingent Liabilities' in the financial Statements.|
The Company's Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to read the other information identified above and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
When we read the Annual report ifwe conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Financial Statements:
The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 (the Act) with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance including other comprehensive income cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act 2013 read with relevant rules issued there under and other accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors is responsible for assessing the company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the company or to cease operations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit in order to design 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 has adequate internal financial controls system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation
We communicate with those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor's Report) Order2016 (the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act we give in the Annexure A a statement on the matters specified in the paragraph 3 and 4 of the Order to the extent applicable.
2) As required by Section 143(3) of the Companies Act2013 we report that:
a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit
b) in our opinion except for the indeterminate effects of the matters referred to in Basis for Qualified opinion paragraph above proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books
c) the Balance Sheet the Statement of Profit and Loss including Other Comprehensive Income Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account
d) Except for the matters referred to in Basis for Qualified opinion paragraph above in our opinion the aforesaid financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act 2013 read with Rule 7 of Companies (Accounts) Rules 2014.
e) on the basis of written representations received from the directors as on 31st March2019 taken on record by the Board of Directors none of the directors is disqualified as on 31st March2019 from being appointed as a director in terms of Section 164(2) of the Act
f) with respect to the adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate report in `Annexure B.
g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act as amended in our opinion and to the best of our information and according to the explanations given to us:
h) No managerial remuneration was paid during the year under review.Accordingly reporting under requirements of section 197 doesn't apply.
i) With respect to the other matters to be included in the Auditor's report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and 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 financial position in its financial statements-Refer Note no 39 (b) to(g) of financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There were no amounts which were required required to be transferred to the Investor Education and Protection Fund by the Company
|for K.S.RAO & CO.|
|Firm's Regn No. 003109S|
|Date : 30.05.2019||Membership No. 231388|
Annexure - A to the Auditor's Report:
The Annexurereferred to in Para 1 under the heading of Report on Other Legal and Regulatory Requirements of our report of even date to the members SHESHADRI INDUSTRIES LIMITED SECUNDERABAD for the year ended March 312019.
1. a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
b. As explained to us the management has physically verified the fixed assets during the year and there is a regular programme of physical verification which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No discrepancies were noticed on such verification.
c. According to the information and explanation given to us and on the basis of our examination of the records of the Company the immovable properties have been transferred to SHESHADRI INDUSTRIES LIMITED (Resulting company) as per the scheme of demerger approved by Hon'ble High Court at Hyderabad.
2. According to information and explanation given to us physical verification of inventory has been conducted at reasonable intervals by the management. However we did not have occasion to overview the physical stock taking. Further according to information and explanation given to us no material discrepancy was noticed in such verification by management.
3. a. During the year the Company has not granted any loans secured or unsecured to Companies firms limited liability partnerships or other parties covered in the register maintained under Section 189 of the Companies Act 2013.
b. In view of our comments in para (a) above Clause (III) (a) (b) and (c) of paragraph 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 the Company has not advanced any loan to any Director and no investments were made during the year as referred to in sections 185 and 186 of the Act. Therefore the provisions of Paragraph 3(iv) of the Companies (Auditor's Report) Order 2016 are not applicable to the Company.
5. The Company has not accepted any deposits from the public. Hence the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed there under do not apply to this Company.
6. We have broadly reviewed the cost records maintained by the Company pursuant to sub-section (1) of section 148 of the Companies Act 2013 and are of the opinion that prime facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the cost records with a view to determine whether they are accurate or Complete..
7. a. According to the records the company is not regular in depositing undisputed statutory dues including provident fund employees `state insurance Income-tax Sales-tax Service tax Goods and Services Tax Duty of customs Duty of excise Value added tax Cess and all other statutory dues with the appropriate authorities. According to the information and explanations given to us there are no arrears ofoutstanding statutory dues as at March 31 2019 for a period more than six months from the date they becamepayable are as follows.
|Name of Statute||Nature of the dues||Amount (In Lakhs)||Period to which the amount relates (Financial Year)||Due Since||Date of Payment|
|Employees provident Fund Act||Provident Fund Contribution||124.27||2016-2017 20172018 & 2018-2019||June2016||Not Yet Paid|
|Employees State Insurance Act||Employees State Insurance||7.93||2018-2019||Apr 2018||Not Yet Paid|
|Professional Tax||Professional Tax||4.09||2016-17 2017-18 & 2018-19||July2016||Not yet Paid|
|Income tax Act 1961||TDS||52.17||2017-18 & 2018-19||April 2017||Not Yet Paid|
|Finance Act||Service Tax||2.52||2016-17 2017-18 & 2018-19||March 2017||Not Yet Paid|
|Central Sales Tax Act||CST||5.99||2016-17||June2016||Not Yet Paid|
b. According to the records of the Company and the information and explanations given to us the dues of Sales tax Income tax Custom Duty Wealth Tax Service Tax Excise Duty Cess which have not been deposited on account of dispute are as follows:
|Name of Statute||Nature of the dues||Amount (InLakhs)||Period to which the amount relates (Financial Year)||Forum where dispute is pending|
|M.P Sales Tax||Sales Tax dues||7.64||2003-04 & 2004-05||Deputy Commissioner (Appeal) Sales Tax Bhopal MP|
|M.P Sales Tax||Sales Tax (Entry tax) dues||22.48||2012-2013||Additional Commissioner (Appeal) Sales Tax Jabalpur MP|
|M.P Sales Tax||Sales Tax (Entry tax) dues||1.96||2013-2014||Additional Commissioner (Appeal) Sales Tax Jabalpur MP|
8. In our opinion and according to the information and explanations given to us the Company has defaulted in repayment of loans to financial institutions and Banks.
|Name of the Bank||Amount of default as at the Balance||Due from|
|Sheet date (Rs in Lakhs)* |
|i) Andhra Bank - I||14.87||From Sep'2016|
|ii) Andhra Bank - II||948.97||From Sep'2016|
|iii) Andhra Bank - III||1178.14||From Sep'2016|
|iv) Andhra Bank -Corp||1036.00||From Sep'2016|
|v) SBH - Corp||443.50||From Sep'2016|
|Working capital Loan|
|Andhra Bank||1147.22||From Sep'2016|
*Total Principal dues excluding interest
9. During the year under review the company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) and Term loans during the year. Accordingly the provisions of paragraph 3(ix) of the Companies (Auditor's Report) Order 2016 is not applicable.
10. According to the information and explanations given to us no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
11. According to the information and explanations given to us and based on our examination of the records of the Company the Company has not paid any remunerations to directors. Accordingly paragraph 3(xi) of the Companies (Auditor's Report) Order 2016 is not applicable.
12. In our opinion and according to the information and explanations given to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Companies (Auditor's Report) Order 2016 is not applicable.
13. According to the information and explanations given to us and based on our examination of the records of the Company transactions with related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.
14. According to the information and explanation given to us and based on our examination of the records of the Company the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
15. According to the information and explanations given to us and based on our examination of the records of the Company the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly paragraph 3(xv) of the Companies (Auditor's Report) Order 2016 is not applicable.
16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
|for K.S.RAO & CO.|
|Firm's Regn No. 003109S|
|Date : 30.05.2019||Membership No. 231388|
Annexure B to the Auditor's Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of SHESHADRI INDUSTRIES LIMITEDSECUNDERABAD (the Company) as of 31st March 2019 in conjunction with our audit of the financial statements 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 internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (`ICAI'). These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the Guidance Note) and the Standards on Auditing to the extent applicable to an audit of internal financial controls both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material aspects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal reporting included obtaining an understanding of internal financial controls over financial a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud and error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that:
1. pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditure of the Company are being made only in accordance with authorisations of management and directors of the Company; and 3. provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the Company'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 financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with policies or procedures may deteriorate. Qualified Opinion.
According to the information and explanations given to us and based on our audit the following weaknesses has been identified as at March 312019.
a) The Company did not obtain comparative quotes for the prices paid/ received relating to the transactions with related parties to ensures that those transactions were entered into at armlength prices.
In our opinion except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria the Company has maintained in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31 2019 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
We have considered the weaknesses identified and reported above in determining the nature timing and extent of audit tests applied in our audit of the financial statements of the company and these weaknesses do not affect our opinion on the financial statements of the company.
|for K.S.RAO & CO.|
|Firm's Regn No. 003109S|
|Date : 30.05.2019||Membership No. 231388|