To the Members of
Syncom Healthcare Limited
Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of Syncom Healthcare Limited
(“the Company”), which comprise the balance sheet as at 31st March 2020, and the
statement of Profit and Loss, statement of changes in equity and statement of cash flows
for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies and other explanatory information.
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, 2020, and profit/loss, changes in equity and its cash flows
for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Companies Act, 2013. Our responsibilities under those
Standards are further described in the Auditors Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the Company in
accordance with the Code of Ethics issued by the Institute of Chartered Accountants of
India together with the ethical requirements that are relevant to our audit of the
financial statements under the provisions of the Companies Act, 2013 and the Rules
thereunder, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Other Matter Para
“ The severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2)",
generally known as COVID-19, which was declared as a pandemic by the WHO on March 11,
2020, continues to spread across India and there is an unprecedented level of disruption
on socioeconomic front across the country. Globally, countries and businesses are under
various restrictions and lockdown. Considering the severe health hazard associated with
COVID-19 pandemic, the Government of India declared a lock down effective from March 24,
2020, there is a high level of uncertainty about the duration of the lockdown, travelling
restrictions and the time required for things to get normal. Due to lockdown and
travelling restrictions our team was unable to visit client premises and plants locations
regularly and most of the work was done on the basis of mail communication, Scan copy of
the documents to the extent made available and workings shared by company.
Material uncertainty related to Going Concern
We draw attention to Note 37 of the Financial Statements, which indicates that the
company has incurred a loss of Rs. 1151.22 Lakhs during the year ended 31st
March 2020 and has accumulated losses due to which its net worth has been fully eroded and
as of that date, the Companys current liabilities exceeds its current assets by Rs.
1351.95 Lakhs. These conditions indicate that a material uncertainty exists that may cast
significant doubt on the companys ability to continue as going concern. However, the
Financial Statements of the Company has been prepared on a going concern basis for the
reasons stated in said note. Our opinion is not modified in this respect.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Description of each key audit matter in accordance with SA 701:
| The Key Audit Matter |
How the matter was addressed in our Audit |
| Revenue Recognition |
Principal Audit Procedures |
| Revenue from the sale of goods (hereinafter referred to as “Revenue”) is
recognised when the Company performs its obligation to its customers and the amount of
revenue can be measured reliably and recovery of the consideration is probable. |
Our audit approach was a combination of test of internal controls and substantive
procedures including: |
| The timing of such recognition in case of sale of goods is when the control over the
same is transferred to the customer, which is mainly upon delivery. The timing of revenue
recognition is relevant to the reported performance of the Company. The management
considers revenue as a key measure for evaluation of performance. |
• Assessing the appropriateness of the Companys revenue recognition accounting
policies in line with Ind AS 115 (“Revenue from Contracts with Customers”) and
testing thereof. |
|
• Evaluating the integrity of the general information and technology control
environment and testing the operating effectiveness of key IT application controls. |
| There is a risk of revenue being recorded before control is transferred. |
• Evaluating the design and implementation of Companys controls in respect of
revenue recognition. |
| Refer to the Standalone Financial Statements - Significant Accounting Policies |
• Testing the effectiveness of such controls over revenue cut off at year- end. |
|
• Testing the supporting documentation for sales transactions recorded during the
period closer to the year end and subsequent to the year end, including examination of
credit notes issued after the year end to determine whether revenue was recognised in the
correct period. |
| Going Concern |
Performing analytical procedures on current year revenue based on monthly trends and
where appropriate, conducting further enquiries and testing |
| The financial statements have been prepared on a going concern basis as discussed in
note 37. |
In assessing the appropriateness of the going concern assumption used in preparing the
financial statements, our procedures included, amongst others: |
| We included the going concern assumption as a key audit matter as it relies on debt
from related parties and Inter corporate deposits to cover necessary expenditure. |
Understanding what forecast expenditure is committed and what could be considered
discretionary. |
|
Considering the liquidity of existing assets on the balance sheet. |
|
Considering the terms of the bank loan and trade finance facilities and the amount
available for drawdown. |
|
Considering potential downside scenarios and the resultant impact on available funds. |
|
Group continues to incur loss, current liabilities exceed current assets and Group has
defaulted in repayment of borrowings, payment of regulatory and statutory dues, these
events indicate that material uncertainty exists that may cast significant doubt on
Groups ability to continue as a going concern. |
Emphasis of Matters
We draw attention to the following matters:
1. CIRP has been filed in case of the company by Financial creditors i.e. Bank of India
under provisions of the Insolvency and Bankruptcy Code, 2016. Pursuant to an application
filed by Bank Of India before the National Company Law Tribunal, Mumbai Bench
(“NCLT”) in terms of Section 9 of the Insolvency and Bankruptcy Code, 2016 read
with the rules and regulations framed thereunder (“Code”), the NCLT had admitted
the application and ordered the commencement of corporate insolvency resolution process
(“CIRP”) of Syncom Healthcare Limited (“Corporate Debtor”) vide its
order dated May 15, 2018. The NCLT had appointed Mr. Jagdishkumar Parulkar as the interim
resolution professional for the Corporate Debtor vide its order dated May 18, 2018.
2. The Company has defaulted in repayment of dues to the Banks of India since December
2016. The Said accounts have been classified as Non-Performing Asset (NPA) by the Bank.
3. The Company is yet to comply with reporting requirements for making full provision
against investment made in its wholly owned subsidiary.
4. Refer to Note 07 to the Standalone Financial Statements; Trade Receivables Rs.
861.28 Lakh for which provisions have been made to the tune of Rs. 836.32 Lakhs in Books
of Accounts.
5. As on 31st March 2020, the Tender Deposits with various Govt. authorized
were Rs. 1.55 Cr. These Deposits are held for more than 180 Days.
6. According to records produced before us, there is significant amount of Inventory
lying Non-Moving/ Slow Moving. Since the company has not obtained any technical and/or
commercial evaluation for the same, we are unable to comment on the realizable value of
the same, which may be lower than the amount at which it has been reflected in the balance
sheet.
7. The Input Credit under GST (Goods & Service Tax) claimed with credits reflected
on GST Portal are yet to be reconciled. Apparently, there is mismatch in Input claimed by
Company in Returns and Books of Accounts of Company vis-a-vis Input available on GST
Portal.
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, (changes in equity)5 and cash flows of the Company in
accordance with6 the accounting principles generally accepted in India, including the
accounting Standards specified under section 133 of the Act. This responsibility also
includes maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding of 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 statement that give
a true and fair view and are free from material misstatement, whether due to fraud or
error. In preparing the financial statements, management is responsible for assessing the
Companys ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so. Those Board of Directors are also responsible for overseeing the
Companys financial reporting process.
Auditors Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors report that includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an audit conducted in accordance with SAs
will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
Paragraph 40(b) of this SA explains that the shaded material below can be located in an
Appendix to the auditors report. Paragraph 40(c) explains that when law, regulation or
applicable auditing standards expressly permit, reference can be made to a website of an
appropriate authority that contains the description of the auditors responsibilities,
rather than including this material in the auditors report, provided that the description
on the website addresses, and is not inconsistent with, the description of the auditors
responsibilities below.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under section 143(3)(i)
of the Companies Act, 2013, we are also responsible for expressing our opinion on whether
the company has adequate internal financial controls system in place and the operating
effectiveness of such controls. Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of managements use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Companys
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditors report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditors
report. However, future events or conditions may cause the Company to cease to continue as
a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit. We also
provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe these matters in our
auditors report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Other Matters
Refer to note no. 10 attached to the Financial statements, The amount of Loans and
Advances given, included in Advances recoverable in Cash or kind or for value to be
received, are closely monitored by Board of Directors and therefore no appraisal, renewal,
policies, procedures and documents has been executed.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
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 Companies Act, 2013, we give in the Annexure a statement on the matters specified in
paragraphs 3 and 4 of the Order, to the extent applicable.
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. Please refer
to other matter para.
(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,
(e) On the basis of the written representations received from the directors as on 31st
March, 2020 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2020 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”.
(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:
1. The Company has disclosed the impact of pending litigations on its financial
position in its financial statements.
2. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.
3. There has been no delay in transferring amounts, required to be transferred, to the
Investor Education and Protection Fund by the Company.
For Bhatter & Company
Chartered Accountants
Firm Registration No: 131092 W
UDIN:20016937AAAADG8187
Daulal H.Bhatter
Proprietor Membership No. 016937
Place: Mumbai
Date:23.06.2020
ANNEXURE A TO THE AUDITORS REPORT
The Annexure referred to in our Independent Auditors Report to the members of the
Company on the standalone financial statements for the year ended March 31st,
2020, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assets by
which fixed assets are verified in a phased manner over a period of one years. In
accordance with this program, certain fixed assets were verified during the year and no
material discrepancies were noticed on such verification. In our opinion, this periodicity
of physical verification is reasonable having regard to the size of the Company and the
nature of its assets.
(c) According to explanation given to us, the title deeds/ lease deeds are held in the
name of the company.
(ii) As explained to us, the inventory has been physically verified by the management
of company during the year. In our opinion, the frequency of such verification is
reasonable. The Discrepancies noticed on verification were not material and have been
dealt with in Books of Accounts.
(iii) (a) The Company has not granted loans to any party covered in the register
maintained under section 189 of the Companies Act,2013 (‘the Act) during the year.
(b) In the case of the loans granted to any parties in the register maintained under
section 189 of the act, the borrowers have been regular in the payment of the interest as
stipulated. The terms of arrangements do not stipulate any repayment schedule and the
loans are repayable on demand. Accordingly, paragraph 3(ii) (b) of the order is not
applicable to the company in respect of payment of the principal amount.
(c) There are no overdue amounts for period of more than ninety days in respect of the
loans granted to the bodies corporate listed in the register maintained under section 189
of the act.
(iv) In our opinion and according to the information and explanations given to us, the
Company has complied with provision of section 185 and 186 of Act, with respect to the
loan and investment made except for certain cases where no Interest has been charged
advances made which is not in accordance with 186 (7) of the Companies Act, 2013.
(v) The Company has not accepted any deposits during the year within the meaning of the
provisions of section 73 to 76 or any other relevant provisions of the Companies Act and
the rules framed there under.
(vi) The Central Government has not prescribed the maintenance of cost records under
section148 (1) of the Act, for any of the services rendered by the Company
(vii) (a) According to the information and explanations given to us and on the basis of
our examination of the records, the Company is regular in depositing undisputed statutory
dues including provident fund, income tax, service tax, cess and other material statutory
dues with the appropriate authorities. As explained to us, the Company did not have any
dues on account of sales tax, wealth tax, duty of customs, value added tax, employees
state insurance and duty of excise.
(b) According to the information and explanation given to us, there is no dispute
pending in respect of dues of provident fund/sales tax/wealth tax/service tax/custom
duty/excise duty/cess/value added tax except GST were in arrears as at 31st
march, 2020 for a period of more than six month from the date they became payable except
follows:
| Name of Statute |
Nature of Dues |
Rs.in lakhs |
Period to which the amount relates |
| Income Tax Act, 1961 |
ITAT, Mumbai |
0.99 |
FY 2005-06 |
| Income Tax Act, 1961 |
CPC TDS |
3.01 |
FY 2007-08 |
| Income Tax Act, 1961 |
CPC TDS |
4.18 |
FY 2008-09 |
| Income Tax Act, 1961 |
CPC TDS |
0.25 |
FY 2010-11 |
| Income Tax Act, 1961 |
ITAT, Mumbai |
0.18 |
FY 2011-12 |
| Income Tax Act, 1961 |
ITAT, Mumbai |
218.31 |
FY 2012-13 |
| MVAT |
STO-C-812-Business Audit |
15.45 |
FY 2009-10 |
| MVAT |
STO-C-812-Business Audit |
3.01 |
FY 2010-11 |
| MVAT |
STO-C-812-Business Audit |
17.78 |
FY 2011-12 |
| UVAT |
Commercial Tax Officer |
187.7 |
FY 2014-15 |
(viii) In our opinion and according to the information and explanation given to us, the
Company has defaulted in repayment of dues to the Banks, Financial Institutions. Accounts
of the Company have been classified as Non-Performing Assets (NPA) from December 2016. The
Company has not taken Loan or Borrowings from Government. The Details of Defaults is as
under:
Continuous defaults in repayment of Principal and interest thereon at the end of the
year to Banks are as under: (Rs. In Lakhs)
| Particulars |
Nature of Facility |
Total |
| Bank of India |
Cash Credit |
1132.07 |
| Bank of India |
Term Loan |
1160.05 |
(ix) The Company did not raise any money by way of initial public offer or further
public offer (including debt instruments) and term loans during the year. Accordingly,
paragraph 3 (ix) of the Order is not applicable.
(x) Based upon the audit procedure performed for purpose of reporting the true and fair
view of the Financial Statements and According to the information and explanations given
to us, no material fraud on or by the Company has been noticed or reported during the
course of our audit.
(xi) According to the information and explanations given to us and based on our
examination of the record of the Company, managerial remuneration has been paid/provided
in accordance with the requisite approvals.
(xii) In our opinion and according to the information and explanations given to us, the
company is not Nidhi Company. Accordingly, paragraph 3(xii) of Order is not applicable.
(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 Standalone financial statements as required by the
applicable accounting standards.
(xiv) The company has not made any preferential allotment or private placement of
shares or fully or partly convertible debentures during the year under review.
(xv) According to the information and explanations given to us and based on our
examination of the record of the Company, the company has not entered into any non-cash
transactions with directors or persons connected with him.
(xvi) According to the information and explanations given to us, the provisions of the
section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the company.
For Bhatter & Company
Chartered Accountants
Firm Registration No: 131092 W
UDIN:20016937AAAADG8187
Daulal H.Bhatter
Proprietor Membership No. 016937
Place: Mumbai
Date: 23.06.2020
ANNEXURE B TO THE 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 Syncom
Healthcare Limited (the Company) as of 31st March 2020 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 (the
“Guidance Note”) issued by the Institute of Chartered Accountants of India (the
“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 the
Companys policies, safeguarding of its assets, prevention and detection of frauds and
errors, accuracy and completeness of the accounting records, and 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 Guidance Note on Audit of Internal Financial Controls Over Financial Reporting
(the “Guidance Note”) and the Standards on Auditing, issued by ICAI and dee med
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 judgment, 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 authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection of
unauthorized 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.
Opinion
In our opinion, the company has, in all material respects, an adequate internal
financial control system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at march 31,2020, 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 control over financial reporting issued by the Institute of Chartered
Accountant of India.
For Bhatter & Company
Chartered Accountants
Firm Registration No: 131092 W
UDIN:20016937AAAADG8187
Daulal H.Bhatter
Proprietor Membership No. 016937
Place: Mumbai
Date: 23.06.2020
+91-9892691696
