Sujana Universal Industries Ltd.
|BSE: 517224||Sector: Consumer|
|NSE: SUJANAUNI||ISIN Code: INE216G01011|
|BSE 00:00 | 02 Feb||Sujana Universal Industries Ltd|
|NSE 05:30 | 01 Jan||Sujana Universal Industries Ltd|
|BSE: 517224||Sector: Consumer|
|NSE: SUJANAUNI||ISIN Code: INE216G01011|
|BSE 00:00 | 02 Feb||Sujana Universal Industries Ltd|
|NSE 05:30 | 01 Jan||Sujana Universal Industries Ltd|
To the Members of
SUJANA UNIVERSAL INDUSTRIES LIMITED
Report on Audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements ofSujana Universal Industries Limited ("the Company") which comprise the BalanceSheet as at March 31 2020 the Statement of Profit and Loss (including othercomprehensive income) the statement of Cash Flows and the statement of changes in equityfor the year then ended and a summary of significant accounting policies and otherexplanatory information ( hereinafter referred to as " Standalone FinancialStatements
In our opinion and to best of our information and according toexplanations given to us except for the effects of the matter described in the"Basis for Qualified Opinion" section of our report the aforesaid standalonefinancials statements read together with significant accounting policies and accompanyingnotes thereon give the information required by the Companies Act 2013 ( the"Act") in the manner so required and give a true and fair view in conformitywith the Indian Accounting Standards prescribed under section 133 of the Act read with theCompanies ( Indian Accounting Standards) rules 2015 as amended ("Ind AS") andother accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2020 and its Loss ( financials performance including otherComprehensive income) the changes in equity and its cash flow for the year ended on thatdate.
Basis of Qualified Opinion
a) The Company has defaulted in repayment of dues to Banks/FinancialInstitutions and all loans outstanding were classified as NPA's by the banks. Provisionfor interest (excluding penal interest) amounting to Rs. 61.95 Cr. and Rs.236.81 Cr forthe quarter ended 31st March 2020 and Year ended on such date respectively on its WorkingCapital Loan and Term Loan has not been made in the books by the Company as those LoanAccounts were classified as NPA by the Lending Banks and Financial Institutions. The lossof the Company has been understated by Rs.61.95 Cr for the quarter ended 31st March 2020and Rs. 236.81 Cr for the year ended on such date in view of non-provision of Interestamount.
b) Trade receivables could not be verified as the confirmation ofbalances have not been received. The Company has made a provision for bad and doubtfuldebts for trade receivables amounting to Rs.65.49 Cr during the Year ended 31st March2020. The realizability of remaining trade receivables amounting to Rs.506.88 Cr is indoubt and the company has not made any provision for Bad and Doubtful Debts in respect ofthis trade receivables.
c) Loans and advances of Rs. 44.11 Cr has been given to varioussub-contractors suppliers and other parties are old advances. Having regard to the age ofthis advances in our opinion this are doubtful of recovery. The company is yet toassess the change in risk of default and resultant expected credit allowance on such Loanand advances. Had the aforesaid Loans and advances has been provided for impairment lossof the company for the quarter ended 31st March 2020 and year ended on such date wouldhave been higher by Rs. 44.11 cr .
d) The Company is not regular in payment of undisputed statutory duestowards TDS Provident Fund Employees State Insurance during the year ended 31st March2020
e) The Company's Net worth has been eroded on account of lossesincurred by the company during the year ended 31st March 2020 and previous financial yearand the net worth of the company is negative. The Current Liabilities of the companyexceeded the current assets of the company as at 31st March 2020 by Rs.831.07 Cr. It wouldcast doubt on the Company's ability to continue as a going concern basis.
f) The Company has not made impairment valuation adjustments towardsPlant and Machinery and other Fixed Assets
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143(10) of the Companies Act 2013. Our responsibility underthose standards are further described in the Auditors Responsibilities for the Audit ofthe Financials Statements section of our report. We are independent of the entity inaccordance with the Code of Ethics issued by ICAI together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of theCompanies Act 2013 and the rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with the Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our qualifiedopinion on the standalone financial statements.
Emphasis of Matters:
a) Note No. 2.37(b) to the financial statements which describes theuncertainty related to the outcome of the lawsuit filed against the Company by theMauritius Commercial Bank which has financed one of its subsidiaries - Hestia HoldingsLimited for which the Company has given a Corporate Guarantee.
b) Note No.2.37 (c) to the financial statements which describes theuncertainty related to the outcome of the Bank Debt recalled by the Standard Bank whichhas financed one of its step-down subsidiaries - Selene Holdings Limited for which theCompany has given a
c) Note No. 2.39 to the financial statements which describes theinitiation of Corporate Insolvency Resolution Process and appointment of ResolutionProfessional based on the application filed by one of the operational creditors.
Our opinion is not modified in respect of the above matters
Key Audit Matters
Key Audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statement of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do notprovide a separate opinion on these matters.
Evaluation of uncertain tax positions:
The company has material uncertain tax positions including mattersunder dispute as disclosed under Contingent Liabilities (Note no: 2.37) which involvessignificant judgement to determine the possible outcome of these disputes.
How our audit addressed the key audit matter
We have obtained from the management the details of the present statusof completed/pending disputes and taken into consideration the effect of these in respectof uncertain tax provisions to evaluate the uncertainties as at the year end.
Information Other Than the Financial Statements and Auditor's ReportThereon
The Company's board of directors is responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportBusiness Responsibility Report Corporate Governance and Shareholder's Information butdoes not include the Standalone financials statement and our auditor's report thereon.
Our opinion on the Standalone financial statements does not cover theother information and we do not express any form of the assurance conclusion thereon
In connection with the audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financials statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we performed we conclude that there is a material misstatement of thisother information; we are required to report the fact. We have nothing to report in thisregard.
Responsibility of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act 2013 ('the act') with respect to the preparationof these Standalone Financial Statements that give a true and fair view of the statefinancial position and financial performance of the company in accordance with theaccounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act read with relevant rules issuedthere under.
This responsibility includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; design implementation and maintenance of adequate internalfinancial controls that are operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors isresponsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing thecompany's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists.
Misstatements can arise from fraud or error and are considered materialif individually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of subsection(11) of section 143 of the Act we give in the "Annexure A" a statement on thematters Specified in paragraphs 3 and 4 of the Order.
2. As required by section 143(3) of the Act we further report that:
a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our audit;
b) in our opinion proper books of account as required by law have beenkept by the Company so far as appears from our examination of those books;
c) the Balance Sheet Statement of Profit and Loss including OtherComprehensive Income the Statement of Cash Flows and the statement of changes in equitydealt with by this Report are in agreement with the books of account;
d) in our opinion the aforesaid Standalone Ind AS Financial Statementscomply with the applicable Accounting Standards specified under Section 133 of the Actread with relevant rule issued there under.
e) On the basis of written representations received from the directorsas on March 31 2020 and taken on record by the Board of
Directors none of the directors is disqualified as on March 31 2020from 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 overfinancial reporting of the company and the operating effectiveness of such controls referto our separate report in "Annexure B". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.
g) With respect to the other matters to be included in the Auditor'sReport in accordance with the requirements of section 197(16) of the Act as amended inour opinion and to the best of our information and according to the explanations given tous the remuneration paid by the Company to its directors during the year is in accordancewith the provisions of section 197 of "the Act"
h) With respect to other matters to be included in the Auditor's Reportin accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and to the best of our information and according to the explanations given to us:
i. The Company has not disclosed the impact of pending litigationswhich would impact its financial position in notes to financial statements.
ii. The Company does not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There are no amounts which were required to be transferred to theInvestor Education and Protection Fund by the company.
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT
Annexure referred to in Independent Auditors Report to the Members ofSujana Universal Industries Limited on the Standalone Financial Statements for the yearended 31st March 2020 we report that :
i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items offixed assets in a phased manner over a period of three years which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Howeverno physical verification has been carried on by the management during the year.Accordingly we were unable to comment on whether any material discrepancies were noticedon such verification and whether they are properly dealt with in the financial statements.
(c) According to the information and explanations given to us and onthe basis of our examination of records of the Company the title deeds of immovableproperties are held in the name of the Company.
ii. The Company was not holding any inventory during the year and henceno physical verification was carried out.
iii. The Company has not granted any loans secured or unsecured tocompanies firms and Limited Liability partnerships or other parties covered in theregister maintained under section 189 of the Companies Act 2013. Therefore theprovisions of Clause 3(iii) (iii)(a) (iii)(b) and (iii)(c) of the said order are notapplicable to the company.
iv. The Company has not granted any loans or made any Investments orprovided any guarantee or security to the parties covered under section 185 and 186 ofthe Act. Therefore the provisions of clause 3(iv) of the said order are not applicable tothe company.
v. The Company has not accepted any deposits during the year from thepublic within the meaning of the provisions of section 73 of "the Act" and hencedirectives issued by the reserve bank of India and the provisions of section 73 to 76 orany other relevant provisions of "the Act" the Rules framed there under are notapplicable to the Company at present
vi. We have broadly verified the books of accounts and recordsmaintained by the company in respect of products where pursuant to the rules made by thecentral government of India the maintenance of cost records has been specified under thesub-section (1) of section 148 of the Companies Act 2013 and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. We havenot however made detailed examinations of the records with a view to determine whetherthey are accurate or complete
vii. (a) According to the information and explanations given to us andbased on the records of the company examined by us the company
is not regular in depositing the undisputed statutory dues includingProvident Fund Employees State Insurance Income Tax
Custom Duty Excise Duty and other material statutory dues asapplicable with the appropriate authorities in India ;
(b) There were undisputed amounts payable amounting Rs. 8.11 Cr inrespect of Income Tax Corporate Dividend Tax VAT Provident Fund ESI Service Tax TDSand Professional Tax in arrears as at 31st March 2020 for a period of more than 6 Monthsfrom the date they became payable. .
(c) Details of dues of Income Tax Sales Tax Customs duty and exciseduty and Value Added Tax which has not been deposited as at March 31 2020 on account ofdispute are given below.
viii. The company has defaulted in the repayment of loans taken frombanks and financial institutions during the current financial year and no interestprovision was made by the company on working capital loan amounting to Rs. 179.88 Cr andterm loan amounting to Rs. 20.52 Cr. Details of defaults are given below
Details of over dues to Banks / Financial Institutions as on 31.03.2020
ix. The Company has not raised any moneys by way of initial publicoffer further public offer (including debt instruments) and term loans during the year.Accordingly the provisions of this clause are not applicable to the Company.
x. According to the information and explanations given to us nomaterial fraud by the company or on the company by its officers or employees has beennoticed or reported during the course of our Audit.
xi. In our opinion and to the best of our information and according tothe explanations given to us the remuneration paid by the Company to two of its directorsduring the year is in excess of the remuneration payable as per provisions of section 197of "the Act"-refer note 2.28 (III) to Standalone financial statements
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it; the Provisions of clause 3(xii) of the order are not applicableto the company.
xiii. The Company has entered into transactions with related parties incompliance with the provisions of section 188 of the Act. The details of such relatedparty transactions have been disclosed in the Ind AS Financial Statements as requiredunder Indian Accounting standard (Ind AS) 24 related party disclosures specified undersection 133 of the Act read with rule 7 of the Companies (Accounts) Rules 2014.
xiv. The Company has not made any preferential allotment of privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3(xiv) of the Order are not applicable tothe Company.
xv. The Company has not entered into non-cash transactions with itsdirectors or persons connected with him. Accordingly the provisions of clause 3(xv) ofthe Order are not applicable to the Company.
xvi. The Company is not required to be registered under section 45-IAof The Reserve Bank of India Act 1934. Accordingly the provisions of clause 3(xvi) of theorder are not applicable to the Company.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls over Financial Reportingunder clause (i) of the Sub-section 3 of the Section 143 of the Companies Act 2013 ('TheAct')
We have audited the internal financial controls over financialreporting of Sujana Universal Industries Limited ('the company') as of 31st march 2020 inconjunction with our audit of standalone financial statements of the company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishingand maintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India. 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 respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act2013.
Our responsibility is to express an opinion on the internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section143(10)of theCompanies Act2013to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the internal financialcontrols system over financial reporting of the Company
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (l) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Limitation of Internal Financial Controls over Financial Reporting
Because of the inherent limitation of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also Projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to theexplanations given to us 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 31 2020 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.