indus fila ltd Auditors report


TO THE MEMBERS OF INDUS FILA LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of M/s Indus Fila Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss,the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

The Company’s 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 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.

Auditor’s 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 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 auditor’s 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 Company’s 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 Company’s 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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 31st March, 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following notes

a) Note (1) of the Notes to financial statements. The Company’s operating results has been materially affected due to various factors as at 31st March 2016, the Company’s accumulated losses has fully eroded the net worth of the company. The appropriateness of the going concern assumption is dependent on the company’s ability to establish consistent profitable operations as well as raising adequate finance to meet its short term and long term obligations. The management has taken various measures to continue the operations for the foreseeable future and believes that the going concern assumption 42 of 74 is appropriate and no adjustments need to be made in the financial statements for the year ended 31st March 2016 and our opinion is not qualified in respect of this matter.

b) Note 25(o) of the financial statement regarding impairment in accordance with the requirement of Accounting Standard-28-mpairment of Assets" in respect of all its units that are not in operation and the consequential impact, if any, on the statement of profit and loss for the year 2015-16 and our opinion is not qualified in respect of this matter.

c) Note 25(p) of the financial statements regarding Bank Reconciliation Statements due to non-availability of bank statement or bank confirmation and the consequential impact, if any, in the financial statements for the year 2015-16 is not quantifiable and our opinion is not qualified in respect of this matter.

d) Note 25(q) of the financial statements regarding computation of interest on the term loans and cash credit accounts based on the rates of terms of sanction due to non-availability of loan statement or confirmation and consequential impact, if any, on the statement of profit and loss and the financial statements for the year 2015-16 is not quantifiable and our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s 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 Aa statement on the matters specified in paragraph 3 and 4 of the said 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 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 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 Auditor’s 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 the financial statements- Refer Note 25(d)to thestandalonefinancial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Companyexcept for Rs.24339/- which is pending to be transferred.

For Suri & Co.
Chartered Accountants
Firm Registration No. 004283S
Sd/-
G. Rangarajan
Place : Bangalore Partner
Date : 30/05/2016 Membership No.024107

Annexure A to the Auditors’ report

(Referred to in our report of even date)

The Annexure referred to in Independent Auditors’ Report to the members of the company on the standalone financial statements for the year ended 31st March, 2016, we report that:

i) a) The Company is maintaining proper records showing full particulars,including quantitative details and situation of fixed assets. b) The company has regular programme for verification of fixed assets to cover all assets at reasonable intervals, which in our opinion, is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such verification. c) In our opinion and according to the information and explanations given to us, the title deeds of immovable property are held in the name of company.

ii) According to the information and explanation provided to us, the company does not hold any physical inventories. Thus, paragraph 3(ii) of the Order is not applicable to the company.

iii) The Company 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 Companies Act, 2013. Thus, paragraph 3(iii) (a) and (b) of the Order is not applicable.

iv) In our opinion and according to the information and explanation given to us, the provision of section 185 and 186 of the Companies Act,2013 in respect of loans and investments have been complied with.

v) The Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed thereunder.

vi) The Central Government has not prescribed the maintenance of cost records under subsection (1) of Section 148 of the Companies Act, 2013. Thus paragraph 3(vi) of the Order is not applicable to the company.

vii) a) The Company is not regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities . There are no undisputed statutory dues payable in respect of above which were outstanding as at 31st March 2016 for a period of more than six months from the date they became payable except for the following.

Nature of Dues Amount outstanding Period of Outstanding
Dividend Distribution Tax Rs 16,46,404/- A.Y 2008-09
Provident Fund Contribution Rs. 7,19,169/- F.Y 2011-12
Provident Fund Contribution Rs. 24,98,449/- F.Y 2012-13
Provident Fund Contribution Rs. 14,26,911/- F.Y 2013-14
Employees State Insurance Corporation Rs. 43,54,947/- F.Y 2012-13
Employees State Insurance Corporation Rs. 1,03,47,317/- F.Y 2013-14
Tax Deducted at Source Rs.52,11,725/- A.Y 2011-12
Tax Deducted at Source Rs. 13,70,438/- A.Y 2012-13
Tax Deducted at Source Rs. 33,31,127/- A.Y 2013-14
Tax Deducted at Source Rs. 10,85,097/- A.Y 2014-15
Tax Deducted at Source Rs. 40,843/- A.Y 2015-16
Tax Deducted at Source Rs. 72,240/- A.Y 2016-17
Service Tax on reverse Charge Rs. 32,15,768/- Before FY 2014-15
Service Tax on reverse Charge Rs. 57,934/- FY 2015-16
Tax collected at source Rs. 11,290/- Before FY 2013-14
Profession Tax Rs. 8,74,200/- Before FY 2013-14

b) According to the information and explanations furnished to us, the details of disputed statutory dues are as under:

Name of the Statute Nature of dues Amount disputed (Rs.) Period to which the amount relates Forum where dispute is pending
Income Tax Act, 1961 Income Tax Rs.1670 Lakhs FY 2009-10 Commissioner of Income Tax (Appeals)
Income Tax Act, 1961 Income Tax Rs.503.5 Lakhs FY 2006-07 Commissioner of Income Tax (Appeals)
Income Tax Act, 1961 Income Tax Rs.705.3 Lakhs FY 2007-08 Commissioner of Income Tax (Appeals)
Income Tax Act, 1961 Income Tax Rs.1769.47 Lakhs FY 2011-12 Commissioner of Income Tax (Appeals)
Karnataka Tax on Entry of Goods Act Entry Tax, interest and penalty Rs.0.47 Lakhs FY 2009-10 Joint Commissioner of Commercial Tax
Karnataka Value Added Tax Act 2003 KVAT, interest and penalty Rs.45.21 Lakhs FY 2009-10 Joint Commissioner of Commercial Tax
CST Act 1956 CST, interest and penalty Rs.1.02 Lakhs FY 2009-10 Joint Commissioner of Commercial Tax
CST Act 1956 CST, interest and penalty Rs. 1.01 Lakhs FY 2006-07 Joint Commissioner of Commercial Tax
Karnataka Tax on Entry of Goods Act Entry Tax, Interest and penalty Rs.11.82 Lakhs FY 2006-07 Joint Commissioner of Commercial Tax
Karnataka Tax on Entry of Goods Act Entry Tax, Interest and penalty Rs.200.55 Lakhs FY 2007-08 Joint Commissioner of Commercial Tax

viii) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks. The details of default are given below.The Company did not have any outstanding debentures during the year.

Particulars Amount of default as at the balance sheet date Period of default
(i) Name of the Lenders Rs.415.80 crores (including interest) From FY 2010-11

ix) The Company did not raise any moneyby way of Initial Public Offer or further public offer (including debt instruments) or term loans during the year.

x) During the course of examination of the books and records and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

xi) According to the information and explanations given to us and based on our examination of the records of the company, the Company has not paid managerial remuneration during the year. Thus paragraph 3(xi) of the Order is not applicable to the company.

xii) The Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the order is not applicable.

xiii)According to the information and explanations given to us and based on our examination of the records of the company, transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details of such transactions have been disclosed in the Financial Statements as required by the applicable accounting standards.

xiv)According to the information and explanations given to us and based on our examination of the records of the company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. xv) According to the information and explanations given to us and based on our examination of the records of the company, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the order is not applicable.

xvi)The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Suri & Co.
Chartered Accountants
Firm Registration No. 004283S
Sd/-
(G.Rangarajan)
Place : Bangalore Partner
Date : 30/05/2016 Membership No.024107

Annexure B to the Auditors’ report

(Referred to in our report of even date)

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 the internal financial controls over financial reporting of Indus Fila Limited ("the Company") as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s 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 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, including adherence to company’s 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 Companies Act, 2013.

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 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 Companies Act, 2013, 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 Institute of Chartered Accountants of India. 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 were 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 auditor’s 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 Company’s 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, 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, 2016, 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 Suri & Co.
Chartered Accountants
Firm Registration No. 004283S
Sd/-
(G. Rangarajan)
Place : Bangalore Partner
Date : 30/05/2016 Membership No.024107