The Members of
SM Dyechem Limited
Report on the Financial Statements
We have audited the accompanying financial statements of the SM Dyechem Limited("the Company") which comprise the Balance Sheet as at 31st March 2017 theStatement of Profit and Loss and the Cash Flow statement for the period ended and asummary of 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 Act2013 ("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) Rule2014 (asamended). This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companypreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgements 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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
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 Rules made there under. We conducted our audit in accordancewith the standards on Auditing specified under section 143 (10) of the Act. Thosestandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on the effectiveness of theCompany's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India.
(a) In the case of the Balance Sheet of the state of affairs of the company as atMarch 31 2017
(b) In the case of the statement of Profit and Loss of the Loss for the period endedon that date; and
(c) In the case of the Cash Flow statement of the cash flows for the period ended onthat date.
Emphasis of Matter
We draw attention to Note No. 2.18 regarding the preparation of financial statements ona going concern basis for the reasons stated therein and filing of Draft RehabilitationScheme to Board of Industrial and Financial Reconstruction (BIFR/NCLT). Our opinion is notqualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2015 ("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 inparagraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act we report to the extent applicable that:
a. 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 proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
c. the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;
d. In our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting Standards specified under Section 133 of the Act readwith Rules 7 of the Companies (Accounts) Rules 2014;
e. 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 clause (g) ofsub-section (1) of section 274 of the Act (Refer Note No. 2.22);
f. 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";
g. with respect to the other matter to be included in Auditor Report in accordance withRule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the bestof our information and according to the explanation given to us
(i) The company has disclosed the impact of pending litigation on its financialposition in its financial statements- Refer Note no. 2.28;
(ii) The Company did not have any long term contracts including derivative contractsfor which there were any material foreseeable losses;
(iii) There has been delays in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
For S. K. KAVATHEKAR & CO.
Firm Regn. No. 104944W
S K Kavathekar
Proprietor M. No. 13720
Place : Mumbai
Date : 26th May 2017
"ANNEXURE A" TO INDEPENDENT AUDITORS' REPORT
Referred to in Paragraph 1 under 'Report on Other Legal and Regulatory Requirements' inthe Independent Auditors' Report of even date to the members of SM Dyechem Limited ('theCompany') on the financial statement for the period ended as on 31st March 2017 we reportthat:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) We are informed that most of the fixed assets have been physically verified by themanagement during the period and that no material discrepancies were noticed on suchphysical verification. In our opinion the frequency of such verification is reasonablehaving regards to the size of the Company and nature of its assets.
(ii) (a) The closing stock of goods have been physically verified during the period bythe management. In our opinion the frequency of such verification is reasonable.
(b) The procedures of physical verification of stocks followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) The Company has maintained proper records of inventories. As explained to us thediscrepancies noticed on verification between the physical stocks and book records werenot material in relation to the operations of the Company and the same have been properlydealt with in the books of account.
(iii) During the period the Company has not granted any unsecured/secured loans tocompanies firms or other parties covered in the register maintained under section 189 ofthe Act. Therefore the provisions of Clause 3(iii)(a) and (iii)(b) of the Order are notapplicable to the aforesaid Company
(iv) As per information and explanations given to us the Company has not granted anyloan or given any guarantee on such loans covered under section 185 and neither it hasmade any investment covered under 186 of the Companies Act 2013.
(v) The Company has not accepted any deposits from the public within the meaning ofSection 73 74 75 and 76 of the Act and the rules framed there under to the extentnotified.
(vi) We are informed that the Central Government has prescribed maintenance of costrecords under sub-section (1) of Section 148 of the Act for certain products in respect ofwhich no manufacturing operations were carried out during the period.
(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues in respect of Wealth Tax Excise Duty Cess and any otherstatutory dues except Sales Tax Service Tax TDS and Investor Education and ProtectionFund.
According to the information and explanations given to us no undisputed amountspayable in respect of the aforesaid dues were outstanding as at 31st March 2017 for aperiod of more than six months from the date of becoming payable except as mentionedbelow: -
|Sr. No ||Name of the statute ||Nature of the Dues ||Amount (Rs in thousands) |
|1. ||Foreign Trade (Development and Regulation Act 1992) ||Customs Duty ||74009 |
|2. ||Central sales Tax Act 1956 and Sales Tax Act of various states. ||Sales Tax ||22412 |
|3. ||Indian Stamp Act 1899 ||Stamp Duty ||3241 |
|4. ||Central Excise Act 1944 ||Excise Duty ||2596 |
|5. ||Income Tax Act 1961 ||Income Tax (TDS) ||574 |
|6. ||Finance Act 1994 (Chapter V) ||Service Tax ||122 |
(b) The disputed statutory dues aggregating to Rs. 11417 thousands that have not beendeposited on account of matters pending before appropriate authorities as under:-
|Name of the Statute ||Nature of the Dues ||Amount of Dispute (Net) Rs. In '000 ||Period to which it relates ||Forum where dispute is pending |
|Central sales Tax Act 1956 and Sales Tax Act of various states. ||Sales Tax ||9000 ||31.03.07 ||Various Appellate/Judicial Authorities |
|Employees Provident Fund Scheme 1962 ||Provident Funds ||2417 ||2004-05 ||Chief Commissioner Provident Fund |
(c) According to the information and explanations given to us the amounts required tobe transferred to Investor Education and Protection Fund in accordance with the relevantprovisions of the Companies Act 1956 and rules there under have been transferred to thesaid fund except as mentioned below:
|Sr. No. ||Name of the statute ||Nature of the Dues ||Amount (Rs in thousands) |
|1. ||Companies Act 1956 ||Investor Education and Protection Fund ||7 |
(viii) Based on our audit and on the information and explanation given by themanagement we are of the opinion that the Company has not defaulted in repayment of anyloan from Financial Institutions Government or Banks or Debenture holders during theperiod.
(ix) According to the information and explanations given to us and based on thedocuments provided to us term loans availed by the Company were prima-facie applied bythe Company for the purpose for which the loans were obtained. However there were no newterm loans that had been obtained during the year and neither any money was raised by wayof further public offers.
(x) According to the information and explanation given to us no material fraud by theCompany and any fraud on the Company by its officers or employees was noticed or reportedduring the course of our audit.
(xi) According to the information and explanations given to us and based on thedocuments provided to us the managerial remuneration has been provided in accordance withthe requisite approvals mandated by the provisions of section 197 read with schedule V tothe Companies Act 2013.
(xii) As explained and informed to us the Company is not a Nidhi Company and hencethis clause is not applicable to it.
(xiii) According to the information and explanation given to us and based on documentsprovided to us all transactions with the related parties are in compliance with section177 & section 188 of the Companies Act 2013 and the details of the same have beenduly disclosed in the financial statements as required by the applicable accountingstandards.
(xiv) According to the information and explanation given to us the Company has notmade any preferential allotment/private placement of shares or fully or partly convertibledebentures during the year.
(xv) According to the information and explanation given to us the Company has notentered into any non-cash transactions with the Directors or Persons connected with him.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
| ||For S K Kavathekar & Co. |
| ||Chartered Accountants |
| ||Registration No. 104944W |
| ||S K Kavathekar |
|Place : Mumbai ||Proprietor |
|Dated : 26th May 2017 ||Membership No. 13720 |
"ANNEXURE B" TO INDEPENDENT AUDITORS' REPORT
Report on the Financial Controls under Clause (i) of Sub-section 3 of Section 143 ofthe Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SM DyechemLimited ("the Company") as of March 312017 in conjunction with out audit of thefinancial 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 laying down 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Act.
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 Standards on Auditing to the extent applicable to an audit of internal financialcontrols and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting ("the Guidance Note") both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls 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 operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risks that a material weakness exists and testing and evaluating the designand operating effectiveness on internal financial control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatements of the financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the inter financial controls system overfinancial reporting.
Meaning of Internal Financial Control Over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that
1. Pertain to the maintenance 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 the generally accepted accountingprinciples and that receipts and expenditures 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 Inter Financial Controls Over Financial Reporting
Because of the inherent limitation 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 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 March 312017 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 S K Kavathekar & Co. |
| ||Chartered Accountants |
| ||Registration No. 104944W |
| ||S K Kavathekar |
|Place : Mumbai ||Proprietor |
|Dated : 26th May 2017 ||Membership No. 13720 |