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Splendid Metal Products Ltd.

BSE: 513414 Sector: Metals & Mining
NSE: SMPL ISIN Code: INE215G01021
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VOLUME 1300
52-Week high 0.56
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Mkt Cap.(Rs cr) 6
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Sell Price 0.19
Sell Qty 1821.00

Splendid Metal Products Ltd. (SMPL) - Auditors Report

Company auditors report

TO THE MEMBERS OF SPLENDID METAL PRODUCTS LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SplendidMetalProductsLimited (‘the Company') (Formerly known as Sujana Metal Products Limited)which comprise the Balance Sheet as at March 31 2018 the Statement of Profit and Lossand the Cash Flow Statement for the year then ended and a summary of the significantaccounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (‘the Act') with respect to the preparation ofthese 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 as applicable. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of these standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

Auditors' Responsibility

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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder and the Order under Section143(11) of the Act. We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the standalone financial statements are free from material misstatement. An auditinvolves performing procedures to obtain audit evidence about the amounts and thedisclosures in the standalone financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the financial statements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2018 and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements: a)Refer note No. 8 and note No. 10 forming part of the financial statements regarding theTrade Receivables which are long overdue to the extent of Rs. 133325.97 lakhs of whichRs.52590.44 lakhs was provided as doubtful debts by the management. And 19061.80 lakhs ofadvances are long overdue of which Rs. 5280.76 lakhs was provided as doubtful advances bythe management. We are unable to form an opinion on the uncertainty regarding thecollection of these long outstanding.

b) Refer note No. 33 regarding the winding up petition filed by Standard Bank(Mauritius) Ltd. in the High Court of Telangana & Andhra Pradesh against the companyfor giving corporate guarantee for loan extended by the said bank to the step downsubsidiary Optimix Enterprises Limited for Rs. 4087.50 lakhs. We are unable to form anopinion on the uncertainty regarding the outcome of Andhra Pradesh High Court decision. c)The Company has adjusted certain Trade Payables amount with Trade Receivables to the tuneRs.15700.28 Lakhs during the year with the consent of both the parties . d) Our opinion isnot modified in respect of these matters.

Basis for Qualified Opinion

Reference is invited to Note 41(foot Note) of the financial statements the company hasnot provided interest on secured loans being borrowing from banks and financialinstitutions during the year ended 31.03.2018 amounting to Rs.28355.50 lakhs . Thisconstitutes a departure from the Accounting Standards notified under the Companies Act2013. Had the company accounted for the said interest component in the financials theloss will increase from Rs. 81728.86 lakhs to Rs. 110084.36 lakhs

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit. (b) In ouropinion proper books of account as required by law relating to preparation of thestandalone financial statements have been kept by the Company so far as it appears fromour examination of those books. (c) The Balance Sheet the Statement of Profit and Lossand the Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount maintained for the purpose of preparation of these standalone financialstatements. (d) In our opinion the aforesaid standalone financial statements comply withthe Accounting Standards specified under Section 133 of the Act as applicable. (e) On thebasis of the written representations received from the Directors as on March 31 2018taken on record by the Board of Directors none of the Directors is disqualified as onMarch 31 2018 from being appointed as a Director in terms of Section 164 (2) of the Act.(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 A'. Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

(g) With respect to the other matters to be included in the Independent Auditors'Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous: i) The Company has not disclosed the impact of pending litigations on its financialposition in its standalone financial statements. ii) The Company did nothave any long-termcontracts including derivative contracts for which there were any material foreseeablelosses; iii) There have been no amounts required to be transferred to the InvestorEducation and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 (‘the Order')issued by the Central Government in terms of Section 143(11) of the Act we give in‘Annexure B' a statement on the matters specified in paragraphs 3 and 4 of the Order

For T.Raghavendra & Associates
Chartered Accountants
(Firm Regn No:003329S)
T. Raghavendra
Date: 30-05-2018 Proprietor
Place: Hyderabad Mem No. 023806

ANNEXURE ‘A' TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 ofthe Companies Act 2013 (‘the Act')

We have audited the internal financial controls over financial reporting ofSplendidMetal Products Limited (‘the Company') asof March 31 2018 in conjunctionwith our audit of the standalone financial statements of the Company for the year endedand ason 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 controlover financial reporting criteriaestablished by the Company considering the essential components of internal control statedin theGuidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountantsof India (the ‘Guidance Note'). Theseresponsibilities include the design implementation and maintenance of adequateinternalfinancial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence toCompany's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completenessof the accounting records and the timely preparation of reliablefinancial information as required under the Act..

Auditors' Responsibility

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 prescribed under Section 143(10) of the Act and theGuidanceNote to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that wecomply with the ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequateinternalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls systemover financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reportingincludedobtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness existsand testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theproceduresselected depend on the auditors' judgment including the assessment of the risksof material misstatement of the standalone financialstatements 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 theCompany'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 thereliability of financial reporting and thepreparation of financial statements for external purposes in accordance withgenerallyaccepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and proceduresthat (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositionsof the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation offinancialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the companyare being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonableassurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets thatcould 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 financialreporting including the possibility of collusion orimproper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Alsoprojections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk thatthe internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degreeof compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all materialrespects an adequate internal financial controlssystem over financial reporting and such internal financial controls overfinancialreporting were operating effectively as at March 31 2018 based on the internalcontrol over financial reporting criteria establishedby the Company considering theessential components of internal control stated in the Guidance Note.

For T.Raghavendra & Associates
Chartered Accountants
(Firm Regn No:003329S)
T. Raghavendra
Date: 30-05-2018 Proprietor
Place: Hyderabad Mem No. 023806

ANNEXURE ‘B' TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date) Report on Companies (Auditor's Report)Order 2016 (‘the Order') issued by the Central Government in terms ofSection 143(11)of the Companies Act 2013 (‘the Act') of Splendid Metal Products Limited (‘theCompany')

1. In respect of the Company's fixed assets:

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

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular program of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examinationof the conveyance deed provided to us we report thatthe title deeds comprising all the immovable properties of landand buildings which arefreehold are held in the name of the Company as at the balance sheet date.

2. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or otherparties covered in the register maintained underSection 189 of the Act.

4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisionsof Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities asapplicable.

5. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2018 andtherefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.

6. The Maintenance of Cost Records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have relied on the Cost audit reportsubmitted by the Cost Auditors of the Company and according to the said report the Companyhas complied with the Companies(Cost Records and Audit) Rules 2014.

7. According to the information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees'State Insurance Income Tax Sales Tax Service TaxValue Added Tax duty of Customs duty of Excise Cess GST and other material statutorydues applicable to it with the appropriate authorities.

(b) There are no disputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Value Added Tax duty of Customsduty of Excise GST Cess and other material statutory dues in arrears as at March 312018 for a period of more than six months from the date they became payable except asdetailed below:

Particulars Outstanding > 6 months (Rs. In lakhs)
Provident Fund 12.28
T.D.S. 21.71
Service Tax 30.73
Income Tax (Corporate Dividend Tax) 2.64
Total 67.36

(c) Details of dues of Income Tax Sales Tax Customs and Excise Duty Foreign ExchangeManagement Act and Value Added Tax which have not been deposited as at March 312018 onaccount of dispute are given below:

Disputed Statutory dues as on 31.03.2018

Name of the Statute Amount Rs. in Lakhs Period to which the amount relates (FY) Forum where dispute is pending
Income Tax Act 1961 1775.45 2006-2015 Income Tax Appellate Tribunal
Central Excise Act 1944 2330.57 1997-2013 Commissioner (Appeals) Chennai Chennai Hon'ble High Court of Chennai Hon'ble High Court of Delhi Hon'ble Supreme Court of India( Dept.Appeals)
Customs Act 1962 775.79 1999-2012 Commissioner (Customs) Sea Port Chennai Hon'ble High Court of Chennai Vommissioner (Appeals) Vizag and Hon'ble Supreme Court of India (Dept.Appeals).
Foreign Exchange Management Act 1999 100.00 1995-1996 Hon'ble High Court of Delhi
APGST ACT 1957 438.13 2002-2003 Hon'ble High Court of Delhi
Central Sales Tax Act 1956 241.34 2006-2007 Sales Tax Appellate Tribunal Commercial Tax Offier
42.68 2007-2008
Tamilnadu Value Added Tax Act 2006 9891.65 2006-2008 Appellate Dpty. Commissioner Hon'ble High Court of Andhra Pradesh.
CST (TN) 2383.64 2008-2015 Hon'ble High Court of Tamilnadu and TN Sales Tax Authorities.

There were no dues of duty of Customs duty of Excise and Cess which have not beendeposited as at March 31 2018 onaccount of dispute.

8. In our opinion and according to the information and explanations given to us theCompany has defaulted in the repaymentof loans or borrowings to banks. The details of thedefault is given below:

Details of Overdues to Banks/ Financial Institutions as on 31-03-2018

Name of the Bank Nature of Default Amount of Default in Rupees Period of Default in Days
Term Loans
IDBI Bank Ltd 1779 Principle & Interest on Term Loans 1263.47529 697
Bank of India Principle & Interest on Term Loans 331734819 709
Andhra Bank Principle & Interest on Term Loans 267952864 667
Punjab National Bank -4272 Principle & Interest on Term Loans 335924280 690
SASF CENNAI (IDBI) Principal & Interest Principle & Interest on Term Loans 622096387 1795
SASF HANDUM (IDBI) Principal & Interest Principle & Interest on Term Loans 251675697 2160
SASF VIZAG (IDBI) Principal & Interest Principle & Interest on Term Loans 354909736 2160
IDBI (Addl TL) Principal & Interest Principle & Interest on Term Loans 14978701 729
Bank of India (Addl TL) Principal & Interest Principle & Interest on Term Loans 38299688 700
Indian Overseas Bank Principal & Interest Principle & Interest on Term Loans 167812915 930
Indian Overseas Bank (Addl TL) Principal & Interest Principle & Interest on Term Loans 21982648 731
PNB (Addl TL) Principal & Interest Principle & Interest on Term Loans 84197162 590
IDBI (FITL 1) Principal & Interest Principle & Interest on Term Loans 20004758 667
Bank of India (FITL 1) Principal & Interest Principle & Interest on Term Loans 62418145 692
Bank of Baroda (FITL1) Principal & Interest Principle & Interest on Term Loans 12891160 701
Indian Bank (FITL 1) Principal Principle & Interest on Term Loans 18022861 698
Indian Overseas Bank (FITL 1) Principal & Interest Principle & Interest on Term Loans 26572453 698
Andhra Bank Ltd (FITL 1) Principal & Interest Principle & Interest on Term Loans 27872145 516
Punjab National Bank (FITL 1) Principal & Interest Principle & Interest on Term Loans 49027385 607
Laxmi Vilas Bank (FITL 1) Principal & Interest Principle & Interest on Term Loans 11979459 120
State bank of India (FITL 1) Principal & Interest Principle & Interest on Term Loans 133256349 608
Oriental Bank of Commerce (FITL II) Principle & Interest on Term Loans 9809228 810
Bank of India (FITL II) Principal & Interest Principle & Interest on Term Loans 23512992 686
Bank of Baroda (FITL II) Principal & Interest Principle & Interest on Term Loans 10888889 636
Indian Bank (FITL II) Principal Principle & Interest on Term Loans 13800000 510
Indian Overseas Bank (FITL II) Principal & Interest Principle & Interest on Term Loans 13243619 731
Andhra Bank Addl TL Principal & Interest Principle & Interest on Term Loans 56236164 609
Punjab Natioanl Bank (FITL II) Principal & Interest Principle & Interest on Term Loans 29650002 510
State Bank of India (FITL II) Principal & Interest Principle & Interest on Term Loans 23943547 578
B) Letter of Credits
Bank of Baroda LC devolvement 175038780 Apr. 2015 to March 2018
Punjab National Bank LC devolvement 1683912604 Oct 2015 to March 2018

 

WORKING CAPITAL TERM LOAN
Bank of India Principle & Interest 650026111 1020
Bank of Baroda Principle & Interest 122450320 990
Indian Bank Principle & Interest 141413531 990
Indian Overseas Bank Principle & Interest 453052988 1260
Laxmi Vilas Bank Principle & Interest 51133600 120
Oriental Bank of Commerce Principle & Interest 69060769 990
Punjab National Bank Principle & Interest 962778833 690
State Bank of India Principle & Interest 364425594 660

9. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3 (ix)of the Order is not applicable.

10. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the Company by its officers oremployees has been noticed or reported during the year.

11. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerialr emuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to theAct.

12. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable.

13. 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 the related parties and the details of related party transactions havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards.

14. 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 to the Company.

15. 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.

16. The Company is not required to be registered under Section 45-I of the Reserve Bankof India Act 1934.

For T. Raghavendra & Associates
Chartered Accountants
(Firm Regn No:003329S)
T. Raghavendra
Date: 30-05-2018 Proprietor
Place: Hyderabad Mem No. 023806