INDEPENDENT AUDITORS REPORT
To The Members of,
MUKESH STRIPS LIMITED,
Village Dhandari Khurd,
Near Phase VII, Focal Point,
LUDHIANA.
Report on the Standalone Financial Statements
We have audited the accompanying financial statements of MUKESH STRIPS LIMITED ("the
Company"), which comprise the Balance Sheet as at 31st March 2016, the Statement of
Profit & 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 Standalone 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 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.
Auditors 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 misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and
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 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.
Basis for Qualified Opinion
We report that:
(i) The company has not arranged to make available the confirmations and/or
reconciliations to verify the balances stated in the financial statements in respect of:
Trade Receivables 765.45 Lacs, Advances to Suppliers 150.79 Lacs and Trade Payables
165.58 Lacs.
We have also not been able to perform any alternative procedures with regard to
verification of the aforesaid balances and thereby have been unable to obtain sufficient
appropriate audit evidence regarding the aforesaid accounts. We are unable to comment upon
the difference, if any, which may arise upon the receipt of confirmations and/or the
carrying out of such reconciliation.
(ii) The company has not made provision in respect of trade receivables which are
doubtful in nature, amounting to Rs. 207.26 Lacs, as on the date of financial statements.
(iii) We further report that, except for the effect, if any, of the matters stated in
paragraph (i) above which are not ascertainable, had the impact of our observation made in
paragraph (ii) above
been considered, then loss for the year ended 31 March, 2016 would have been 1009.21
Lacs against reported figure of 801.95 Lacs and reserve and surplus would have been (
834.82 Lacs) against reported figure of ( 627.56 Lacs) and current asset would have been
2183.85 Lacs (against the reported figure of 2391.11 Lacs) and
(iv) The earning (loss) per share for the year ended 31 March, 2016 would have been
(27.57) against reported earning (loss) per share of (21.91)
Qualified Opinion
In our opinion and to the best of our information and according to explanations given
to us, subject to our comments in Basis of Qualified Opinion above, 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 March
31,2016, and its loss and its cash flows for the year ended on that date.
Emphasis of Matter
Without qualifying our opinion, we draw attention to the followings:
(i) We draw attention to Note No. 37 in the financial statement. The manufacturing
operations of the Company have been suspended from the close of 31 March, 2016 and the
company has surrendered its Excise Registration Certificate with the authorities vide
letter dated 5th April, 2016 and the bank has also recalled its debts due from
the Company.
These events indicate the existence of a material uncertainty that cast significant
doubt about the Companys ability to continue as a going concern. The appropriateness of
the going concern assumption is dependent on the companys ability to established
consistent profitable operations and generate positive cash flows as well as raising
adequate finance to meet its short term and long term obligations.
Based on the mitigating factors stated in the said note, the management of the company
believes that the going concern assumption is appropriate and has prepared the financial
statements on going concern assumption.
Report on Other Legal and Regulatory Requirements
1. As required by the section 143(3) of the Act, we report that:
a) We have sought and obtained all the information and explanations, subject to
matters stated in ‘Basis of Qualified Opinion above, 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 except as stated in para ‘Basis of Qualified
Opinion above;
e) On the basis of written representations received from the directors as on March
31,2016 taken on record by the Board of Directors, none of the directors is disqualified
as on March 31,2016 from being appointed as a director in term 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 operative effectiveness of such controls, refer Annexure
‘A to this report; and
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, 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 as referred to note no. 29(c), 29(d), 39, 42 and 43
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. There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
2. 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 ‘B, a statement on the matters specified in paragraphs 3 and 4 of the
Order, to the
extent applicable.
|
For GUPTA VINOD KUMAR & ASSOCIATES |
|
Chartered Accountants |
|
(Firm Regn. No. : 006904N) |
| PLACE : Ludhiana |
|
| DATED : This 30th Day of May, 2016 |
(VINOD K. GUPTA) |
|
Prop. |
|
Membership No. : 085489 |
ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT
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 Mukesh
Strips 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.
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
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 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, issued by ICAI and 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 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 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
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 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 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 of Qualified Opinion
According to the information and explanations given to us and based on our audit, the
following material weakness has been identified in the operating effectiveness of the
Companys internal financial controls over financial reporting as at March 31, 2016.
(i) The Companys internal financial controls with respect to obtaining customer/vendor
confirmations and their reconciliations with the books of accounts at regular intervals
were not operating effectively, which could potentially result in misstatement of
receivables/payables.
(ii) The Companys internal financial controls with regard to making provision in
respect of balances recoverable from Trade Receivables, Loans and Advances and other
recoverables which are doubtful in nature were not effective.
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 annual or interim financial
statements will not be presented or detected on a timely basis.
Qualified Opinion
In our opinion, the Company has, subject to the possible effects of the material
weakness described above, 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 GUPTA VINOD KUMAR & ASSOCIATES |
|
Chartered Accountants |
|
(Firm Regn. No. : 006904N) |
| PLACE : LUDHIANA |
|
| DATED : This 30th Day of May, 2016 |
(VINOD K. GUPTA) |
|
Prop. |
|
Membership No. : 085489 |
+91-9892691696
