M/S. PRECISION CONTAINEURS LIMITED
(A Company under corporate insolvency resolution process vide NCLTorder 10th March, 2022)
Report on the Audit of the Standalone Financial Statements
Qualified Opinion
We have audited the financial statements of M/S. PRECISON CONTAINEURS LIMITED ("the Company"), which comprises the Balance Sheet as at 31st March, 2023, and the Statement of Profit and Loss (including other comprehensive income), and statement of cash flows and statement of changes in equity for the year ended, and notes to the financial statements including a summary of significant accounting policies and other explanatory information (herein after referred as "Financial Statement").
In our opinion and to the best of our infonnation and according to the explanations given to us, except for the effects of the matters described in the Basis of Qualified Opinion section of our report, the aforesaid financial statements give the infonnation required by the Companies Act. 2013 (the "Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act (Ind AS) and the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023, its loss and total comprehensive loss, its cash flows and changes in equity for the year ended on that date.
Basis for Qualified Opinion
1 We drawr your attention to Note No. 39 (i) where the Hon'ble NCLT, Mumbai Bench vide its order dated 21st March,2023 in IA-2116/2022 in C.P.(IB)-2146(MB)/2019, has declared transactions amounting to Rs. 2,43,40,707 as preferential transactions under section 43 of the Insolvency and Bankruptcy Code, 2016 ("Code").
However, no accounting impact is given in the books of accounts for the same. Hence, to this extent Loans (Liabilities) and Loans & Advances (Assets) are understated by Rs. 2,43,40,707 /-.
We conducted our audit in accordance with the 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 the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the 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 Paragraph
We draw attention to Note No. 35 to the financial statements where NCLT vide its order dated 2nd May, 2023 approved the resolution plan as submitted by the Resolution Applicant. However, since the date of NCLT order is 2nd May. 2023 which is subsequent to the financial year ending 31st March.2023, the effect of the same has not been provided in the financial statements for the year ending 31st March.2023.
Our opinion is not modified in respect of this matter.
Going Concern Concept
The Resolution Plan is approved by the NCLT, Mumbai Bench vide order dated 2nd May, 2023 subject to compliance of NCLT order dated 21st March, 2023 and the process of implementation of Resolution Plan will be started as per the NCLT approval. Hence, in view of these facts, the financial statements have been prepared on going concern basis.
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 Basis of qualified opinion, we have determined that there are no other key audit matters to communicate in our report.
Information other than the financial statements and Auditors Report thereon
The Company management / Board of Directors/Resolutional Professional (RP) are responsible for the other information. The other information comprises the infonnation in the Company's annual report, but does not include the financial statement and our auditor's report thereon. The company's annual report is expected to be made available to us after the date of this auditor's report.
Our opinion on the financial statement does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of financial statement, our responsibility is to read the other infonnation and in doing so, consider whether the other infonnation is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appear to be materially misstated.
If. based on the work pcrfomied. we conclude that there is a material misstatement of this other infonnation. we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for Standalone Financial
The Hon'ble Company Law Tribunal ("NCLT"). Mumbai Bench, vide its order dated 10,h March. 2022("NCLT Order") admitted company petition (IB) no.2146/MB-IV /2019 filed by Stressed Assets Stabilization Fund ("SASF1 or "financial creditor") for initiation of Corporate Insolvency Resolution Process ("CIRP") against the company u/s 7 of the Insolvency and Bankruptcy Code, 2016 ("the Code"). Vide the NCLT order, the moratorium u/s 14 of the Code came into the effect and Mr. Ramnarav an Rajaraman with IP registration No. IBBI/IPA-002/IP-N000699/ 2018-19/ 12204 was appointed as Interim Resolution Professionalf'IRP") to. inter alia, manage the affairs of the Company in accordance with the provisions of Code. Subsequently Committee of Creditors ("CoC") in its meeting held on 8th April, 2022 resolved to replace the IRP Mr Ramnarayan Rajaraman with Mr. Chetan T Shah, with IP registration no. IBBI/ 1PA-001 / IP-P00026/ 2016-17/10059 as Resolution Professional ("RP"). The NCLT has confirmed the appointment of Mr. Chetan T Shall as RP vide order dated 26th April. 2022. As per the provisions of the Code, powers of the Board of Directors are vested with the Resolution Professional. The Hon'ble NCLT, Mumbai Bench has approved the Resolution Plan for the Company vide Order dated 2nd May, 2023. In view of the said order, the status of the Resolution Professional has changed to Monitoring Agent & Erstwhile Resolution Professional.
The Company's Board of Directors/Resolution Professional is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation 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 Ind AS and other accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act. 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 statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Boards of Directors/Resolution Professional 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.
Those Board of Directors/ Resolution Professional are also responsible for overseeing the company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone 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 standalone 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 Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
• 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 standalone 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.
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 w ith 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 lawr 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
1) As required by the Companies (Auditor's Report) Order. 2020 ("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 the Annexure "A", a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2) 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 of Qualified Opinion paragraph above 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 possible effects of the matters described in the Basis of 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), Cash Flow' Statement and the Statement of Changes in Equity dealt with by this Report are in agreement w ith the relevant books of account.
d) Except for the matters described in the Basis of Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Indian Accounting Standard specified under Section 133 of the Act.
e) On the basis of the wTitten representations received from the directors as on 31st March, 2023 taken on record by the Resolution Professional, none of the Directors is disqualified as on 31st March, 2023 from being appointed as a director in terms of Section 164(2) of the Act. However, as per provision of Insolvency and Bankruptcy Code, 2016 the power of Board of Directors were suspended and are vested with Resolution Professional.
f) With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate Report in Annexure "B".
g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of the 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 company has not paid remuneration to its directors during the year, further the Ministry of Corporate Affairs has not prescribed other details under section 197( 16) of the Act w hich are required to be commented by us.
3) 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 as at 31st March.2023 on its financial position in its Financial Statements. (Refer Note No. 31).
b) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
c) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
d) (i). The management has represented that, to the best of it's knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(ii) . The management has represented, that, to the best of it's knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Parties), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(iii) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under subclause (d)(i) and (d)(ii). contain any material mis-statement.
e) There was no dividend declared or paid by the Company during the year, and therefore the clause as to whether the dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013 is not applicable.
FOR APMH & ASSOCIATES LLP CHARTERED ACCOUNTANTS FRN: 102699W/W100142
Stl/-
PLACE: MUMBAI (HEMANT MEHTA)
DATE: 30th May, 2023 PARTNER
UDIN: 23046437BGXDYY2512 MEMBERSHIP NO.046437
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