Tecpro Systems Ltd.
|BSE: 533266||Sector: Engineering|
|NSE: TECPRO||ISIN Code: INE904H01010|
|BSE 00:00 | 04 Mar||Tecpro Systems Ltd|
|NSE 05:30 | 01 Jan||Tecpro Systems Ltd|
|BSE: 533266||Sector: Engineering|
|NSE: TECPRO||ISIN Code: INE904H01010|
|BSE 00:00 | 04 Mar||Tecpro Systems Ltd|
|NSE 05:30 | 01 Jan||Tecpro Systems Ltd|
TO THE MEMBERS OF TECPRO SYSTEMS LIMITED
1. Report on the Financial Statements:
We have audited the accompanying financial statements of TECPRO SYSTEMS LIMITED("the Company") which comprise the Balance Sheet as at March 312015 and theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
2. Management's Responsibility for the 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 and presentationof these financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the Accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with rule 7 of the Companies (Account) Rule 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selections and application of appropriateaccounting policies; making judgement and estimates that are reasonable and prudence; anddesign implementation and maintenance of internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to include in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143 (10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. 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 audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
Basis for Qualified opinion
1. Reference is invited to Note No. 29(i) of Notes to Accounts to Financial Statementsthat the Company has incurred a loss during the earlier year and during the period ended31st March 2015 and as on the said date the Company's Total Liabilities exceed its TotalAssets. Some of the company's lenders have transferred their loan amounts to AssetReconstruction companies during the year and consequently the CDR proposal of the companybecame irrelevant. We are also informed that reference has been made to Board forIndustrial and Financial Reconstruction (BIFR) as mandated under Section 23 of the SickIndustrial Companies (Special Provisions) Act 1985 in view of the erosion of more thanfifty percent of the Net worth of the company as at March 31 2014. All these factorswould indicate the existence of a material uncertainty that casts a significant doubt onthe Company's ability to continue as a going concern. The financial statements do notinclude any adjustments that might result from the outcome of this uncertainty.
In light of the fact that the events occurring after the Balance Sheet date ashighlighted by the management the conditions exist which prove that the company cansustain its business operations as a going concern.
2. The Company has not received the Statement of account/ Confirmation of balance inrespect of certain balances with banks aggregating to a net value of Rs14490.13 lakhs(credit) as per books of account as at 31st March 2015. Consequently the bankreconciliation statements have not been drawn up in respect of these accounts and theattached financial statements do not include any adjustments that might result had theabove been made available.
3. For the period under audit provision for human resource costs (including salariesgratuity superannuation leave encashment and other employee benefits) have been accruedon an estimated basis Rs.43921akhs in view of the inaccessibility to records/lack ofinformation. The company has not provided for terminal benefits of employees who have leftthe services of the company.
4. Results of physical verification of Fixed Assets carried out by the management'during the period have not been made available to us. Discrepancies if any noticed onsuch verification as compared to books have not been given effect to in the attachedfinancial statements.
5. Quantity of Inventory as at 31st March 2015 at various sites/ factories is based onManagement representation and is pending physical verification of such inventory andreconciliation with books. We are also informed that value of inventory debit able toCustomers has been reviewed and the cost of inventory not considered recoverable has beenabsorbed in the Statement of Profit and Loss for the period.
6. Reference is invited to Note No 29 (ii)(a) that certain customers have encashedBank Guarantees of Rs.101525 lakhs including performance guarantees up to 31st March2015 (including Rs.59620.21 lakhs encashed during the financial year 2014-2015) for thedelays in execution of the projects. The same has been included in Other Receivables underTrade Receivables and have been considered realizable by the management.
The financial statements do not include any adjustments that might result from theoutcome of uncertainties/ observations in clauses 1 to 6 supra
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matters described in the Basis for QualifiedOpinion paragraph the aforesaid financial statements give the Information required by theAct in the manner so required and give a true and fair view in conformity with theAccounting principles generally accepted in India:
a) in the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2015;
b) in the case of the Statement of Profit and Loss of the loss of the Company for theyear ended on that date; and
Emphasis of Matter
1. Trade Receivables and Unbilled Revenue (other than amounts reported in Para 6 above)aggregating to Rs.219588.19 lakhs includes balances outstanding for a period of morethan three years debts for additional supplies/ work made upon request by customersoutside of the contract interest levied on delayed payments of customers which have beenconsidered realizable based on management representation of their interactions with thecustomers and negotiations/discussions. Further certain circumstances necessitated someof the customers to make direct payments to Company's vendors to avoid delays indeliverables. The Company has initiated steps to obtain confirmation of payment from suchvendors for adjustment of payments made by customers The balances of Customers/Vendorsare therefore subject to the result of such confirmation/reconciliation.
2. No provision for liability and consequential interest / penalty that may arise fromnon-filing and noncompliance with statutory provisions relating to Service tax VATProvident Fund and Tax Deducted at Source have been made in the Financial Statements.
3. In respect of certain contracts there have been significant delays in thecompletion of the projects beyond the contracted dates. This could lead to levy ofliquidated damages by the customers as per the terms of contract entered with themalthough the company has not been made aware of any such amount being levied by any of itscustomers.
4. Reference is invited to Note no. 14 relating to the payment made to Director towardsmanagerial remuneration of Rs.51.94 lakhs for the period 2013-2014 which was in excessof limits specified in the companies Act and was subject to the approval from the CentralGovernment. The company is yet to seek the approval of Central Government.
5. Balances in the account of Trade Receivables/ Trade Payables and Loans and Advancesincluding dues from associate entities are subject to confirmation of balance andreconciliation.
6. Management has informed us that the 'recoverable amount' of fixed assets within themeaning of Accounting Standard 28 is more than their carrying value and as such no amountneeds to be recognized in the financial statements for impairment loss. We have not beenable to validate this assertion in the absence of bids from prospective buyers/valuationreport of an independent agency.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor's Report) Order 2015 ("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 a statement on the matters specified in paragraphs 3 and4 of the Order to the extent applicable.
2. 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 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 [and proper returnsadequate for the purposes of our audit have been received from branches not visited byus];
c) the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account [and with the returns receivedfrom branches not visited by us];
d) except for the effect of the matters described in the Basis for 'Qualified Opinion'paragraph in our opinion the Balance Sheet Statement of Profit and Loss andCash Flow Statement comply with the Accounting Standards specified under Section 133 ofthe Act read with Rule 7 of the Companies (Account) Rule 2014;
e) On the basis of written representations received from the directors as on March312015 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2015 from being appointed as a director in terms of Section164 (2) of the Act.
f) With respect to the other matters to be included in the auditors' report inaccordance with the rule 11 of the companies (Audit and Auditors) Rule 2014 in ouropinion and to the best of our information and according to the explanations given to us:
i. The company has various pending litigations and we are unable to ascertain itsimpact on the financial statements and consequently no provisions were made.
ii. We are of the opinion that the company will have material foreseeable loss on itslong term contracts including derivative contracts.
iii. owever we are unable to quantify the same in the absence of adequate information.iii. There were no amounts which were due to be transferred by the company to the Investoreducation and protection fund
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
Re: TECPRO SYSTEMS LIMITED
Referred to in paragraph 7under 'Report on Other Legal and Regulatory Requirements'section of our report of even date
1. In respect of its fixed assets:
i. the Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed asset..
ii. the fixed assets were not physically verified by the Management during the year andhence we are unable to comment on the discrepancies if any noticed.
iii. substantial part of the fixed assets were not disposed off during the year in ouropinion and hence the going concern status of the Company is not affected.
2. In respect of its inventories:
i. As per the information and explanations given to us the inventories have beenphysically verified by the Management at the year end.
ii. We were unable to observe the physical verification of such inventory but based oninformation and explanations given by Management the procedures of physical verificationof the inventory followed appear reasonable and adequate in relation to the size of theCompany and the nature of its business.
iii. in our opinion and according to the information and explanations given to us theCompany is generally maintaining proper records of its inventories and no materialdiscrepancies were noticed on physical verification.
3. (a) On the basis of our examination of the books of account and as per informationand explanations given to us the Company has during the year given interest freeunsecured Trade Advance (not being a loan) to a party covered in the register Maintainedunder section 189 of the Companies Act 2013. The maximum amount outstanding during theyear was Rs.742.04 lakhs and the balance due from such party as at the end of the year wasRs.74204 lakhs. The said Trade Advance is being repaid regularly. There are no otheramounts granted as loans or advance to any other party covered in the register maintainedunder section 189 of the Companies Act 2013.
(b) In our opinion the other terms and conditions of such trade advances are notprima-facie prejudicial to the interests of the Company.
4. In our opinion and according to the information and explanations given to us thatsome of the items purchased are of special nature and suitable alternative sources are notreadily availaible for obtaining comparable quotations and that the invoices issued bythe company involve technical estimates and measurements which may not at times be readilyaccepted by the customer there is a reasonable internal control system commensurate withthe size of the Company and the nature of its business for purchase of inventories atfactory and fixed assets for payment of expenses and for sale of goods and services. Withregard to internal control system for accounting for purchase of inventories for deliveryat site and sales of inventory need to be further strengthened. During the course of ouraudit we have not observed any major weakness in such internal control system.
5. According to the information and explanations given to us the company has notaccepted any deposits within the meaning of Section 73 to 76 of the Act and the rulesframed thereunder and accordingly the provisions of clause (v) of paragraph 3 of the Orderare not applicable to the Company.
6. We have broadly reviewed the cost records maintained by the Company pursuant to theRules made by the Central Government under section 148(1) of the Companies Act 2013 andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained. We have however not made a detailed examination of these records with aview to determining whether they are accurate or complete.
7. (a) According to the information and explanations given to us and records of theCompany examined by us the Company has not been regular in depositing undisputedstatutory dues including Provident Fund Employees' StateInsurance Income Tax WealthTax service Tax Value Added Tax Customs Duty Excise Duty Cess and other materialstatutory dues as applicable with the appropriate authorities. There have been significantdelays in a large number of cases in depositing these dues and even cases of non-paymentwith the appropriate authorities. The undisputed statutory dues outstanding as at March31 2015 for a period of more than six months from the date they became payable is asunder:
(b) According to the information and explanations given to us and records of theCompany examined by us Particulars of dues outstanding in respect of VAT/ Sales TaxIncome Tax Service Tax Excise Duty and Cess which have not been deposited as at March312015 on account of dispute are as stated below:
c) There were no amounts which were due to be transferred by the Company to theInvestor Education and Protection Fund.
8. The accumulated losses of the company are more than fifty percent of its net worth.The company has incurred cash losses during the financial year covered by our Audit and inthe immediately preceding financial year.
9. Inour opinion and according to the information and explanations given to us theCompany has defaulted in the repayment of dues to financial institutions and banks asunder.
There are no Debenture holders in the company.
The company's CDR proposal has not materialized resulting in some of the lenderstransferring their loan amounts to Asset Reconstruction Companies during the year.
10. In our opinion and according to the explanations given to us the terms andconditions of the guarantees given by the company for loans taken by others from banks andfinancial institutions are not prima facie prejudicial to the interests of the company.
11. In our opinion and according to the information and explanations given to us theterm loans have been applied by the company during the year for the purposes for whichthey have been obtained.
12. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company has been noticedor reported during the period.