To the members of Vapi Enterprise Limited (Formerly known as Vapi Paper Mills Limited)
Report on the Audit of the Financial Statements Opinion
We have audited the financial statements of Vapi Enterprise Limited ("theCompany") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand 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 ofthese 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. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of 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 statement that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany s ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the Company s financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
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 underprovisions of the Act and the Rules made there under. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Ind AS financial statements are free from materialmisstatements. An audit involves performing procedures to obtain audit evidence about thedisclosures and amounts in the Ind AS financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the Ind AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal control relevant to the Company's preparationof the financial statements that give true and fair view in order to design auditprocedures that are appropriate in the circumstances but not for the purpose of expressingan opinion on whether the company has in place an adequate internal financial controlssystem over financial reporting and the operating effectiveness of such controls. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by Company s directors as well asevaluating the overall presentation of the Ind AS financial statements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Ind AS financial statements.
Basis for Qualified Opinion
i. In our opinion the following accounting standards are not complied by the company:
1. Indian Accounting Standard (Ind AS-19) on "Employee Benefits"; regardingnon-provisioning of employee benefits
2. Indian Accounting Standard (Ind AS-105) on "Non-current Assets Held for Saleand Discontinued Operations"
3. Indian Accounting Standard (Ind AS-12) on "Income tax".
The effect of the above on assets and liabilities as well as loss and reserves is notascertainable.
ii. We are unable to form an opinion about the obligations of:
a. Rs.4748076/- is Long term borrowings from inter corporate which is subject toconfirmations.
b. Balance of Rs.961349/- of long term trade payables is subject to confirmation andadjustment if any required upon such confirmations are not determinable.
c. Balance of Rs.2585000/- of Long term trade deposits is subject to confirmation andadjustment if any required upon such confirmations are not determinable.
d. Balance of Rs.77412/- of Advance to creditor is subject to confirmation andadjustment if any required upon such confirmations are not determinable.
e. Balance of Rs.974825/- of long term Trade receivables is subject to confirmationand adjustment if any required upon such confirmations are not determinable.
f. Balance of Rs. 64127/- of amount other financial liability is under dispute.
The effects of the matters referred to Para above on assets and liabilities as well asLosses and reserves could not be ascertainable.
In our opinion and to the best of our information and according to the explanationsgiven to us subject to the possible effects of the matter described in the Basis forQualified Opinion paragraph the Ind AS 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 March 31 2019 its Losses and its cash flows and change in equity for the yearended on that date.
Emphasis of Matter:
We draw attention to the note no. 23 in the Ind AS financial statement which indicatesthat Company's net worth is negative as on March 31 2019. Going concern assumption forthe Company is dependent upon the surplus that may be generated out of present activity aswell as promoters bringing in funds to finance losses.
Our opinion is not qualified on this matter.
Report on Other Legal and Regulatory Requirements
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 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable. As required bySection 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 financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 then under except those mentioned in the basis for qualifiedopinion;
e. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
f. 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".
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:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements (Refer Note 25 to the financial statements;
2. The Company did not have long-term contracts including derivative contracts henceprovision for material foreseeable losses is not applicable.
3. There were been no amounts which required to be transferred to the InvestorEducation and Protection Fund by the Company.
For Chirag N Shah & Associates Chartered Accountants (118215W)
Signature (Hetal Shah) (Partner) (Membership No. 111610)
Place of Signature: Mumbai
" ANNEXURE A" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph A under Report on Other Legal and Regulatory Requirementssection of our report of even date)
To the Members of VAPI ENTERPRISE LIMITED
We refer to our report on the Ind AS financial statements of VAPI ENTERPRISE LIMITED(Formerly Known as Vapi Paper Mills Limited) for the year ended March 31 2019 issuedon even date.
i. a. The Company has not maintained proper records showing full particulars includingquantitative details and situation of Fixed Assets
b. The fixed assets have not been physically verified by the management. In the absenceof physical verification we are not in a position to comment on the discrepancies ifany between physical and book balances and the impact thereof.
c. As per information and explanation provided to us the title deeds of immovableproperties are held in the name of the company.
ii. The Company does not hold any inventories. Thus paragraph 3(ii) of the order is notapplicable.
iii. The company has not granted any unsecured loan to a firm company limitedliability Partnerships or other parties covered in the section 189 of the Companies ActHowever the register is not maintained as per Sec 189 of the Companies Act 2013.Therefore clause (iii) of the order is not applicable.
iv. As per information and explanations given to us there are no loans investmentsguarantees and securities covered u/s 185 and 186 of the Companies Act 2013; accordinglyclause (iv) of the order is not applicable.
v. According to the information and explanations given to us the Company has notaccepted any deposit from the public. Therefore the provisions of Clause (v) of paragraph3 of the CARO 2016 are not applicable to the Company.
vi. As per the information and explanation given to us the company is not required tomaintain cost records pursuant to the Companies (Cost Records and Audit) Rules 2014prescribed by the Central Government under Section 148(1) of the Companies Act 2013.
Therefore the provisions of Clause (vi) of paragraph 3 of the CARO 2016 are notapplicable to the Company.
vii. According to the records of the Company undisputed statutory dues IncludingProvident Fund Employees State Insurance Income Tax Goods and service tax Sales TaxWealth Tax Service Tax duty of Customs Duty of Excise Value Added Tax Cess and othermaterial statutory dues have been Profession Tax have been generally regularly depositedwith the appropriate authorities. According to the records of the Company and informationand explanations given to us no undisputed amounts payable in respect of the aforesaiddues were outstanding as at March 31 2019 for a period of more than six months from thedate of becoming payable.
According to the records of the Company there are no amounts of dues of Income TaxSales Tax Wealth Tax Service Tax duty of Customs Duty of Excise Value Added Tax Cesswhich have not been deposited as on March 31 2019 on account of disputes except below :
|Type of Tax payment ||Forum under which case is pending ||Year ||Amount Details |
|ESIC ||ESIC Department ||2010- 2011 2011-12 ||Demanded Rs 71250 Paid Rs.7123 Payable Rs.64127 |
|Sales Tax ||Appellate Tribunal ||2010- 2011 ||Demanded Rs 256503 paid Rs.185417 payable Rs.71086 which is challenged hence not provided |
viii. Based on our audit procedures and according to the information and Explanationsgiven to us we are of the opinion that the Company has not borrowed from any financialinstitutions banks and debenture holders thus paragraph 3(viii) of the order is notapplicable.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instrument) and term loans during the year. Accordinglyparagraph 3(ix) of the order is not applicable.
x. According to the information and explanations given to us no material fraud on orby the Company has been noticed or reported during the course of our audit.
xi. In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.
xii. The company is not Nidhi Company thus paragraph 3(xii) of the order is notapplicable.
xiii. All the transactions with related parties are in compliance with section 188 and177 of Companies Act 2013. The details of the same have been disclosed in the Ind ASfinancial statements as required by the accounting standards.
xiv. The company has not made any preferential allotment / private placement of sharesor fully or partly convertible debentures during the year under review thus paragraph3(xiv) of the order is not applicable.
xv. The company has not entered in to any non-cash transactions with directors orpersons connected with him. Thus paragraph 3(xv) of the order is not applicable.
xvi. The company is not required to be registered u/s 45IA of the Reserve Bank of IndiaAct 1934 thus paragraph 3(xvi) of the order is not applicable.
For Chirag N Shah & Associates Chartered Accountants FRN.118215W
Hetal C. Shah Partner
Membership No: 111610
" Annexure B" to the Auditors' Report
(Referred to in paragraph B (6) under Report on other legal and regulatory requirementssection of our report of even date) Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct") We have audited the internal financial controls over financial reporting ofVapi Enterprise Limited (Formerly Known as "Vapi Paper Mills Limited") as ofMarch 31 2019 in conjunction with our audit of the Ind AS financial statements of theCompany 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company s policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor s judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company s internal financial controls system over financialreporting.
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 Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial 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 explanation given to us the Company has notestablished its internal financial control over financial reporting on criteria based onor considering 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. Because of this reason we are unable to obtain sufficientappropriate audit evidence to provide a basis for our opinion whether the Company hadadequate internal financial controls over financial reporting and whether such internalfinancial controls were operating effectively as at March 31 2019. We have considered thedisclaimer reported above in determining the nature timing and extent of audit testsapplied in our audit of the Ind AS financial statements of the Company and the disclaimerdoes not affect our opinion on the standalone Ind AS financial statements of the Company.
For Chirag N Shah & Associates Chartered Accountants FRN: 118215W
Hetal C Shah Partner
Membership No: 111610