TO THE MEMBERS OF SYSCHEM (INDIA) LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of SYSCHEM (INDIA) LIMITED (''the Company) which comprise the balance sheet as at 31st March 2019 the statement of profit and loss including other comprehensive income statement of changes in equity and statement of cash flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the financial statements).
In our opinion and to the best of our information and according to the explanation given to us the aforesaid financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and faire view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) specified under section 133 of the Act of the state of affairs (financial position) of the company as at March 31 2019 its profit (financial performance including other comprehensive income) and its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the standards on auditing (SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the financial statement 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provision of the Companies Act 2013 and the Rules there under and we have fulfilled our other ethical responsibilities in accordance with these requirements and the 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 financial statement.
Emphasis of Matter
1. Interest provisioning on facilities from bank
The company's various credit facilities have been declared NPA (Non-Performing Assets) by the bank. There is usual practice that bank discontinue to account for as Income in respect to the accrued interest on such assets subsequent to the declaration of these as NPA. The bankers of the Company too have not accounted as Income in respect to the interest subsequent to NPA declaration date. In order to achieve the desired congruency on this issue and uncertainty of the amount liable to be paid the management of the company has not provided for such interest i.e. interest on credit facilities subsequent to the date of declaration of these credit facilities as NPA. Such interest amounting to Rs. 141.00 Lakhs for the current financial year which has resulted in the understatement of liabilities and expenses to that extent.
2. One Time Settlement (OTS) with Punjab National Bank
The Company has proposed its OTS offer to Punjab National Bank. The bank has approved the same at Rs. 1295.00 Lakhs out of which Company has paid Rs. 305.00 Lakhs during the current financial year. The Company has complied with all the terms and conditions except for repayment period. As informed to us the company has requested to the bank for extension of the period of repayment of OTS amount.
Information other than the financial statement and Auditor's Report Thereon
The Company's Board of Director is responsible for the preparation of the other information. The other information comprise the information included in the Board's Report including Annexures to Board's Report but does not include the financial statement and our auditor's report thereon.
Our opinion on the financial statement does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our report 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 financial statement or our knowledge obtained during the course of our 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 the fact. We have nothing to report in this regard.
Responsibility of Management for Financial Statements
The company's Board of Directors is responsible for the matter stated in section 134(5) of the Companies Act 2013 (the Act) with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance including other comprehensive income changes in equity and cash flow of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standard (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provision 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 implementation and maintenance of accounting policies; making judgment 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 financial statement that give a true and fair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements management in responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matter 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.
Those Board of Directors are also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objective are to obtain reasonable assurance about whether the financial statement 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 SAs will always detect a material misstatement when it exists. Misstatement 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 financial statements.
As part of an audit in accordance with SAs we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 Companies Act 2013 we are also responsible for expressing 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 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 financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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.
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.
Materiality is the magnitude of misstatement in the financial statement that individually or in aggregate make it probable that the economic decision of a reasonably knowledgeable user of the financial statement may be influenced. We consider quantitative materiality and qualitative factor 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 financial statement.
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 best of our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion proper books of accounts 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 and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31st March 2019 taken on record by the Board of Directors none of the Directors is disqualified as on 31st March 2019 from being appointed as a Airector in terms of section 164(2) of the Act.
f) with respect to adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such control refer to our separate report in Annexure A. Our report expresses an unmodified opinion on the adequacy and operative effectiveness of the Company's internal financial control over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirement of the section 197(16) of the Act as amended;
- In our opinion and to the best of our information and according to the explanations given to us the remuneration paid by the Company to its directors during the year is in not accordance with the provisions of section 197 of the Act.
h) 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 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 Ind AS Financial Statements. (Refer Note No. 28 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.
2. 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 B a statement on the matters specified in paragraphs 3 and 4 of the order to the extent applicable.
for VINOD SUMITRA & CO.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred in paragraph 1(f) under Report on other Legal and Regulatory requirements' section of our report to the members of SYSCHEM (INDIA) LIMITED of even date;
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ('the Act)
We have audited the internal financial controls over financial reporting of SYSCHEM (INDIA) LIMITED (the Company) as of March 31 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The board of directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting (IFCOFR) 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 (the Guidance Note) issued by the Institute of Chartered Accountants of India. 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 respective 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 Act.
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 the Audit of Internal financial control over financial reporting (the Guidance Note) issued by Institute of Chartered Accountants of India and the standard on Auditing prescribed under section 143(10) of the Act to the extent applicable to an audit of Internal Financial Controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting were 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 IFCOFR included obtaining an understanding of IFCOFR 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 judgment 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 IFCOFR.
Meaning of Internal Financial Controls Over Financial Reporting
A company's IFCOFR 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 IFCOFR 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 authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized 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 IFCOFR 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 IFCOFR to future periods are subject to the risk that IFCOFR may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
In our opinion to the best of our information and according to the explanation given to us the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 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 Institute of Chartered Accountants of India.
|for VINOD SUMITRA & CO.|
|(Firm Registration No. 014398N)|
|(CA VINOD KUMAR BANSAL)|
|DATED : 30.05.2019||PARTNER|
|PLACE : CHANDIGARH||M. No. 093341|
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements section of our Report of even date on the accounts for the year ended on 31st March 2019 of SYSCHEM (INDIA) LIMITED. On the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanation given to us during the course of audit we state that : -
(i) (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The fixed assets of the Company have been physically verified by the management at reasonable intervals and discrepancies were noticed on such verification.
(c) Title deeds of immovable properties are held in the name of erstwhile name of the Company i.e. Anil Pesticides Limited The name of Company was changed from Anil Pesticides Limited to Syschem (India) Limited w.e.f. 26.12.2001. However name in the revenue records have not been updated.
(ii) As explained to us the physical verification of the inventory has been conducted by the management at reasonable intervals during the year. No material discrepancies have been noticed on physical verification. The balances of stock established on physical verification as at the year-end have been incorporated in the books of accounts. Consequently the shortage / excess if any have been adjusted in the consumption of materials.
(iii) The Company has not granted any loans secured or unsecured to companies firms Limited Liability Partnerships other parties covered in the register maintained under section 189. Accordingly paragraph 3 (iii) of the Order is applicable.
(iv) The Company has not granted any loans made investment or given any guarantees and security in terms of section & section 186. Accordingly paragraph 3 (iv) of the Order is not applicable.
(v) In our opinion and according to the information and explanations given to us the company has not accepted deposits with the meaning of section 73 of the Companies Act 2013. Accordingly paragraph 3(v) of the Order is applicable.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records Audit) Rules 2014 as amended and prescribed by the Central Government under section 148 (1) of the Companies 2013 and are of the opinion that prima facie the prescribed cost records have been made and maintained. As informed us Cost Audit will be conducted in due course of time. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and on the basis of records produced before us the Company is not regular in depositing undisputed statutory dues including Provident Fund Income Tax Sales Tax Service Tax appropriate authorities applicable to the Company. The arrears of outstanding statutory dues as at the last day financial year for a period of more than six months from the date they became payable is as under : -
|S.NO.||Nature of Statutory Dues||Amount (In Rs.)|
(b) According to the information and explanations given to us there are no material dues of Income Tax Sales Tax Wealth Tax Service Tax Custom Duty Excise Duty Value Added Ttax or any other cess applicable to the Company have not been deposited with the appropriate authorities on account of any dispute except the following : -
|S.No||Name of the Statute||Nature of Dues||Amount (In Lacs)||Forum where dispute pending|
|1||Central Excise Act 1944||Excise Duty||14.94||Central Excise Department|
(viii) In our opinion and according to the information and explanations given to us the Company has defaulted in repayment dues to Banks & Financial Institutions. The amount of default is Rs.1280.78 Lakhs since the account is NPA. Details lender is as under:
|S.NO.||NAME OF THE LENDER||AMOUNT (In Lakhs)|
|1||Punjab National Bank Sector 22-D Chandigarh||1280.78|
The Company does not have any loans or borrowings from any financial institution Government or Debenture holder during the year.
(ix) The Company did not raise money by way of initial public offer or further offer (including debt instruments) and term during the year. Accordingly paragraph 3(ix) of the Order is not applicable.
(x) According to information given to us no fraud by or on the Company by its officers or employees has been noticed reported during the course of our audit.
(xi) In our opinion and according to the information and explanation given to us managerial remuneration has been provided in accordance with the provisions of section 197 read with Schedule V to the Companies Act.
(xiI) The Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanation given to us and based on examination of the record of the Company transactions with the related parties are in compliance with Section 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards
(xiv) The Company has not made any preferential allotment or private placement of shares or fully or party convertible debenture during the year. Accordingly paragraph 3(xiv) of the Order is not applicable.
(xv) The Company has not entered into any non-cash transactions with directors or person connected with them. Accordingly paragraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section 45-IA of Reserve Bank of India act 1934.
|for VINOD SUMITRA & CO.|
|(Firm Registration No. 014398N)|
|(CA VINOD KUMAR BANSAL)|
|DATED : 30.05.2019||PARTNER|
|PLACE : CHANDIGARH||M. No. 093341|