TO
THE MEMBERS OF SUPREME TEX MART LIMITED
1. REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Supreme Tex Mart Limited
("the Company"), which comprise the Balance Sheet as at March 31, 2017, the
Profit and Loss Statement and the Cash Flow Statement for the year then ended and a
summary of significant accounting policies and other explanatory information.
2. MANAGEMENTS RESPONSIBILITY FOR THE 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 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.
3. AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on these 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 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, 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 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 financial statements
4. Emphasis on matter
The Company has prepared the accounts on going concern basis. The company has incurred
a net loss of Rs. 4338.92 Lacs for the year ended 31st March, 2017 (Rs.17884.09 Lacs), the
companys current liabilities exceeded its current assets by Rs.16196.48 lacs and its
total liabilities exceeded its total assets by Rs.19180.86 lacs. The lead bank State Bank
of India and member banks ie Central Bank of India, Union Bank of India, SBER Bank,
Allahabad Bank, IDBI Bank and Canbank Factors Ltd have classified the accounts of the
company as Non Performing Assets. The net worth of the company has been completely eroded
as on the balance sheet date. The appropriateness of the going concern basis is inter alia
dependent on the companys ability to turnaround the operations and ability of infusing
requisite funds for meeting its obligations and rescheduling of debts.
5. BASIS FOR QUALIFIED OPINION
Further we report that
i) The company has not provided for finance cost in respect of Banks/Financial
Institutions except for Punjab & Sind Bank and UCO Bank but the company has neither
provided nor acknowledge the liability in respect of other consortium banks and financial
institutions. The exact quantification of interest/finance cost accrued during the year
has not been ascertained. However as computed by the company an amount of Rs. 5857.57 Lacs
has not been provided for , which has resulted in understatement of loss and liabilities
by Rs.5857.57 Lacs. (Refer Note No. 41 to the financial statements)
ii) In the absence of information of Secured Borrowings (Long Term and Short Term) we
are unable to comment upon the exact liabilities towards banks and financial institutions
as on balance sheet date and its impact on financial statments.
iii) In the absence of details and records of liability towards creditors covered under
the Micro Small & Medium Enterprises Development Act 2006, we are unable to report the
status as required by the Companies, Act 2013.
iv) The company has credited capital reserve account by Rs. 4231.70 Lacs by writing off
the liability towards Banks/FIs and debited capital reserve by Rs. 420.91 Lacs by
increasing the liability towards Banks/FIs. The company has not produced any evidence
facilitating such adjustment. This has resulted in overstatement of reserves and surplus
under the head capital reserve and understatement of the liability by Rs. 3810.79 lacs.
v) The secured term loan borrowing except that of Punjab National Bank amounting to Rs.
1560.33 lacs and IDBI amounting to Rs.1728.28 lacs should have been classified current
liabilities since recall notice under SARFAESI Act by all banks except Punjab & Sind
Bank and UCO Bank has been served. This has resulted in overstatement of long term
borrowing and understatement of current liabilities by Rs. 15876.18 Lacs.
vi) In respect of the following receivables the company has not provided complete
information justifying their realiseability :
| Sr.No. Particulars |
(Rs. In Lacs) |
| i) Interest Receivable On account Interest Subsidy (Tuffs) |
1104.04 |
| ii) Insurance Claim Recoverable |
489.70 |
| iii) Interest on Insurance Claim Recoverable |
446.51 |
| iv) Amount Receivable (Union Bank) |
66.88 |
| v) Amount Receivable (PNB) |
63.79 |
| vi) FDR Receivable from Bank |
1123.88 |
| vii) Amount Receivable (Central Bank) |
977.88 |
| viii) Vat (Notational) |
239.46 |
| Total |
4512.14 |
The above receivables at Sr. (i) to (iii) amounting to Rs.2279.71 Lacs are outstanding
for last few years. The other receivables are due from banks, who are secured creditors of
the company. We are of the view that the bank in the normal course have adjusted the
amount at Sr. No. (iv) to (vii) amounting to Rs.2232.43 Lacs against their outstanding.
The necessary adjustment has not been made by the company. This has resulted in
overstatement of receivables and understatement of secured liabilities by Rs. 2232.43
lacs. The consequential impact on the profit and loss amount has not been quantified by
the company.
vii) The company has made a provision for gratuity and leave encashment on estimated
basis without actuarial valuation, which in not in accordance with Accounting Standard-15
on Employee Benefits. In the absence of actuarial valuation we are unable to comment on
the adequacy of the provision.
viii) The company has accounted for interest on security deposit with PSPCL amounting
to Rs. 47.28 lacs on receipt basis against accrual method of accounting adopted by the
company. In the absence of interest recoverable from PSPCL for the current year we are
unable to quantify the effect of the same on loss of the company.
6. QUALIFIED OPNION
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 matter described in the Basis for
Qualified Opinion and Emphasis on matter paragraphs above, the aforesaid 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, 2017, and its loss and its
cash flows for the year ended on that date.
7. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
As required by the Companies (Auditors Report) Order, 2016 issued by the Central
Government of India in terms of subsection (11) of Section 143 of the Act, we give in the
"Annexure - A", a statement on the matters specified in Paragraphs 3 and 4 of
the order, to the extent applicable.
8. As required by Section 143(3) of the Act, we report that:
a. We have sought and obtained all the information and explanations, except for the
matters described in the Basis for Qualified Opinion and Emphasis on matter paragraph,
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 Profit and Loss Statement, and the Cash Flow Statement dealt
with by this Report are in agreement with the books of account.
d. In our opinion, the aforesaid 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 with the requirement of Accounting Standard (AS)-15 on
"Employee Benefits" notified by the Companies (Accounts) Rules, 2014;
e. On the basis of the written representations received from the directors as on March
31, 2017, taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 2017, 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"; 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 in Note 26 to the financial
statements.
ii. The Company has made provision, as required under the applicable law or accounting
standards, for material foreseeable losses, if any, and as required on long-term contracts
including derivative contracts.
iii. The company is not required to transfer any amount to the Investor Education and
Protection Fund.
iv. The Company has provided requisite disclosures in the financial statements as to
holdings as well as dealings in Specified Bank Notes during the period from 8th November
2016 to 30th December 2016. Based on audit procedures and relying on the management
representation, we report that the disclosures are in accordance with books of account
maintained by the Company and as produced to us by the Management Refer Note 47 to
financial statements.
|
For Datta Singla & Co. |
|
Chartered Accountants |
|
F.R.N. : 006185N |
| Place: Ludhiana |
Ashish Yashpal Bhardwaj |
| Dated: 30th May, 2017 |
Partner |
|
M. No. 501320 |
+91-9892691696
