To the Members of MAHA RASHTRA APEX CORPORATION LIMITED
Report on the Audit of the Financial Statements Qualified
We have audited the financial statements of MAHA RASHTRA APEX CORPORATION LIMITED (the Company) which comprise the balance sheet as at March 31 2019 and the statement of Profit and Loss (Including Other Comprehensive Income) the statement of cash flows and Statement of Changes in Equity for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information. (hereinafter refer to standalone financial statements).
In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matter described in the Basis for Qualified Opinion section of our report aforesaid the financial statements give the information required by the companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with (Indian Accounting Standards Prescribe under Section 133 of the Act read with the companies (Indian Accounting Standards) Rules 2015 as amended (Ind AS) and other accounting principles generally accepted in India of state of affairs of the Company as at March 312019 and its profit total comprehensive income its cash flows and the changes in equity for the year ended on that date.
Basis for Qualified Opinion
a. Investment in one of Its Associate Kurlon Limited Not Shown at Fair Value (FVOCI) In absence of latest Audited Financial Statement we are unable to quantify its effect on the value Investment and Other Comprehensive Income and corresponding previous year figures are incomparable.
b. MAT Provision Amounting to `42.85 Lakhs provided in the last quarter however company has not paid any advance tax for the current financial Year.
We conducted our audit in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilities under those Standards are further described in the Auditor's 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 we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the financial statements.
Emphasis of matter
a. As per the scheme sanctioned by Honourable High Court of Karnataka vide order dated 8th October 2004 all Deposit/ Bonds should have been repaid by 15.06.2009. The balance outstanding as on date are shortfall of repayment is ?` 5270.33 Lakhs.
b. RBI has cancelled the Certificate of Registration Granted to the company to Act as NonBanking Financial Company by its order dated 13th June 2002.
c. Unpaid creditors being outstanding Bonds / Deposit with Interest under Other Financial Liability- Current Includes Rs.60693454.83 Deposit Bonds Pending Realisation year wise/ Instalment wise reconciliation not produced for verification.
d. Company entered into an agreement between Kurlon Enterprises Limited and Kurlon Limited. Total amount credited to Kurlon Limited Account is Rs.116001879.35 up to 31-3-2019. Out of which Rs.11992233 Kurlon Limited directly settled Maha Rashtra Apex corporation Deposit/Bond Liability which is adjusted towards Advance for Property purchase during the year.
Our opinion is not modified in respect of these matters.
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. In addition to the matter described in the Basis for Qualified Opinion section we have determined the matters described below to be the key audit matters to be communicated in our report.
1. Evaluation & Assessment of ongoing income tax litigations:
[Refer to Note 36 (a) & (b) (contingent liability) as at 31st March 2019 company is subject to a number of significant Income tax Litigations these matters are pending before higher applet authority these litigations have been disclosed as contingent liabilities for which no provision is made in the in the financial statements management expects favourable outcome of these liabilities. Given uncertainty in this area of eventual outcome of these litigations involves significant judgement we determine this to be a key audit Matters.
We have obtained the details of completed tax assessments and demands received from the management. Managements estimates and assumptions regarding possible outcome of the disputes. We did not identify any significant exceptions to the managements assessment of ongoing income tax and indirect tax litigations as a result of the above procedures.
Information Other than the Financial Statements and Auditor's Report Thereon
The company's Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis Board 's Report including Annexures to Board's Report Business Responsibility Report Corporate Governance and Shareholder's Information but does not include the standalone financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. As described in the Basis for Qualified Opinion section above we have nothing to this regard.
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 Act with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance including other comprehensive income cash flows and changes in equity 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 and Companies (Indian Accounting Standards) Rules 2016 as amended from time to time 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 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 Company's 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.
The board of directors are also responsible for overseeing the Company's financial reporting process.
Auditor's 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 auditor's 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.
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 suchcontrols
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's 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 auditor's 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.
Materiality is the magnitude of misstatements in the financial statements that individually or in aggregate makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.
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 auditor's 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.
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 section 143 of the Companies Act 2013 we give in Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.
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;
(b) Except for the effect 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 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) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above in our opinion the aforesaid financial statements comply with the accounting standards specified under section 133 of the Act read with rule 7 of the Companies (Accounts) Rules2014;
(e) On the basis of the written representations received from the directors as on March 31 2019 taken on record by the board of directors none of the directors is disqualified as on March 31 2019 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. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting;
(g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197 (16) of the Act as amended in our opinion and to the best of our information and according to the explanations given to us the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act; and
(h) 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;
a. The Company has disclosed the impact of pending litigations on its financial position in its financial statements -ReferNote 36 to the financial statements;
b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and
c. Refer to Note No 30. The entire deposit liability is covered under the scheme of arrangement hence the transfer of unclaimed deposit and remaining unpaid for a period of exceeding 7 years to Investor Education and Protection fund the question of delay in transferring such sums does not arise.
FOR MAIYA AND MAIYA
Chartered Accountants Firm
Registration No: 001944S
RAVI PRASAD K
MEMBER SHIP NO: 228348
Annexure A to the Independent Auditor's Report*
(Referred to in paragraph 1 under 'Report on other legal and regulatory requirements' section of our report to the members of MAHA RASHTRA APEX CORPORATION LIMITED of even date)
1. In respect of the Company's fixed assets:
(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The fixed assets of the Company were physically verified in full by the management during the year. According to the information and explanations given to us and as examined by us no material discrepancies were noticed on such verification. In respect of Assets on lease have not been physically certified by the management as most of the assets are under legal proceedings. Material discrepancies noticed (if any) on such verification have been property dealt with in the books of accounts.
(c) According to the information and explanations given to us the records examined by we report that the title deeds comprising all the immovable properties of land and buildings which are freehold are held in the name of the Company as at the balance sheet date.
2. The nature of business of the company does not require it to have any inventory. Hence the requirement of clause (ii) of paragraph 3 of the said order is not applicable to the company.
3. According to information and explanation given to us the company has not granted any loan secured or unsecured to companies firms limited liability partnerships or other parties covered in the register required under section 189 of the Companies Act 2013. In respect of loans granted earlier years the repayment of loans is not regular but the company has taken proper steps to recover the same.
4. In our opinion and according to information and explanation given to us the company has not granted any loans or provided any guarantees or given any security or made any investments to which the provision of section 185 and 186 of the Companies Act 2013. Accordingly paragraph 3 (iv) of the order is not applicable.
5. In our opinion and according to the information and explanations given to us the company has not accepted any deposits and accordingly paragraph 3 (v) of the order is not applicable.
6. The Central Government of India has not prescribed the maintenance of cost records under sub-section (1) of section 148 of the Act for any of the activities of the company and accordingly paragraph 3 (vi) of the order is not applicable.
7. In respect of statutory dues:
(a) According to the information and explanations given to us and on the basis of our examination of the records of the Company amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including providentfund employees' state insurance income-tax State Tax Goods and Service Tax Custom duty Excise duty and other material statutory dues as applicable with appropriate authorities in India
(b) According to Information and expiations given to us and based on the records of the company examined by us there are no dues of Income tax service tax Sales tax custom duty and excise duty which have not been deposited to any disputes. Disputed Income tax liability amounting to ? 264.82 Lakhs for the assessment year 1998-99 to 2000-01 are pending for disposal. This demand raised on account of disallowance of depreciation on leased asset and bad debts. The said demand is adjusted against refund due to the company Disputed sales tax amounting to Rs. 17.54 Lakhs in Andhra Pradesh pending for disposal sales tax appellate Tribunal.
8. The Company has not borrowed loans from Banks Financial institution government authorities. In respect of Debenture interest accrued there on up to 31.03.2002 the company is in the process of repayment as per the scheme of compromise and arrangement sanctioned by the Honorable High Court of Karnataka dated 8th October 2004.
9. As Informed the company has not raised money by way of Initial Public offer/ Further Public Offer (Including debt Instrument) during the year.
10 During the course of our examination of the books and records of the company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us we have neither come across any instance of fraud by the company or any fraud on the company by its officers or employees noticed or reported during the year nor have we been informed of any such instance by the management.
11. In our opinion and according to the information and explanations given to us the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.
12. The Company is not a Nidhi Company and accordingly paragraph 3 (xii) of the order is not applicable to the Company.
13. 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 section 177 and 188 of the Act. Where applicable the details of such transactions have been disclosed in the financial statements as required by the applicable Indian accounting standards (Ind AS) However In respect of Rajmahal Hotels Limited and advance from Kurlon limited in absence of adequate evidence we are unable to comment upon related party transaction entered in respect of arm's length price.
14 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. Accordingly paragraph 3(xiv) ofthe order is not applicable.
15 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 them. Accordingly paragraph 3(xv) of the order is notapplicable.
16 The Certificate of registration granted to the company as Non-Banking Financial company under section 45-IA of the Reserve Bank of India Act 1934 has been cancelled by an order dated 13th June 2002.
FOR MAIYA AND MAIYA
Firm Registration No: 001944S
RAVI PRASAD K
MEMBER SHIP NO: 228348
Annexure B to the Independent Auditor's Report
(Referred to in paragraph 2 (f) under 'Report on other legal and regulatory requirements' section of our report to the Members of MAHA RASHTRA APEX CORPORATION LIMITED of even date)
Report on the internal financial controls over financial reporting 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 MAHA RASHTRA APEX CORPORATION LIMITED (the Company) as at March 31 2019 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 board of directors of the Company 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. These responsibilities include the design implementation andmaintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its business 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.
Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company 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 the Institute of Chartered Accountants of India and the standards on auditing prescribed under Section 143 (10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls. 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 were 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 judgement including the assessment ofthe risks of material misstatement in 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 control 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 (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.
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 of 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.
In our opinion and according to the information and explanations given to us 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 2019 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.
FOR MAIYA AND MAIYA
Chartered Accountants Firm
Registration No: 001944S
RAVI PRASAD K
MEMBER SHIP NO: 228348