To
The Members of Kumar Wire Cloth Manufacturing Company Limited.
Report on the Financial Statements
We have audited the accompanying standalone financial statements of Kumar Wire Cloth Manufacturing Company Limited("the Company"), which' comprise the Balance Sheet as at 31st March , 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Management’s Responsibility for the Standalone Financial Statements
The management and BoaH of Directors of the Company are responsible for the matters stated in Sectionl34(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 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; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the 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 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 standalone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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 Company's 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 Company's management and Board of 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.
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 31st March, 201f>, its Loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
. As required by the Companies (Auditor’s Report) Order, 2016 ("the Order”) issued by the Central Government of India in terms of sub-section (11) of sectionl43 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.
. As required by section 143(3) of the Act, we further 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, the Statement of Profit and Loss and 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 applicable Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.
e. On the basis of written representations received from the directors as on March 31, 2016, and 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 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"
g. In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:
i. The Company does not have any pending litigations which would impact its financial position except as stated otherwise.
ii. The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise. -
iii. Since, there has been no occasion during the year under report to transfer any sums to the Investor Education and Protection Fund, the question of delay in transferring such sum does not arise.
(Annexure "A" Referred to in Paragraph 1 under the heading "Report on other legal and regulatory requirements” of Our Report of Even Date.]
On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we state that:
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Clause
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Sub
Clause
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Particulars
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CO
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(a)
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The Company is in the process of updating records showing full particulars, including quantitative details and situation of fixed assets.
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(b)
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As per information given to us, Some of the Fixed Assets have been physically verified by the management at reasonable intervals and there were no material discrepancies noted during such verification.
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r
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(c)
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As per information and explanations given to us, the title deed of immovable property held in the name of the Company.
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(ii)
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(a)
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According to the information and explanations given to us, the inventories have been physically verified by the management at reasonable intervals.
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(b)
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According to the information and explanations given to us, the procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and its nature of business.
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(c)
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The Company is maintaining proper records of inventory and as explained to us there were no material discrepancies, noticed on physical verification of inventory as compared to the book records.
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Cni)
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According to information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered under section 189 of the Act. Accordingly paragraph 3(iii) of the said Order is not applicable.
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(iv)
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The Company has given the guarantee of Rs. 30 Lakhs for the Loan taken by Vishal Chairs Limited.
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O)
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According to information and explanations given to us, the Company has not accepted any deposits from the public covered under section 73 to 76 of the Companies Act, 2013 and the rules framed there under. Therefore, the provision of clause 3(v) of the Order is not applicable.
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(vi)
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To the best of our knowledge and as explained, Central Government has not prescribed the maintenance of cost records under sub-section (1) of section 148 of the Act, for the products of the Company, Therefore, the provisions of Clause 3(vi) of the Order is not applicable to the Company.
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(vii)
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(a)
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According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is regular in depositing the undisputed statutory dues, including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities except the undisputed statutory dues as per the scheme defined by the Board for Industrial and Financial Reconstruction (BIFR). However as per the Draft Rehabilitation Scheme sanctioned by BIFR vide its Order dated February 25, 2010, Following are the undisputed statutory dues as on 31st March, 2016:
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Particulars .
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Amount (Rs.)
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Interest on Sales Tax
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59,06,618/-
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Central Sales Tax (CST)
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2,49,181/-
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Interest on Income Tax
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45,57,213/-
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Gram panchayat Tax
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1,38,564/-
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(b)
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According to the information and explanations given to us, the dues of Income tax, wealth tax, sales tax, custom duty, excise duty, and cess which have not been deposited on account of dispute is as follows:
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Statute
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Nature of Dues
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Forum where Dispute is pending
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Period to which the Amount Relates.
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Amount Involved (In Rs.)
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Income Tax Act. 1961
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Assessment
Dues.
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Income Tax
Appellate
Tribunal
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A.Y. 200809
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39,782/-
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Income Tax Act, 1961
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Penalty
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Income Tax
Appellate
Tribunal
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A.Y. 200809
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1,27,68,676/-
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Income Tax Act, 1961
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Assessment
Dues.
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Commissioner of Income Tax
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A.Y. 201112
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11,48,990/-
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Maharashtra Value Added Tax Act
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Assessment
Dues.
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Deputy
Commissioner of Sales Tax
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F.Y. 20102011
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297335/-
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Clause
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Sub
Clause
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Particulars
/
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(viii)
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Based on our audit procedures and as per the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or banks during the year.
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(ixj
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As informed to us, The Company had not taken any term loan during the year.
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W
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Based on the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the company has been noticed or reported during the year.
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[xij
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According to the records of the company examined by us and as per the information and explanations given to us, the managerial remuneration has been paid or provided in accordance with the provisions of section 197 read with schedule V of the Companies Act.
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(xii)
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In our opinion the Company is not a chit fund or a Nidhi/mutual benefit fund/society Therefore, the provision of clause 3 (xii) of the Order is not applicable to the Company.
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(xiii)
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In our opinion, all the transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable and the details have been disclosed in the financial statements as required by applicable accounting standard. (Refer Note No 30.)
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(xiv)
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According to the information and explanations given to us, The company has not made any preferential allotment or private placement of shares or partly convertible debentures during the year; therefore reporting under Clause (3) (xiv) of the Order is not applicable to the Company.
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(XV)
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According to the information and explanations given to us, we report that the company has not entered into any non-cash transaction with directors or persons connected with him.
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(xvi)
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In our opinion the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
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Kumar Wire Cloth Manufacturing Company Limited.
Independent Auditors’ Report to the Members of Kumar Wire Cloth Manufacturing Company Limited.
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”)
In conjunction with our audit of the standalone financial statements of the Company as of and for the year ended 31 March 2016, we have audited the internal financial controls over financial reporting of Kumar Wire Cloth Manufacturing Company Limited', ("the Company’’].
Management’s Responsibility for Internal Financial Controls
The Respective Board of Directors of the Company are 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 company's 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 Company's 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”) issued by ICAI 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 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 auditor’s 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 Company’s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's 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 company's 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 company's 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 controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 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 ICAI.
FOR: AMAR BAFNA& ASSOCIATES
CHARTERED AACCOUNTANTS
ICAI Firm Registration No: 114854W
Membership No: 048639
Place: Mumbai
Date: May 30, 2016
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