To
The Members of S.R. Industries Limited
(Company under Corporate Insolvency Resolution Process)
Pursuant to an order of the Honble National Company Law Tribunal, Chandigarh
("NCLT") dated December 21, 2021, Corporate Insolvency Resolution Process
("CIRP") of the Company had been initiated and Sh. R.K Jain,(IP Registration No.
IBBI/IPA-001/IP- P00543/2017-18/10968) had been appointed as the Resolution Professional
(RP) under Insolvency and Bankruptcy Code 2016 ("Code"), against the proceedings
initiated under CIRP vide Order No. CP(IB) No.198/Chd/Pb/2021 of the National Company Law
Tribunal, Chandigarh Bench dated 21.12.2021 on the petition of UCO Bank for default in the
payment of financial debt.
Qualified Opinion
We have audited the accompanying standalone Ind AS Financial statements of S.R.
Industries Limited ("the Company"), which comprise the Balance Sheet as at
March
31,2022, and the Statement of Profit and Loss (including Other Comprehensive Income),
the Statement of Changes in Equity and the Statement of Cash Flows for the year then
ended, and notes to the standalone Ind AS financial statements, including a summary of
significant accounting policies and other explanatory information. In our opinion and to
the best of our information and according to the explanations given to us, except
for the effects of the matters described in the basis for qualified opinion section,
the aforesaid standalone Ind AS financial statements give the information required by the
Companies Act, 2013 (as amended from time to time) hereinafter referred to as 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 31,2022, and its profit and loss, total comprehensive income, the changes in
equity and its cash flows for the year ended on that date.
Basis for Qualified Opinion
We conducted our audit of the standalone financial statements in accordance with the
Standards on Auditing specified under section 143(10) of the Act (SAs). Our
responsibilities under those Standards are further described in the Auditors
Responsibilities for the Audit of the Standalone Financial Statements section of our
report. We are independent of the Company in accordance with the Code of Ethics issued by
the Institute of Chartered Accountants of India (ICAI) together with the independence
requirements that are relevant to our audit of the standalone financial statements under
the provisions of the Act and the Rules made thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the ICAIs Code of
Ethics. 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.
The company has made provisioning of simple interest in the financial statements for
the first 3 Quarters on the amounts due towards SBI at the rate of 10% and UCO Bank at the
rate of 12%. However, now, since the Corporate Insolvency Resolution Process has been
initiated against the Company and the accounts of the Company have been classified as NPA,
there is no credible information on the basis of which the liability of the Company can be
ascertained, and hence, provision of interest earlier made during the first 3 quarters has
now been reversed while preparing the Annual Results for the year as the management is
expecting full waiver of interest as per the Resolution Plan to be approved under
Corporate Insolvency Resolution Process..
Emphasis of Matter
Key Audit Matters
Key Audit Matters are those matters, which in our professional judgment, were of most
significance in the audit of Financial Statements of Current Period and these matters were
addressed in the context of audit of financial Statements as a whole and auditor does not
provide a separate opinion on these matters.
Other Audit Matters
The Companys Board of Directors is responsible for the other information. The other
information comprises the information included in the directors report and the corporate
governance report, but does not include the standalone Ind AS financial statements and our
auditors report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon. In connection
with our audit of the standalone Ind AS financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is
materially inconsistent with the standalone Ind AS financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this
regard.
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 including other comprehensive income, cash flows and
changes in equity of the Company in accordance with the Indian Accounting Standards (Ind
AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting
Standards) Rules, 2015, as amended, and other accounting principles generally accepted in
India.
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 the standalone
financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditors Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone
financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditors report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these standalone financial statements.
The balances of trade receivables, trade payables, deposits and loans & advances as
appearing in the books of accounts of company are subject to verification and
reconciliation.
The GST liability payable by the company (if any) would be subject to reconciliation
and verification. The differences, if any, with the Books of Accounts, will be dealt with
at the time of filing of Annual Return in Form GSTR-9 by the company.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal financial control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under section 143(3)(i)
of the Act, we are also responsible for expressing our opinion on whether the Company has
adequate internal financial controls system in place and the operating effectiveness of
such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of managements use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Companys
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditors report to the related disclosures in
the standalone financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditors report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the standalone financial
statements, including the disclosures, and whether the standalone financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
Materiality is the magnitude of misstatements in the standalone financial statements
that, individually or in aggregate, makes it probable that the economic decisions of a
reasonably knowledgeable user of the standalone financial statements may be influenced. We
consider quantitative materiality and qualitative factors in (i) planning the scope of our
audit work and in evaluating the results of our work; and (ii) to evaluate the effect of
any identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the standalone financial statements
of the current period and are therefore the key audit matters. We describe these matters
in our auditors report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit and subject to notes to
accounts 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 including Other Comprehensive
Income, Statement of Changes in Equity and the Statement of Cash Flow 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 Indian
Accounting Standards prescribed under section 133 of the Act.
e) On the basis of the written representations received from the directors of the
Company as on March 31, 2022 taken on record by the Board of Directors, none of the
directors is disqualified as on March 31, 2022 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 over financial reporting.
g) In our opinion and to the best of our information and according to the explanations
given to us, the managerial remuneration for the year ended March 31, 2022 has been paid /
provided by the Company to its directors in accordance with the provisions of section 197
read with Schedule V to the Act.
h) 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, as amended, 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 standalone financial statements.
ii. The Company has made provision, as required under the applicable law or accounting
standards, for material foreseeable losses, if any.
iii. There has been no delay in transferring amounts, required to be transferred, to
the Investor Education and Protection Fund by the Company
2. As required by the Companies (Auditors Report) Order, 2020 ("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 and 4 of the Order.
|
For M/S Goel Satish & Co. |
|
Chartered Accountants |
|
Firm Registration No. 010693N |
| Place: Chandigarh |
|
| Date: 21.06.2022 |
|
|
(CA. Satish Goel) |
|
Proprietor |
|
Membership No. 089414 |
|
UDIN: 22089414ALLHNF8329 |
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 to the Members of S.R. Industries Limited (Company
under Corporate Insolvency Resolution Process) of even date}
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of
Subsection 3 of
Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of S.R.
Industries Limited ("the Company") as of March 31, 2022 in conjunction with
our audit of the standalone financial statements of the Company for the year ended on that
date.
Managements Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaining
internal financial controls 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. 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, 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 internal financial controls over
financial reporting of the Company 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") issued by the
Institute of Chartered Accountants of India and the Standards on Auditing prescribed
under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of
internal financial controls. 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 auditors judgement, 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 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.
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, to the best of our information and according to the explanations given
to us, 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 March 31, 2022, 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.
|
For M/S Goel Satish & Co. |
|
Chartered Accountants |
|
Firm Registration No. 010693N |
| Place: Chandigarh |
|
| Date: 21.06.2022 |
|
|
(CA. Satish Goel) |
ANNEXURE ‘B TO THE INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory
Requirements section of our report to the Members of S.R. Industries Limited (Company
under Corporate Insolvency Resolution Process) of even date}
To the best of our information and according tot the explanations provided to us by the
Company and the books of account and records examined by us in the normal course of audit,
we state that:
i. In respect of the Companys Property, Plant and Equipment:
(a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of Property, plant and equipment.
(b) The Company has a program of verification to cover all the items of Property, plant
and equipment. Pursuant to the program, Property, plant and equipments were physically
verified by the management during the year. However, according to the information and
explanations given to us, no material discrepancies are ascertained.
(c) According to the information and explanations given to us, the records examined by
us and based on the examination of the deeds provided to us, we report that, the title
deeds, comprising all the immovable properties of land and buildings which are freehold,
are held in the name of the Company as at the balance sheet date.
(d) The Company has not revalued any of its Property, Plant and Equipment (including
right of-use assets) and intangible assets during the year.
(e) No proceedings have been initiated during the year or are pending against the
Company as at March 31, 2022 for holding any benami property under the Benami Transactions
(Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.
ii. In respect of the Companys Inventory:
(a) The management has carried out physical verification of inventory at reasonable
intervals and no discrepancies of 10% or more for each class of inventory were noticed
during the year.
(b) The accounts of the Company have been classified as Non-Performing Assets by the
Banks (SBI and UCO Bank)since30.06.2017 and hence reporting under clause 3(ii)(b) of the
Order is not applicable.
iii. The Company has not made investments in companies, firms, Limited Liability
Partnerships, and granted unsecured loans to other parties and hence reporting under
clause 3(iii) of the Order is not applicable to the Company.
iv. The Company has not granted any loan, investment nor provided any guarantees and
securities under Sections 185 and 186 of the Act and hence reporting under clause 3(iv) of
the Order is not applicable to the Company. v. The Company has not accepted deposits
during the year and hence reporting under clause 3(v) of the Order is not applicable to
the Company.
vi. The maintenance of cost records has not been specified by the Central Government
under section 148(1) of the Companies Act, 2013 for the business activities carried out by
the Company. Hence, reporting under clause 3(vi) of the order is not applicable to the
Company.
vii. In respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues,
with certain delays, the dues including, Income Tax, Sales Tax, Service Tax, Goods and
Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and other material statutory
dues applicable to it with the appropriate authorities except Provident Fund,
Employees state
Insurance, Income Tax (TDS & TCS).
(b) Further, as at 31st March 2022, there are certain dues which have been outstanding
for a period of more than six months from the date they became payable.
| Nature of the statute |
Nature of dues |
Amount |
|
|
( Lakhs) |
| Employees State Insurance Act, 1948 |
Employees State Insurance |
0.92 |
| Employees Provident Fund & |
Provident Fund |
1.25 |
| Miscellaneous Provisions Act, 1952 |
|
|
| Income Tax Act, 1961 |
Income Tax (TDS) |
0.84 |
| Income Tax Act, 1961 |
Income Tax (TCS) |
0.18 |
However, the said outstanding duesshall be dealt with in accordance with the Resolution
Plan under Corporate Insolvency Resolution Process
(c) Details of dues of Income Tax, Sales Tax, Service Tax, Excise Duty and Value Added
Tax which have not been deposited as at March 31, 2022 on account of dispute are given
below:
| Nature of the |
Nature of |
Forum where |
Period to which the |
Amount |
| statute |
dues |
Dispute is Pending |
Amount Relates |
( Lakhs) |
| Central Excise |
Excise |
High Court |
2001 |
44.00 |
| Act, 1944 |
Duty |
|
|
|
The matters stated above are pending for adjudication at relevant authorities.
viii. There were no transactions relating to previously unrecorded income that have
been surrendered or disclosed as income during the year in the tax assessments under the
Income Tax Act, 1961.
ix. (a) The accounts of the Company have been classified as Non-Performing Assets by
the
Banks (SBI and UCO Bank)since 30.06.2017.
(b) As per the information and data made available to us, the Company has not been
declared wilful defaulter by any bank or financial institution or government or any
government authority.
(c) On an overall examination of the financial statements of the Company, the loan
taken by the Company has been utilised for the purposes for which they were obtained.
(d) On an overall examination of the financial statements of the Company, funds raised
on shortterm basis have, prima facie, not been used during the year for long-term
purposes.
(e) On an overall examination of the financial statements of the Company, the Company
has not taken any funds from any entity or person on account of or to meet the obligations
of its subsidiaries.
(f) The Company has not raised any loans during the year by pledging the securities
held in their subsidiaries, joint ventures or associate companies.
x. (a) The Company has not raised moneys by way of initial public offer or further
public offer (including debt instruments) during the year and hence reporting under clause
3(x)(a) of the Order is not applicable.
(b) During the year, the Company has not made any preferential allotment or private
placement of shares or convertible debentures (fully or partly or optionally) and hence
reporting under clause 3(x)(b) of the Order is not applicable.
xi. (a) No fraud by the Company and no material fraud on the Company has been noticed
or reported during the year.
(b) No report under sub-section (12) of section 143 of the Companies Act has been filed
in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014
with the Central Government, during the year and upto the date of this report.
(c) We have taken into consideration the whistle blower complaints received by the
Company during the year (and upto the date of this report), while determining the nature,
timing and extent of our audit procedures.
xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the
Order is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us, the
Company is in compliancewith Section 177 and 188 of the Companies Act, 2013 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.
xiv. a) In our opinion the Company doesnthas an adequate internal audit
system commensurate with thesize and the nature of its business. However, we are informed
that the company has effective internal control system in place.
(b) Since no internal audit was conducted for the year under audit, we
have not considered any internal audit reports in determining the nature, timing and
extent of our audit procedures.
xv. In our opinion, during the year, the Company has not entered into any non-cash
transactions with its Directors or persons connected to its directors and hence provisions
of section 192 of the Companies Act, 2013 are not applicable to the Company.
xvi. (a) In our opinion, the Company is not required to be registered under section
45-IA of the Reserve Bank of India Act, 1934. Hence, reporting under clause 3(xvi)(a), (b)
and (c) of the Order is not applicable to the Company.
(b) In our opinion, there is no core investment company within the Group (as defined in
the Core Investment Companies (Reserve Bank) Directions, 2016) and accordingly reporting
under clause 3(xvi)(d) of the Order is not applicable to the Company.
xvii. The Company has incurred cash losses of Rs. 91.74 Lac and Rs. 87.77 Lac during
the financial year covered by our audit and the immediately preceding financial year
respectively.
xviii. There has been no resignation of the statutory auditors of the Company during
the year.
xix . On the basis of the financial ratios, ageing and expected dates of realisation of
financial assets and payment of financial liabilities, other information accompanying the
financial statements and our knowledge of the Board of Directors and Management plans and
based on our examination of the evidence supporting the assumptions, there are
certain things which have come to our attention like classification of companys loan
accounts as NPA and the initiation of The Corporate Insolvency Resolution Process against
the company U/S 7 of the Insolvency and Bankruptcy Code, 2016 vide Order No. CP(IB) No.
198/Chd/Pb/2021 of the National Company Law Tribunal, Chandigarh Bench dated 21.12.2021 on
the petition of UCO Bank for default in the payment of financial debt.
The above stated facts cause us to believe that material uncertainty exists as on the
date of the audit report indicating that Company is not capable of meeting its liabilities
existing at the date of balance sheet as and when they fall due within a period of one
year from the balance sheet date.
We, however, state that this is not an assurance as to the future viability of the
Company. We further state that our reporting is based on the facts up to the date of the
audit report.
xx. The provisions of Section 135 of Companies Act,2013, are not applicable to the
company, so reporting under clause 3(xx) of the order is not required by the company.
xxi. In our opinion and according to the information and explanations given to us, the
Company is not required to prepare any Consolidated Financial Statements and therefore
reporting under clause 3(xxi) of the Order is not applicable to the Company.
|
For M/S Goel Satish & Co. |
|
Chartered Accountants |
|
Firm Registration No. 010693N |
| Place: Chandigarh |
|
| Date: 21.06.2022 |
|
|
(CA. Satish Goel) |
|
Proprietor |
|
Membership No. 089414 |
|
UDIN: 22089414ALLHNF8329 |
+91-9892691696
