Report on the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of SHALIMAR WIRES INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows 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 Company's 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.
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 judgements 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these Standalone Financial Statements based on our audit. In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and the 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 issued under section 143(11) of the Act.
We conducted our audit of the Standalone Financial Statements 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 auditor’s judgement, including 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 Company's 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 Company’s Directors, as well as evaluating the overall presentation of the standalone financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Standalone Financial Statements.
Basis for Qualified Opinion
(a) No provision has been made for Claims Receivable remaining outstanding for long, amounting to Rs. 26.98 lacs (Refer Note No. 8)
(b) The Accounting Standard on Contingent Liabilities have not been fully complied with as disclosed in Footnote No. 2 to 4 of Note No. 35, the quantum of non-provision in respect whereof is not ascertained pending settlement / disposal of disputes.
(c) Non-provision of Items indicated in (a) and (b) above constitute a departure from the Indian Accounting Standards referred to in Section 133 of the Act. Without considering Item Nos. (c) above, whose impact on the Company's Statement of Profit and Loss is presently non-ascertainable, had the provisions indicated in Item Nos. (a) been made,
(i) The Profit for the year would have decreased by Rs. 26.98 lacs
(ii) Other Non-Current Assets would have decreased by Rs. 26.98 lacs
(iii) The Retained Earnings would have been lower by Rs. 26.98 lacs.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid Standalone Financial Statements give the information 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, 2018 and its profit, total comprehensive income, the changes in equity and its cash flows for the year ended on that date.
Emphasis of Matters
We draw your attention to the following matter in the Notes to the Standalone Financial Statements:
1. Note No. 35 to the financial statements, which describe the uncertainty related to the outcome of the lawsuits indicated therein.
Our opinion is not modified in respect of the above matter.
Report on Other Legal and Regulatory Requirements
i) As required by the Companies (Auditor's Report) Order, 2016 ("the Order") issued by the Central Government in terms of Sub-section (11) of Section 143 of the Act, we enclose in the Annexure - A, a statement on the matters specified in the said Order, to the extent applicable to the Company.
ii) As required by Section 143(3) of the Act, based on our audit we report that
a) We have sought and, except for the matters described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;
b) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, 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 including Other Comprehensive Income, Statement of Changes in Equity and the Statement Cash Flows dealt with by this Report are in agreement with the books of account;
d) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act.;
e) The matters described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;
f) On the basis of written representations received from the Directors as on 31st March, 2018 taken on record by the Board of Directors, none of the Director is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164(2) of the Act.
g) 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. Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting in the matters of Sales.
h) With respect to the other matters to be included in the Auditor's Report in accordance with amended Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, 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, wherever ascertainable -Refer Note No. 35
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable loss.
iii. The Order dated 10th June, 2010, of the erstwhile Board for Industrial and Financial Reconstruction, has exempted the Company from transferring any amount to the Investor Education and Protection Fund.
The Annexure referred to in our report to the members of Shalimar Wires Industries Limited for the year ended 31st March, 2018.
We report that :
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(i) (a) Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;
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(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets.
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(b) Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;
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(b) The fixed assets have been physically verified under a phased program of physical verification. To the best of our knowledge, no material discrepancies were noticed on such verification.
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(c) Whether the title deeds of immovable properties are held in the name of the company. If not, provide the details thereof;
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(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties, which remain deposited with the ICICI Bank, are held in the name of the Company, subject to charges created in favour of the lenders of the Company.
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(ii) Whether physical verification of inventory has been conducted at reasonable intervals by the management and whether any material discrepancies were noticed and if so, whether they have been properly dealt with in the books of account;
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(ii) The Inventories have been physically verified by the management at reasonable intervals during the year and discrepancies noticed on such physical verification, which were not material, have been properly dealt with in the books of account.
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(iii) Whether the company has granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. If so,
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(iii) During the year the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.
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(a) whether the terms and conditions of the grant of such loans are not prejudicial to the company’s interest;
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(a) Not applicable
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(b) whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular;
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(b) Not applicable
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(c) if the amount is overdue, state the total amount overdue for more than ninety days, and whether reasonable steps have been taken by the company for recovery of the principal and interest;
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(c) Not applicable
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(iv) In respect of loans, investments, guarantees, and security whether provisions of section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide the details thereof.
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(iv) The Company has not given any loan within the meaning of Section 185 of the Act. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Section 186 of the Act, with regard to investments made.
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(v) In case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act,2013 and the rules framed there under, where applicable, have been complied with? if not, the nature of such contraventions be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not?
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(v) The Company has not accepted any deposit within the meaning of Section 73 of the Companies Act.
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(vi) Where maintenance ofcost records has been specified bythe Central Government under sub-section (1) of section 148 of the Companies Act, 2013 and whether such accounts and records have been so made and maintained.
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(vi) The Central Government has specified maintenance of cost records under Section 148 (1) of the Companies Act, 2013 for Metal Wire Cloth manufactured by the Company. We have broadly reviewed such accounts and records and we are of the opinion that the accounts and records have been made and maintained by the Company. However, we have not made any detailed examination of such records in order to ascertain whether those are complete and accurate.
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(vii) (a) Whether the company is regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated;
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(vii) (a) According to the records, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Custom Duty, Excise Duty and other statutory dues with appropriate authorities, except the following amounts which are outstanding as on 31st March 2018 for a period of more than six months from the date of becoming payable:
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Name of Act
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Nature of Dues
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Years
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Amount (Rs) in Lacs)
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CST ACT 1958
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Sales Tax
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2003-04
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0.72
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Bombay Stamp Act 1958.
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Stamp Duty and interest thereon
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2001-10
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210.32
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As explained to us, the Company does not have any dues in respect of Wealth Tax, Service Tax and Cess.
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(b) Where dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not be treated as a dispute)
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(b) The disputed statutory dues aggregating to Rs 1207.16 Lacs (inclusive of amounts not provided in financial statement) that have not been deposited on account of matters pending before appropriate authorities are as under:
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Nature of dues
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Amount (Rs in Lacs)
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Year which it relates
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Forum
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Vat & Penalty
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0.34
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1980-81
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The Additional Commissioner of Commercial Taxes, Kolkata
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Vat ,
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0.54
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1993-94,
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The Additional Commissioner of Commercial Taxes, Kolkata
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Tax , Penalty & Interest
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1.22
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1988-89
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The West Bengal Commercial Taxes Appellate & Revision Board, Kolkata
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Nature of dues
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Amount (Rs in Lacs)
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Year which it relates
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Forum
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Tax & Penalty
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31.92
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2000-01 to 2006-07
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The West Bengal Taxation Tribunal
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Tax & Penalty
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0.44
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2011-12
2012-13
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The West Bengal Commercial Taxes Appellate & Revision Board, Kolkata
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CST , Interest & Penalty
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133.45
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1995-96 to 2012-13
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The Sr.Joint Commissioner of Commercial Taxes
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Central Excise Tax & Penalty
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70.66
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1992, 1994, 1996, 2003, 2004
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Commissioner (Appeals) Central Excise, Kolkata-IV
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Central Excise Tax & Penalty
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31.29
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2006, 2009, 2010, 2011, 2012, 2013
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Commissioner (Appeals) Central Excise, Kolkata-IV
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Central Excise Tax & Penalty
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108.55
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2014 to 2016
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Commissioner (Appeals) Central Excise, Kolkata-IV
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Central Excise Tax & Penalty
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11.23
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1989-90
2005-06
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Hon’ble High Court, Mumbai
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Central Excise Tax & Penalty
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4.34
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2003-04
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Commissioner (Appeals) Nashik
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Central Excise Tax & Penalty
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1.73
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2002-03
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Commissioner (Appeals) Nashik
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Central Excise Tax & Penalty
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82.04
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2002-03
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Commissioner of Central Excise & Custom (Appeals) Nashik
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Penalty of Custom Duty
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475.61
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2002-03
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Commissioner of Export (III) (JNPT) Nashik
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Penalty of Custom Duty
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15.60
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2002-03
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Commissioner of Custom(EP) (Appeals) Mumbai
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Sales Tax
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0.62
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1999-2002
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The Asst. Commissioner, Sales Tax, Delhi
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Sales Tax & Penalty
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5.50
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1999-00
2002-03
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The Asst. Commissioner, Sales Tax, Ahmedabad
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Sales Tax & Penalty
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213.50
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2004
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The Asst. Commissioner, Sales Tax, Nasik.
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Tax, Nasik Municipal Corpn.
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11.69
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1989-90
&1991-92
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Hon’ble High Court, Mumbai.
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Tax & Penalty Nasik Municipal Corpn.
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6.88
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2007-08
2008-09
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Hon’ble High Court, Mumbai
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(viii) Whether the company has defaulted in repayment of loans or borrowing to a financial institution, bank, Government or dues to
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(viii) The Company has made following default in repayment of dues to Financial Institution and Debenture Holders:
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be reported (in case of defaults to banks, financial institutions, and Government, lender wise details to be provided).
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Financial Institution
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Amount (Rs in lacs)
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Period of default
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Term Loan
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SICOM
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47.58
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Mar '10 to Mar '14
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Sale Tax Loan (Under Sales Tax Deferral Scheme)
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269.06
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Mar '10 to Mar '14
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Also Refer to Footnotes No (v) of Note No 17 to Financial Statements.
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(ix) Whether moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans were applied for the purposes for which those are raised. If not, the details together with delays or default and subsequent rectification, if any, as may be applicable, be reported;
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(ix) The Company did not raise any money by way of initial public offer of further public offer (including debt instruments) during the year. According to the information and explanations given to us, the Term Loan raised during the year had been applied for the purposes for which the same was raised.
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(x) Whether any fraud by the company or any fraud on the Company by its officers or employees has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated;
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(x) Based upon the audit procedure performed and the information and explanation given by the Company, we report that no fraud on or by the Company has been noticed or reported during the year that causes the financial statements materially misstated.
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(xi) Whether managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act? If not, state the amount involved and steps taken by the company for securing refund of the same;
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(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/ provided for managerial remuneration in accordance with the requisite approval mandated by the provisions of Section 197 read with Schedule V of the Act.
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(xii) Whether the Nidhi Company has complied with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability and whether the Nidhi Company is maintaining ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability;
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(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.
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(xiii) Whether all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards;
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(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 financial statements as required by the applicable accounting standards.
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(xiv) Whether the company has made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and if so, as to whether the requirement of section 42 of the Companies Act, 2013 have been complied with and the amount raised have been used for the purposes for which the funds were raised. If not, provide the details in respect of the amount involved and nature of non-compliance;
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(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
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(xv) Whether the company has entered into any non-cash transactions with directors or persons connected with him and if so, whether the provisions of section 192 of Companies Act, 2013 have been complied with;
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(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.
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(xvi) Whether the company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and if so, whether the registration has been obtained.
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(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
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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 Shalimar Wires Industries Limited ("the Company") as of 31 March 2018 in conjunction with our audit of the Financial Statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The Company's 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 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") 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 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 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 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.
Qualified Opinion
According to the information and explanations given to us and based on our audit, the following material weakness has been identified as at 31 March, 2018:
a) The Company's internal control system for customer acceptance, credit evaluation and establishing customer credit limits for sales need to be strengthened adequately so as to negate the potential possibility of recognising revenue without establishing reasonable certainty of ultimate collection.
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 on the Company's annual or interim financial statements will not be prevented or detected on a timely basis.
In our opinion, except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of March 31, 2018, 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.
We have considered the material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2018 Financial Statements of the Company, and the material weakness does not affect our opinion on the Financial Statements of the Company.
For KHANDELWAL RAY & CO.,
Chartered Accountants
FR No.302035E
(S. KHANDELWAL)
Place : Kolkata Partner
Date : 23.05.2018 (Membership No. 054451)
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