varun polymol organics ltd Auditors report

To

The Members of Value Industries Limited

Report on the Audit of the Financial Statements

Disclaimer of Opinion

We were engaged to audit the financial statements of Value Industries Limited (the Company), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the financial statements).

We do not express an opinion on the accompanying financial statements of the entity. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for Disclaimer of Opinion

a) We are unable to comment on necessary adjustments / disclosures in these financial statements in relation to following items in view of non-availability of necessary information / documentations / satisfactory explanations relevant to the audit for the current year :-

(i) As mentioned in Note No. 48 to the financial statements, the Company has carrying value of investments of Rs 60.57 million, has given advances of Rs 33.87 million and has trade receivables of Rs 1,719.93 million aggregating to Rs 1,814.37 Million in group/affiliate companies, which have been also admitted to Corporate Insolvency Resolution Process (CIRP).

In view of the referral of these group/affiliate companies to National Company Law Tribunal and consequent admission thereof under the Insolvency and Bankruptcy Code, 2016, we are unable to express an opinion on the extent of realisability of aforesaid investments, advances and trade receivables from these group / affiliate companies till the completion of resolution process of these entities. The consequential effect of the above, on the financial statements for the year ended March 31,2019 is not ascertainable.

(ii) As mentioned in Note No 49 to the financial statements, non assessment of impairment of fixed assets, non-ascertainment of net realisable value of inventory, and non-ascertainment of the realisable value of investments; though as explained to us, valuers have been appointed for valuation of assets including inventory and investments.

(iii) As mentioned in Note No. 50 to the financial statements, the balance confirmations have not been received in respect of certain secured and unsecured loans, balances with banks, trade receivables, trade and other payables and loans and advances. The Company continues the process of obtaining confirmations and reconciliation of the balances of trade receivables, trade and other payables and loans and advances. The impact of the same is not ascertainable at present.

(iv) As mentioned in Note No. 51 to the financial statements, pursuant to commencement of Corporate Insolvency Resolution Process (CIRP) of the Company under Insolvency and Bankruptcy Code, 2016, there are various claims submitted by the financial creditors, operational creditors, and employees to the RP. Such claims can be submitted to the RP till the approval of the resolution plan by CoC. The overall obligations and liabilities including interest on loans and the principal amount of loans shall be determined during the CIRP. Pending final outcome of the CIRP, no accounting impact in the books of account has been made in respect of excess, short, or non-receipts of claims for operational and financial creditors.

b) Material uncertainty relating to Going Concern:

As mentioned in Note No. 47 to the financial statements, the Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, and there is considerable decline in level of operations of the Company and net worth of the Company as on the reporting date is negative and it continues to incur losses. The Company is a co-obligor and has received demand notices in respect of borrowings of other obligors/ borrowers. Since Corporate Insolvency Resolution Process (CIRP) is currently in progress, as per the Code, it is required that the Company be managed as going concern during CIRP. Accordingly, the financial statements are continued to be prepared on going concern basis. However, there exists a material uncertainty about the ability of the Company to continue as a Going Concern. The same is dependent upon the resolution plan to be approved by NCLT. The appropriateness of the preparation of financial statements on going concern basis is critically dependent upon CIRP as specified in the Code. Necessary adjustments required on the carrying amount of assets and liabilities are not ascertainable at this stage.

c) The Company has not recognised the impact and hasnt complied with the disclosure requirements of Indian Accounting Standards (Ind-AS) including Ind AS 109- Financial Instruments, Ind AS 36 - Impairment of Assets, Ind AS - 2 Inventories, Ind AS - 16 Property, Plant and Equipment.

d) As mentioned in Note No 55 to the financial statements, the Company has not submitted its financial results for the quarter/ period ended March 31, 2018, and subsequent periods till date as required under regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Consequently, we are unable to comment on the monetary impact if any of these non-compliances on the financial statements in additional to the fact that the equity shares of the Company are suspended from trading on the BSE Limited and National Stock Exchange of India Limited.

In view of our observations at para (a) to (d) above, we are unable to determine the adjustments that are necessary in respect of Companys assets, liabilities as on Balance sheet date, income and expenses for the year, the elements making up the statement of changes in equity, cash flow statement and related presentation and disclosures in financial statements.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

The Company has been under the Corporate Insolvency Resolution Process (‘CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (‘the Code) vide order dated September 5, 2018 passed by the National Company Law Tribunal (‘NCLT). The powers of the Board of Directors stand suspended as per Section 17 of the Code and such powers are being exercised by the Resolution Professional (RP) appointed by the NCLT by the said order under the provisions of the Code. As per Section 20 of the Code, the management and operations of the Company were being managed by Interim Resolution Professional / Resolution Professional Mr. Dushyant C. Dave.

Subsequently, NCLT Principal Bench on October 24, 2018 directed to transfer all insolvency petitions related to certain Videocon group/ affiliate entities to one bench at NCLT, Mumbai and left open the matter of substantive consolidation to be decided by NCLT, Mumbai bench. Further, State Bank of India had filed a petition at NCLT, Mumbai bench for substantive consolidation of CIRP of group/affiliate entities.

The NCLT, Mumbai Bench has, vide order dated August 8, 2019, allowed State Bank of Indias application by, inter alia, (i) allowing the consolidation of the CIRP of the Company with that of 12 other Videocon group companies; and (ii) appointing Mr. Mahender Khandelwal as the insolvency resolution professional for the Videocon Group Entities.

Subsequently, the first meeting of the Consolidated Committee of Creditors (CoC) of the Company was held on September 16, 2019 and approved the name of Mr. Abhijit Guhathakurta as the Resolution Professional for the Videocon Group Entities, including the Company in place of Mr. Mahender Khandelwal.

The NCLT vide Order dated September 25, 2019 has appointed Mr. Abhijit Guhathakurta as Resolution Professional (RP) for the consolidated CIRP cases of the 13 Videocon group entities including the Company, which was published on September 27, 2019 and has been directed to take over the process of insolvency. Further, as per the order dated August 8, 2019, the CIRP is to be completed within 180 days from the date of the said order i.e. August 8, 2019. Therefore, the management and operations of the Company and other 12 consolidated entities, namely, Videocon Industries Limited, Videocon Telecommunications Limited, Evans Fraser & Co. (India) Limited, Millennium Appliances India Limited, Applicomp (India) Limited, Electroworld Digital Solutions Limited, Techno Kart India Limited, Century Appliances Limited, Techno Electronics Limited, PE Electronics Limited, CE India Limited and Sky Appliances Limited are being managed by Resolution Professional Mr. Abhijit Guhathakurta.

The Companys management is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the state of affairs, profit and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. 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.

In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The management is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

Our responsibility is to conduct an audit of the entitys financial statements in accordance with Standards on Auditing and to issue an auditors report. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

We are independent of the entity in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the entity.

Report on Other Legal and Regulatory Requirements

A. As required by the Companies (Auditors Report) Order, 2016 (the Order), issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we give in the Annexure ‘A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

B. As required by Section 143(3) of the Act, we report that:

a) As described in the Basis for Disclaimer of Opinion paragraph, we sought but were unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether 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) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Balance Sheet, Statement of Profit and Loss, Statement of Changes in Equity and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

e) The matter described in the Basis for Disclaimer of Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the board of directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;

g) 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 ‘B, and

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, in our opinion and to the best of our information and according to the explanations given to us:

i. Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Company has disclosed the complete impact of pending litigations on its financial position in note no. 36, 37, 38 and 39 to the financial statements;

ii. As per the information and explanation given to us, the Company did not have any long term contracts including derivatives contracts for which there were any material foreseeable losses. (refer note no.52)

iii. The company has defaulted in transferring amounts of Rs 2.07 Million, required to be transferred to the Investor Education and Protection Fund during the year ended March 31,2019. (refer note no.53)

C. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of Section 197(16) of the Act, as amended:

In our opinion and according to the information and explanations given to us, the Company has not paid any remuneration to its directors during the year. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

	For S Z DESHMUKH & CO.
	Chartered Accountants
	(Firm Registration No. 102380W)
	D. U. KADAM
	Partner
Place: Mumbai	Membership No. 125886
Date: January 03, 2020	UDIN : 20125886AAAAAB9610

ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT

The Annexure ‘A referred to in Independent Auditors Report to the Members of the Value Industries Limited (‘the Company) on the financial statements for the year ended March 31,2019, we report the following:

(i) In respect of fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) We have not been given information regarding physical verification of fixed assets carried out if any, during the year by the Company. Hence, we are unable to comment as to whether there is any material discrepancies on physical verification. In our opinion, the frequency of verification is not satisfactory, having regard to the size of the Company and nature of its business.

(c) According to the information and explanation given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) (a) We have not been given the details of physical verification of the inventories carried out during the period by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is not reasonable.

(b) As per information and explanation given to us, the Company has appointed Valuers for verification of inventory and its valuation. However, no report of valuer has been made available to us. Hence, we are unable to comment as to whether there is any material discrepancy noticed on physical verification and the same has been adjusted in the books of accounts.

(iii) As per the information and explanation given to us, the Company during the year has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanation given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, in respect of loans, investments, guarantees and security.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the period. Therefore, the provisions of clause (v) of the Order is not applicable.

(vi) According to the information and explanations given to us, in our opinion, the Company has, prima facie, made and maintained the prescribed cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under section 148(1) of the Companies Act, 2013. We have however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, goods and service tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues with appropriate authorities except that, undisputed arrears of following statutory dues were outstanding as on March 31, 2019 for a period of more than six months from the date they became payable and not paid till date (including dues in respect of pre-CIRP period):

Nature of the Dues	Rs in Million
1. Central Sales Tax	0.01
2. Value Added Tax	82.52
3. Entry Tax	3.73
4. Profession Tax	0.38
5. Provident Fund	6.41
6. ESIC Fund	2.69
7. Income Tax (TDS)	0.32

(b) Except for the effects of the matters described in the basis for disclaimer of opinion paragraph in main report and according to the information and explanation given to us and on the basis of our examination of the records of the Company, details of dues of income tax, goods and service tax, sales tax, service tax, custom duty, excise duty, value added tax, cess which have not been deposited as on March 31, 2019 on account of disputes are given below:

Name of Statute	Nature of the Dues	Rs in Million	Forum where dispute is pending
1. Customs Act, 1962	Custom Duty and Penalties	4.37	Commissioner
		5.46	Asst. Commissioner
2. Central Excise Act, 1944	Excise Duty and Penalties	19.73	CESTAT
		187.72	Commissioner
			(Appeals)
		2.81	Addl. Commissioner
		8.82	Deputy Commissioner
		0.49	Assistant Commissioner
3. Sales Tax Acts of various States	Sales Tax	3.57	Assistant Commissioner
		1.24	Deputy Commissioner
		0.46	Additional Commissioner
		48.17	Joint Commissioner
		927.44	Commissioner
4. Income Tax Act, 1961	Income Tax	17.60	CIT (Appeals)

(viii) According to the information and explanation given to us and on the basis of our examination of the records of the Company, we observed that, the Company has defaulted in repayment of interest and principal amount of all loans to financial institutions and banks. The default runs into more than 365 days.

The Company has not borrowed from government and has not issued any debentures.

(ix) According to the information and explanations given to us, the Company has not raised money by way of initial public offer or further public offer (including debt instruments) or term loans during the year.

(x) According to the information and explanations given to us, no material fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the period.

(xi) The Company has not paid or provided the managerial remuneration to any of its Director.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.

(xiii) Except for the effects of the matters described in the basis for disclaimer of opinion paragraph in main report and according to the information and explanation given to us and on the basis of our examination of the records of the Company, we observed that, transactions with the related parties are in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the financial statements, etc., as required by the applicable accounting standards.

(xiv) According to the information and explanation given to us and on the basis of our examination of the records of the Company, we observed that, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the period.

(xv) Except for the effects of the matters described in the basis for disclaimer of opinion paragraph in main report and according to the information and explanation given to us and on the basis of our examination of the records of the Company, we observed that, the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.

(xvi) In our opinion, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Therefore, the Clause (xvi) of paragraph 3 of the Order is not applicable to the Company.

	For S Z DESHMUKH & CO.
	Chartered Accountants
	(Firm Registration No. 102380W)
	D. U. KADAM
	Partner
Place: Mumbai	Membership No. 125886
Date: January 03, 2020	UDIN : 20125886AAAAAB9610

ANNEXURE ‘B TO THE INDEPENDENT AUDITORS REPORT

Report on the Internal Financial Controls Over under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act)

We were engaged to audit the internal financial controls over financial reporting of Value Industries Limited (‘the Company) as of March 31, 2019 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management 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 (the Guidance Note) issued by the Institute of Chartered Accountants of India (ICAI). 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 Companys 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 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 Guidance Note and the Standards on Auditing 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 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 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 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.

Basis for Adverse opinion

As described in basis for disclaimer opinion paragraph of our main report, the Company has not established adequate internal financial controls with respect to matters stated therein and that whatever financial controls have been established were not operating effectively. While reference may be made to the aforesaid Paragraph, the following significant aspects of material weaknesses in internal control system are particularly noteworthy:

(a) The confirmations and reconciliation of balances of certain secured and unsecured loans, balances with banks, trade receivables, trade and other payables and loans and advances are not being taken and reconciliations are pending. (Refer Note No. 50).

(b) The Company had not made any assessment of impairment of fixed assets, loans and advances and other assets as at the balance sheet date.

(c) Non-compliance of the requirements of Companies Act, 2013 and Security and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015 with regard to preparation of periodical Financial results from quarter ended March 31,2018 till date.

(d) Statutory dues (Goods and Service Tax / Value Added Tax / Tax Deducted at Source) accounts are in the process of reconciliation and there are delays in filing of certain statutory returns with the respective authorities.

A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys financial statements will not be prevented or detected on a timely basis.

Adverse opinion

Because of the matters described in the basis of adverse opinion paragraph and the matters described in the basis for disclaimer of opinion paragraph of main report and in view of possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, in our opinion the Company has not maintained adequate internal financial controls over financial reporting were not operating effectively as of March 31,2019, 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.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31,2019 financial statements of the Company, and these material weaknesses have inter-alia affected our opinion on the financial statements of the Company and we have issued a disclaimer of opinion on the financial statements.

	For S Z DESHMUKH & CO.
	Chartered Accountants
	(Firm Registration No. 102380W)
	D. U. KADAM
	Partner
Place: Mumbai	Membership No. 125886
Date: January 03, 2020	UDIN : 20125886AAAAAB9610