TO,
THE MEMBERS OF,
AUTOPAL INDUSTRIES LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying financial statements of Autopal Industries Limited(‘theCompany*),which
comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss, the Cash
Flow Statement for the year then ended, and a summary of significant accounting policies
and other explanatory information.
Managements Responsibility for the Financial Statements and for Internal Financial
Controls over Financial Reporting
The Companys Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation
and presentation of these standalone financial statements that give a true and fair view
of the financial position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of
adequate accounting records in accordance with the provisions of the Act for safeguarding
of the assets of the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and design, implementation and
maintenance of adequate internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
The Companys management is responsible for establishing and maintaining internal
financial controls based on the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting issued by the Institute of Chartered Accountants of India". These
responsibilities include the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to companys policies, the safeguarding of
its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial
information, as required under the Act.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our
audit and to express an opinion on the Companys internal financial controls over
financial reporting based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing
standards and matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under
Section 143(10) of the Act and the guidance Note on Audit of Internal Financial Controls
over Financial Reporting. Those Standards andthe Guidance Noterequire that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement and whether adequate
internal financial controls over financial reporting was established and maintained and if
such controls operated effectively in all material respects.
An audit involves performing procedures to obtain audit evidence about the amounts and
the disclosures in the financial statements and adequacy of internal financial controls
system over financial reporting and their operating effectiveness. Our audit of internal
financial controls over financial reporting included obtaining an understanding of
internal financial controls over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. The procedures selected depend on the
auditors judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal financial control relevant to the Companys preparation of the
financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness of the accounting
estimates made by the Companys Directors, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Companys internal financial controls system
over financial reporting and the standalone financial statements.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial controls over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal financial control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys 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 financial
reporting, including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls over financial
reporting to future periods are subject to the risk that the internal financialcontrol
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Basis for Qualified opinion
A. The company has taken term loan on 30.04.2016 from Reliance Capital Limited
amounting to Rs. 1,75,00,000 for purchase of Machinery as per Sanction Letter and also
shown as secured term loan.
B. The company has booked Purchase Return worth Rs. 91,87,674 due to line rejection of
which sufficient and appropriate audit evidence is not available.
C. The company has capitalized repairs and maintenance expense worth Rs. 5,77,278;
salary expense worth Rs. 36,27,600 and wages worth Rs. 6,82,023 /- in respect of machine
under fabrication for which sufficient and appropriate audit evidence is not available.
D. We draw your attention to Note No. 39 for Deferred Tax Liability regarding non
recognition of deferred tax liability amounting Rs. 66,97,197/-. The same is due to the
estimate considered by the management of the company considering absence of reasonable
certainty in the near future that the same will be reversed.
E. The company has 30% partnership share in associate concern G.K. Autopal Lighting
Solution. However, loss of Rs. 25,06,713 for F.Y. 2015-16 has not been considered
according to the total loss in the ratio of Fixed capital in the relevant period; and the
company has also not considered the investment in and profit of M/s Om Sai Electronics
with 98% partnership share of Rs. 1,54,996 for F.Y. 2015-16. The company has not prepared
consolidated financial statements. The company has also not considered profits/losses of
G.K. Autopal Lighting Solution and M/s Om Sai Electronics for F.Y. 2016-17 in its books of
accounts for the year ended 31st March, 2017. The company has acquired fixed assets worth
Rs. 81,56,471 from Om Sai Electronics at year end after closing their activities.
F. Statutory dues such as PF are pending for last eleven months, ESI is pending for
last ten months, Service Tax for the half year Oct, 16 to March, 17 has not been deposited
yet and there is a late payment made of TDS for quarters 1,2 and 3 whereas TDS, Basic
Excise Duty and VAT for quarter 4 has not been deposited yet. Annual Return of Value Added
tax VAT 10A has not been filed by the company for F.Y. 2014-15 and F.Y. 2015-16. Also,
quarterly VAT Return for Quarter 4 is pending.
G. Bonus payable (carried forward from previous years) amounting to Rs 20,88,006was
paid in cashin the current year; but this payment could not be verified. The company also
has many unadjusted sundry debtors, sundry creditors, security advances from dealers and
loans advances and closing stock valuation are subject to verification and reconciliation.
H. The company has provided the Provision for Gratuity for the year ended on 31st March
2017on the basis of valuation done by Companys own H.R. Dept, and not as per Actuarial
Valuation prescribed by AS-15.
I. The company has not deducted TDS in case of payment of interest on the loans of
Reliance Capital Limited and Intech Capital.
J. The company obtained unsecured loan from promoters, M/s Surga International, Fine
Gems Exports Private Limited, Lata Gupta, S.E. Investors Ltd., Alfamax Consultancy, Doon
Engineering Solution on which no interest was provided in the books.
K. The company has not transferred an old outstanding amount of Rs. 2,04,428 of unpaid
dividend to the Investor Education and Protection Fund account.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations
given to us, except for the effect on the financial statements of the matter described in
the basis for qualified opinion paragraph, the aforesaid financial statements give the
information required by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India, of the state of
affairs of the Company as at 31 March 2017, and its profit and its cash flows for the year
ended on that date.
Report on Other Legal and Regulatory Requirements
1. 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 best
of 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 the
Company so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss, the cash flow statement dealt
with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received from the directors as on 31
March 2017 taken on record by the Board of Directors, none of the directors is
disqualified as on 31 March 2017 from being appointed as a director in terms of Section
164 (2) of the Act; and
(0 In our opinion considering nature of business, size of operation and organizational
structure of the entity, the Company has, in all material respects, an adequate internal
financial controls system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at 31st March 2016, based on the
internal control over financial reporting criteria established by the Company considering
the essential components of internal control stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered
Accountants of India.
(g) With respect to the other matters to be included in the Auditors Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion
and 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 financial
position in its financial statements - NIL
ii. the Company has made provision, as required under the applicable law or accounting
standards, for material foreseeable losses, if any, on long-term contracts including
derivative contracts.
iii. the company has not transferred an amount of Rs. 2,04,428 of unpaid dividend to
the Investor Education and Protection Fund account.
(h) The Companyhasprovided requisite disclosures in its financialstatements as to
holdings as well as dealings in Specified BankNotes during the period from 8thNovember,
2016 to 30thDecember, 2016 and these are in accordance with the books of
accounts maintained by the Company.ReferNote 29to the Financial statements.
2. As required by "the Companies (Auditors Report) Order, 2016" ("the
Order") issued by the Central Government of India in terms of sub-section (11) of
section 143 of the Act, we give in the Annexure A, a statement on the mattersspecified in
paragraphs 3 and 4 of the Order, to the extent applicable.
For Rajvanshi & Associates
Chartered Accountants
Firm Regn. No : 005069C
VikasRajvanshi
Partner
Membership No.: 073670
Place : Jaipur
Date :30"lMay, 2017
Annexure-A to the Independent Auditors Report
The Annexure referred to in Independent Auditors Report to the members of the Company
on the financial statements for the year ended 31 March 2017, we report that:
i) In respect of Fixed Assets:
a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets on the basis of available information.
b) As explained to us, fixed assets have been physically verified by the management in
a phased periodical manner which in our opinion is reasonable having regard to the size of
the Company and the nature of its assets. No material discrepancies were noticed on such
verification, as per the explanations provided to us.
c) According to the information and explanations given to us and on the basis of our
examination of the records of the Company, the title deeds of immovable properties are
held in the name of the Company.
ii) In respect of Inventories:
As explained to us, the inventories have been physically verified by the management
during the year. In our opinion, the frequency of verification is reasonable having regard
to the size of the company and the nature of its business. As explained to us no material
discrepancies were noticed on verification between the physical stocks and the book
records.
iii) The Company has not granted any loans, secured or unsecured, to companies, firms,
Limited Liability Partnerships or other parties covered in the register maintained under
section 189 of the Act. Therefore, the provisions of clause 3(iii)(a), (iii) (b) and (iii)
(c) of the said Order are not applicable to the Company.
iv) In our opinion and according to the information and explanations given to us, the
Company has complied with the provisions of section 185 and 186 of the Act, with respect
to the loans and investments made.
v) As informed and explanation given to us the Company has not accepted any new
deposits from the public during the year. However, company has made full payment of the
deposits as per order under SICA Act, 1985.
v) As informed to us, Company is maintaining the cost records pursuant to the Companies
(Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government
under Section 148(1) of the Companies Act 2013 for the products of the Company. We have,
however, not made a detailed examination of the cost records with a view to determine
whether they are accurate or complete.
vii) According to the information and explanations given to us and on the basis of our
examination of the records of the Company, in our opinion
a) The payment in respect of undisputed statutory dues, including Provident Fund,
Employees State Insurance, Service Tax, Income Tax, Tax deducted at sources, Customs
duty, Value Added Fax, Excise duty, Cess and other material statutory dues applicable to
it have been regularly deposited during the year by the Company with the appropriate
authorities though there has been a delay in a few cases. ESI amounting to Rs. 3,78,157
and PF amounting to Rs. 23,00,105 were outstanding as at 31 March, 2017 for a period of
more than six months from the date they became payable.
b) There were no disputed amounts payable in respect of Income-tax, Custom Duty, Excise
Duty, Cess, TDS and other material statutory dues in arrears were outstanding as at 31s,March,
2017 except Sales lax dues of earlier years amounting to Rs. 1.52 crores due to mismatch
in purchases and non - receipt of C Forms, however, company has filed rectification/
amnesty application, effect of which is still pending.
viii) According to the information and explanations given to us, the Company has not
defaulted in repayment of dues to the financial institution during the year.
ix) The Company did not raise any money by way of initial public offer or further
public offer (including debt instruments) but has takenterm loan on 30.04.2016 from
Reliance Capital Limited amounting to Rs. 1,75,00,000 for purchase of Machinery as per
Sanction Letter.
x) According to the information and explanations given to us, no material fraud by the
Company or on the Company by its officers or employees has been noticed or reported during
the course of our audit.
xi) According to the information and explanations give to us and based on our
examination of the records of the Company, the Company has paid/provided for managerial
remuneration in accordance with the requisite approvals mandated by the provisions of
section 197 read with Schedule V to the Act.
xii) In our opinion and according to the information and explanations given to us, the
Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not
applicable.
xiii) According to the information and explanations given to us and based on our
examination of the records of the Company, transactions with the related parties are in
compliance with sections 177 and 188 of the Act where applicable and details of such
transactions have been disclosed in the financial statements as required by the applicable
accounting standards.
xiv) According to the information and explanations give to us and based on our
examination of the records of the Company, the Company has not made any preferential
allotment or private placement of shares or fully or partly convertible debentures during
the year.
xv) According to the information and explanations given to us and based on our
examination of the records of the Company, the Company has not entered into non cash
transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of
the Order is not applicable.
xvi) The Company is not required to be registered under section 45-IA of the Reserve
Bank of India Act 1934.
For Rajvanshi & Associates
Chartered Accountants
Firm Regn. No.: 005069C
Vikas Rajvanshi Partner
Membership No.: 073670
Place : Jaipur
Date : 30th May 2017.
+91-9892691696
