Modern Syntex (India) Ltd Auditors Report.
The Members of Modern Syntex (India) Limited .
Report on the Financial Statements
We have audited the accompanying standalone financial statements of Modern Syntex (India) Limited ("the Company") which comprise the Balance Sheet as at March 31,2015, and the Statement of Profit and Loss and 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 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 die 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, 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 taken1 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, 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.
We report the observations/comments as under:
1 The accounts of the company have been prepared on going concern basis though the accumulated losses of the company have exceeded its net worth and the company has continued to per losses. (Note 1).
2 The premium on redemption o debentures is not provided (Sub para iv of Note 1.3) and devolved non-fund based borrowings are accounted for as and when paid/discharged (Note 1.18), amounts whereof are not ascertained.
3 Balance confirmations from debtors, creditors, advances, secured and unsecured lenders, etc. are generally not asked/received and accordingly not reconciled/confirmed. In absence of the same, these balances and their classification are reflected as per the records produced to us(Note 30.3).
4 Penal interest, compound interest and liquidated damages on loans from Financial Institutions, Banks and Others, wherever applicable, have not been provided for in current as well as in previous period(s), amounts where of are not ascertained (Note30.5).
5 Calls in arrears accounts are subject to confirmation and reconciliation (Note 2.2and3.2). .
6 Interest on foreign currency loan availed in DM currency calculated at fixed rate of2.74% p.a. rather than a floating interest rate based on 6-months- DM-Liborplusamarginof0.80%p.a impact of which is not as curtained [Note5.5(c).
7 The company had suspended operation of its POY division since 15 th November, 2012. The company has not ascertained liability if any, for suspended period from 15th November, 2012 onwards due to matter pending with Labour Court. However POY division has restarted operation on certain lines to the extent of captive consumption(Note 23.1).
8 The company had not provided salary and wages of POY division for the period from 1st October, 2012 to 14th November, 2012 amounting to Rs. 65.55 Lacs as the matter is pending with Labour Court. In case the liability is accounted for as on the Balance Sheet date, the "Current Liabilities " would have been higherbyRs.65.55Lacsand"AccumulatedLosses"wouldhavebeenhigherbyRs.65.55Lacs(Note23.1).
9 Amount of Rs. 1,042.4ILacs paid towards restructuring/settlement to various preference share holders till 31" March 2015 has been reflected under the head "Other current assets "pending sanction of rehibilition scheme by BIFR. In case, the payments made have been adjusted from the same, than the "Preference Share Capital" and "Current Assets "would have been lower by Rs. 1,042.4ILacs (Note 2.1).
10 Amount of Rs.8,331.38 Lacs paid towards restructuring/settlement to varous lenders till 31" March, 201 Shad been reflected under the head "Other
current assets " rather than reducing the same from Loans shown as current maturities of long term debt under "Other current liabilities ". In case, the payments made have been adjusted from the same, then the "Other current liabilities" and "Current Assets" would have been lower by Rs.8,331.38 Lacs(Note 18.1). .
II SUUTI has restored the total liabilities due to default in payment of OTS amount and have intimated the outstanding dues of Rs. 1,98,650.27 Lacs including unsecured debts, dues of UTIMF, overdue & penal interest etc. as per their records as on 31" March, 2015. The company has disputed the entire dues of UTI MF and in the process of renegotiating the OTS proposal with them, pending which, unpaid liability of Rs. 1,360Lacs is kept in books of accounts as per earlier settlement terms. In case, the liability is accounted for as restored by SUUTI and UTI MF, "Current Liabilities " would have been higher by Rs. 1,97,290.27 Lacs, "Loss before tax for the year" would have been higher by Rs.34,846.44 Lacs and "Accumulated Losses " would have been higher by Rs. 1,97,290.27Lacs (Note 9.3).
12 Exchange Fluctuation on foreign currency loan availed in DM currency to acquire Plant & Machinery has not been provided since 1st April, 2001 due to conversion of currency from DM to Euro, as there is no currency conversion clause in the agreement. Accordingly, foreign currency loan and interest thereon is stated in books at exchange rates prevailing on 31st March, 2001. In case, the liability is accounted for based on the exchange rate of Euro as on the Balance sheet date, the "Current liability " would have been higher by Rs. 9,282.55, "Loss before tax for the year " would have been lower by Rs. 4,531.38 Lacs and "Accumulated Losses " would have been higher by Rs.9,282.55 Lacs [Note 5.5 (b)J.
13 Provision for interest amounting to Rs. 1,007.46 Lacs (including Rs. 96.72 Lacs for the year) has not been made on public fixed deposits and on retail non convertible debentures as company expects waiver/reliefs. In case, the liability is accounted for, the "Current Liabilities " would have been higher by Rs. 1,007.46Lacs, "Loss before tax for the year would have been higher by Rs. 96.72 Lacs and "Accumulated Losses would have been higher by Rs. 1,007.46Lacs(Note9.4).
14 The company has not provided for interest on dealers deposit of Rs. 28.50 Lacs (including Rs. 9.50 Lacs for the year), and commission & brokerage on sales ofRs. 24.70 Lacs (including Rs. Nil for the year) related to POT division due to pending settlements with customers/dealers.ln case the liability is accounted for as on the Balance Sheet date, the "Current Liabilities" would have been higher by Rs. 53.20 Lacs and "Loss before tax for the year "would have been higher by Rs. 9.50 Lacs and "Accumulated Losses "would be higher by Rs. 53.20Lacs (Notes 24.1& 25.3).
We further report that, without considering items mentioned at para 1 to 7 above, the effect ofwhich could not be determined, had the observations made by us in para 8 to 14 above been considered, accumulated losses would have been Rs. 2,63,814.33 Lacs (as against the reported figure of Rs. 56,115.30 Lacs), loss for the year would have been Rs. 32,113.67Lacs (as against reported figure ofRs. 1,692.39Lacs), Current Liabilities would have been Rs. 2,38,634.55 Lacs(as against the reported figure of Rs. 39,266.90 Lacs), Preference Share Capital would have been Rs. 457.59 Lacs (as against the reportedfigure ofRs. 1,500Lacs) and Current Assets would have been Rs. 3,219.20 Lacs (as against the reported figure ofRs. 12,592.99Lacs).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements subject to our observations as above and read together with Notes to Accounts 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, 2015, and its loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraph 3 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 purpose of our audit;
b. In our opinion, 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. The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts;
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, 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 " March, 2015 from being appointed as a director in terms of Section 164(2) of the Act.
f. 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 (Refer Note 30.2 to the . financial statements).
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. The Company is not required to deposit any amount in Investor Education and Protection Fundin lieu of reason mentioned in Note no. 30.6 & 30.7 of the financial statements.
|For T.R. Chadha&Co.|
|Firm Regn. No: 00671IN|
|Place: Mumbai||Arvind Modi|
|M. No. 112929|
Annexure to the Independent Auditors Report for the year ended 31"March 2015
(Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date)
I. Fixed Assets
a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of its fixed assets except that there cords for some of the assets are under up dation.
b) As per the information and explanation given to us, the company carries out the physical verification of its fixed assets over a period of three years in a phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verifications.
II. Inventories -
a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.
b) The procedures of physical verification of inventory followed by the Company is reasonable and adequate in relation to the size of the Company and the nature of its business.
c) The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.
III. Loans given
During the year under audit, the Company has not granted any loan to any party covered in the register maintained under Section 189 of the Companies Act, 2013.
IV. Internal Control
According to the information and explanations given to us and in our opinion, there are adequate internal control systems commensurate with the size of the company and the nature of its business, with regard to purchase of inventory, fixed assets and with regard to sales of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.
V. Public Deposit
The Company has accepted fixed deposits under Section 73 of the Companies Act, 2013 in past. In our opinion and according to the explanations given to us, the company has complied with the provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder with regard to deposits accepted from public except for default in payments of the same and non maintenance of liquid assets against the deposits. As given in Note 30.6, the Company Law Board (CLB) has passed an order on 23.1.2002 that "The repayment of fixed deposits shall be made by the Company in accordance with the revival scheme as and when approved by BIFR under provisions of SICA ". However payment on compassionate ground are continued to be made as per the decision of the committee formed by Hon ble Company Law Board for this purpose. As informed to us, no other orders are passed by National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.
VI. Cost Records
We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.
VII. Statutory Dues
a) The Company has been regular in depositing its undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income tax, Sales Tax, Service tax, Customs Duty, Excise Duty, Cess and other statutory dues as applicable with the appropriate authorities during the year except delay in deposition in few cases. Undisputed dues at 31.03.2015 for a period of more than six months pending to be deposited are as under:-
|: Nature||Rs. in Lacs|
|Royalty to Gram Panchayat||13.25|
b) The details of dues of Income tax / Sales tax / Wealth tax / Service tax / Custom duty / Excise duty / cess not deposited on account of dispute alongwith the amounts involved and the forum where dispute is pending is given as under:
|Nature of dues||Amount Rs. in Lacs||Forum at which pending|
|Excise Duty||396.86||CESTAT, Ahmedabad|
|118.21||Gujarat High Court, Ahmedabad|
|13.60||Commissioner Appeal, Baroda|
|3.72||Assistant Commissioner, Baroda (Central Excise)|
|Provident Fund||1.84||PF Tribunal, Delhi|
|1.51||PF Department, Jaipur|
|Sales Tax||590.06||Jt. Comm.(Commercial) Tax Appeal/ Tribunal, Baroda|
|3.55||Commissioner Appeal, Jaipur|
|Textile Committee Cess||147.88||Textile Committee Tribunal|
|Municipal Tax||1.56||Rajasthan High Court|
|Custom Duty||129.44||Commissioner of Custom, Mumbai|
|Land & Building Tax||12.43||Municipal Corporation, Alwar|
c) The Company is not required to deposit any amount in Investor Education and Protection Fund in lieu of reason mentioned in Note no. 30.6 & 30.7 ofthe financial statements.
VIII. The accumulated losses of the company at the end of the financial year are more than the net worth of the company. It has incurred cash losses during the current year as well as in immediately preceding financial year.
IX. The Company has defaulted in repayment of dues to Financial Institutions, Banks and Debenture holders /Public Fixed Deposit amount of Rs. 8,820.88 Lacs, Rs. 17,002.30 Lacs and Rs. 1,965.65 Lacs respectively as on the Balance Sheet date from the year 1999-2000 onwards as per books of accounts of the Company.
X. As explained and verified, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions.
XI. Based upon the audit procedures and as per the information and explanations given by the management, the company has not obtained any term loan during the year under audit.
XII. According to the information and explanations given by the management, no fraud on or by the Company has been noticed or reported.during the year.
|For T. R. Chadha & Co.|
|Firm Regn. No: 006711N|
|Place: Mumbai||Arvind Modi|
|M. No. 112929|