Splendid Metal Products Ltd Auditors Report.

TO THE MEMBERS OF SPLENDID METAL PRODUCTS LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SplendidMetal ProductsLimited (‘the Company) (Formerly known as Sujana Metal Products Limited), which comprise the Balance Sheet as at March 31, 2018, 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 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, as applicable. 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 these standalone 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 and the Order under Section 143(11) of the Act. 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 standalone financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone 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 standalone 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 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 March 31, 2018, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements: a) Refer note No. 8 and note No. 10 forming part of the financial statements regarding the Trade Receivables which are long overdue to the extent of Rs. 133,325.97 lakhs of which Rs.52,590.44 lakhs was provided as doubtful debts by the management. And 19061.80 lakhs of advances are long overdue of which Rs. 5,280.76 lakhs was provided as doubtful advances by the management. We are unable to form an opinion on the uncertainty regarding the collection of these long outstanding.

b) Refer note No. 33 regarding the winding up petition filed by Standard Bank (Mauritius) Ltd., in the High Court of Telangana & Andhra Pradesh against the company for giving corporate guarantee for loan extended by the said bank to the step down subsidiary Optimix Enterprises Limited for Rs. 4,087.50 lakhs. We are unable to form an opinion on the uncertainty regarding the outcome of Andhra Pradesh High Court decision. c) The Company has adjusted certain Trade Payables amount with Trade Receivables to the tune Rs.15700.28 Lakhs during the year with the consent of both the parties . d) Our opinion is not modified in respect of these matters.

Basis for Qualified Opinion

Reference is invited to Note 41(foot Note) of the financial statements, the company has not provided interest on secured loans being borrowing from banks and financial institutions during the year ended 31.03.2018 amounting to Rs.28,355.50 lakhs . This constitutes a departure from the Accounting Standards notified under the Companies Act, 2013. Had the company accounted for the said interest component in the financials, the loss will increase from Rs. 81,728.86 lakhs to Rs. 1,10,084.36 lakhs

Report on Other Legal and Regulatory Requirements

1. 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 relating to preparation of the standalone financial statements 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 maintained for the purpose of preparation of these standalone financial statements. (d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, as applicable. (e) On the basis of the written representations received from the Directors as on March 31, 2018, taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2018 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 A. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

(g) With respect to the other matters to be included in the Independent 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 not disclosed the impact of pending litigations on its financial position in its standalone financial statements. ii) The Company did nothave any long-term contracts including derivative contracts for which there were any material foreseeable losses; iii) There have been no amounts 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 in terms of Section 143(11) of the Act, we give in ‘Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order

For T.Raghavendra & Associates
Chartered Accountants
(Firm Regn No:003329S)
T. Raghavendra
Date: 30-05-2018 Proprietor
Place: Hyderabad Mem No. 023806

ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 ofthe Companies Act, 2013 (‘the Act)

We have audited the internal financial controls over financial reporting of SplendidMetal Products Limited (‘the Company) asof March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended and ason that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountantsof India (the ‘Guidance Note). These responsibilities include the design, implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence toCompanys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completenessof the accounting records, and the timely preparation of reliable financial information, as required under the Act..

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 Standards on Auditing prescribed under Section 143(10) of the Act and the GuidanceNote, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that wecomply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls systemover financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting includedobtaining 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 proceduresselected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone financialstatements, 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 theCompanys 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 thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A companys internal financial control over financial reporting includes those policies and proceduresthat (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositionsof the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the companyare being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets thatcould 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 orimproper 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 thatthe internal financial controls over financial reporting may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all materialrespects, an adequate internal financial controls system over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in the Guidance Note.

For T.Raghavendra & Associates
Chartered Accountants
(Firm Regn No:003329S)
T. Raghavendra
Date: 30-05-2018 Proprietor
Place: Hyderabad Mem No. 023806

ANNEXURE ‘B TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements section of our report of even date) Report on Companies (Auditors Report) Order, 2016 (‘the Order) issued by the Central Government in terms ofSection 143(11) of the Companies Act, 2013 (‘the Act) of Splendid Metal Products Limited (‘the Company)

1. In respect of the Companys fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular program of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us and based on the examinationof the conveyance deed provided to us, we report that, the title deeds, comprising all the immovable properties of landand buildings which are freehold, are held in the name of the Company as at the balance sheet date.

2. The Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or otherparties covered in the register maintained under Section 189 of the Act.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisionsof Sections 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, asapplicable.

5. The Company has not accepted deposits during the year and does not have any unclaimed deposits as at March 31, 2018 andtherefore, the provisions of the clause 3 (v) of the Order are not applicable to the Company.

6. The Maintenance of Cost Records has been specified by the Central Government under section 148(1) of the Companies Act, 2013. We have relied on the Cost audit report submitted by the Cost Auditors of the Company and according to the said report the Company has complied with the Companies(Cost Records and Audit) Rules, 2014.

7. According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, EmployeesState Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of Customs, duty of Excise, Cess, GST and other material statutory dues applicable to it with the appropriate authorities.

(b) There are no disputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, duty of Customs, duty of Excise, GST, Cess and other material statutory dues in arrears as at March 31, 2018 for a period of more than six months from the date they became payable except as detailed below:

Particulars Outstanding > 6 months (Rs. In lakhs)
Provident Fund 12.28
T.D.S. 21.71
Service Tax 30.73
Income Tax (Corporate Dividend Tax) 2.64
Total 67.36

(c) Details of dues of Income Tax, Sales Tax, Customs and Excise Duty, Foreign Exchange Management Act and Value Added Tax which have not been deposited as at March 31,2018 on account of dispute are given below:

Disputed Statutory dues as on 31.03.2018

Name of the Statute Amount Rs. in Lakhs Period to which the amount relates (FY) Forum where dispute is pending
Income Tax Act , 1961 1775.45 2006-2015 Income Tax Appellate Tribunal
Central Excise Act, 1944 2330.57 1997-2013 Commissioner (Appeals) Chennai, Chennai Honble High Court of Chennai, Honble High Court of Delhi , Honble Supreme Court of India( Dept.Appeals)
Customs Act, 1962 775.79 1999-2012 Commissioner (Customs) Sea Port, Chennai, Honble High Court of Chennai, Vommissioner (Appeals), Vizag and Honble Supreme Court of India (Dept.Appeals).
Foreign Exchange Management Act, 1999 100.00 1995-1996 Honble High Court of Delhi
APGST ACT, 1957 438.13 2002-2003 Honble High Court of Delhi
Central Sales Tax Act, 1956 241.34 2006-2007 Sales Tax Appellate Tribunal, Commercial Tax Offier
42.68 2007-2008
Tamilnadu Value Added Tax Act, 2006 9891.65 2006-2008 Appellate Dpty. Commissioner, Honble High Court of Andhra Pradesh.
CST (TN) 2383.64 2008-2015 Honble High Court of Tamilnadu and TN Sales Tax Authorities.

There were no dues of duty of Customs, duty of Excise and Cess which have not been deposited as at March 31, 2018 onaccount of dispute.

8. In our opinion and according to the information and explanations given to us, the Company has defaulted in the repaymentof loans or borrowings to banks. The details of the default is given below:

Details of Overdues to Banks/ Financial Institutions as on 31-03-2018

Name of the Bank Nature of Default Amount of Default in Rupees Period of Default in Days
Term Loans
IDBI Bank Ltd 1779 Principle & Interest on Term Loans 12,63.47,529 697
Bank of India Principle & Interest on Term Loans 33,17,34,819 709
Andhra Bank Principle & Interest on Term Loans 26,79,52,864 667
Punjab National Bank -4272 Principle & Interest on Term Loans 33,59,24,280 690
SASF CENNAI (IDBI) Principal & Interest Principle & Interest on Term Loans 62,20,96,387 1795
SASF HANDUM (IDBI) Principal & Interest Principle & Interest on Term Loans 25,16,75,697 2160
SASF VIZAG (IDBI) Principal & Interest Principle & Interest on Term Loans 35,49,09,736 2160
IDBI (Addl TL) Principal & Interest Principle & Interest on Term Loans 1,49,78,701 729
Bank of India (Addl TL) Principal & Interest Principle & Interest on Term Loans 3,82,99,688 700
Indian Overseas Bank Principal & Interest Principle & Interest on Term Loans 16,78,12,915 930
Indian Overseas Bank (Addl TL) Principal & Interest Principle & Interest on Term Loans 2,19,82,648 731
PNB (Addl TL) Principal & Interest Principle & Interest on Term Loans 8,41,97,162 590
IDBI (FITL 1) Principal & Interest Principle & Interest on Term Loans 2,00,04,758 667
Bank of India (FITL 1) Principal & Interest Principle & Interest on Term Loans 6,24,18,145 692
Bank of Baroda (FITL1) Principal & Interest Principle & Interest on Term Loans 1,28,91,160 701
Indian Bank (FITL 1) Principal Principle & Interest on Term Loans 1,80,22,861 698
Indian Overseas Bank (FITL 1) Principal & Interest Principle & Interest on Term Loans 2,65,72,453 698
Andhra Bank Ltd (FITL 1) Principal & Interest Principle & Interest on Term Loans 2,78,72,145 516
Punjab National Bank (FITL 1) Principal & Interest Principle & Interest on Term Loans 4,90,27,385 607
Laxmi Vilas Bank (FITL 1) Principal & Interest Principle & Interest on Term Loans 1,19,79,459 120
State bank of India (FITL 1) Principal & Interest Principle & Interest on Term Loans 13,32,56,349 608
Oriental Bank of Commerce (FITL II) Principle & Interest on Term Loans 98,09,228 810
Bank of India (FITL II) Principal & Interest Principle & Interest on Term Loans 2,35,12,992 686
Bank of Baroda (FITL II) Principal & Interest Principle & Interest on Term Loans 1,08,88,889 636
Indian Bank (FITL II) Principal Principle & Interest on Term Loans 1,38,00,000 510
Indian Overseas Bank (FITL II) Principal & Interest Principle & Interest on Term Loans 1,32,43,619 731
Andhra Bank Addl TL Principal & Interest Principle & Interest on Term Loans 5,62,36,164 609
Punjab Natioanl Bank (FITL II) Principal & Interest Principle & Interest on Term Loans 2,96,50,002 510
State Bank of India (FITL II) Principal & Interest Principle & Interest on Term Loans 2,39,43,547 578
B) Letter of Credits
Bank of Baroda LC devolvement 17,50,38,780 Apr. 2015 to March 2018
Punjab National Bank LC devolvement 1,68,39,12,604 Oct 2015 to March 2018

 

WORKING CAPITAL TERM LOAN
Bank of India Principle & Interest 65,00,26,111 1020
Bank of Baroda Principle & Interest 12,24,50,320 990
Indian Bank Principle & Interest 14,14,13,531 990
Indian Overseas Bank Principle & Interest 45,30,52,988 1260
Laxmi Vilas Bank Principle & Interest 5,11,33,600 120
Oriental Bank of Commerce Principle & Interest 6,90,60,769 990
Punjab National Bank Principle & Interest 96,27,78,833 690
State Bank of India Principle & Interest 36,44,25,594 660

9. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause 3 (ix) of the Order is not applicable.

10. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company by its officers or employees has been noticed or reported during the year.

11. In our opinion and according to the information and explanations given to us, the Company has paid / provided managerialr emuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

12. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable.

13. In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Act, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards.

14. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause 3(xiv) of the Order is not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its Directors and hence provisions of Section 192 of the Act are not applicable.

16. The Company is not required to be registered under Section 45-I of the Reserve Bank of India Act, 1934.

For T. Raghavendra & Associates
Chartered Accountants
(Firm Regn No:003329S)
T. Raghavendra
Date: 30-05-2018 Proprietor
Place: Hyderabad Mem No. 023806