To,
The Members,
Texplast Industries Limited
Report on the Financial Statements:
We have audited the accompanying standalone financial statements of Texplast Industries
Limited (the Company), which comprise the balance sheet as at 31 March 2017, 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 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 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.
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
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 and other applicable authoritative pronouncement issued by the
Institute of Chartered Accountants of India. Those Standards and pronouncement 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
the 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 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, but not for the purpose of expressing an
opinion on whether the Company has in place an adequate internal financial controls system
over financial reporting and the operating effectiveness of such controls. 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
1. Balances of debtors, creditors, secured loans including interest payable thereon and
loans and advances are subject to confirmation.
2. Company has not made Provision for Interest on Working Capital Facility and Term
Loan availed from Banks and Financial Institution pursuant to classification of its
account by the concerned Banks and Financial Institution as Non-performing Assets (NPA).
3. In absence of availability of net realizable value of items of inventories to the
tune of 33.18 Lakh, these have been valued at management estimate instead of lower of cost
and net realizable value. We are relying on value of closing stocks as certified and
provided by the management. The impact of valuation on loss and current assets is not
ascertainable.
4. Excise records are not available for verification due to non-functioning of the
factory because of the strike undertaken by the workers and seizure of the factory by the
bank under the SARFEASI Act 2002. We are unable to comment on excise records and
liability.
5. As the Factory is not functional due to strike and seizer of Factory and Plant by
Bank as the Bank Loan became NPA as on 31.03.2014 w.e.f. 28.01.2014 thereafter the
strength of Employees, labour and Workers has been reduced. As on date the employees of
the company below 10 only hence there is no Long term Employees Benefits provisions made
by the Company. AS 15 Employee Benefits (revised 2005) issued by ICAI.
6. As we are unable to verify/check conditions of Fixed Assets to determine the life of
Plant, Machinery, furniture and Fixture of the Company due to Seizer of possession by bank
as the loans become NPA the Depreciation calculation done as per Income tax Act instead of
Companies Act, 2013.
7. The fact of Banks classifying the company as a NPA and seizure of factory by the
bank for recovery proceedings has raised substantial doubt as to the Companys ability to
continue as going concern and therefore, the Company may not be able to realize its assets
and discharged its liabilities in the normal course of business. The financial statement
does not include any adjustment relating to the recoverability and classification of
recorded assets amount. Further, the Financial statement which indicates that the Company
has accumulated losses and its Net worth has been fully eroded, the Company has incurred
Net Loss of Rs.2.43 Crore during the current financial year (Previous Year Rs.23.35 Crore)
and net cash Loss during the current year of Rs. 2.03Crore (Previous year net Cash Profit
of Rs. 1.28 Crore) also, the Company current liabilities exceeded its current assets as at
the balance sheet date. These conditions, along with other matters set forth in Note No.
28.11 also indicate the existence of a material uncertainty that cast significant doubt
about the Companys ability to continue as a going concern.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us except for the effect of the matter described in Basis of Qualified Opinion,
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 31
March 2017 and its profit and its cash flows for the year ended on that date.
Matter of Emphasis:
We draw your attention to -
1. The company was unable to repay credit facilities availed from Indian Overseas Bank.
Due to the noncompliances of terms & condition and non-payment of amount due all these
loans have been classified as Non-Performing Assets (NPA) by the bank as on 12/05/2014.
The Company had received letter from Indian overseas Bank in the financial year
2015-16, stating the recall of advances & giving notice under subsection (2) of
section 13 of Securitization & Reconstruction of Financial Assets & Enforcement of
security of interest Act, 2002 and calling to pay in full and discharge the liability of
bank amounting to Rs. 32 crore (approximately)(excluding undebited interest).
During the financial year 2015-16, the bank had taken the possession of factory
premises and assets lying with the factory.
Report on Other Legal and Regulatory Requirements
1. 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 matters specified in the paragraph 3 and 4 of
the Order, to the extent applicable.
2. 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 and 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
f. with respect to the adequacy of internal financial controls over financial reporting
of the company and the operating effectiveness of such controls, refer to our separate
report in Annexure B
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.
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. The Company
does not have any derivative contract.
iii. There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in its financial statements as to
dealing in Specified Bank Notes during the period from 8th November 2016 to 30th December
2016 and these are in accordance with the books of accounts maintained by the company.
Refer Note no.28 (12) to the financial statement of the company.
| For P.C. Rathi & Co. |
|
| Chartered Accountants |
|
| Firms Registration No.-111799W |
|
| Sd/- |
Place : Mumbai |
| Prakash Rathi |
Date : 30.05.2017 |
|
| Proprietor |
| Membership No. 045104 |
|
ANNEXURE "A" TO THE AUDITORS REPORT
The Annexure "A" referred to in our Independent Auditors Report to the
members of the Company on the standalone financial statements for the year ended 31 March
2017, we report that:
(i) (a) The Company has not maintained proper records showing full particulars,
including quantitative details and situation of fixed assets, as the physical possession
of fixed assets taken by bank for recovery procedure.
(b) The Company has a regular programme of physical verification of its fixed assets by
which fixed assets are verified in a phased manner over a period of three years except
Assets lying at factory in Wada due to workers strike and seizure of factory by bank.
In accordance with this programme, certain fixed assets were verified during the year
and no material discrepancies were noticed on such verification. In our opinion, this
periodicity of physical verification is reasonable having regard to the size of the
Company and the nature of its assets.
(c) The title deed of immovable property could not be verified as necessary documents
are with Bank.
(ii) (a) According to the information and explanations given to us, the Company
couldnt physically verify stock lying at warehouse of factory due to workers strike and
seizure of factory.
(b) As examined by us procedures of physical verification could not be verified by us
since the Company couldnt physically verify stock lying at warehouse of factory due to
workers strike and seizure of factory by the bank.
(c) We could not verify records of inventory since the Company couldnt physically
verify stock lying at warehouse of factory due to workers strike and seizure of factory by
bank. We have relied on the value of stock based on certificates obtained from the
management.
(iii) (a) The Company has not granted loans to parties covered in the register
maintained under section 189 of the Companies Act, 2013 (the Act). Thus, paragraph 3(b)
and 3 (c) of the Order is not applicable.
(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 Companies Act, 2013
in respect of the loans and investments made, and guarantees and security provided by it.
(v) The Company has not accepted any deposits from the public within the meaning of
Sections 73 to 76 of the Act and the rules framed there under to the extent notified.
(vi) The Company is not covered under sub-section (1) of section 148 of the Companies
Act, in respect of maintenance of cost records.
(vii) (a) According to the information and explanations given to us and on the basis of
our examination of the records , the Company is regular in depositing undisputed statutory
dues including income tax, service tax, cess and other material statutory dues with the
appropriate authorities. As explained to us, the Company did not have any dues on account
of sales tax, wealth tax, duty of customs, value added tax, employees state insurance and
duty of excise.
According to the information and explanations given to us, no undisputed amounts
payable in respect of income tax, service tax, cess and other material statutory dues were
in arrears as at 31 March 2017 for a period of more than six months except following dues
o/s for more than six months as at balance sheet date-
| Statute |
Nature of dues |
Relevant Year |
Amount |
Date of Payment |
| MVAT Act,2005 |
Sales Tax |
2012-13 |
35.68 Lacs |
Not Paid |
| MVAT Act ,2005 |
Sales Tax |
2013-14 |
7.77 Lacs |
Not Paid |
| MVAT Act ,2005 |
Sales Tax |
2014-15 |
2.13 Lacs |
Not Paid |
| M VAT ACT ,2005 |
Sales Tax |
2015-16 |
10.50 Lacs |
Not Paid |
| MVAT ACT ,2005 |
Sales Tax |
2007-08 |
45.03 Lacs |
Not Paid |
| MVAT ACT ,2005 |
Sales Tax |
2008-09 |
138.73 Lacs |
Not Paid |
| Central Sales Tax Act1956 |
Sales Tax |
2009-10 |
22.03 Lacs |
Not Paid |
| Central Sales Tax Act 1956 |
Sales Tax |
2007-08 |
03.56 Lacs |
Not Paid |
| Central Sales Tax Act 1956 |
Sales Tax |
2008-09 |
16.77 Lacs |
Not Paid |
| The Maharashtra State Tax On Professions, Trades, Callings And Employments Acts, 1975. |
Profession Tax |
2013-14 |
0.27 Lacs |
Not Paid |
(b) According to the information and explanations given to us, there are no material
dues Income Tax or Sales Tax or wealth tax or service tax or duty of customs or duty of
excise or value added tax or cess which have not been deposited with the appropriate
authorities on account of any dispute except following dues o/ s for more than six months
as at balance sheet date-.
| Statute |
No of dues |
Relevant Year |
Nature Amount |
Forum where dispute is pending |
| Income Tax Act |
Income Tax |
Ass. Year 2012-13 |
51.41 Lacs |
DCIT, CIRCLE-3, THANE |
| Income Tax Act |
Income Tax |
Ass. Year 2013-14 |
78.06 Lacs |
DCIT, CIRCLE-3, THANE |
| MVAT ACT ,2005 |
Sales Tax |
2007-08 |
45.03 Lacs |
JC Appeal Bhayander |
| Central Sales Tax Act 1956 |
Sales Tax |
2007-08 |
03.56 Lacs |
JC Appeal Bhayander |
| MVAT ACT ,2005 |
Sales Tax |
2008-09 |
138.73 Lacs |
Assessment order Passed set- aside by the JC Appeal Bhyander |
| Central Sales Tax Act 1956 |
Sales Tax |
2008-09 |
16.77 Lacs |
Assessment order Passed set- aside by the JC Appeal Bhyander |
(c) According to the information and explanations given to us there is no amounts due
which were required to be transferred to the investor education and protection fund during
the year.
(viii) Based on our audit procedures and according to the information and explanations
given by the management, In our opinion and information given to us the Company has
defaulted and irregular in repayment of dues to financial institutions and Banks. The
defaults existing as at balance sheet date are as below- 1. Cash Credit from Indian
Overseas Bank -
| Limit Sanctio ned |
Drawing power |
Outstanding as on 31/03/2017 |
Overdrawn as on 31/03/2016 |
| 10 Crore |
NIL |
19.67 Crore |
19.67 Crore |
2. Packing credit overdue from Indian Overseas Bank of Rs 8.18 Crore due to
non-submission of export bills.
3. Recalled term loan from Indian Overseas Bank -
| Particulars |
Amount |
| Term Loan In INR (From Indian Overseas Bank) |
|
| Term Loan-1 |
15,98,711 |
| Term Loan-2 |
74,93,249 |
| Term Loan in Foreign Currency (From Indian Overseas Bank) |
|
| FCTL-981300001 |
1,01,00,198 |
| FCTL-981300002 |
58,89,257 |
| FCTL-981300003 |
1,19,70,776 |
| Total |
3,70,52,191 |
4. Recalled term loan from other Financial Institution -
| Particulars |
Amount |
| S E Investments Ltd |
56,45,538 |
| Finquest Financial Solutions P. Ltd. |
1,01,87,260 |
| Total |
1,75,90,236 |
(ix) The Company has not raised any moneys by way of initial public offer, further
public offer (including debt instruments) and term loans. Accordingly, the provisions of
Clause 3(ix) of the Order are not applicable to the Company.
(x) During the course of our examination of the books and records of the Company,
carried out in accordance with the generally accepted auditing practices in India, and
according to the information and explanations given to us, we have neither come across any
instance of material fraud by the Company or on the Company by its officers or employees,
noticed or reported during the year, nor have we been informed of any such case by the
Management.
(xi) According to the information and explanations given to us and based on our
examination of records of the company. The Company has not paid any amount for managerial
remuneration which is in excess of amount as mandated under section 197read with schedule
V to the Act.
(xii) As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not
applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the
Company.
(xiii) According to the information and explanation given to us and based on our
examination of records of the company. Transactions with related parties are in compliance
with section 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) The Company has not made any preferential allotment or private placement of
shares or fully or partly convertible debentures during the year under review.
Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the
Company.
(xv) According to the information and explanation given to us and based on our
examination of records of the company. The Company has not entered into any non-cash
transactions with its directors or persons connected with him. Accordingly, the provisions
of Clause 3(xv) of the Order are not applicable to the Company.
(xvi) In our opinion The Company is not required to be registered under Section 45-IA
of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of
the Order are not applicable to the Company.
| For P.C. Rathi & Co. |
|
| Chartered Accountants |
|
| Firms Registration No.-111799W |
|
| Sd/- |
|
| Prakash Rathi |
Place : Mumbai |
| Proprietor |
Date : 30.05.2017 |
| Membership No. 045104 |
|
ANNEXURE-B TO INDEPENDENT AUDITORS REPORT
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 internal financial controls over financial reporting of Texplast
Industries Ltd. ("The Company") as of March 31, 2017 in conjunction with our
audit of the financial statements of the Company for the year then ended on the date.
Managements Responsibilities for the Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal
control over financial reporting criteria established by the Company considering the
essential components of internal control stated in Guidance Note on Audit of Internal
Financial Controls over Financial Reporting issued by the Institute of Chartered
Accountants of India (ICAI). The responsibilities includes design, implementation and
maintenance of adequate internal financial controls that were operating effectively for
ensuring the orderly and efficient conduct of business, including adherence to Companys
policies, the safeguarding of the 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 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 deemed to be prescribed under Section
143(10) of the Act 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 ICAI.
Those Standards and Guidance note require that we comply with ethical requirements and
plan and perform 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 procedure to obtain audit evidence about the adequacy of
the internal financial control 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 controls based on the assessed risk. The
procedures selected on the auditors 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 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 a reasonable assurance regarding the reliability of financial reporting and
preparation of financial statements for external purpose in accordance with generally
accepted accounting principles. A Companys internal financial control over financial
reporting includes those policies and procedure 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 the transactions are recorded as necessary to
permit preparation of financial statements in accordance with the generally accepted
accounting principles, and the receipts and expenditures of the Company are being made
only in accordance with authorization of management and the 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 overrides of
controls, material misstatements due to error or fraud may occur and not to be detected.
Also, projections of any evaluation of the internal financial control 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 aspects, an adequate internal
financial control system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at March 31, 2017, based on the
internal control over financial reporting criteria established by the Company considering
the essential components of internal control stated in Guidance Note on Audit of Internal
Financial Controls over Financial Reporting issued by the Institute of Chartered
Accountants of India.
| For P.C. Rathi & Co. |
|
| Chartered Accountants |
|
| Firms Registration No.-111799W |
|
| Sd/- |
|
| Prakash Rathi |
Place : Mumbai |
| Proprietor |
Date : 30.05.2017 |
| Membership No. 045104 |
|
+91-9892691696
