The Members of Tirupati Inks Limited Delhi
1. Report on the Financial Statements
We have audited the accompanying financial statements of Tirupati Inks Limited
("the Company") which comprise the Balance Sheet as at 31 March 2017 theStatement of Profit and Loss and Cash Flow Statement for the year then ended and a summaryof the 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 matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that given a true and fair view of the financial positionfinancial performance of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe preparation of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effective for ensuring the accuracy and completeness of the accounting recordsrelevant to the preparation and presentation of the financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
3. Auditor's Responsibility
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 be included in the audit report under theprovisions 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. 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 about the amounts and thedisclosures 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 control systemover financial reporting and the operating effectiveness of such controls. An auditincludes evaluating of the accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors as well as evaluating the overallpresentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financial statements.
4 Basis for Qualified Opinion
a) The Company has not provided depreciation in accordance with Schedule II of theCompanies Act 2013. It has followed old procedure for calculating depreciation as perSchedule XIV of the Companies Act 1956 resulting in incorrect determination ofdepreciation expense. Consequently we are unable to quantify the impact of depreciationon the Profit & Loss Account and comment on the correctness of the values of FixedAssets shown in the Balance Sheet.
b) The present financial position of the Company and uncertainties in availability ofthe required financial resources to operate the Cash Generating Unit (CGU) at the optimumlevels leaves doubts that the Value in Use of the Cash Generating Unit may be lower thanthe carrying amount of the CGU. The Company however has not carried out any exercise todetermine the Value in Use of the CGU as per the provisions of AS 28 to ascertain anyimpairment loss for which provision is required. The impact therefore presently is notascertainable.
c) The Company has provided for interest on bank loans only partially in view of nondebit by banks and / or non availability of bank statements. The loss of the Company tothe extent of non provision of interest liability is under stated and is not quantifiablepresently due to lack of required information.
d) The Company has prepared the financial statements on the presumption of goingconcern. In view of prolonged lock out in its manufacturing facility substantial lossesand disintegration of organizational structure and team we believe that the presumptionof going concern is not valid.
5. Qualified Opinion
In our opinion and to the best of our information and according to the explanationgiven to us except for the effects of the matter described on the basis for QualifiedOpinion paragraph above the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2017 its loss and its Cash flows for the year ended on that date.
6. Emphasis of Matters
We draw attention to the following matters in the notes to the financial statements:
a) The basis of valuation of the inventories taken by the management.
b) The company has not fulfilled its financial commitments and has defaulted in paymentof its dues because of financial crisis.
c) The company has received notices under the SARFAESI Act 2002 and under RDDBFI Act1993 from the banks for recovery of their dues.
d) During the quarter ended on June 2016 the Company had undertaken a detailedtechnical evaluation of Inventories in view of fast deteriorating chemical properties andpossible hazardous environmental impact. The technical experts have advised quick disposalof these stocks which pose environmental risks. Some of these stocks which were notexpected to fetch any value in view of loss of expired chemical properties have beendisposed off during the quarter ended on September 2016 resulting in huge loss. Thisbeing an extra ordinary situation the loss has been reflected as Exceptional Items in theProfit & Loss Account.
Further during the quarter ended on September 2016 the Board of Directors havedecided to write down the value of remaining inventories after a careful assessment oftheir present condition and realisibility.
The total loss arising during the year on this account of Rs. 4350.27 lacs has beenreflected as Exceptional Items in the Profit & Loss Account.
e) Write off of old Trade Receivables of Rs. 4824.76 lacs on 31.03.2017 against whichthe Company had made a provision for bad & doubtful debts during the quarter ended onSeptember 2016. It has been reflected as Exceptional Items in the Profit & LossAccount.
f) The Company has been settling its liabilities with assignment of debts for whichconfirmation from respective parties are pending in certain cases.
g) The Greater Noida Manufacturing facility of the Company has been put in a Lock Outsince 03.05.2016 consequent to some labour unrest and financial stress. The matter isunder the jurisdiction of Assistant Labour Commissioner Noida and the Company is inprocess of getting the labour issues resolved with appropriate legal advice.
The Company has not provided for any liability of wages or compensation which may ariseafter eventual settlement / adjudication. h) The company has defaulted in payment ofinterest amounting to Rs. 51.50 lacs (approx.) from 01.04.2016 to 31.03.2017 on theUnsecured Loans obtained in the previous years. The provisions for these interest havealso not considered in the financial statements ending on 31.03.2017.
Further the Company has not provided various expenses amounting to Rs. 4.12 lacs(approx.) in its books of accounts during the current financial year.
Our opinion is not modified in respect of these matters.
7. Report on Other Legal and Regulatory Requirements
1. As required by The Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Companies Act 2013 we give in the annexure a statement on the matters specified inparagraph 3 and 4 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 except for the possible effect of the matter described on thebasis of qualified opinion paragraph above obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the propose of our audit.
(b) Except for the possible effect of the matter described on the basis of qualifiedopinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far it appears from our examination of those books.
(c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with books of account.
(d) Except for the possible effect of the matter described on the basis of qualifiedopinion paragraph above in our opinion the aforesaid financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies
(Accounts) Rules 2014.
(e) On the basis of the written representation received from the directors as on31st March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in Section 164 (2)of the Act.
(f) In our opinion the company has reasonably adequate internal control system inplace providing operative effectiveness of such
(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 explanation given to us:
i. Except for the possible effect of the matter described on the basis of qualifiedopinion paragraph above the financial statements disclose the impact of pendinglitigation on the financial position of the company which would impact its financialposition. (Refer Note No. 2.37 of Notes to Accounts)
ii. The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses.
iii. There was no amount required to be transferred to the Investor Education andProtection Fund by the Company.
For Shashi Dinesh & Co.
CA Sudhir Kapoor
Place : Delhi
Date : 30.05.2017
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF TIRUPATIINKS LIMITED
We have audited the internal financial controls over financial reporting of TirupatiInks Limited ("the Company") as of 31 March 2017 in conjunction with our auditof the financial statements of the Company for the year ended on that 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 (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
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 and
maintained 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 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 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of un authorized 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.
In our opinion the Company's internal financial controls system over financialreporting has gradually weakened and such internal financial controls over financialreporting were though operating as at 31 March 2017 needs to be strengthened 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 Shashi Dinesh & Co.
CA Sudhir Kapoor
Place : Delhi Date : 30.05.2017
ANNEXURE TO THE AUDITOR'S REPORT
(i) (a) The company has not been able to produce records showing full particulars ofFixed Assets. We have been explained that due to prolonged lock out and sudden discertionby staff the Company is not able to locate the register / files.
(b) No physical verification of Fixed Assets is being carried out by the managementduring the year.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) The inventories have not been physically verified during the year by themanagement. We have been explained that formal inventory verification was rendereddifficult and hence not done because of challenges in availability of staff.
(iii) The company has not granted any loans secured or unsecured to the companiesfirms or other parties covered under section 189 of the Companies Act 2013.
(iv) The Company has not granted any loans investments guarantees and securitycovered under the provisions of section 185 and 186 of the Companies Act 2013.
(v) The company has not accepted deposits from public.
(vi) The maintenance of cost records have not been prescribed by the CentralGovernment.
(vii)(a) The company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund Employees State Insurance ServiceTax Custom Duty Excise Duty Cess and other material statutory dues applicable to it.
According to the information and explanations given to us no undisputed amounts ofstatutory dues were in arrears as at 31st March 2017 for a period of more than sixmonths from the date they became payable with the appropriate authorities except IncomeTax of Rs. 106.74 lacs for the financial year 2013-2014 and VAT amounting to Rs. 6.85 lacswhich is not paid till the date of signing of the Balance Sheet.
(b) According to the information and explanations given to us there are no dues ofDuty of Excise Service Tax Duty of Customs which have not been deposited with theappropriate authorities on account of any dispute.
However according to information and explanations given to us there are statutorydisputed dues of income tax sales tax and value added tax which have not been depositedby the Company. Refer point no. 2.37(a) of Notes to Accounts.
(viii) The company has defaulted in repayment of its dues to the consortium banks.
(ix) No monies were raised by way of initial public offer or further public offer(including debt instruments) and term loans during the year.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
(xi) The managerial remuneration has been paid or provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act.
(xii) This clause is not applicable since the company is not a Nidhi Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him.
(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Shashi Dinesh & Co.
Chartered Accountants (FRN 004975C)
CA Sudhir Kapoor
(Partner) (Membership No.073456)
Place : Delhi Date : 30.05.2017