To
The Members of
Khaitan Electricals Limited
Report on Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Khaitan Electricals Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Changes in Equity, the Statement of Profit and Loss, the Cash Flow for the accounting year then ended, and a summary of the significant policies and other explanatory information.
Managements responsibility for the Ind AS 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 financialstatements that give a true and fair view of the financialposition, financial performance 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, 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 Ind AS 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 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 Ind AS financialstatements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal financialcontrol relevant to the Companys preparation of the financialstatements 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 Ind AS financial statements. We believe that the audit evidencewehaveobtainedissufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Basis for Qualified Opinion:
i. The accounts have been prepared on going concern basis although the net worth of the Company has been fully eroded (Refer Note No. 42).
ii. The balance due to / from creditors, parties to whom advances have been given and certain debtors are subject to confirmation (Refer Note No. 34).
iii. The company has not provided for Bank Interest from the month of July 2017, since the same has been declared NPA by the banks. Had this interest been provided then there would have been an increase in the loss amounting to Rs. 4,041.50 lakhs (Refer Note No. 30).
iv. The company has given Loan having closing balance of Rs. 140.55 lakhs to a related Party on which interest amounting to Rs.16.84 lakhs has not been provided. Had this interest been provided then there would have been a decrease in the loss amounting to Rs.16.84 lakhs (Refer Note No. 37).
Qualified Opinion:
In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the aforesaid Ind AS financialstatements 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, 2018 and its loss and its cash flows for the year ended on that date.
Other Emphasis Matters:
The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 1, 2016 prepared in accordance with Ind AS, included in these Ind AS financial statements, have been audited by the predecessor joint auditors who had audited the financial reporting of the Company and statements for the relevant periods. The report of the predecessor auditors on the comparative financial information and the opening balance sheet dated June 9, 2017 expressed a modified opinion.
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 mattersspecified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, we report that:
i. Except for the matter described in para of Basis for Qualified Opinion, we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
ii. 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.
iii. 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.
iv. Except for the possible effects of the matter described in para on Basis for Qualified Opinion, the aforesaid Ind AS financial Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
v. On the basis of the written representations received from the directors as at 31st March, 2018 and taken on record by the Board of Directors, none of the directors is disqualified as at 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.
vi. With respect to the adequacy of the internal financial controls over financial the operating effectiveness of such controls, refer to our separate Report in "Annexure B". vii. 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:
a. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements.
b. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.
c. There is no amount required to be transferred to the Investor Education and Protection Fund by the Company.
For Bidasaria & Associates
Chartered Accountants
F.R.No.315101E
( CA. Ankit Bidasaria)
Partner
Membership No. 307256
Place of Signature : Kolkata statementscomplywith the Accounting
Date: 30th May, 2018
"Annexure A" to the Independent Auditors Report of Even Date on the Ind AS Financial Statements of Khaitan Electricals Limited
Statement referred to in paragraph Report on Other Legal and Regulatory Requirements of our report of even date to the members of Khaitan Electricals Limited on the Ind AS financial statements for the year ended 31st March, 2018.
(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.
b) The fixed assets were physically verified during the year by the management in accordance with a regular programme of verification which, in our opinion, provides for physical verificationof all fixed assets at reasonable intervals except fixed assets lying at Kolkata factory, as the factory has been seized by Kolkata Port Trust. According to the information & explanations given to us, no material discrepancies were noticed on such verification.
c) According to the information and explanations 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 except title deeds of immovable properties having written down value of Rs. 1.94 lacs which were not made available to us for our verification.
(ii) The inventories (excluding stocks with third parties and inventories lying at Kolkata factory which has been seized by Kolkata Port Trust) have been physically verified during the year at most of the branches and Hyderabad Factory by the management at reasonable intervals. However, no physical verification has been conducted at Faridabad factory the year.
(iii) According to the information and explanation given to us, the company has granted loan to 1 party covered in the register maintained under Section 189 of the Act, having closing balance 140.55 lacs. Interest amounting to Rs. 16.84 lakhs has not been provided and except this other terms and conditions whereof are not prejudicial to the interest of the Company. There are no stipulations as to repayment of loan and interest.
(iv) In our opinion and according to the information and explanations given to us, there are no guarantees and securities granted in respect of which provisions of section 185 & 186 of the Companies Act 2013 are applicable . Based on our audit procedure performed and according to the information and explanations given by the management, the Company has complied with provision of section 186 of the Act in respect of loans granted and investments.
(v) The Company has not accepted any deposit within the meaning of section 73 to 76 or any other relevant provisions of the Act and the rules framed there under. The directives issued by the Reserve Bank of India are not applicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where pursuant to the rules made by the Central Government, the maintenance of Cost records has been prescribed under section 148(1) of the Act and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We, however, as not required, have not made a detailed examination of such records.
(vii) a) On the basis of our examination, the Company has been generally irregular in depositing undisputed statutory dues including provident fund, income tax, sales tax, value added tax, employees state insurance, duty of excise, GST, service tax, and other material statutory dues to the extent applicable with appropriate authorities.
According to the records, the following statutory dues were outstanding as at 31st March, 2018 for a period of more than six months from the date they became payable:
Name of the Statute | Nature of Dues | Period to which pertain | Amount (Rs. In Lacs) | Due date | Paid on |
Income Tax Act, 1961 | Tax deducted at source | 2015-16 to 2017-18 | 130.75 | 7th of the succeeding month | - |
The Central/State Sales Tax Act | Value Added Tax | 2015-16 to 2017-18 | 225.52 | 20th of succeeding month | - |
The West Bengal State Tax on Professions, Trades, Callings and Employment Act | Profession Tax | 2016-17 & 2017-18 | 2.65 | 21st of succeeding month | - |
Employee State Insurance | ESI | 2016-17 & 2017-18 | 2.11 | 21st of succeeding month | - |
Finance Act 1994 | Service Tax | 2017-18 | 7.78 | 5th of the succeeding month | - |
Provident Fund | Provident Fund Act | 2016-17 & 2017-18 | 94.09 | 15th of succeeding month | - |
b. The disputed statutory dues aggregating to Rs. 3510.22 lakhs that have not been deposited on account of matters pending before appropriate authorities are as under:
Name of the Statute | Nature of Dues | Amount (Rs. In Lacs) | Period | Forum where dispute in pending |
State Sales Tax | Sales Tax /Penalty | 2693.60 | 2005-06 to 2015- 16 | AC, DC, Commissioner, Revision Board of Commercial Taxes, Tax Tribunal, High Court. |
The Central Excise Act, 1944 | Excise Duty | 797.08 | 1994-95, 2000-01 to 2001-02 & 2007- 08 to 2013-14 | Commissioner of Central Excise, Tribunal, CESTAT |
Penalty | 10.00 | 2008-09 | Tribunal, Delhi | |
Finance Act1994 | Service Tax | 2.47 | 2011-12 | Asstt. Commissioner, Service tax |
Employee State insurance Corporation | Employee State insurance Act | 6.78 | 1994-95 | ESI Court |
Income Tax Act, 1961 | Income Tax | 0.29 | 2010-11 | Dy. Commissioner of Income Tax |
Total | 3510.22 |
(viii) The Company does not have any loans or borrowings from Government or debenture holder. However, according to the records, the
Company has defaulted in repayment of borrowings to following financial institutions or banks :
Name of the financial institutions /banks | Nature of dues | Period to which pertain | Amount (Rs. in Lakhs)* | Delays in days |
Bank of India | Bills discounting | 2015-16 To 2017-18 | 15,19,89,164 | 55 to 1026 days |
Religare Finvest Limited | Bills discounting | 2015-16 To 2017-18 | 5,68,25,759 | 5 to 1056 days |
IDBI Bank Limited | Bill Discounting | 2016-18 | 10,60,45,248 | 61 to 628 days |
Allahabad Bank | Cash Credit | 2016-18 | 32,32,05,247 | 1 to 517 days |
Indian Bank | Cash Credit | 2016-18 | 53,19,80,548 | 1 to 670 days |
State Bank of Patiala | Cash Credit | 2016-18 | 25,85,80,600 | 1 to 548 days |
IDBI Bank Limited | Cash Credit | 2016-18 | 51,34,12,571 | 1 to 700 days |
State Bank of Travancore | Cash Credit | 2016-18 | 51,71,37,052 | 1 to 704 days |
Allahabad Bank | WCTL | 2016-18 | 5,73,30,797 | 58 to 515 days |
Allahabad Bank | FITL | 2016-18 | 5,20,60,137 | 58 to 515 days |
Allahabad Bank | Term Loan | 2016-18 | 67,34,80,711 | 58 to 515 days |
Indian Bank | WCTL | 2016-18 | 8,69,54,072 | 58 to 515 days |
Indian Bank | FITL | 2016-18 | 8,65,16,248 | 58 to 515 days |
State Bank of Patiala | WCTL | 2016-18 | 3,10,16,708 | 423 days |
State Bank of Patiala | FITL | 2016-18 | 2,92,06,640 | 423 days |
State Bank of Travancore | WCTL | 2016-18 | 7,31,62,420 | 58 to 515 days |
State Bank of Travancore | FITL | 2016-18 | 6,83,50,413 | 58 to 515 days |
IDBI Bank Limited | WCTL | 2016-18 | 6,84,87,738 | 58 to 515 days |
IDBI Bank Limited | FITL | 2016-18 | 7,98,55,327 | 58 to 515 days |
* Interest from the month July, 2018 has not been charged.
(ix) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) or term loan during the year.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees 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 paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion, the Company is not a Nidhi Company. Therefore, clause (xii) of paragraph 3 of the said order is not applicable to the Company.
(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 the Act where applicable and 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 give to us and based on our examination of the records of the Company, the Company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(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 non-cash transactions with directors or persons connected with them. Accordingly, clause (xv) of paragraph 3 of the said order is not applicable to the Company.
(xvi) According to the information and explanations given to us, the provisions of Section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.
For Bidasaria & Associates
Chartered Accountants
F.R.No.315101E
(CA. Ankit Bidasaria)
Partner
Membership No. 307256
Place of Signature : Kolkata
Date: 30th May, 2018
Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 control over financial of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Khaitan Electricals Limited ("the Company") as of March 31, 2018 in conjunction with our audit of the Ind AS 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 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 ("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 Companies Act, 2013.
Auditors Responsibility
Our responsibility is to express an opinion on the Companys internal financial controls 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, to the extent applicable to an audit of internal financial 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 over financialinternal reporting financial 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 financial 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 judgement, 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
Acompanysinternalfinancial 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 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 authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised 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 information, as required under the Reporting
Because of the inherent limitations of internal financialcontrols over financial reporting, including the possibility of collusion or improper management override of controls, material over financial misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financialcontrols over financialreporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may controls, 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 financialcontrols system over financial and such internal financial operating effectively as at March 31, 2018, based on the internal control over financialreporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Overcontrols over Financial Reporting issued by the ICAI. reporting, assessing the risk that a material weakness
For Bidasaria & Associates
Chartered Accountants
F.R.No.315101E
(CA. Ankit Bidasaria)
Partner
Membership No. 307256
Place of Signature : Kolkata
Date: 30th May, 2018
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