Simplex Projects Ltd.
|BSE: 532877||Sector: Infrastructure|
|NSE: SIMPLEX||ISIN Code: INE898F01018|
|BSE 00:00 | 13 Dec||Simplex Projects Ltd|
|NSE 05:30 | 01 Jan||Simplex Projects Ltd|
|BSE: 532877||Sector: Infrastructure|
|NSE: SIMPLEX||ISIN Code: INE898F01018|
|BSE 00:00 | 13 Dec||Simplex Projects Ltd|
|NSE 05:30 | 01 Jan||Simplex Projects Ltd|
The Members of
Simplex Projects Limited
Report on the Standalone Financial Statements:
1. We have audited the accompanying standalone financial statements of Simplex ProjectsLimited ("the Company") which comprise the Balance Sheet as at March 31 2017the Statement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements:
2. 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act; safeguarding the assets of the Company;preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made 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 standalone 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 theauditor's 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 standalone financial statements.
Basis of Qualified Opinion
4. a) Attention is invited to Note no. 33 regarding company's branch at Libya which hasstopped functioning due to political unrest prevailing there.
The total expenses incurred at the branch during the year amounts to Rs.2720.78 Lakhsincluding depreciation which have been transferred to work in progress and the totalassets of the branch as on the balance sheet date amounts to Rs.94502.35 Lakhs. Themanagement has certified the financial accounts assets and liabilities of the branch ason 31.03.2017 and is confident of realising the above amounts and hence no adjustmentshave been considered necessary in the accounts by them. The company has signed asupplementary agreement with the government for realization of dues & resumption ofcontract. However in view of prolonged uncertainty of resumption the company has moved anapplication with the Hon'ble High court at Delhi for proceeding with Arbitration and hasbeen granted an interim stay for further extension/invocation of Bank guarantees for theproject. Accordingly no provision for charges has been made after extension.
b) In view of the lack of adequate information we are unable to comment on the extentof the eventual recoverability of the amounts due and the assets at Libya. The impact ofthis matter on the financial statement profits for the period assets and liabilities andEPS of the Company is not ascertainable presently at this stage and hence we are unable toable to express our opinion on the impact of the same on the financial statements of theCompany for the year.
c) Investment of Rs 542.94 lakhs in the partnership firm Simplex Projects (Netherlands)Co-operative U.A. is doubtful of recovery since project has not started and no provisionfor the same has been made by the company due to this loss of the company is understatedby Rs 542.94 lakhs and Reserves of the Company overstated by same amount.
d) We did not audit the financial statements of two branches at Libya and Kuwaitincluded in the standalone financial statements of the Company whose financial statementsreflect total assets of Rs 106976 as at 31st March 2017 and total revenues of Rs19243.93 lacs for the year ended on that date as considered in the standalone financialstatements. The financial statements of these branches are unaudited and have beenfurnished to us by the management and are certified by the management and our opinion inso far as it relates to the amounts and disclosures included in respect of these branchesis based solely on the report of management.
e) Attention is invited to Note no. 30 (a) relating to non provision of interest onEight numbers of cash credit accounts and one term Loan accounts with Bank as theseaccounts have become NPA. Such interest pertaining to cash credit facilities amounts to Rs4627.54 lakhs for year ended March 31 2017 as per Calculation of the management withoutconsidering any late or penal interest. Also no further provision of interest has beenmade on to one another term loan account which is not quantified. Due to this profit areoverstated.
f) Attention is invited to Note no. 30(b) regarding Interest amounting Rs 21.34 crores(as certified by the management) which has been reversed by the management and reallocatedtowards its Libyan branch and consequently is part of its WIP due to which profit has beenoverstated.
g) Attention is invited to Note no 31 where no provision for diminution in the value orimpairment has been made for CWIP of Rs 18.94 crores which is lying for a long time whichincludes material in transit amounting to Rs 465.29 lacs pertaining to material importedand lying at port since long.
h) The company has not made any provision against Trade Receivables of more than threeyears amounting to Rs 142.96 crores (including trade receivable under arbitrationamounting to Rs 5.80 crores) and Advances paid to suppliers of material Subcontractors& staff advances amounting to Rs 47.84 crores since long and advance against projectsRs 5.48 crores which according to management are recoverable / adjustable and no provisionis required for the same.
i) Site work in progress (included under inventory) amounting to Rs 51.60 crores(including Rs 15.28 crores due to dispute with customers) and uncertified sales amountingto Rs 15.85 crores (included under revenue) have been lying as such since long againstwhich no provisions have been made
5. 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 the financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2017 and its profit and its Cash Flow for the year ended on thedate.
Emphasis of Matter:
6. We draw attention to the following matters in the notes to the following statement.
a) note no. 29 regarding closing balance confirmations of Debtors Creditors EarnestMoney loans and advances being unconfirmed in respect of which we are unable to expressour opinion.
b) note no. 34 regarding foreign exchange fluctuation on account of overseas borrowingwhich has been amortized by treating the same as long term from the initial time ofborrowing. Due to this profit has increased by Rs.683.73 Lakhs for the year as the same isamortized.
Our opinion is not modified in respect of these matters except as otherwise stated.
Report on Other Legal and Regulatory Requirements:
7. As required by the Companies (Auditor's 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 4 of the Order.
8. As required by section 143(3) of the Act we report that:
a) except for the indeterminate effect of matter referred to in paragraph 4(a) to (i)above we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b) in our opinion except for the effect of the matter described in the Basis forQualified opinion paragraph 4(a) to (i) above proper books of account as required by lawhave been kept by the Company so far as appears from our examination of those books exceptin case of branches which have not have audited and for which we are unable to give ourcomments.
c) The reports on the accounts of the two branch offices of the Company duly certifiedby the management have been given to us and have been properly dealt with by us inpreparing this report.
d) except for the matter referred to in paragraph 4(a) to (i) and above the BalanceSheet the Statement of Profit and Loss and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account and with the certified accounts of thetwo branches given by the management.
e) in our opinion except for the effects of the matter described in the Basis forQualified Opinion paragraph 4 above the aforesaid standalone financial statement complywith the Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rule 2014.
f) The matter described in the Basis for Qualified Opinion paragraph 4 above in ouropinion may have an adverse effect on the function of the Company.
g) On the basis of written representations received from the directors as on March 312017 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of section 164(2) of theAct.
h) The qualification relating to the maintenance of accounts and other mattersconnected therewith reference is drawn to Basis of Qualified Opinion paragraph to thefinancial statements and the matters are as stated in the Basis of Qualified Opinionparagraph above.
i) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in Annexure B and
j) 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 standalonefinancial position as detailed in Note 35 to the standalone financial statements;
ii) the Company has long term contracts as on 31st March 2017. Material Foreseeablelosses relating to the same has not been quantified by the Company.
iii) there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company at the end of the year.
iv) The company has provided requisite disclosures in its financial statements fordealings in Specified Bank Notes during the period from 8th November 2016 to 30thDecember 2016 and these are in accordance with the books of accounts maintained by thecompany. Refer Note 46 to the financial statements.
ANNEXURE-A TO THE INDEPENDENT AUDITORS' REPORT
ANNEXURE-A TO THE INDEPENDENT AUDITORS REPORT (REFERRED TO IN PARAGRAPH-7 UNDERREPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS' SECTION OF OUR REPORT OF EVENDATE)
(i) (a) The company has generally maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
(b) Fixed assets have been physically verified by the management during the year end(except for the assets deployed at its branch in Libya and Kuwait) which in our opinionis reasonable having regard to the size of the company and the nature of its assets. Nomaterial discrepancies were noticed on such verification. However in absence of physicalverification at its branch in Libya and Kuwait we are unable to comment on thediscrepancies therein if any.
(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 the immovable properties areheld in the name of the Company.
(ii) As explained to us the inventories were physically verified during the year bythe Management except for the branch at Libya at reasonable intervals and no materialdiscrepancies were noticed on physical verification.
(iii) (a) According to the information and explanation given to us the company hasgranted interest free advance in the nature of loans to two parties (one subsidiaries ofthe company and one Joint Venture) which are covered in the register maintained undersection 189 of the Companies Act 2013.
(b) The advance in the nature of loans are given interest free.
(c) According to the information and explanation given to us no repayment schedule hasbeen specified and loans are repayable on demand. Accordingly paragraph 3(iii)(b) of theorder is not applicable to the Company in respect of repayment of principal amount.
(d) There are no overdue amounts in respect of loans granted to the bodies corporatelisted in the register maintained under section 189 of the Act
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicableexcept that no interest is being charged to the associate and joint venture.
(v) In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits and therefore the directives issued by the ReserveBank of India and the provisions contained in Section 73 to 76 or any other relevantprovisions of the Companies Act 2013 and Rules framed there under are not applicable tothe company. According to the information and explanation given to us no order has beenpassed by the Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any Court or any other Tribunal in respect of deposits.
(vi) We have broadly reviewed the books and accounts maintained by the company pursuantto rules made by the Central Government of India regarding the maintenance of costrecords under such clause (l) of the section 148 of the Company's Act 2013 and are of theopinion that prima facie the prescribed accounts and records have been maintained. Wehave not made a detailed examination of the records with a view to determine whether theyare accurate or complete.
(vii) (a) According to the information and explanation given to us and as per therecords of the Company examined by us undisputed statutory dues including Provident FundEmployees State Insurance Income Tax Sales Tax duty of customs duty of excise VATCess TDS and other material statutory dues have been deposited with the appropriateauthorities with certain delays.
Undisputed amount payable in respect of Service Tax and TDS dues outstanding at theyear-end for a period of more than six months from the date it became payable is inrespect of service tax Rs. 579.88 lacs and in respect of TDS Rs. 19.88 lacs.
(b) According to the information and explanation given to us the particulars of duesof Income Tax Sales Tax Service Tax duty of customs duty of excise VAT which have notbeen deposited on account of dispute are as follows:
(viii) Based on our audit procedures and according to the information and explanationgiven to us the company has delayed in making repayment of dues to banks and financialInstitution. The Company has also defaulted in some repayment of dues to certain Banks andsome bank accounts have become NPA. The outstanding dues as on 31.03.2017 are as follows :
(Rs in Lakhs)
(ix) The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments). The term loans have been applied for the purpose forwhich they were raised.
(x) To the best of our knowledge and according to the information and explanationsgiven to us by the Management no fraud by the Company or on the Company by its officersor employees has been noticed or reported during the year.
(xi) To the best of our knowledge and according to the information and explanationsgiven to us the Company has paid /provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
(xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theorder is not applicable.
(xiii)In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Act where applicable for alltransactions with related parties and the details of related party transactions have beendisclosed in the standalone financial statements as required by the applicable accountingstandards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause 3(xiv) of the order is not applicable.
(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non cash transactions with itsDirectors or persons connected to its Directors and hence provisions of Section 192 of theAct are not applicable.
(xvi) The Company is not required to be registered under section 45-I of the Reservebank of India Act 1934.
ANNEXURE "B' TO THE INDEPENDENT AUDITORS' REPORT
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(REFERRED TO IN PARAGRAPH 8(I) UNDER REPORT ON OTHER LEGAL AND REGULATORYREQUIREMENTS' OF OUR REPORT OF EVEN DATE)
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 SIMPLEXPROJECTS LIMITED (the Company') as on 31st March 2017 in conjunction with our auditof the standalone 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 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 design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies the safe guardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required 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 issued by ICAI and deemed to beprescribed under Section 143(10) of the Companies Act 2013 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 were established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operativeeffectiveness. 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 or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion of the Company's internal financial controls systemover 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 purpose 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 responsible detail accurately and fairy reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are records as necessary to permit preparation of financial statements inaccordance with authorizations of the Management and directors of the Company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the Company's assets that could have a material effecton 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 nor be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future period are subject to the risk that the internal financial controlover financial reporting may become inadequate because of change in conditions or thatthe degree of compliance with the 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 31st March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.