TO THE MEMBERS OF SURANA CORPORATION LIMITED REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Surana Corporation Limited
(‘the Company), which comprise the Balance Sheet as at March 31, 2017, and the
Statement of Profit and Loss and 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
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 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 generally
accepted Accounting principles accepted in India, including the Indian accounting
standards (Ind AS) 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 the assets of the company and
for preventing and detecting the frauds and other irregularities; selection and
application of appropriate accounting policies; making judgment 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 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 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 under the
provisions of the act and the rules made there under.
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 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 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 control relevant to the Companys 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 also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting estimates made by
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 financial statements.
Basis for Qualified Opinion:
a. The Consortium of Lenders has exited from the CDR package during the year and as a
result, repayment of loan should be as per the original agreements entered with such
lender banks. However, in the absence of the relevant details and information with respect
to calculation of interest including penal interest, we are unable to comment upon the
impact of such exit on the carrying amount of interest expense and loan liability for the
financial year ended March 31,2017 and the consequential impact on the financial results.
The Company has not provided for the interest and the penal interest on certain borrowings
for the year ended March 31,2017 which is estimated at Rs. 4,697.57 lakhs.
b. The Company has considered trade receivables outstanding for more than 6 months of
Rs. 24,936.11 lakhs and long term trade receivables of Rs. 35,892.94lakhs, as good and
recoverable. However, we were unable to confirm or verify, by alternative means, balances
of such trade receivables and we are unable to comment on the adjustments that may be
required as at March 31, 2017.
c. Had provision been made with respect to the above interest and receivables in the
books of accounts, the net loss would have been increased by 65,525.64 lakhsand
consequently net- worth would have been reduced by Rs. 65,525.64lakhs.
d. The Company has not complied with the requirements of Ind AS-109 "Financial
Instruments" in terms of measurement of carrying values of the financial instruments
as at March 31, 2017 and the corresponding figures as at March 31, 2016 and the disclosure
requirements of its financial instruments as specified by Ind AS-107 "Financial
Instruments: Disclosures". In the absence of these information, we are unable to
comment on the adjustments that may be required to the carrying values of the financial
instruments.
Opinion:
In our opinion and to the best of our information and according to the explanation
given to us, except for the effects of matters as described in the Basis for Qualified
Opinion paragraph as above, the aforesaid Financial Statements give the information
required by the Actin 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, 2017, their loss, cash flows and statement of changes in equity
for the year ended on that date.
Emphasis of Matter
We draw attention to Note no 39, the Company has incurred net loss of Rs. 31,926.64
lakhs during year ended March 31, 2017 and as on that date, the Companys current
liabilities exceeded its current assets by Rs. 1,19,317.03 lakhs. These conditions along
with other matters as set forth in the aforesaid note indicate the existence of a material
uncertainty that may cast significant doubt about the Companys ability to continue as a
going concern. However, the financial statements have been prepared under the assumption
of going concern, considering the outcome of the consortium meeting dated December 14,
2016 and May 08, 2017, whereby the company has offered One Time Settlement of its
liabilities with the consortium members, which has been considered by them for further
approval. The ability of the company to continue as a going concern is significantly
dependent on the further approval by consortium of lenders on the one time settlement
offered by the company.
Our opinion is not qualified in respect of the above matter.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditors report) Order, 2016 ("The Order")
issued by the Central
govemment of India in terms of subsection 11 of section 143 of the Act, We give in the
"Annexure
A" a statement on the matter specified in paragraphs 3 & 4 of the order.
2. As required by section 143(3) of the Act, we report that:
a. We have sought and except for the effects / possible effects of the matter described
in the Basis for Qualified Opinion paragraph aboveobtained all the information and
explanations which to the best of our knowledge and belief were necessary for the purpose
of our audit of the aforesaid Ind AS financial statements;
b. Except for the effects / possible effects of the matter described in the Basis for
Qualified Opinion paragraph above in our opinion proper books of account as required by
law have been kept by theCompany so far as it appears from our examination of those books;
c. The Balance Sheet, the Statement of Profit and Loss, the Statement of Cash Flows and
Statement of Changes in Equity dealt with by this report are in agreement with the
relevant books of account maintained for the purpose of preparation of the Ind AS
financial statements.
d. Except for the effects / possible effects of the matter described in the Basis for
Qualified Opinionparagraph above, in our opinion, the aforesaid Ind AS financial
statements comply with the accountingstandards specified under Section 133 of the Act,
read with relevant rules issued thereunder.
e. The matters described in the Basis for Qualified Opinion paragraph above, in our
opinion, may havean adverse effect on the functioning of the Company.
f. On the basis of the written representations received from the directors of
theCompany as on 31 March 2017 taken on record by the Board of Directors of the Company,
none of the Directors of the Company incorporated in India are disqualified as on 31 March
2017 from being appointed as a Director of that company in terms of Section 164(2) of the
Act.
g. with respect to the adequacy of the internal financial controls over financial
reporting and the operating effectiveness of such controls, refer to our separate report
in "Annexure A",
h. With respect to the other matters included in the auditors report and to best of
our information and according to the explanation given to us.
1) Except for the effects / possible effects of the matter described in the Basis for
Adverse Opinion paragraph above, the Ind AS financial statements disclose the impact of
pending litigations on the financial position of the Company.
2) Except for the effects / possible effects of the matter described in the Basis for
Adverse Opinion paragraph above provision has been made in the financial statement, as
required under the applicable law or accounting Standards, for material foreseeable
losses, if any, on long term contracts including derivative contracts.
3) There has been no delay in transferring amounts, required to be transferred, to the
investors education and protection fund by the Company.
4) The Company has provided requisite disclosures in the financial statements as to
holdings as well as dealings in Specified Bank Notes during the period from 8th
November, 2016 to 30th December, 2016. However, we are unable to obtain
sufficient and appropriate audit evidence to report on whether the disclosures are in
accordance with books of account maintained by the Company and as produced to us by the
Management - Refer Note 11.
For V D S R & Co,
Chartered Accountants F.R. No 001626S
Venkatesh Kamath .S.V PartnerMembership No : 202626
Place : Chennai.
Date : May 18, 2017
+91-9892691696
