To the Members of
LABH CONSTRUCTION AND INDUSTRIES LIMITED
Ahmedabad
1. REPORT ON THE FINANCIAL STATEMENT
We have audited the accompanying financial statement of LABH CONSTRUCTION AND
INDUSTRIES LIMITED, ("the company"), which comprise the Balance Sheet as at
31st 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.
2. MANAGEMENT RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Company’s Board of Directors is responsible for the matters in Section 134(5)
of the Companies Act, 2013 ("the Act") with respect to the preparation of these
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 the 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 the 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 internal financial control, 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.
3. AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on these financial statements based on our
audit.
We have taken into account the provisions of the Act, the accounting and accounting
standards and matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.
We have 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 financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the
auditor’s judgement, 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
Company’s preparation of the financial statements that give true and fair view in
order to design audit procedures that are appropriate in the circumstances. An audit
includes evaluating the appropriateness of accounting policies used and the reasonableness
of the accounting estimates made by Company’s 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 financial statements.
4. OPINION
We invite attention to the following: a. Note 15, regarding non-provision of
Rs.6.50 lacs (PY Rs. 6.50 lacs) out of Cash balance looted in the year 1995-96 and not
recovered so far, due to which profit for the year and other non- current assets both are
overstated by the amount, An amount of Rs.6.50 lacs was looted on 14th August, 1995. A
complaint was lodged on 14th August, 1995 vide FIR No.I-246/95 with Vejalpur Police
Station Ahmedabad, for the same. The amount has since been recovered by Police and handed
over to Income Tax authorities through court of law but not yet handed over to the
assessee. The assessee has filed case in ITAI and succeeded against the department but the
department has not given any effect for the same and hence no effect has been provided in
books. Further, Rs. 61.80 lacs has been written off against one of the trade receivable as
it will not be realizable in future as per the opinion of the management. The account has
been matched with the trade receivable as informed by the management.
b. Note 19, regarding other income, company has received previous dues from
income tax department along with interest. The dues have been set off against balances
carried forward and interest of refund has been recognized as other income in statement of
profit and loss. There is not business activity in the company during full previous year
2016-17.
c. Note 25, regarding non provision of certain liabilities in the accounts. In
view of the non-availability of the relevant information, consequential impact thereof, on
the state of affairs of the company remains to be ascertained.
d. Note 25, regarding financial as well as other impact on the state of
affairs of the company due to delayed payment of statutory dues and those to Secured
lenders. In view of the non- availability of the relevant information, consequential
impact thereof, on the state of affairs of the company remains to be ascertained.
Subject to above,
In our opinion and to the best of our information and according to the explanations
given to us, the 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:
a) In the case of the Balance Sheet, of the state of affairs of the company as at March
31,2017;
b) In the case of the Statement of Profit and Loss, of the Loss for the year ended on
that date; and
c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.
5. EMPHASIS OF MATTERS
We draw specific attention to the following:
a) Proceedings under Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act 2002 Being initiated against the company by its
secured creditors, the liability under which may exceed the amount provided by the
company.
b) Various Recovery and other suits filed by secured and unsecured creditors, pending
against the company in various courts, the liability under which may exceed the amount
provided by the company on that account.
c) Violation of provisions of section 73 of Companies Act 2013, in respect of Public
Deposits accepted by the Company,
d) Violation regarding made to associate companies and other entities as per Companies
Act 2013.
Our opinion is not modified in respect of these matters.
Report on other Legal and Regulatory Requirements
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 purpose of our audit.
b) In our opinion proper books of account as required by law have been kept by the
Company so far as appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss, and Cash Flow Statement dealt
with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid 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 written representations received from the directors as on March 31,
2017, and taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2017, from being appointed as a director in terms the Companies Act, 2013.
f) With respect to the other matters included in the Auditor’s Report and to our
best of our information and according to the explanations given to us :
I. The Company has partially disclosed the impact of pending litigations on its
financial position in its financial statements – Refer Note 5, 14 & 25 to the
financial statements ;
II. The Company has not made provision, as required under the applicable law or
accounting standards, for material foreseeable losses, if any, – Refer Note 5, 14
& 25 to the financial statements;
For, Darshil Shah & Associates
Chartered Accountants
FRN No. 133590W
Partner
Darshil Shah
Place : Ahmedabad
Date : 30/05/2017
Reports under The Companies (Auditors Report) Order, 2016 (CARO 2016) for the year
ended on 31st March 2017
To,
The Members
LABH CONSTRUCTION & INDUSTRIES LIMITED
(1) In Respect of Fixed Assets
(a) Secured loans as per note 5 have been secured by way of equitable mortgage of
immovable properties, belonging to the principals of the company as per note 12. GSFC has
already sold the said property for recovery of loan hence entire fixed assets have been
written off in current financial year. No depreciation has been provided as per companys
act, 2013 as there is no business in the financial year. (See Note No. 12)
(b) Secured loans as per note 5 have been secured by way of equitable mortgage of
immovable properties, belonging to the principals of the company as per note 12. GSFC has
already sold the said property for recovery of loan hence entire fixed assets have been
written off in current financial year. No depreciation has been provided as per companys
act, 2013 as there is no business in the financial year. (See Note No. 12)
(c) N.A. as there are no immovable properties held in the name of the company.
(2) In Respect of Inventories N.A. as there is no inventory.
(3) Compliance under section 189 of The Companies Act, 2013
The company has not granted any loans, secured or unsecured to companies, firms or
other parties covered in the register maintained u/s 189 of the companies Act-2013 in
current F.Y..
(a) On the basis of records examined by us and information provided by the management,
we are of the opinion that the company has not given guarantees for loans taken by other
from banks or financial institutions.
(b) The loans granted are re-payable on demand. As informed, the company has not
demanded repayment of any such loan during the year, thus, there has been no default on
the part of the parties to whom the money has been lent. The payment of interest has been
regular. (See Note No. 14 )
(c) There is no overdue amount of loans granted to companies, firms or other parties
listed in the register maintained under section 189 of the companies Act, 2013. (See
Note No. 12)
(4) Compliance under section 185 and 186 of The Companies Act , 2013
While doing transaction for loans, investments, guarantees, and security provisions of
section 185 and 186 of the Companies Act, 2013 have been complied with.
(5) Compliance under section 73 to 76 of The Companies Act, 2013 and Rules
framed there under while accepting Deposits
According to the information and explanation given to us the company has not accepted
deposits in FY 2016-17 except accepted years before from public in previous years hence
provision of section 73 to 76 and / or any other rules framed there under are applicable.
The company has contravened the provisions and no orders have been passed by Company Law
Board or National Company Law Tribunal or Reserve Bank of India or any court or any other
tribunal.
(6) Maintenance of cost records
The Company is not required to maintain cost records pursuant to the Rules made by the
Central Government for the maintenance of cost records under Section 148 (1) of the Act.
(7) Deposit of Statutory Dues
(a) According to the records of the company, undisputed statutory dues including
provident fund, investor education and protection fund, employees state insurance, income
tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess have not been
regularly deposited with the appropriate authorities. Final dues to or from are
unascertainable as on balance sheet date.
(b) According to the information and explanations given to us, disputed dues in respect
of provident fund, investor education and protection fund, employees state insurance,
income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other
statutory dues which were outstanding at the yearend for a period of more than six months
from the date they became payable are not ascertainable by the management as the disputes
are quit old and cases are pending with various revenue authorities. Final dues to or from
are unascertainable as on balance sheet date.
(8) Repayment of Loans and Borrowings
Based on our audit procedures and as per the information and explanations given by the
management, we are of the opinion that the company has defaulted in repayment of dues to a
financial institution & banks and the lenders have already initiated actions against
the company as disclosed in notes to audited balance sheet. Company doesnt have any
outstanding towards debenture holders. (See Note No. 5)
(9) Utilization of Money Raised by Public Offers and Term Loan For which they
Raised
The company has not raised any money by way of initial public offer or further public
offer {including debt instruments) and term loans. Hence this clause is not applicable.
(10) Reporting of Fraud During the Year
Based on our audit procedures and the information and explanation made available to us
no such fraud noticed or reported during the year.
(11) Managerial Remuneration
No managerial remuneration has been provided during the financial year hence this
clause is not applicable.
(12) Compliance by Nidhi Company Regarding Net Owned Fund to Deposits Ratio
As per information and records available with us The company is not Nidhi Company.
(13) Related party compliance with Section 177 and 188 of companies Act –
2013
Yes. All transactions with the related parties are in compliance with section 177 and
188 of Companies Act, 2013 where applicable and the details have been disclosed in the
Financial Statements etc., as required by the applicable accounting standards. (See
Note No. 31)
(14) Compliance under section 42 of Companies Act - 2013 regarding Private
placement of Shares or Debentures
No Preferential allotment or private placement of shares etc have been issued hence
this clause is not applicable.
(15) Compliance under section 192 of Companies Act – 2013
The company has not entered into any non-cash transactions with directors or persons
connected with him.
(16) Requirement of Registration under 45-IA of Reserve Bank of India Act, 1934
The company is not required to be registered under section 45-IA of the Reserve Bank of
India Act.
For, Darshil Shah & Associates
Chartered Accountants
FRN No. 133590W
Partner
Darshil Shah
Place : Ahmedabad
Date : 30/05/2017
ANNEXURE TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONE
FINANCIAL STATEMENTS OF LABH CONSTRUCTION & INDUSTRIES LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of (the
Company) as of 31-Mar-2017 in conjunction with our audit of the standalone 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 internal
financial controls. 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
company’s 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 Companies Act, 2013.
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 Guidance Note on Audit of Internal Financial Controls Over Financial Reporting
(the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed
to be prescribed under section 143(10) of the Companies Act, 2013, to the extent
applicable to an audit of internal financial controls, both applicable to an audit of
Internal Financial Controls and, both issued by the Institute of Chartered Accountants of
India. Those Standards and the Guidance Note require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether
adequate 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 of the 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 auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. We believe that
the audit evidence I/we have obtained is sufficient and appropriate to provide a basis for
our audit opinion on the Company’s internal financial controls system over financial
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 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 financial control
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, 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 31-Mar-2017.
For, Darshil Shah & Associates
Chartered Accountants
FRN No. 133590W
Partner
Darshil Shah
Place : Ahmedabad
Date : 30/05/2017
+91-9892691696
