Uniworth Textiles Ltd.
|BSE: 500138||Sector: Industrials|
|NSE: FABWORTH||ISIN Code: INE486C01019|
|BSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
|NSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
|BSE: 500138||Sector: Industrials|
|NSE: FABWORTH||ISIN Code: INE486C01019|
|BSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
|NSE 05:30 | 01 Jan||Uniworth Textiles Ltd|
TO THE MEMBERS OF UNIWORTH TEXTILES LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of UNIWORTH TEXTILESLIMITED ("the Company") which comprise the Balance Sheet as at 31st March2018 the Statement of Profit and Loss (including other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand a summary of the Significant Accounting Policies and other explanatory information.
Management's Responsibility for the Standalone 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 Standalone Financial Statements that give a true and fair view of the financialposition financial performance including other comprehensive income changes in equityand cash flows of the Company in accordance with the Indian Accounting Standards (Ind AS)prescribed under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia.
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 judgements 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
our responsibility is to express an opinion on these Standalone Financial Statementsbased on our audit. In conducting our audit we have taken into account the provisions ofthe Act the accounting and auditing standards and the matters which are required to beincluded in the audit report under the provisions of the Act and the Rules made thereunderand the Order issued under section 143(11) of the Act.
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Standalone Financial Statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Financial Statements. The procedures selected depend onthe auditor's judgement including assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. 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 standalone 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.
Basis for Qualified Opinion
a) Footnote to Note No.28 regarding interest provision on borrowings from some of theinstitutions and banks made in the financial statements under simple interest method atthe prevailing / estimated rates applicable on such loans in absence of relevant documents/ confirmations as also the on-going matters of disputes between the Company and itsBankers / Creditors over the issue of charging interest as stated in the said Footnote.
b) Note No.8 (ii)(a)(ii)(b) and (ii)(c) regarding non-provision of certain debtsamount to Rs.6373.92 lacs.
c) Note No. 12(i)(a) regarding of Rs.711.14 lacs due from a party in respect of whichwe are unable to form any opinion as to the nature and purpose of making such advance asalso recoverability of the same.
d) Note No.12 (i) (b) regarding non-provision for advance of Rs.211.70 lacs paid to anOverseas Consultant due to reasons stated therein.
e) The Accounting Standard on Contingent Liabilities have not been fully complied withas disclosed in Footnote No.(i) to (iii) of Note No. 31 the quantum of non-provision inrespect whereof is not ascertained pending settlement / disposal of disputes.
f) Non-provision of Items indicated in (b) (c) and (b) above constitute a departurefrom the Indian Accounting Standards referred to in Section 133 of the Act. Withoutconsidering Item Nos. (e) above whose impact on the Company's Statement of Profit andLoss is presently non-ascertainable had the provisions indicated in Item Nos. (b) to (d)been made
(i) The Loss for the year would have increased by Rs. 7260.66 lacs
(ii) Trade Receivable would have decreased by Rs.6337.82 lacs
(iii) Other Current Assets would have decreased by Rs. 922.84 lacs
(iv) The Retained Earnings / (-) Loss would have been higher by (-) Rs. 7260.66 lacs.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the Basis for QualifiedOpinion paragraph above the aforesaid Standalone Financial Statements give theinformation by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2018 and its profit total comprehensive incomethe changes in equity and its cash flows for the year ended on that date.
Emphasis of Matters
We draw your attention to the following matter in the Notes to the Standalone FinancialStatements:
1. Following Notes to the Financial Statements describe the uncertainty related to theoutcome of the lawsuits /other legal matters indicated therein:
(a) Note No. 18 (ii) regarding application filed against the Company before DebtRecovery Tribunal for recovery of the dues by certain banks.
(b) Note No. 4 (i) regarding non-provision for investment amounting to Rs.14.05 lacs inCompanies which have become Sick.
(c) Note No.16 (Footnote) regarding estimated amount of Rs.1674.45 lacs having beenprovided during the year 2002-03 as sales claims and commission relating to earlier yearsfrom overseas Customers of the Company which is pending for final settlement. Necessaryadjustment for such claims and commission will be made after final settlement andobtaining necessary approval from concerned regulatory.
(d) Note No 31 regarding demands for Excise Duty Income Tax and other mattersdisclosed under Contingent Liabilities which are contested by the Company and pendingbefore various forums / Authorities for final decisions.
2. Note No. 15(iv) Note No. 18 (iii) and Note No.9 (i) regarding non-receipt ofconfirmations in respect of borrowings from financial institutions / banks and also debitbalances in certain Current Accounts with banks due to restructuring being in processbook balances thereof have been considered in these financial statements.
3. Note No. 37 (ii) regarding balances with a related party under reconciliation.
4. the Company's units at Raipur and Nagpur are under closure. refer Note No-41
5. As indicated in the financial statements the Company has accumulated losses and itsnet worth has been fully eroded the Company has incurred net loss during the current andprevious years and the Company's current liabilities exceeded its current assets as atthe Balance Sheet date. These conditions along with other matters set forth in Notes toFinancial Statements indicate the existence of a material uncertainty that may castsignificant doubt about the Company's ability to continue as a going concern. Howeverthese Financial Statements of the Company have been prepared on a going concern basis dueto reasons stated in Note No.33.
Our opinion is not modified in respect of the above matter.
Report on Other Legal and Regulatory Requirements
i) As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Sub-section (11) of Section 143 of the Actwe enclose in the Annexure - A a statement on the matters specified in the said Order tothe extent applicable to the Company.
ii) As required by Section 143(3) of the Act based on our audit we report that
a) We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as 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 the Statement Cash Flows dealt with by thisReport are in agreement with the books of account;
d) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid Standalone Financial Statements complywith the Indian Accounting Standards specified under Section 133 of the Act.;
e) The matters described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;
f) On the basis of written representations received from the Directors as on 31stMarch 2018 taken on record by the Board of Directors none of the Director isdisqualified as on 31st March 2018 from being appointed as a director in terms of Section164(2) of the Act.
g) 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 - B. Our report expresses a qualified opinion on the adequacyand operating effectiveness of the Company's internal financial controls over financialreporting in the matters of Sales.
h) With respect to the other matters to be included in the Auditor's Report inaccordance with amended Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
i) The Company has disclosed the impact of pending litigations on its financialposition wherever ascertainable - Refer Note No. 31
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable loss.
ANNEXURE - A TO THE AUDITORS' REPORT
The Annexure referred to in our report to the members of Uniworth Textiles Limited forthe year ended 31ST March 2018.
We report that:
* Also refer to Note No. 15 ** Refer to Note No.18 (ii)
Annexure - B to the Auditors' 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 the internal financial controls over financial reporting of UniworthTextiles Limited ("the Company") as of 31 March 2018 in conjunction with ouraudit of 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 ). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 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 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 unauthorised 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.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31 2018:
1. The Company's internal financial controls over customer acceptance creditevaluation and establishing credit limits for sales were not operating effectively whichcould potentially result in the Company's recognising revenue without establishingreasonable certainty of ultimate collection;
2. The Company's internal financial controls for inventory particularly with regard totimely completion of physical verifications and reconciliation of discrepancies were notoperating effectively which could potentially result in material misstatements in theCompany's consumption and inventories.
3. The Company's internal financial controls over payment of advances to overseasconsultants and other parties particularly with regard to the terms and conditions ofmaking such advance payments by the Company were not operating effectively which couldpotentially result in material misstatements in the Company's working capital and expenseaccount balances.
4. The Company's internal financial controls over creditors for expenses particularlywith regard to the adequacy for such expenses as also obtaining confirmations from thecreditors were not operating effectively which could potentially result in materialmisstatements in the Company's working capital and expense account balances.