Coventry Coil O Matic (Haryana) Ltd Auditors Report.
To the Members of COVENTRY COIL-O-MATIC (HARYANA) LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of COVENTRY COIL-O-MATIC (HARYANA) LIMITED ("the Company"), which comprise the Balance Sheet as at 31s1 March, 2017, and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Managements Responsibility forthe Financial Statements
The Companys Board of Directors is responsible forthe 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 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 (as amended). 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.
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 thereunder. 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 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. 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 financial statements.
Basis for Qualified Opinion
1. Note No. (xx) of 20(B) of other notes to financial statement regarding Going Cqncern Assumption may no longer be appropriate - As the Company has incurred significant operating losses, negative operating cash flows, adjudication of legal process against the company for loan liability and negative net worth indicating that going concern assumption is no longer be appropriate. Consequently, adjustment for amount of assets and classification of liabilities required to be recorded has not been carried.
2. 2.1 The company has not made provisions of Interest & Other Charges on Secured Loans taken from
Financial Institutions/ Banks Rs. 7,05,33,652 as per interim order of the divisional bench of Punjab and Haryana high court, Chandigarh, as stated in Note No. - (viii) of Other notes 20(B).
2.2 Note No. 20(B) (viii) para (j) of other notes to financial statements describes that company has not made provision calculated on the IFCI debts confirmed by the order dated 18-01-2016 in DRT-I, New
Delhi by AARCL for the recovery of Rs. 84,49,38,818 together with simple interest @ 13.50% p.a. from 14-05-2007 which amount to Rs. 197,27,93,246.
2.3 Had the Provision been made, the Loss up to the year after tax Rs. 1,40,48,105/-wou!dhaveresulted in loss of Rs. 2,01,80,15,347/-, Reserve & Surplus Deficit (Balance of Statement of Profit and Loss) wouldhavebeenRs.2,12,26,85,465/-insteadofRs.11,87,18,223/-
3. The company had to give physical possession of a part of land comprising of approx. 10 acres as stated in Note No. 7 (b) whose approx, cost appearing in books is Rs. 12.02 Lakhs, to Alchemist Asset Reconstruction Company Ltd., assignees of IDBI & IFCI (Financial Institution) on 8th March 2013 as per the direction of Honourable Supreme Court who re-affirmed the interim orders of Honourable Punjab & Haryana High Court, Chandigarh of 9th August 2011. As informed to us, registry and other documents relating to sale of the land to third party is not available with the company, therefore necessary accounting entries could not be made in view of the matter stated above, we are unable to form any opinion relating to state of affairs, profit&loss etc. in regards to the land.
In our opinion and to the best of our information and according to the explanations given to us, for the effects/ possible effects of the matter described in the basis for qualified opinion paragraph, the aforesaid financial statements give the information required by the Act in the manner so required but does not 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 st March, 2017, and its Loss and its cash flows for the year ended on that date
Emphasis of Matter
We draw attention to:
a) Note No. 20 (B) para (xv) (ii) to financial statement, which describes contingent liability not provided for claims under adjudication
in DRT-I, New Delhi by AARCL for recovery of the dues calculated bn the IDCI Debts Rs. 93,15,19,000
(The Company has also filed counter claims of more than Rs.500 Crores on both KMBL and AARCL.)
b) Note No. 20 (B) para (iii) to financial statement, which describes Account Reconciliation/Confirmation in respect of certain accounts of Debtors, have not been received and they are subject to confirmations and reconciliation. The management is of the opinion that adjustment, if any, arising out of such reconciliation would not have material effect on the financial statement of current year.
c) Note No. 20 (B) para (iv) to financial statement, which describes Account Reconciliation/Confirmation in respect of certain accounts of Vendors have not been received and they are subject to confirmations and reconciliation. The management is of the opinion that adjustment, if any, arising out of such reconciliation would not have material effect on the financial statement of current year.
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 paragraphs 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 ancfbeliefwere necessary forthepurposesofouraudit.
b. for the effects/ possible effects of the matter described in the basis for qualified opinion paragraph in our opinion, in our opinion, proper books of account as required by law have not 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. for the effects/ possible effects of the matter described in the basis for qualified opinion paragraph in our opinion, the aforesaid financial statements does not comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended).
e. On the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 3T March, 2017 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 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, 2017, 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 - Refer Note 20 (B) (viii) and (xv) to the Financial Statements;
ii. The Company did not have any material foreseeable losses on long term contracts including derivative contracts;
iii. There were no amounts which were required to be transferred to the Investor Education & Protection Fund by the company.
iv. The Company has provided requisite disclosures in Note No. Note 20 (B) (xxi) to these financial statements as to holding of Specified Bank Notes on November 8,2016 and December 30,2016 as well as dealing in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the book of accounts maintained by the company as produced to us.
|For SINGHI & CO.|
|Firm Registration No. 302049E|
|Date: 30.05.2017||Membership No. 022973|