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Sumeet Industries Ltd.

BSE: 514211 Sector: Industrials
NSE: SUMEETINDS ISIN Code: INE235C01010
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OPEN 1.76
PREVIOUS CLOSE 1.68
VOLUME 161794
52-Week high 3.70
52-Week low 1.26
P/E
Mkt Cap.(Rs cr) 18
Buy Price 1.76
Buy Qty 11908.00
Sell Price 1.76
Sell Qty 692.00
OPEN 1.76
CLOSE 1.68
VOLUME 161794
52-Week high 3.70
52-Week low 1.26
P/E
Mkt Cap.(Rs cr) 18
Buy Price 1.76
Buy Qty 11908.00
Sell Price 1.76
Sell Qty 692.00

Sumeet Industries Ltd. (SUMEETINDS) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

SUMEET INDUSTRIES LTD.

Report on the Audit of Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of SUMEETINDUSTRIES LTD. ("The Company") which comprises the Balance Sheet as on 31stMarch 2019 the Statement of Profit and Loss Statement of Changes in Equity andStatement of Cash Flows for the year then ended and a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"Standalone Financial Statements").

2. 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 Companies Act 2013 (‘the Act') in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards ("Ind AS")prescribed under Section 133 of the Act read with Companies (Indian Accounting Standard)Rules 2015 as amended and other accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2019 and its loss(financial performance including other comprehensive income) changes in equity and itscash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We beli that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for eve our opinion.

Key Audit Matters

4. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing 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 becommunicated in our report: Refer Note 7 10 and 19 to the accompanying standalonefinancial statements:

(a) A sum of credit of Rs. 2449.60 lakh lying in Buyer's credit ledger as on31.03.2018. During the year company has debited sum of Rs. 12298.59 lakh and credited sumof Rs. 844.64 lakh in this account. Closing Balance as on 31.03.2019 of Rs. 9004.35 lakhhas been reduced from reserve and surplus a/c. As per the information and explanationgiven to us it is a prior period exchange loss not recognized in books of accounts inprevious years. However the details has not been provided to us for the purpose ofverification.

(b) During the year a sum of Rs. 2262.46 lakh has been credited to Purchase a/c of rawmaterials on account of slow moving items and debited to Reserve and surplus a/c. As aresult of this the cost of material consumed is reduced by the said amount. As perexplanation given to us these are slow moving items.

(c) During the year company has written off stock amounting to Rs. 5136.56 lakh onaccount of obsolete stock and the same has been provided for as "Extraordinaryitem" in the Statement of Profit and Loss.

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

5. The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

6. 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 preparationof these standalone financial statements that give a true and fair view of the financialposition financial performance total comprehensive income change in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Ind AS specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

7. In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

8. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility

9. Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

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

•  Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

•  Obtain an understanding of internal control relevant to the audit in orderto 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 Companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.

•  Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimate and related disclosures made by management.

•  Conclude on the appropriateness of management's use of the going concernbasis 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

•  Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

11. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

12. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

13. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Emphasis of Matters

Without qualifying our opinion we draw attention on certain matter stated in "Annexure-A"attached to this report which are of such importance that it is fundamental/ relevant touser's understanding of the financial statement. Our opinion is not modified in respect ofthese matters.

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 Sub-section (11) of Section 143 ofthe Act we give in the "Annexure B" a statement on the matters specified inthe paragraph 3 & 4 of the order to the extent applicable. 2) As required by section143(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 purpose of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and Cash Flow Statement dealt with by this Reportare in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e) On the basis of written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms ofSection 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 C".

g) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:

i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements. Refer Note No. 32 Contingentliabilities under "Notes Accompanying the Financial Statements" of thestandalone Ind AS financial statements.

ii) The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise.

iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

 

FOR H. TOSNIWAL & CO.
CHARTERED ACCOUNTANTS
CA. HARISHANKAR TOSNIWAL
PARTNER
M.NO. : 055043
PLACE : SURAT PAN : AACFH 1890 B
DATE : 30/05/2019 FIRM REG. NO: 111032W

Annexure- A to our Main Audit Report: F.Y. 2018-19

1. Company has shown Claim Receivable of Rs. 4855.59 Lakh as Other Current Assets as on31.03.2019 which is subject to our verification.

2. Company has shown Inland LC (Union Bank) of Rs. 1842.72 lakh and Inland LC (CanaraBank) of Rs. 1436.69 lakh under the head of "Current Borrowings" during theyear. However we have not been provided with any supporting documentary evidenceregarding verification of the same.

3. As per information and explanations given to us following bank accounts arein-operative. We are unable to verify the closing balance of following bank accounts asthe bank statements have not been provided to us.

Sr. No. Name of Bank Balance as on dt.31.03.2019
1. HDFC Bank Delhi 34382/-
2. HDFC IEX Settlement A/C NIL

4. Company has written off "Provision for Dividend and Distribution Tax"amounting to Rs. 9.97 lakh. As per explanation given to us it is an excess provision ofDividend Distribution Tax [DDT] of prior year which is written off during the year.

5. Sum of Rs. 12.02 lakh has been written off on account of withholding tax payable. Asexplained to us the company was not liable to pay withholding tax. Therefore same hasbeen credited to reserves and surplus account during the year.

6. As informed to us the transactions with the MSME Parties were conducted as pertrade practices and creditors had not claimed any interest on the payment made after duedate as per MSME Act 2006. Therefore Company has not made provision for interest underMSME Act 2006.

 

FOR H. TOSNIWAL & CO.
CHARTERED ACCOUNTANTS
CA. HARISHANKAR TOSNIWAL
PARTNER
M.NO. : 055043
PLACE : SURAT PAN : AACFH 1890 B
DATE : 30/05/2019 FIRM REG. NO: 111032W

ANNEXURE ‘B' TO THE INDEPENDENT AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OFSUMEET INDUSTRIES LTD ON THE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH2019

Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

i. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of property plants and equipment.

(b) The property plants and equipment of the company have been physically verified bythe management at regular intervals and no significant discrepancies were noticed on suchverification. In our opinion the frequency of verification is reasonable having regard tothe size of the Company and the nature of its assets.

(c) The title deeds of immovable property are held in the name of the company.

ii. In our opinion the inventories have been physically verified at reasonableintervals during the year by the management and following significant discrepancies wasnoticed on such verification.

(a) During the year company has written off stock amounting to Rs. 5136.56 lakh onaccount of obsolete stock and the same has been provided for as "Extraordinaryitem" in the Statement of Profit and Loss. As a result of this the cost of materialconsumed has been reduced by the same amount.

(b) During the year a sum of Rs. 2262.46 lakh has been credited to Purchase a/c of rawmaterials on account of slow moving items and debited to Reserve and surplus a/c. As aresult of this the cost of material consumed is reduced by the said amount. As perexplanation given to us these are slow moving items.

iii. The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnership or other parties covered in the register maintained undersection 189 of the Companies Act 2013 (‘the Act'). Hence Clause iii (a) (b) and (c)is not applicable.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provision of section 185 and 186 of the Act with respect tothe loans and investment made.

v. In our opinion and according to the information and explanations given to us thecompany has not accepted any deposit in contravention of directives issued by the ReserveBank of India and the provision of sections 73 to 76 or any other relevant provisions ofthe Companies Act 2013 and the rules framed thereunder where applicable.

vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and servicesand are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. However we have not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanation given to us and on the basis ofour examination of the records of the Company amount deducted/accrued in the books ofaccount in respect of undisputed statutory due including provident fund employees' stateinsurance income tax sales tax service tax duty of custom duty duty of excise valueadded tax cess and other material statutory dues have been regularly deposited during theyear by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund sales tax service tax duty of custom duty ofexcise and other material statutory due were in arrears as at 31/03/2019 for aperiod of more than six months from the date they became payable.

However based on the audit procedure and on the information and explanations given bythe management the following dues of Income Tax have not been deposited by the company:

Name of the Statute Nature of the dues Period to which the amount relates Amount Due Date
Income Tax Act Income Tax Demand A.Y.2016-17 78739870/- 31/03/2018
Income Tax Act Income Tax Demand A.Y.2017-18 95177090/- 31/03/2018

(b) According to the information and explanation given to us there are no dues ofsales tax or wealth tax or service tax or duty of customs or value added tax or cesswhich have not been deposited with the appropriate authorities on account of any dispute.However based on the audit procedure and on the information and explanations given by themanagement the following dues of Income Tax have not been deposited by the company onaccount of disputes:

Name of the Statute Nature of the dues Period to which the amount relates Amount Forum where dispute is pending.
Income Tax Act Income Tax Demand A.Y. 2012-13 59558850/- CIT Appeal Surat-4
Income Tax Act Income Tax Demand A.Y. 2014-15 1113928/- CIT Appeal Surat-4
Income Tax Act Income Tax Demand A.Y. 2015-16 972740/- CIT Appeal Surat-4

viii. Based on the audit procedures and on the information and explanations given bythe management we are of the opinion the company has defaulted in repayment of dues to afinancial institutions banks etc. The detail of period and the amount of default asascertained by the management is as follows: -

Name of Bank Principal Amount Installment Period Default
BOB Term Loan 62000000/- 12 Months
Canara Bank Term Loan [Texturising] 1530425/- 3 Months
Canara Bank Term Loan[Carpet] 210294/- 3 Months
IDBI Corporate Loan 32407410/- 7 Months
Tourism Finance Corporation Ltd. 22500000/- 9 Months
Bremer Kredit Bank 307375481/- 30 Months
[3957327 EURO]
ECB London Term Loan (BOB) 98792828/- 12 Months
[1428571 USD]

ix. Based on the audit procedures applied by us & according to the information& explanations provided by the management the Company has not raised any moneys byinitial public offer or further public offer (including debt instruments) and term loanduring the year.

x. According to the information and explanations given to us no material fraud by thecompany or any fraud on the Company by its officers/employees has been noticed or reportedduring the period covered by our audit.

xi. Managerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the CompaniesAct.

xii. In our opinion the company is not a nidhi company. Therefore the provisions ofclause (xii) of the Companies (Auditor's Report) Order 2016 (As Amended) are notapplicable to the company.

xiii. According to the information and explanations given to us all the transactionswith the related parties are in compliance with sections 177 and 188 of Companies Act2013 and the details have been disclosed in the Financial Statement as required by theapplicable accounting standards.

xiv. The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year. Accordingly provisions ofclause 3(xiv) of the Order are not applicable. However. the company has issued bonusshares to equity shareholders in the ratio of 1:4.

xv. In our opinion the Company has not entered into any non-cash transactions with thedirectors or persons connected with them covered under Section 192 of the Act.

xvi. The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

 

FOR H. TOSNIWAL & CO.
CHARTERED ACCOUNTANTS
CA. HARISHANKAR TOSNIWAL
PARTNER
M.NO. : 055043
PLACE : SURAT PAN : AACFH 1890 B
DATE : 30/05/2019 FIRM REG. NO: 111032W

AUDITORS REPORT- ANNEXURE C

TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTSOF THE SUMEET INDUSTRIES LTD.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("The Act")

We have audited the internal financial controls over financial reporting of SUMEETINDUSTRIES LTD. ("The Company") as on March 31 2019 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

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 Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our eve audit opinion on the Company's internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

FOR H. TOSNIWAL & CO.
CHARTERED ACCOUNTANTS
CA. HARISHANKAR TOSNIWAL
PARTNER
M.NO. : 055043
PLACE : SURAT PAN : AACFH 1890 B
DATE : 30/05/2019 FIRM REG. NO: 111032W