To The Members Of UNIWORTH LIMITED
Report on the Financial Statements
We have audited the accompanying Standalone Financial Statements of UNIWORTH LIMITED("the Company") which comprise the Balance Sheet as at 31st March 2018 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and a summaryof the Significant Accounting Policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies act 2013 ("the Act") with respect to the preparation ofthese Standalone Financial Statements that give a true and fair view of the financialposition financial performance including other comprehensive income changes in equityand 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 AccountingStandards) Rules 2015 as amended and other accounting principles generally accepted inIndia.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgements and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these Standalone Financial Statementsbased on our audit. In conducting our audit we have taken into account the provisions ofthe Act the accounting and auditing standards and the matters which are required to beincluded 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 theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Standalone Financial Statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Standalone Financial Statements. The procedures selected depend onthe auditor's judgement including assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Standalone Financial Statements.
Basis for Qualified Opinion
1. Footnote (2) to Note No. 31 regarding interest provision on borrowings from some ofthe institutions and banks which has been made in the financial statements under simpleinterest method at the prevailing / estimated rates applicable on such loans in absence ofrelevant documents/confirmations as a result of which impact of compound interest/penalcharges wherever applicable having not been ascertained as well as the note thereinregarding the matter of dispute between the Company and the Bankers/Creditors inconnection with charging of interest payment and payment of principal.
2. Footnote No (3) to Note No. 31 regarding non-provision of Interest on certain loansand the impact of the non-provision is not presently ascertainable.
3. Footnote No.1 and 4 (i) (ii) (Hi) and (iv) of Note No. 10 regarding overdue ExportBills amounting to Rs 47802.46. lakhs outstanding for long which in our opinion aredoubtful of recovery against which adequate provision has not been made in the financialstatements.
4. Footnote 1 of Note No.13 regarding Claims Receivable amounting to Rs. 689.36 lakhsdue from various banks outstanding for long which in our opinion are doubtful of recoveryagainst which adequate provision has not been made in the financial statements.
5. Footnote 2 of Note No. 14 regarding Miscellaneous Advance of Rs. 3499.95 lakhs duefrom certain parties and Footnote 1 of Note No. 14 regarding Advance relating to Companiesof Rs. 1511.64 lakhs respectively which in our opinion are considered doubtful ofrecovery against which adequate provision has not been made.
6. Footnote 2 of Note No. 11 relating to non-accounting in an earlier year ofwithdrawals / other transactions from certain Bank accounts due to reasons stated on thesaid Note 11 (2).
7. In absence of any workings for impairment of assets as per Indian AccountingStandard (Ind AS) 36 Impairment of Assets the impact of such impairment is notascertainable.
8. Non-provision / non-compliance of items indicated in (2) to (7) above constitute adeparture from the Accounting Standards referred to in Section 133 of the Act. Withoutconsidering item Nos (1) (2) (6) and (7) above whose impact on the Company's Statementof Profit and Loss is presently non-ascertainable had the provisions indicated in itemNos. (3) to (5) been made
(i) Loss for the year would have increased by Rs. 53502.91 lakhs
(ii) Trade Receivables would have been decreased by Rs.47802.46 lakhs
(iii) Other Financial Assets would have been decreased by Rs.689.36 lakhs
(iv) Other Current Assets would have been decreased by Rs.5011.09 lakhs
(v) The Retaining Earnings/(-)Loss would have been higher by (-)Rs.53502.91 lakhsQualified Opinion
In our opinion and to the best of our information and according to the explanationsgiven to us except for the like effects of the matters described in the Basis forQualified Opinion paragraph above the aforesaid Financial Statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31 st March 2018 and its loss and its cash flows for the year ended on thatdate.
Emphasis of Matters
We draw your attention to the following matters in the Notes to the FinancialStatements:
1. Following Notes to the Financial Statements describe the uncertainty related to theoutcome of the lawsuits /other legal matters and matters under settlements indicatedtherein:
(a) Footnote (2) of Note No. 10 regarding pending adjustments of Sundry Debtors againstsupplies and other liabilities etc. due to the buyers. In absence of final settlement withthe parties and non-receipt of necessary approval from concerned regulatory authorityextent of the amount of adjustments so required could not be ascertained.
(b) Footnote to Note No. 19 regarding estimated amount of Rs. 8722.28 lakhs providedduring the year 2002-03 as sales claims and commissions relating to earlier years fromoverseas customers of the Company which is pending for final settlement. Necessaryadjustments for such claims and commissions will be made after final settlement andobtaining necessary approval from the concerned regulatory authority.
(c) Note No. 43 regarding legal recourse taken by certain banks and financialinstitutions for recovery of their dues and the matter is sub-judice as stated in the saidNote.
(d) Note No. 44 regarding applications made by the Company with the Reserve Bank ofIndia from time to time for extension / setting off of certain overdue bills.
(e) Matters disclosed in Note No. 36 relating to Entry Tax Central/Commercial SalesTax Demands Customs Demands Professional Tax/Labour Cases/Water Cess Electricity Dutyetc. disclosed under Contingent Liabilities which are contested by the Company andpending before various forums / authorities for final decisions.
(f) Note No. 21 (2) regarding application filed against the company before DebtRecovery Tribunal for recovery of the dues by certain banks.
(g) Note No. 9 regarding Inventory lying with a third party realisability and futureusage of which is not presently ascertainable.
(h) Note No.14(4) regarding Transfer of Fixed Assets awaiting necessary adjustment.
2. Note No. 17 (Footnote 3) Note No. 21 (Footnote 3) and Note No. 11 (Footnote 1) andNote No-12 (Foot Note-1) to the financial statements regarding non-receipt ofconfirmations in respect of borrowings from Banks/Financial Institutions and also debitbalances in certain current accounts with Banks due to restructuring being in progressbook balances thereof have been relied upon.
3. Note No 38 regarding balance with a related party under reconciliation
4. In absence of any relevant documents and adequate information relating to matterspecified in Note No-45 & 48 we are unable to form to any opinion in these respect.
5. Footnote 2(a) of Note No.17 regarding payments made to ARCH by certain parties onbehalf of the Company confirmations of which from the respective parties are awaited.
6. Footnote 2(b) of Note No. 17 to the financial statements regarding preparation ofthese financial statements on Going Concern basis for the reasons stated therein as alsothe fact that the Company has accumulated losses and its net worth has been fully erodedFurther the Company has incurred net loss during the current and previous years and theCompany's current liabilities exceeded its current assets as at the Balance Sheet date.These conditions along with other matters set forth in Notes to Financial Statementsindicate the existence of a material uncertainty that may cast significant doubt about theCompany's ability to continue as a going concern.
Our opinion is not modified in respect of these matters.
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 Actwe enclose in the Annexure - A a statement on the matters specified in the said Order tothe extent applicable to the Company.
ii) As required by Section 143(3) of the Act we report that
a) We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;
b) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen 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 ComprehensiveIncome Statement of Changes in Equity and the Statement Cash Flows dealt with by thisReport are in agreement with the books of account;
d) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the Balance Sheet Statement of Profit and Loss andCash Flow Statement comply with the Accounting Standards specified under Section 133 ofthe Act
e) The matters described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;
f) The matters described in sub-paragraph (1) under the Emphasis of Matters paragraphabove in our opinion may have an adverse effect on the functioning of the Company;
g) On the basis of written representations received from the Directors as on 31stMarch 2018 taken on record by the Board of Directors none of the Director isdisqualified as on 31st March 2018 from being appointed as a director in terms of Section164(2) of the Act.
h) With respect to the adequacy of the Internal Financial Controls over FinancialReporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure - B.
i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition wherever ascertainable. Refer Note No -36.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable loss
iii. The Company has not transferred any amount to Investor Education and ProtectionFund (Refer to Footnote No. 1 to Note No.17)
For For KHANDELWAL RAY & CO.
FR No. 302035E
(CA S. Khandelwal)
Membership No. 054451
Date: 5th June 2018.
ANNEXURE - A TO THE AUDITORS' REPORT
The Annexure referred to in our report to the members of UNIWORTH Limited for the yearended 31st March 2018.
We report that:
|(i) (a) Whetherthe company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets; ||(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. |
|(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; ||(b) The physical verification of fixed assets as stated by the management has been conducted by the Management during the year wherever practicable and the discrepancies which were not material have been adjusted in books. |
|(c) Whether the title deeds of immovable properties are held in the name of the company. If not provide the details thereof; ||(c) Title Deeds for Freehold and Leasehold Immovable Properties are held in the name of the Company. |
|(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; ||(ii) (a) Inventories of Raw Materials Finished Goods Work in Progress and Stores & Spares have been physically verified at reasonable intervals by the Company except Finished Goods of Rs.43.11 Lakhs lying with third parties subject to confirmation. |
|(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 ||(iii) The Company has not granted any loan secured or unsecured during the year to any company firm or other party covered in the register maintained under section 189 of the Companies Act 2013. |
|(a) whether the terms and conditions of the grant of such loans are not prejudicial to the company's interest; ||In this regard we have relied upon the entries recorded in the register maintained under section 189 of the Act |
|(b) whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular; || |
|(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; || |
|(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. ||(iv) In our opinion and according to the information and explanations given to us the company has complied with the provisions of Sections 185 and 186 of the Act with regard to loans and investments made. |
|(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 Act2013 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? ||(v) The Company has not accepted any deposit within the meaning of Section 73 of the Companies Act. |
|(vi) Where maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act2013 and whether such accounts and records have been so made and maintained. ||(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. |
|(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; ||(vii) (a) According to the records of the Company the Company has been generally regular in depositing during the year with appropriate authorities 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 any other statutory dues where applicable except in the following cases which are outstanding for a period of more than six months from the date they became payable: |
| ||VAT Rs. 5.98 lakhs |
| ||Central Sales Tax Rs. 27.76 lakhs |
| ||Electricity Duty & cess Rs. 18.67 lakhs |
(b) Where dues of income tax or sales tax or (b) According to the records of theservice tax or duty of customs or duty of Company following statutory dues have excise orvalue added tax have not been not been deposited by the Company on deposited on account ofany dispute then account of disputes: the amounts involved and the forum where dispute ispending shall be mentioned. (A mere representation to the concerned Department shall notbe treated as a dispute)
|Nature of Dues ||Amount |
|Period since when ||Forum |
|Electricity Duty & Cess ||915.26 ||2005 ||Bilaspur High Court. |
|Excise Duty ||8.64 ||Prior to 2000 ||CESTAT New Delhi |
|Excise Duty ||4.96 ||95-9696-97 ||Bilaspur High Court |
|Excise Duty ||8.73 ||JUL'94 & AUG'94 ||Bilaspur High Court. |
|Excise Duty ||26.47 ||95-9696-97 ||CESTAT New Delhi |
|Excise Duty ||2.03 ||JULY'00 TO JUNE'01 ||CESTAT New Delhi |
|Excise Duty ||32.88 ||April'2009 to March'2013 ||CESTAT New Delhi |
|Excise Duty ||714.00 ||2006-08 ||CESTAT New Delhi |
|243.27 ||March-2005 ||CESTAT New Delhi |
|225.94 ||Aug-1996 ||CESTAT New Delhi |
|388.30 ||20011-12 to 2014-15 ||CESTAT New Delhi |
|Entry Tax ||57.11 ||1997-98 ||Commissioner of Commercial Tax. |
|CG VAT ||2.24 ||1995-96 ||Commissioner of Commercial Tax. |
|CST ||32.92 ||1993-94-95 ||Commissioner of Commercial Tax. |
|CST ||165.56 ||2007-08 & 2010-11 ||Commissioner of Commercial Tax. |
|CST ||9.50 ||2002- 03 to |
|Bilaspur High Court |
|Entry Tax ||90.48 ||1993-94 to 1997-98 ||Commissioner of Commercial Tax. |
(viii) Whetherthe company has defaulted in repayment The Company has defaulted inrepayment
of loans or borrowing to a financial institution of dues to financial institutionsbanks and
bank Governmentorduesto debenture holders? debenture holders as under:
If yes the period and the amount of default to be (a) As per Original Agreement allthe reported (in case of defaults to banks financial following Term Loans have become due
institutions and Government lender wise details for repayments. However theCompany's
to be provided). negotiations with the term lenders
for rescheduling / restructuring is in process:
|Nature of Financial Assistance ||Amount (fin Lakhs) ||Period of Default |
|Term Loan ||* || |
|Financial Institution || ||Not Ascertainable |
|Principal ||21253.39 || |
|Interest ||12591.73 || |
|Bank || ||Not Ascertainable |
|Principal ||9090.95 || |
|Interest ||1345.64 || |
|Debenture || || |
|Nov-convertible Part C Redeemable Debenture || || |
|Principal ||1900.23 || |
|Interest ||196.89 || |
|Loan Repayble on Demand (Short Term Borrowing) ||** || |
| ||** Refer Note No. 21 (i) |
|(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; ||(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. |
|(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; ||(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. |
|(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; ||(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. |
|(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; ||(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. |
|(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; ||(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. |
|(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; ||(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. |
|(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; ||(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. |
|(xvi) Whether the company is required to be registered under section 45-IAofthe Reserve Bank of India Act 1934 and if so whether the registration has been obtained. ||(xvi) The Company is not required to be registered under Section 45-IAofthe Reserve Bankof India Act 1934. |
| ||For KHANDELWAL RAY & CO. |
| ||Chartered Accountants |
| ||Firm Reg.No: 302035E |
| ||(CA S. Khandelwal) |
|Place: Kolkata ||Partner |
|Date: 5th June 2018. ||Membership No. 054451 |
Annexure - B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of UniworthLimited ("the Company") as of 31 March 2018 in conjunction with our audit of theStandalone 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 internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany'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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 312018:
1. The Company's internal financial controls over customer acceptance creditevaluation and establishing credit limits for sales in respect of certain very old debtswere not operating effectively which could potentially result in the Company's recognisingrevenue without establishing reasonable certainty of ultimate collection;
2. The Company's internal financial controls over payment of certain long outstandingadvances to parties particularly with regard to the terms and conditions of making suchadvance payments by the Company were not operating effectively which could potentiallyresult in materially affecting the Company's working capital and expense account balances.
3. The Company's internal financial controls over certain long outstanding creditorsfor expenses particularly with regard to the adequacy for such expenses as also obtainingconfirmations from the creditors were not operating effectively which could potentiallyresult in materially affecting the Company's working capital and expense account balances.
Place: Kolkata Date: 5th June 2018.
For KHANDELWAL RAY & CO.
FR. No. 302035E
(CA S. Khandelwal)
Membership No. 054451