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Spentex Industries Ltd.

BSE: 521082 Sector: Industrials
NSE: SPENTEX ISIN Code: INE376C01020
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VOLUME 500
52-Week high 2.02
52-Week low 0.29
P/E
Mkt Cap.(Rs cr) 3
Buy Price 0.33
Buy Qty 753.00
Sell Price 0.29
Sell Qty 9524.00

Spentex Industries Ltd. (SPENTEX) - Auditors Report

Company auditors report

To the Members of CLC Industries Limited (Formerly Known as Spentex Industries Limited)

Report on the Audit of the Standalone Financial Statements Qualified

Opinion

1. We have audited the accompanying standalone financial statements of CLC Industries Limited(Formerly known as Spentex Industries Limited) ('the Company') which comprise the Balance Sheet as at 31st March 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 (hereinafter referred to as the standalone financial statements)

2. 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 section of our report the aforesaid Standalone 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 Standards) 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 31 2019 the loss and total comprehensive income changes in equity and its cash flows for the year ended on that date

3. Basis for Qualified Opinion a) Refer Note No. 48 of the standalone financial statements which indicates that the Company has not charged to statement of Profit and loss interest expense of Rs. 569149755 for the year and related penal interest and other charges if any in respect of delay in repayment of borrowings from banks. Therefore we are unable to comment on the adequacy of interest and other charges provided for in the statement of Profit & Loss.

We further report that had the observation made by us in paragraphs (a) is considered the loss before tax for the year ended March 31 2019 would have been Rs. 781117899/-as against the reported figure of Rs. 211968144/-and Interest Accrued and due on Borrowing understated by Rs.569149755.

We conducted our audit of the standalone financial statements in accordance with Standards on Auditing specified under section 143(10) of the Act(SAs). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone 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 independence requirements that are relevant to our audit of the standalone 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 ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone financial statements.

4. Material uncertainty related to going concern

We draw attention to Note 47 of the standalone financial statements which indicates that the Company's net worth has deteriorated and as of March 31 2019 the Company's current liabilities exceeded its total assets by Rs. 4562671903 as stated in said note these events or conditions along with other matters as set forth in said note indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

5. Emphasis of Matter

We draw attention to the following matter in the notes to the Standalone Ind-AS financial statements:

 a) Note No. 46 of the Standalone Financials for the year ended March 31 2019 wherein the Company had made 100% provision of the value of long term Investments held in Amit Spinning Industries Limited (ASIL) erstwhile subsidiary of the Company during F.Y. 2017-18. National Company Law Tribunal (NCLT) vide order dated 01.08.2017 had admitted ASIL's petition and had appointed Resolution Professional for ASIL under the Insolvency and Bankruptcy Code. The NCLT vide its order dated 31st July 2018 has approved the resolution plan as per which the Company was required to transfer its entire shareholding held in ASIL at a total consideration of Rs.One only in favour of Resolution Applicants. The Company was holding 20981077 equity shares (50.96%) in ASIL and the Company is in the process of complying with the Resolution plan.Further we are unable to determine the amount of liability that may arise on account of Corporate Guarantee given on behalf of subsidiary and compliance of IND-AS 109 in respect to accounting of corporate guarantee.

b) Note No. 21 of the Standalone Financials for the year ended March 31 2019 wherein the Company had not allotted shares against share application amount of Rs.110950000/- which was brought in by the promoters in various in stalments up to 30th December 2015 and accordingly not complied with the provision of Section 42 of the Companies Act 2013.During the year under audit such Share application money pending allotment amounting to Rs.110950000/- has been treated as Deposits as per Companies (Acceptance of Deposits) Rules 2014 made under Chapter V of the Companies Act2013 at the Board Meeting held on 13th February 2019 vide resolution no.19(ii). Necessary compliances under Section 42 and Section 73 of Companies Act 2013 read with Companies (Acceptance of Deposit) Rules and regularisation of continuing defaults thereof are pending by the Company.

c) Note No. 51 to the Standalone Financials for the year ended March 31 2019 regarding balances of parties under the head trade receivable trade payable and loans & advances Govt. Authorities which are subject to confirmation reconciliation and consequential adjustments if any. Further receivable from Govt. Authorities of Rs. 49 2737085 out of which Rs 49679000/- are pending for more than three years

d) Note No. 49 to the Standalone Financials for the year ended March 31 2019 where the Company is required to deposit/invest a sum of at least 15% of the amount of its Debentures maturing during the financial year 2018-19 in one or more of the prescribed methods vide circular no.04/2013 dated February 11 2013 issued by Ministry of Corporate Affairs. However the Company has failed to comply with the requirements of the said Circular.

Our opinion is not modified in respect of the aforesaid matters.

6. Key Audit Matters

Key audit matters are those matters that in our professional judgment were of most significance in our audit of the standalone 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.

We have determined the matters described below to be the key audit matters to be communicated in our report.

S. No.Key Audit MatterHow our audit addressed the key audit matter
1.Contingent Liabilities We assessed the Company's process for identification and monitoring of significant developments in relation to pending litigations.
Litigations and claims- provisions and contingent liabilitiesOur audit procedures to assess litigations include but not limited to the following-
As disclosed in Note 35 [contingent liability note] to the standalone financial statements the Company is involved in direct indirect tax and other legal matters ('litigations') that are pending with different authorities. Whether a liability is recognised or disclosed as a contingent liability in the financial statements is inherently judgmental and dependent on a number of significant assumptions and assessments. We understand the current status of litigations and monitored changes in the disputes through discussions with the management.
 Critically assessed the Company's assumptions and estimates in respect of litigations including the provisions recognised or contingent liabilities disclosed in the financial statements. This involved assessing the probability of an unfavorable outcome of a given proceeding and the reliability of estimates of related amounts;
The amounts involved are potentially significant and determining the amount if any to be recognized or disclosed in the financial statements is inherently subjective. Performing substantive procedures on the underlying calculations supporting the provisions recorded;
 Assessing management's conclusions through understanding precedents set in similar cases and obtaining independent attorney confirmations;
Assessed whether the disclosures detailing significant legal proceedings adequately disclose the Company's potential liabilities.
We found that the Company has a process for identifying and monitoring potential exposures arising from legal and regulatory developments as well as determination of the appropriate measurement and disclosures of such litigations in the Company's financial statements. From our audit procedures performed we found the liabilities recognised and disclosures on litigations are within a reasonable range of our expectation.
2.Loan Transferred to ARCILOn the basis of letter received from respective banks loan has been assigned to the ARC as no confirmation from ARC was received hence the same loan is not transferred to ARC.
During the year loans from State Bank of India and Indian Bank amounting to Rs.2614960630 and Rs.394263340 respectively has been assigned to Asset Reconstruction Company Private Limited (ARC) under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFESI) Act2002.
No confirmation from the ARC was received by the Company for assignment of the loan.
3.Impairment Testing of Baramati unitAs per the discussion with Management and as per the management representation letter given once the working capital is available plant will be operational and management is trying its best efforts for arrangement of working capital.
Baramati Unit is inoperative since September 2017 and as per Ind AS 36 Impairment testing is required to be done for the unit. The Company has not done any Impairment testing during the year.
4.Attraction of Section 164 of Companies Act 2013Based on Legal Opinion issued by a Corporate lawyer dated April 08 2019to the management Directors are not disqualified as on 31/3/2019 under Section 164 since disqualification arises only at the time of appointment or reappointment.
Company failed to redeem its debentures on the due date i.e. March 31 2018 and fails to pay interest due thereon and such failure to redeem debentures and payment of interest thereon continuing for one year or more therefore directors shall not be eligible to be re- appointed as a director of the company. As at March 31 2019 none of the directors are required to be reappointment.
5.Receivable from Government Authority:-We have reviewed the letter issued by the respective department and management is very much confident regarding the recoverability of amount which proves the virtually certainty.
During the year management has booked VAT Refundable from Govt. Authority for the year ended March 31 2019
As per IND-AS 37 Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However when the realisation of income is virtually certain then the related asset is not a contingent asset and its recognition is appropriate.

Information other than the Financial Statements and Auditor's Report thereon

7. The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis Board's Report including Annexure to Board's Report Business Responsibility Report Corporate Governance and Shareholder's Information but does not include the standalone 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 and in doing so consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed we 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 Standalone Financial Statements

8. The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position financial performance total comprehensive income changes in equity and cash flows of the Company in accordance with the Ind AS 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 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 the standalone financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

9. In preparing the standalone financial statements management 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 management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

10. The Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

11. Our objectives are to obtain reasonable assurance about whether the standalone 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 Standards on Auditing 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.

12. As part of an audit in accordance with Standards on Auditing we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the standalone 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 control 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 explaining 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 standalone 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 Standalone financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

13. Materiality is the magnitude of misstatements in the standalone financial statements that individually or in aggregate makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

14. 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.

15. 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.

16. 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

17. As required by the Companies (Auditor's Report) Order 2016 (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 paragraphs 3 and 4 of the Order. 18. As required by section 143(3) of the Act based on our audit we report that:

a) We have sought and [except for the matter described in the Basis for Qualified Opinion/ Emphasis of Matter paragraphs] 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 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 Statement of Cash Flow dealt with by this Report are in agreement with the books of account

d) Except for the effects of the matter described in the Basis for Qualified Opinion/ Emphasis of Matter paragraphs above in our opinion the aforesaid [Ind AS] financial statements comply with the [Accounting Standards specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015] as amended

e) The matter described in the Basis for Qualified Opinion/ Emphasis of Matter / Key Audit Matters paragraphs above in our opinion may have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors and taken on record by the Board of Directors none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of section 164(2) of the Act except as mentioned in Para 4 of key audit matters.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these [standalone] [Ind AS] financial statements and the operating effectiveness of such controls refer to our separate Report in Annexure B to this report.

h) As required by section 197(16) of the Act we report that the company has not paid the remuneration to its directors during the year ended March 31 2019.

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 (as amended) 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 [standalone] [Ind AS] financial statements - Refer Note 35 to the [standalone] [Ind AS] 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 to be transferred to the Investor Education and Protection Fund by the Company

For R.N. Marwah& CO. LLP
Chartered Accountants
Firm Registration Number: 001211N/N500019
Sunil Narwal
Place: New DelhiPartner
Date: May 302019Membership No.: 511190

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 17 under 'Report on Other Legal and Regulatory Requirements' in the Independent Auditor's Report of even date to the members of CLC Industries Limited(Formerly Known as Spentex Industries Limited)as on the Standalone Financial Statements for the year ended March 31 2019] We report that:

i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) During the year fixed assets have not been physically verified by the management. Hence discrepancies if any cannot be ascertained.

(c) The Title deeds of all Immovable properties (which are included under the head 'Property Plant and equipment) are held with lenders and original title deeds are not available for verification.

(ii) The inventory except goods in transit has been physically verified by the management during the year. In our opinion the frequency of verification is reasonable. As informed no material discrepancies were noticed on physical verification carried out during the year.

(iii) According to the information and explanations given to us 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 Act. Accordingly paragraph 3 (iii)(a) 3 (iii)(b) and 3 (iii)(c) of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us there are no loans investments guarantees and securities.

Accordingly paragraph 3 (iv) of the Order is not applicable to the Company.

(v) In our opinion and according to the information and explanations given to us the company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and rules framed there under except Conversion of Share application money pending for allotment in to Deposits as per Companies (Acceptance of Deposits) Rules 2014 for which necessary compliance is to be done.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie the prescribed accounts and records have not been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii)(a) The Company is not regular in depositing with appropriate authorities undisputed statutory dues including provident fund employees' state insurance income taxGoods and service tax customs duty cess and any other material statutory dues applicable to it and there have been serious delays in a large number of cases.

AND

According to the information and explanations given to us undisputed dues in respect of provident fund employees' state insurance income taxGoods and service tax customs duty cess and any other material statutory dues applicable to it which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Name of the StatuteNature of the DuesAmount ( )Period to which the amount relatesDue DateDate of Payment
Employees Provident Fund and Miscellaneous Provisions Act1952Provident fund & Interest payable28546642 & 9315089 April 2016 to march 2017 15th of the next month to which amount relatesUnpaid Till date
63577792 & 11290100April 2017 to March 2018
31031348 & 2112872April 2018 to 30 September 2018
Employees State Insurance Act1948Employees State Insurance & Interest Payable5421757 & 1582720August 2016 to march 201715th of the next month to which amount relatesUnpaid Till date
11991973 & 2007793April 2017 to March 2018
7158251 & 561200April 2018 to 30 September 2018
Tax Deducted At Source(TDS)TDS and TCS & Interest Payable11799972 & 7085560April 2016 to march 20177th of the next month to which amount relatesUnpaid Till date
9811931 & 3428042April 2017 to March 2018
7006760 & 1119980April 2018 to 30 September 2018
Professional Tax Act1975Professional Tax & Interest Payable1974136 & 1119155April 2016 to march 201730th of the next month to which amount relatesUnpaid Till date
2280292 & 698583April 2017 to March 2018
552815 & 80620April 2018 to 30 September 2018
Finance Act 1994Service Tax & Interest Payable2031078 & 1532107April 2016 to March 20176th of the next month to which amount relatesUnpaid Till date
b) According to the information and explanation given to us the dues outstanding with respect to income tax sales tax service tax value added tax customs duty excise duty on account of any dispute are as follows:
Name of the StatuteNature of the DuesAmount DisputedAmount paid under protestPeriod to which the amount relatesForum where dispute is pending
The Income Tax Act1961Income Tax108756573981354Rs.6894303 for A.Y 2003-04 And 3981354 for A.Y 2001-02Income Tax Tribunal Delhi-Rs.3981354 High Court- Rs.6894303
The Income Tax Act1961Income Tax271057472000000Rs.8315813 for A.Y 2003-04High Court-New Delhi
Rs.7831285 for A.Y 2005-06
Rs.10958649 for A.Y 2006-07
The MP Commercial Tax Act1994Sales Tax1641951281951996-97First Appellate Authority
The MP Commercial Tax Act 1994Sales Tax8151578151572009-10MP Commercial Tax Appellate Board Bhopal
The MP Commercial Tax Act1994Sales Tax197023302001-03 2009-10Assessing Authority Indore
The MP Commercial Tax Act1994Sales Tax4551601137952013-14First Appellate Authority
The MP Commercial Tax Act1994Sales Tax3758031052502010-11MP Commercial Tax Appellate Board Bhopal
Entry Tax Act1976Entry Tax15384534148441992-97Assessing Authority Bhopal
Maharashtra Value Added Tax Act 2002Sales Tax Demand5328702000002004-05Deputy Commissioner Nagpur
Central Sales tax act1956Sales Tax Demand299929010000002004-05Deputy Commissioner Nagpur
Central Sales tax act1956Sales Tax5020121255602014-15First Appellate Authority
Central Sales tax act1956Sales Tax12179723045002014-15First Appellate Authority
Central Sales tax act1956Sales Tax9947282487102014-15First Appellate Authority
Central Sales tax act1956Professional Tax59370302008-09First Appellate Authority
Maharashtra Value Added Tax Act2002Sales Tax Demand3606237802012-13Joint Commissioner Appeal Pune
Central Sales Tax1956Sales Tax Demand5243764102012-13Joint Commissioner Appeal Pune
Finance Act1994Service Tax28028202005-06Customs Excise& Service Tax Appellate Tribunal New Delhi
Finance Act1994Service tax10795491079552009-10 to 2010-11Customs Excise& Service Tax Appellate Tribunal New Delhi
The MP Commercial Tax Act1994Sales Tax248323248502015-16First Appellate Authority
The MP Commercial Tax Act1994Sales Tax17985902015-16First Appellate Authority
The Central Excise Act1944Excise8192430722011-12Commissioner (Appeals) Central Excise Bhopal
The Central Excise Act1944Excise Demand108061760June-99 to Dec-01Custom Excise& Service Tax Appellate Tribunal Mumbai
The Central Excise Act1944Excise1688120Apr-00 to Mar-04Commissioner (Appeals)Central Excise Indore
The Central Excise Act1944Excise8676910Apr-03 to July 2015Customs Excise& Service Tax Appellate Tribunal New Delhi- Rs.81195 Commissioner(Appeals)- Rs.786496
The Central Excise Act1944Excise33310167597Apr-03 to Oct-13Customs Excise& Service Tax Appellate TribunalNagpur- Rs.117762 Deputy Commissioner Central ExciseNagpur- Rs.215339
The Central Excise Act1944Excise52696166733292002-03 to 2010-11Customs Excise & Service Tax Appellate Tribunal Nagpur - Rs. 2565854/- Additional Commissioner of Central Excise Nagpur - Rs.2551564 Deputy Commissioner of Central Excise Nagpur-Rs.152198
The Central Excise Act1944Excise5329100213322751Mar-04 to Feb-07High Court Indore
The Central Excise Act1944Excise5100801382560April 2015 to March 2017The Commissioner Central Excise(Appeals) Bhopal
The Central Excise Act1944Excise9253057702012-13Customs Excise & Service Tax Appellate Tribunal Nagpur
The Central Excise Act 1944Excise1254611002017-18Deputy Commissioner/ Assistant Commissioner Appeals Nagpur
The Central Excise Act 1944Excise329083402009-10 to 2013-14Assistant Commissioner Nagpur
The Central Excise Act 1944Excise2585189728724352007-08Customs Excise & Service Tax Appellate Tribunal New Delhi
The Central Excise Act 1944Excise47182413825602015-16 to 2016-17Commissioner (Appeals) Central Excise Bhopal
Employees Provident Fund & Miscellaneous Provisions Act 1952EPF Appellate Authority313015215650762000-01 to 2003-04Regional Provident Fund Commissioner Indore

(viii) According to the information and explanations given to us the Company has not defaulted in repayment of loans or borrowings to financial institution(s) bank(s) government(s) or dues to debenture holder(s) except as mentioned below:

ParticularsAmount of default as at March 31 2019 (Rs.)Period of DefaultRemarks
i) Name of the lenders:18367905NPA as on
1. Axis Bank Ltd.31.03.2019
(Short Term Borrowing)
2.Bank of Baroda72086000NPA as on
(Short Term Borrowing)31.03.2019
3.Canara Bank38270687NPA as on
(Short Term Borrowing)31.03.2019
4.IDBI Bank Ltd36396217NPA as on
(Short Term Borrowing)31.03.2019
5.Indian Bank394263340NPA as on
(Short Term Borrowing)31.03.2019
(6.State Bank Of India2614960630NPA as on
(Short Term Borrowing)31.03.2019
7.INGVysa Bank Ltd.304856431NPA as on
(Short Term Borrowing)31.03.2019
8.Oriental Bank Of Commerce979586080NPA as on
(Short Term Borrowing)31.03.2019
9.EARC Trust354100000NPA as on
(Short Term Borrowing)31.03.2019
ii) Debentures (including interest)112131490NPA as on 31.03.2019
Total4925018780NPA as on 31.03.2019

Interest not provided in the books is 569149755 for the year.

(ix) The Company has neither raised money by way of public issue offer nor has obtained any term loans. Accordingly paragraph 3(ix) of the Order is not applicable to the Company.

(x) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees noticed or reported during the year nor have we been informed of any such instance by the management.

(xi) According to the information and explanations given to us the Company has not paid / provided for any managerial remuneration. Accordingly paragraph 3(xi) of the Order is not applicable to the Company.

(xii) In our opinionand according to the information and explanations given to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanation given to us all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of Act where applicable and the details have been disclosed in the Financial Statements etc. as required by the applicable Indianaccounting standards.

(xiv) According to the information and explanations given to us the Company has not entered into any non-cash transactions with directors or persons connected with him.

(xv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

(xvi) According to the information and explanation given to us the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

For R.N. Marwah& CO. LLP
Chartered Accountants
Firm Registration Number: 001211N/N500019
Sunil Narwal
Place: New DelhiPartner
Date: May 302019Membership No.: 511190

Annexure B to Independent Auditors' Report

Referred to in paragraph 18 under 'Report on Other Legal and Regulatory Requirements' in the Independent Auditor's Report of even date to the members of CLC Industries Limited(Formerly known as Spentex Industries Limited) on the standalone financial statements for the year ended March 31 2019.

Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 (the Act)

We have audited the internal financial controls over financial reporting of CLC Industries Limited(Formerly known as Spentex Industries Limited) (the Company) as of March 31 2019 in conjunction with our audit of 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 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.

Auditors' Responsibility

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 specified under section 143(10) of the Actto the extent applicable to an audit of internal financial controls both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in all material respects.

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 financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that 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 or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.

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 expenditures 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 the policies or procedures may deteriorate.

Qualified opinion

According to the information and explanations given to us and based on our audit the following material weaknesses have been identified as at March 31 2019: The Company did not have an appropriate internal control system for obtaining confirmation from certain parties included under the head Banks/NBFC's trade receivables trade payables loans & advances and other current liabilities and its reconciliation/consequential adjustments if any.

The Company's internal financial controls were not operating effectively in respect of the above which may potentially impact the results of the company.

A 'material weakness' is a deficiency or a combination of deficiencies in internal financial control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria the Company has maintained in all material respects adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of 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 ICAI.

We have considered the material weaknesses identified and reported above in determining the nature timing and extent of audit tests applied in our audit of the March 31 2019 standalone financial statements of the Company and these material weaknesses have affect our opinion on the standalone financial statements of the Company and we have accordingly issued a qualified opinion on the standalone financial statements.

For R.N. Marwah& CO. LLP
Chartered Accountants
Firm Registration Number: 001211N/N500019
Sunil Narwal
Place: New DelhiPartner
Date: May 302019Membership No.: 511190