We have audited the accompanying financial statements of HANUNG TOYS
AND TEXTILES LIMITED ("the Company"), which comprise the Balance Sheet
as at 31st March, 2015, the Statement of Profit and Loss and the Cash
Flow Statement for the year then ended and a summary of the significant
accounting policies and other explanatory information.
2) Management's Responsibility for the 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 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 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 financial statements are free
from material misstatements.
An audit involves performing procedures to obtain audit evidence about
the amounts and the 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 control relevant to the
Company's preparation and presentation 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 to the operating
effectiveness of such control. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Management/Company's Directors,
as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the standalone
financial statements.
4) Opinion
In our opinion and to the best of our information and according to the
explanations given to us, 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 31st March, 2015, and its loss and its cash flows for the year ended
on that date.
5) Emphasis of Matter
Without qualifying our opinion, we draw attention to note no. 3.1 to
the financial statement. We report that the Company has incurred a net
loss of Rs. 126,722.84 Lacs during the year ended March 31, 2015 and
the accumulated losses of the Company as at March 31, 2015 amount to
Rs. 147,888.29 Lacs leading to erosion of its entire net worth. The
current liabilities of the Company as at the same date exceed its
current assets by Rs. 16,123.94 Lacs . These conditions indicate the
existence of a uncertainty and cast significant doubt about the
Company's ability to continue as a going concern, which is dependent on
the Company being supported by its lenders and achieving a profitable
level and state of operation.
6) Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government in terms of Section 143(11) of
the Act, we give in the Annexure a statement on the matters specified
in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that:
(a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
(b) In our opinion, proper books of account as required by law 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, 2014;
(e) On the basis of the written representations received from the
directors as on March 31, 2015, taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015,
from being appointed as a director in terms of Section 164 (2) of the
Act.
(f) With respect to the other matters to be included in the Auditor's
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, in accordance with the generally accepted
accounting practice, disclosed the impact of pending litigations on its
financial position in its financial statements- Also refer Note 14.1,
14.2, 30.1 to 30.8 to the financial statements.
(ii) The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses under the applicable law or accounting standard.
(iii) There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company .
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory
Requirements' section of our report of even date on the accounts of
Hanung Toys and Textiles Limited ("the Company") for the year ended
March 31, 2015
1) In respect of fixed assets:
a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
b) As explained to us and according to the practice of the Company, all
the fixed assets have been physically verified by the management during
the year, which in our opinion, is reasonable having regard to the size
of the Company and the nature of its assets. According to the
information and explanations given to us, discrepancies noticed, if
any, on physical verification have been adjusted in the books of
accounts.
2) In respect of inventory:
a) As explained to us, the inventory was physically verified during the
year by the Management and independent Auditors appointed by bank at
reasonable interval during the year.
b) In our opinion and according to the information and explanation
provided to us, the procedure and frequency of verification of
inventories carried out by the management is reasonable and adequate in
relation to the size of the Company and nature of its business.
c) The Company has maintained proper records of inventories. As
explained to us, the observation of Stock Auditors and discrepancies
noticed on physical verification as compared to book records have been
properly dealt with in the books of account for the year ended March
31, 2015.
3) According to the information and explanations given to us and on the
basis of our examination of the books of account, the Company has not
granted/taken any loans, secured or unsecured to/from companies, firms
or other parties covered in the register maintained under Section 189
of the Companies Act, 2013 and accordingly, the provisions of clauses
(iii) of paragraph 3 of the Order are not applicable to the Company.
4) In our opinion and according to the information and explanations
given to us, there is generally an adequate internal control procedure
commensurate with the size of the Company and the nature of its
business, for the purchase of inventories & fixed assets and payment
for expenses & for sale of goods. During the course of our audit, no
major instances of continuing failure to correct any weaknesses in the
internal controls have been noticed.
5) According to the information & explanation given to us, the Company
has not accepted any deposits and accordingly, the provision of clause
(v) of paragraph 3 of the Order are not applicable to the Company.
6) We have broadly reviewed the cost records maintained by the Company
pursuant to the Companies (Cost Records and Audit) Rules, 2014
specified by the Central Government under Section 148 of the Companies
Act, 2013 and are of the opinion that prima facie the prescribed cost
records have been maintained. We have, however, not made a detailed
examination of the cost records with a view to determine whether they
are accurate or complete.
7) According to the information & explanation given to us and on the
basis of our examination of the records of the Company, in respect of
statutory dues;
a) The Company has not been generally regular in depositing undisputed
statutory dues including provident fund, employees' state insurance,
income tax, sales tax, wealth tax, service tax, duty of customs, duty
of excise, value added tax, cess and other material statutory dues
applicable to it with appropriate authorities during the year. Details
of the outstanding statutory dues as at March 31, 2015 have been given
in the note no. 7.1 of the financial statements. According to the
information and explanation given by the Company, there are some
undisputed amounts payable in respect of Employee's state insurance,
Employee's provident fund, Tax deducted at source, Sales Tax of Rs.
96.81 lacs, Rs. 224.50 lacs, Rs. 24.00 lacs and Rs. 29.75 lacs
respectively, which were outstanding, as at March 31, 2015, for a
period of more than six months from the date they became payable.
b) According to information and explanation given to us and the records
of the Company examined by us, there are no dues of wealth tax, service
tax, sales tax, duty of custom and duty of excise which have not been
deposited on account of any dispute. The particular of dues of income
tax as at March 31, 2015 which has not been deposited on account of any
dispute, are as follow-
Name of the Nature of dues Amount Rs. Period to which
status in lacs the amount relates
Income Tax
Act, 1961 Income tax including 334.17 Assessment Year
interest, as applicable 2006-07
Income Tax
Act, 1961 Income tax including 440.44 Assessment Year
interest, as applicable 2009-10
Income Tax
Act, 1961 Income tax including 196.23 Assessment Year
interest, as applicable 2010-11
Name of the
Statute Forum where the
dispute is pending
Income Tax
Act,1961 Income-tax
Appellate Tribunal
Income Tax
Act,1961 Income-tax
Appellate Tribunal
Income Tax
Act,1961 Appellate Authority
-up to Commissioner's level
c) According to information and explanation given to us and the records
of the Company examined by us, there are no amount required to be
transferred to Investor Education and Protection Fund in accordance
with the relevant provision of the Companies Act, 1956 (1 of 1956) and
rules made there under.
8) The Company have accumulated losses at the end of the financial year
are in excess of 50% of its net worth. The Company has net loss of Rs.
1267.23 Crores and has incurred cash loss of Rs. 1204.87 Crores during
the financial year covered by our audit and a net loss of Rs. 495.78
Crores in the immediately preceding financial year.
9) Based on our audit procedures performed and based on the information
and explanations given by the management, we are of the opinion that,
the Company had defaulted in repayment of dues to financial institution
and banks. The Company had approached its lead banker for restructuring
of its debt under CDR mechanism. The Restructuring scheme has been
approved by the CDR cell in the meeting held on 23rd May, 2014 and the
same was informed to the Company on 16th June, 2014. The Master
Restructuring Agreement has been prepared and signed by the consortium
member banks (except Edelweiss ARC, assignee of SBI) and the other
lenders/banks had restructured the accounts as per the approved CDR
scheme, which restructuring is continuing as on the Balance Sheet date.
Apart from the above, the balance as on March 31, 2015 of Central Bank
of India, State Bank of India, Bank of Maharastra, Karur Vysa Bank and
Union Bank of India is as per books of account for want of confirmation
thereof from these banks. We further report that during the financial
year covered by our audit most of the banks have classified the
accounts of the Company either Sub-Standard or NPA. The Company had not
issued any debenture during the year and hence, there is no default as
such to be reported.
10) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions. Accordingly, the provision of clause
(x) of paragraph 3 of the Order is not applicable to the Company.
11) Based on our audit procedures and on the information given by the
management, we report that the Company has not obtained any term loans
during the year. However, term loans obtained in earlier years had been
applied for the purpose for which they were obtained.
12) To the best of our knowledge and according to the information and
explanations given to us, and considering the size and nature of the
Company's operations, no fraud of material significance on the Company
or no fraud by the Company has been noticed or reported during the
year.
For RAVINDRA SHARMA & ASSOCIATES
Chartered Accountants(CA
(Ravindra Sharma)
Date : May 30, 2015 Partner
Place : Noida Membership No.: 085271 |