Texplast Industries Ltd.
|BSE: 530635||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE544D01013|
|BSE 00:00 | 27 Jan||Texplast Industries Ltd|
|NSE 05:30 | 01 Jan||Texplast Industries Ltd|
|BSE: 530635||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE544D01013|
|BSE 00:00 | 27 Jan||Texplast Industries Ltd|
|NSE 05:30 | 01 Jan||Texplast Industries Ltd|
Texplast Industries Limited
Report on the Financial Statements:
We have audited the accompanying standalone financial statements of Texplast IndustriesLimited ('the Company') which comprise the balance sheet as at 31 March 2017 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.
Management's Responsibility for the Financial Statements:
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the Act' ) with respect to the preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act and other applicable authoritative pronouncement issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncement requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers 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. Balances of debtors creditors secured loans including interest payable thereon andloans and advances are subject to confirmation.
2. Company has not made Provision for Interest on Working Capital Facility and TermLoan availed from Banks and Financial Institution pursuant to classification of itsaccount by the concerned Banks and Financial Institution as Non-performing Assets (NPA).
3. In absence of availability of net realizable value of items of inventories to thetune of 33.18 Lakh these have been valued at management estimate instead of lower of costand net realizable value. We are relying on value of closing stocks as certified andprovided by the management. The impact of valuation on loss and current assets is notascertainable.
4. Excise records are not available for verification due to non-functioning of thefactory because of the strike undertaken by the workers and seizure of the factory by thebank under the SARFEASI Act 2002. We are unable to comment on excise records andliability.
5. As the Factory is not functional due to strike and seizer of Factory and Plant byBank as the Bank Loan became NPA as on 31.03.2014 w.e.f. 28.01.2014 thereafter thestrength of Employees labour and Workers has been reduced. As on date the employees ofthe company below 10 only hence there is no Long term Employees Benefits provisions madeby the Company. AS 15 Employee Benefits (revised 2005) issued by ICAI.
6. As we are unable to verify/check conditions of Fixed Assets to determine the life ofPlant Machinery furniture and Fixture of the Company due to Seizer of possession by bankas the loans become NPA the Depreciation calculation done as per Income tax Act instead ofCompanies Act 2013.
7. The fact of Banks classifying the company as a NPA and seizure of factory by thebank for recovery proceedings has raised substantial doubt as to the Company's ability tocontinue as going concern and therefore the Company may not be able to realize its assetsand discharged its liabilities in the normal course of business. The financial statementdoes not include any adjustment relating to the recoverability and classification ofrecorded assets amount. Further the Financial statement which indicates that the Companyhas accumulated losses and its Net worth has been fully eroded the Company has incurredNet Loss of Rs.2.43 Crore during the current financial year (Previous Year Rs.23.35 Crore)and net cash Loss during the current year of Rs. 2.03Crore (Previous year net Cash Profitof Rs. 1.28 Crore) also the Company current liabilities exceeded its current assets as atthe balance sheet date. These conditions along with other matters set forth in Note No.28.11 also indicate the existence of a material uncertainty that cast significant doubtabout the Company's ability to continue as a going concern.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter described in Basis of Qualified Opinionthe aforesaid standalone financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2017 and its profit and its cash flows for the year ended on that date.
Matter of Emphasis:
We draw your attention to -
1. The company was unable to repay credit facilities availed from Indian Overseas Bank.Due to the noncompliances of terms & condition and non-payment of amount due all theseloans have been classified as Non-Performing Assets (NPA) by the bank as on 12/05/2014.
The Company had received letter from Indian overseas Bank in the financial year2015-16 stating the recall of advances & giving notice under subsection (2) ofsection 13 of Securitization & Reconstruction of Financial Assets & Enforcement ofsecurity of interest Act 2002 and calling to pay in full and discharge the liability ofbank amounting to Rs. 32 crore (approximately)(excluding undebited interest).
During the financial year 2015-16 the bank had taken the possession of factorypremises and assets lying with the factory.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act wegive in the ' Annexure A' a statement on the matters specified in the paragraph 3 and 4 ofthe 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 purposes 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 and the cash flow statementdealt with by this Report are 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 the written representations received from the directors as on 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2017 from being appointed as a director in terms of Section164 (2) of the Act; and
f. with respect to the adequacy of internal financial controls over financial reportingof the company and the operating effectiveness of such controls refer to our separatereport in 'Annexure B'
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts. The Companydoes not have any derivative contract.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in its financial statements as todealing in Specified Bank Notes during the period from 8th November 2016 to 30th December2016 and these are in accordance with the books of accounts maintained by the company.Refer Note no.28 (12) to the financial statement of the company.
ANNEXURE "A" TO THE AUDITORS' REPORT
The Annexure "A" referred to in our Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 31 March2017 we report that:
(i) (a) The Company has not maintained proper records showing full particularsincluding quantitative details and situation of fixed assets as the physical possessionof fixed assets taken by bank for recovery procedure.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years exceptAssets lying at factory in Wada due to workers strike and seizure of factory by bank.
In accordance with this programme certain fixed assets were verified during the yearand no material discrepancies were noticed on such verification. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.
(c) The title deed of immovable property could not be verified as necessary documentsare with Bank.
(ii) (a) According to the information and explanations given to us the Companycouldn't physically verify stock lying at warehouse of factory due to workers strike andseizure of factory.
(b) As examined by us procedures of physical verification could not be verified by ussince the Company couldn't physically verify stock lying at warehouse of factory due toworkers strike and seizure of factory by the bank.
(c) We could not verify records of inventory since the Company couldn't physicallyverify stock lying at warehouse of factory due to workers strike and seizure of factory bybank. We have relied on the value of stock based on certificates obtained from themanagement.
(iii) (a) The Company has not granted loans to parties covered in the registermaintained under section 189 of the Companies Act 2013 ('the Act'). Thus paragraph 3(b)and 3 (c) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by it.
(v) The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 of the Act and the rules framed there under to the extent notified.
(vi) The Company is not covered under sub-section (1) of section 148 of the CompaniesAct in respect of maintenance of cost records.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records the Company is regular in depositing undisputed statutorydues including income tax service tax cess and other material statutory dues with theappropriate authorities. As explained to us the Company did not have any dues on accountof sales tax wealth tax duty of customs value added tax employees' state insurance andduty of excise.
According to the information and explanations given to us no undisputed amountspayable in respect of income tax service tax cess and other material statutory dues werein arrears as at 31 March 2017 for a period of more than six months except following dueso/s for more than six months as at balance sheet date-
(b) According to the information and explanations given to us there are no materialdues Income Tax or Sales Tax or wealth tax or service tax or duty of customs or duty ofexcise or value added tax or cess which have not been deposited with the appropriateauthorities on account of any dispute except following dues o/ s for more than six monthsas at balance sheet date-.
(c) According to the information and explanations given to us there is no amounts duewhich were required to be transferred to the investor education and protection fund duringthe year.
(viii) Based on our audit procedures and according to the information and explanationsgiven by the management In our opinion and information given to us the Company hasdefaulted and irregular in repayment of dues to financial institutions and Banks. Thedefaults existing as at balance sheet date are as below- 1. Cash Credit from IndianOverseas Bank -
2. Packing credit overdue from Indian Overseas Bank of Rs 8.18 Crore due tonon-submission of export bills.
3. Recalled term loan from Indian Overseas Bank -
4. Recalled term loan from other Financial Institution -
(ix) The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
(xi) According to the information and explanations given to us and based on ourexamination of records of the company. The Company has not paid any amount for managerialremuneration which is in excess of amount as mandated under section 197read with scheduleV to the Act.
(xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014 are notapplicable to it the provisions of Clause 3(xii) of the Order are not applicable to theCompany.
(xiii) According to the information and explanation given to us and based on ourexamination of records of the company. Transactions with related parties are in compliancewith section 177 and 188 of the Act where applicable and details of such transactions havebeen disclosed in the financial statements as required by the applicable accountingstandards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly the provisions of Clause 3(xiv) of the Order are not applicable to theCompany.
(xv) According to the information and explanation given to us and based on ourexamination of records of the company. The Company has not entered into any non-cashtransactions with its directors or persons connected with him. Accordingly the provisionsof Clause 3(xv) of the Order are not applicable to the Company.
(xvi) In our opinion 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) ofthe Order are not applicable to the Company.
ANNEXURE-B TO INDEPENDENT AUDITOR'S REPORT
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 internal financial controls over financial reporting of TexplastIndustries Ltd. ("The Company") as of March 31 2017 in conjunction with ouraudit of the financial statements of the Company for the year then ended on the date.
Management's Responsibilities for the Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India (ICAI). The responsibilities includes design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of business including adherence to Company'spolicies the safeguarding of the assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on Company's internal financial controlsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls over Financial Reporting ('theGuidance Note') and the Standards on Auditing deemed to be prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of internal financial controls and both issued by the ICAI.Those Standards and Guidance note require that we comply with ethical requirements andplan and perform 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 procedure to obtain audit evidence about the adequacy ofthe internal financial control 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 controls based on the assessed risk. Theprocedures selected 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 audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Company's internal financial control over financial reporting is a process designedto provide a reasonable assurance regarding the reliability of financial reporting andpreparation of financial statements for external purpose in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedure that:
1. Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
2. Provide reasonable assurance that the transactions are recorded as necessary topermit preparation of financial statements in accordance with the generally acceptedaccounting principles and the receipts and expenditures of the Company are being madeonly in accordance with authorization of management and the directors of the Company; and
3. Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial 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 overrides ofcontrols material misstatements due to error or fraud may occur and not to be detected.Also projections of any evaluation of the internal financial control 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.
In our opinion the Company has in all material aspects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.