TO THE MEMBERS OF SPLENDIDMETALPRODUCTSLIMITED Report on the Standalone
Financial Statements
We have audited the accompanying standalone financial statements of
SplendidMetalProductsLimited {the Company) (Formerly known as SujanaMetal Products
Limited), which comprise the Balance Sheet as at March 31, 2020, the Statement of Profit
and Loss and the Cash Flow Statement for the year ended, and a summary of the significant
accounting policies and otherexplanatory information.
Managements Responsibility for the Standalone Financial Statements
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
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, as applicable. This responsibility also includes
maintenance of adequate accounting records in accordance with the provisions of the Act
for safeguarding 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 these standalone financial statements that give a true and
fair view and are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these standalone
financial statements 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 underthe provisions of the Act and the Rules made thereunder and the
Order under Section 143(11) of the Act. We conducted our audit in accordance with the
Standards on Auditing specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the standalone financial statements are free from
material misstatement. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the standalone financial statements. The
procedures selected depend on the auditorsjudgment, including the assessment of the risks
of material misstatement of the standalone 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 standalone 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 standalone financial statements.
Basis for Qualified Opinion
(ij The Company has defaulted in repayment of dues to Banks/Financial
Institutions and all loans outstanding were
classified as NPAs and were recalled by all the Banks. Note 5 forming
part of the Statement regarding Interest on Working Capital Loans, Term Loans and
Electricity power charges for the last three guarters of non-operating units. The
accumulated loss as on 31st March 2020 would have been increased from Rs. 1,79,873.50
lakhs to Rs.261,675.52 lakhs had the company provided for the same.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone 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 March 31,2020, and its loss and its cash flows for the year
ended on that date.
Emphasis of Matter
We Draw attention to the following
{I) The Company has been continuously making losses consequently its
net worth is negative and the Companys total
liabilities exceeded Its total asset as at 31" March 2020 by
Rs.{117,814.53Lakhs). This indicates the existence of material uncertainty that may cast
Significant doubt on the Companys ability to continue as going concern.
{ii) The dues to Banks/Financial Institutions as on 31.03.2020 as per
company is Rs. 2,42,790.64 lakhs, whereas the actual claims made by Banks/FIsand admitted
by Resolution Professional is Rs.6,27,652.66 lakhs.
{iii) The Trade receivable could not be verified as the confirmation of
balances have not been received and made available to us. The companys Trade Receivables
aggregating to Rs.69,344.06 Lakhs is more than three years old. The company has not
provided any bad debts in the books of account during the quarter. We are unable to form
an opinion on the extentto which the debts may be recoverable.
(iv) The Loans & advances could not be verified as the confirmation
of balances have not been received and made available to us. The companys loans and
advances aggregating to Rs.l0,351.73Lakhs is more than three years old. The company has
not provided any bad debts in the books of account during the quarter. We are unable to
form an opinion on the extentto which the debts may be recoverable.
(v) The Companys Capital advances to the extent of Rs. 5005.16 Lakhs
We are unable to ascertain whether such balances are fully recoverable. Accordingly, we
are unable to ascertain the impact, if any, that may a rise in case any of these advances
are subsequently determined to be doubtful of recovery. Had the Company provided for the
same, the loss forthe period would have been higher by the said amount.
(vi) The Company has an advance of Rs.477.29 lakhs are more than 365
days old and hence shall be treated as Deposits received under the Companies Act 2013 and
the same has to be returned within one year as per the provisions of the Act.
(vii) With regard to investments in unquoted equities of subsidiarys
for a value of Rs. 5,046.93 lakhs are valued at cost of investment however the present
realizable value of these are not ascertained by the management hence the same is
subjectto current valuation.
(viii) A winding up petition filed by Standard Bank {Mauritius) Ltd.,
in the High Court of Telangana&Andhra Pradesh against the company for giving corporate
guarantee for loan extended by the said bank to the step down subsidiary Optimix
Enterprises Limited for Rs. 4,087.50 lakhsis still pending.
(ix) The Company is not regular in payment of undisputed statutory dues
towards ESI, Provident Fund, TDS and Goods & Service Tax during the year ended 31st
March 2020.
(x) Bank Statements were not made available with the Company for all
the Banks except that of Vizag Branch. Interest ca Iculations are on the basis of the last
interest rates on the outstanding balances.
(xi) The GST Returns are yet to be reconciled for all the Branches
except Vizag branch as GST returns are yet to be filed by the company.
(xii) On accountoftheCOVID-19 related lock-down restrictions, we were
not able to physically observe the verification of inventory that was carried out by the
Management. Consequently, we have performed alternate procedures to audit the existence of
Inventory as per the guidance provided by in SA 501 "Audit Evidence - Specific
Considerations for Selected Items" and have obtained sufficient audit evidence to
issue our unmodified opinion on these Standalone Financial Results.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143{3)oftheAct, we reportthat:
{a) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief werenecessaryforthepurposesofouraudit.
(b) In our opinion, proper books of account as required by law relating
to preparation of the standalone financial statements 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 and the Cash
Flow Statement dealt with by this Report are in agreement with the books of account
maintained for the purpose of preparation of these standalone financial statements.
(d) In our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of the Act, as
applicable.
(e) On the basis of the written representations received from the
Directors as on March 31, 2020, taken on record by the Board of Directors, none of the
Directors is disqualified as on March 31, 2020 from being appointed as a Director in terms
of Section 164 {2) of the Act.
(f) With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effectiveness of such controls,
refer to our separate Report in Annexure A. Our report expresses an unmodified opinion
on the adequacy and operating effectiveness of the Companys internal financial controls
overfinancial reporting.
(g) With respect to the other matters to be included in the Independent
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 not disclosed the impact of pending litigations on
its financial position in its standalone financial statements.
ii) The Company did nothave any long-term contracts including
derivative contracts for which there were any material foreseeable losses andthe Company
is showing contingent liability.
iii) There have been no amounts required to be transferred, to the
Investor Education and Protection Fund by the Company.
2. As required by the Companies {Auditors Report) Order, 2016 {the
Order) issued by the Central Government in terms of Section 143(11) of the Act, we give
in Annexure B a statement on the matters specified in paragraphs 3 and4oftheOrder.
|
For T.Raghavendra&
Associates |
|
Chartered Accountants |
|
(Firm Regn No:003329S) |
|
T.Raghavendra |
|
Proprietor |
|
Mem No 023806 |
| Date: 30-07-2020 |
|
| Place: Flyderabad |
|
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT
{Referred to in paragraph 1(f) under Report on Other Legal and
Regulatory Requirements section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting
under Clause (i) of Sub-section 3 of Section 143 ofthe Companies Act, 2013 (the Act)
We have audited the internal financial controls over financial
reporting of SplendidMetal Products Limited {the Company) asof March 31,2020in
conjunction with our audit of the standalone financial statements ofthe Company for the
year ended and ason that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and
maintaining internal financial controls based on the internal controlover financial
reporting criteria established by the Company considering the essential components of
internal control stated in theGuidance Note on Audit of Internal Financial Controls Over
Financial Reporting issued by the Institute of Chartered Accountantsof India {the
Guidance Note). These responsibilities include the design, implementation and
maintenance of adequate internalfinancial controls that were operating effectively for
ensuring the orderly and efficient conduct of its business, including adherence
toCompanys policies, the safeguarding of its assets, the prevention and detection of
frauds and errors, the accuracy and completenessof the accounting records, and the timely
preparation of reliable financial informations required underthe Act.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal
financial controls over financial reporting based on our audit.We conducted our audit in
accordance with the Standards on Auditing prescribed under Section 143{10) of the Act and
the GuidanceNote, to the extent applicable to an audit of internal financial controls.
Those Standards and the Guidance Note require that wecomply with the ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether
adequateinternal financial controls over financial reporting was established and
maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence about
the adequacy of the internal financial controls systemover financial reporting and their
operating effectiveness. Our audit of internal financial controls over financial reporting
includedobtaining 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
proceduresselected depend on the auditors judgment, including the assessment ofthe risks
of material misstatement ofthe standalone financialstatements, whether due to fraud or
error.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on theCompanys internal financial
controls system overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control 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 proceduresthat {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 offinancial
statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorisations of
management and directors ofthe company; and {3) provide reasonableassurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition ofthe
companysassetsthatcould 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 orimproper 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 thatthe internal financial controls
over financial reporting may become inadequate because of changes in conditions, orthat
the degreeof compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the
explanations given to us, the Company has, in all materialrespects, an adequate internal
financial controls system over financial reporting and such internal financial controls
over financialreporting were operating effectively as at March 31, 2020, based on the
internal control over financial reporting criteria establishedbythe Company considering
the essential components of internal control stated in the Guidance Note.
|
For T. Raghavendra&
Associates |
|
Chartered Accountants |
|
(Firm Regn No:003329S) |
|
T.Raghavendra |
| Date: 30-07-2020 |
Proprietor |
| Place: Hyderabad |
Mem No 023806 |
ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT
{Referred to in paragraph 2 under Report on Other Legal and Regulatory
Requirements section of our report of even date)
Report on Companies (Auditors Report) Order, 2016 (the Order) issued
by the Central Government in terms ofSection 143(11) of the Companies Act, 2013 (the
Act) of Splendid Metal Products Limited (the Company)
1. In respectoftheCompanysfixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixedassets.
(b) The fixed assets were physically verified duringthe year by the
Management in accordance with a regular program ofverification which, in our opinion,
provides for physical verification of all the fixed assets at reasonable intervals.
According to the information and explanations given to us, no material discrepancies were
noticed on such verification.
(c) According to the information and explanations given to us and the
records examined by us and based on the examination of the conveyance deed provided to us,
we report that, the title deeds, comprising all the immovable properties of landand
buildings which are freehold, are held in the name of the Company as at the balance sheet
date.
2. As explained to us, the inventories were physically verified during
the year by the Management at reasonable intervals and nomaterial discrepancies were
noticed on physical verification.We have relied on the report of M/s MallikarjunaRao and
Associates, Chartered Accountants for the physical availability and valuation as atthe
year ended 31-03-2020.
3. The Company has not granted any loans, secured or unsecured, to
companies, firms, limited liability partnerships or otherparties covered in the register
maintained under Section 189 of the Act.
4. In our opinion and according to the information and explanations
given to us, the Company has complied with the provisionsof Sections 185and 186 of the
Actin respect of grant of loans, making investments and providing guarantees and
securities, asapplicable.
5. The Company has not accepted deposits during the year and does not
have any unclaimed deposits as at March 31, 2020andtherefore, the provisions of the clause
3 (v) of the Order are not applicable to the Company.
6. The Maintenance of Cost Records has been specified by the Central
Government under section 148(1) of the Companies Act, 2013. We have relied on the Cost
audit report submitted by the Cost Auditors of the Company and according to the said
report the Company has complied with the CompaniesfCost Records and Audit) Rules, 2014.
7. According to the information and explanations given to us, in
respect of statutory dues:
{a) The Company has not been regular in depositing undisputed statutory
dues, including Provident Fund, EmployeesState Insurance, Income Tax, Sales Tax, Service
Tax, Value Added Tax, duty of Customs, duty of Excise, Cess, GST and other material
statutory dues applicable to it with the appropriate authorities.
(b) There are no disputed amounts payable in respect of Provident Fund,
Employees State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of
Customs, duty of Excise, GST, Cess and other material statutory dues in arrears as at
March 31, 2019 fora period of more than six months from the date they became payable
except as detailed below:
|
Outstanding |
|
> 6 months |
| Particulars |
Rs. In lakhs |
| T.D.S |
1.7 |
| Service tax |
1.93 |
| Income Tax (Corporate Dividend Tax) |
2.64 |
| Total |
6.27 |
(c) Details of dues of Income Tax, Sales Tax, Customs and Excise
Duty, Foreign Exchange Management Act and Value Added Tax which have not been deposited as
at March 31,2020 on account of dispute are given below:
Disputed Statutory dues as on 31.03.2020
| Name of the Statute |
Amount |
Period to which
the amount relates (FY) |
Forum where
dispute is pending |
| Rs. in Lakhs |
| Income Tax Act, 1961 |
1775.45 |
2006-2015 |
Income Tax Appellate Tribunal |
| Central Excise Act, 1944 |
2045.10 |
1997-2013 |
Commissioner (Appeals) Chennai,
Chennai Honble High Court of Chennai, Honble High Court of Delhi, Honble Supreme Court
of lndia( Dept.Appeals |
| Customs Act, 1962 |
792.45 |
1999-2012 |
Commissioner (Customs) Sea Port,
Chennai, Honble High Court of Chennai, Vommissioner (Appeals), Vizag and Honble Supreme
Court of India (Dept.Appeals). |
| Foreign Exchange Management Act, 1999 |
400 |
1995-1996 |
Honble High Court of Delhi |
| APGST ACT, 1957 |
438.13 |
2002-2003 |
Honble High Court of Delhi |
| Central Sales Tax Act, 1956 |
241.34 |
2006-2007 |
Sales Tax Appellate
Tribunal, Commercial Tax Officer |
| 42.68 |
2007-2008 |
| Tamilnadu Value Added Tax Act, 2006 |
9891.65 |
2006-2008 |
Appellate Dpty. Commissioner,
Honble High Court of Andhra Pradesh. |
| CST (IN) |
2383.64 |
2008-2015 |
Honble High Court of Tamilnadu
and TN Sales Tax Authorities. |
|
|
|
|
8. In ouropinion and accordingtothe information and explanations given
to us, the Company has defaulted in the
repayment of loans or borrowings to banks. The detail of the default is
given below:
Details of Overdues to Banks/Financial Institutions as on 31.03.2020.
| Bank name |
Total |
| Andhra Bank |
7,590.24 |
| Bank of Baroda |
10,435.14 |
| Bank of India |
48,890.98 |
| IDBI Bank |
3,790.65 |
| Indian Bank |
7,549.56 |
| Indian Overseas Bank |
28,957.80 |
| Edelweises ARC Ltd (KBL) |
6,228.68 |
| Lakshmi Vilas Bank |
8,592.47 |
| Oriantal Bank of Commerce |
7,951.13 |
| Punjab National Bank |
68,475.92 |
| State Bank of India |
32,041.24 |
| SASF |
12,286.82 |
| Gopalka Savings Investments Pvt Ltd-USL |
70 |
| Total: |
242860.64 |
9. The Company has not raised moneys by way of initial public offer or
further public offer {including debt instruments) ortermloans and hence reporting under
clause 3 (ix) of the Order is not applicable.
10. To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no fraud on the Company by its
officers or employees has been noticed or reported duringtheyear.
11. In ouropinion and accordingtothe information and explanations given
to us, the Company has paid / provided managerial remuneration in accordance with the
requisite approvals mandated by the provisions of Section 197 read with Schedule
VtotheAct.
12. The Company is not a Nidhi Company and hence reporting
underclause3{xii)ofthe Order is not applicable.
13. In ouropinion and according to the information and explanations
given to us the Company is in compliance with Section 177and 188 of the Act, where
applicable, for all transactions with the related parties and the details of related party
transactions have been disclosed in the standalone financial statements as required by the
applicable accounting standards.
14. Duringtheyear, the Company has not made any preferential allotment
or private placement of shares or fully or partly convertible debentures and hence
reporting under clause 3{xiv) of the Order is not applicable to the Company.
15. In ouropinion and according to the information and explanations
given to us, during the year the Company has not enteredinto any non-cash transactions
with its Directors or persons connected to its Directors and hence provisions of Section
192 of theAct are not applicable.
16. The Company is not required to be registered under Section 45-1 of
the Reserve Bank of India Act, 1934.
|
ForT. Raghavendra &
Associates |
|
Chartered Accountants |
|
(Firm Regn No:003329S) |
|
T.Raghavendra |
|
Proprietor |
|
Mem No 023806 |
| Date: 30-07-2020 |
|
| Place: Hyderabad |
|
+91-9892691696
