We have audited the accompanying standalone financial statements of SUMEET INDUSTRIES
LIMITED (“The Company”) which comprises the Balance Sheet as on 31st March 2024, the
Statement of Profit and Loss, the Statement of Changes in Equity and Statement of Cash Flows for
the year ended and the notes to the financial statements including a summary of significant accounting
policies and other explanatory information (hereinafter referred to as “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 paragraph and Material
Uncertainty Related to Going Concern under the Emphasis of Matter paragraph below, the
aforesaid standalone financial statements:
(a) Are presented in accordance with the requirements by the Companies Act 2013, (“Act”) in the
manner so required; and
(b) give a true and fair view in conformity with the Indian Accounting Standards (“IND AS”)
prescribed under Section 133 of the Act read with Companies (Indian Accounting Standard) Rules
2015, as amended, and other accounting principles generally accepted in India, of the state of
affairs of the company as at 31 March 2024 and its Loss (financial performance including other
comprehensive income), changes in equity and its cash flows for the year ended on that date.
2. Basis for Qualified Opinion
We conducted our audit of standalone financial statements in accordance with the Standards on
Auditing (SAs) issued by ICAI and 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 ICAI together with ethical requirements that are relevant
to our audit of the standalone 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 obtained by us is
sufficient and appropriate except:
• The company has not created any provision for interest on loan taken from bank and financial
institutions for the year ending 31.03.2024. The financial impact is not quantifiable as the
provision amount cannot be ascertained based on the material existing.
• The company has not created provision for Interest amounting to Rs 1,04,31,389/- (pertaining to
purchases made after the CIRP period cut-off date i.e 20.12.2022) and previous pending interest
amounting to Rs. 12,89,57,976/- (pertaining to purchases made before CIRP period cut-off date
i.e 20.12.2022) on delayed payment of MSME dues resulting in overstatement of profit.
• The Company has not complied the disclosure for the following as per IND AS: -
IND AS 36: The Company has carried out review of its assets with respect to economic
performance. However detailed evaluation/working as to whether any impairment
is warranted has not been made available to us. In the absence of such
evaluation/working, we are unable to comment about the impact, if any, arising on
account of impairment, as required to be provided under Ind AS 36 'Impairment of
Assets'.
• Trade receivables include overdue amounts outstanding for a period of more than three years
aggregating to Rs. 4,46,09,949/- receivable from its subsidiary and amount outstanding for a
period of more than 1 year of Rs. 3,91,06,533/- from its customer. The company has not made any
Expected Credit Loss provision till date as the management feels that no provisions would be
required as per their policy of recognition of ECL. In the absence of sufficient appropriate audit
evidence to corroborate management’s assessment of recoverability of these balances and having
regard to the age of these balances, we are unable to comment on the carrying value of above
receivables and the shortfall, if any, on the amount that would be ultimately realizable from the
said customers.
• With reference to the Standalone Financial Statements, in respect of investments held in subsidiary
of Rs. 22,73,77,500/- and in respect of Trade receivables of Rs.4,46,09,494/- from its subsidiary
as at March 31, 2024, the business continuity of such subsidiary is significantly dependent upon
the financial support of the Company to enable to meet its liabilities as and when they fall due.
No impairment assessment was carried out on the Investments held in subsidiary and Trade
Receivable. Therefore, we are unable to comment upon the carrying value of these investments
and Trade receivables pertaining to the Subsidiary.
Emphasis of Matter:
We draw attention to the following matters: -
• The Standalone Financial Statement explains that the Company was admitted under the CIRP vide
order dated 20.12.2022 as the Corporate Debtor was admitted into CIRP, in an application filed
by the Financial Creditor, namely, IDBI Bank u/s 7 of the IB Code, triggering moratorium under
section 14 of the IB Code and Mr. Kuresh Hatim Khambati was appointed as Interim Resolution
Professional (hereinafter referred to as “IRP"), who made a public announcement in Form-A on
28.12.2022
• After collating the claims received from the creditors of the Corporate Debtor, the IRP formed the
CoC on 18.01.2023 comprised of Six Financial Creditors, namely: Union Bank of India with
4.61% voting share, Bank of Baroda with 60.98 % voting share, IDBI Bank Limited with 25.10
% voting share, Canara Bank with 3.04 % voting share, Central Bank of India with 4.68 % voting
share, Oldenburgische Landesbank AG with 1.59 % voting share (with which Bremer Kredibank
AG, formerly known as KBC Bank Deutschland AG merged).
• The 1st CoC meeting was held on 24.01.2023 wherein the members of the COC did not confirm
the IRP as RP. Further, in the 2nd COC meeting was held on 09.02.2023 in which COC passed
the resolution for the appointment and replacement of IRP from RP Mr. Satyendra Prasad
Khorania. It is also decided by the CoC for the appointment of two Registered Valuers to carry
out the valuation. The 03rd CoC meeting was held on 04.03.2023 wherein the COC approved the
resolution for publication of FORM- G along with the eligibility criteria and the same was
published on 12.03.2023.
• The Resolution Professional had examined and admitted the claims from Secured Financial
Creditors amounting to Rs. 583.48 Cr, Unsecured Financial Creditors amounting to Rs. 107.61 Cr
and from Operational Creditors (other than Workmen, Employees and Government dues)
amounting to Rs. 36.64 Cr. The variations between balances as per books and amount claimed by
the Secured financial creditors was due to charging of interest and other charges claimed by the
financial creditors and by unsecured financial creditors amounting was due to claim by Bank of
Baroda against Corporate Guarantee by Company for Sumeet Global Pte Ltd and claim by Sitaram
Prints Pvt. Ltd. against Corporate Guarantee given in favour of secured creditors of company, as
explained to us.
• Then an application was been filed by Mr. Satyendra Prasad Khorania, Resolution Professional of
M/s. Sumeet Industries Ltd. under section 30(6) read with Section 31 and 60(5) of Insolvency &
Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016) for approval of the Resolution Plan
submitted by the M/s Eagle Fashions Private Limited, Eagle Fibers Limited, Eagle Synthetics
Private Limited, Padmini Polytex Private Limited, Eagle Sizers & JPB Fibers Jointly as Eagle
Group / Successful Resolution Applicant(hereinafter referred to as “SRA”) which was approved
by Committee of Creditors ("COC") of Sumeet Industries Limited (“Corporate Debtor”).
However, pertaining to the observations as mentioned in the points a) to k) of Para 20 of the NCLT
order pronounced on 05.04.2024 the application was rejected. The company have filed an appeal
before the NCLAT against the order passed vide Company Appeal (AT) (Insolvency) No. 922 of
2024 registered on 29.04.2024 and the order is awaited.
• As stated in the Standalone Ind AS Financial Statements which indicate that as the Net worth has
become negative, the existence of a material uncertainty that may cast significant doubt about the
Holding Company’s ability to continue as a going Concern. Adding the Holding Company’s
ability to continue as a going concern is dependent upon many factors including continued support
from the financial creditors, operational creditors and approval of a viable resolution plan by the
prospective investor. These events or conditions indicate that a material uncertainty exists that
may cast significant doubt on the Holding Company’s ability to continue as a going concern. In
view of the opinion of the Directors and KMPs, resolution and revival of the Holding Company
is possible in foreseeable future. Further the RP is required to make every endeavor to protect and
preserve the value of the property of the corporate debtor and manage the operations of the
corporate debtor as a going concern. In view of the aforesaid details and pending outcome of the
CIRP at NCLAT, the financial statements of the Holding Company have been prepared on going
concern basis.
• We have not received the bank statement and confirmation of balance for the balance lying in
Central Bank amounting to Rs. 10,000/-. In the absence of sufficient appropriate audit evidence,
we are unable to determine any possible impact thereof on the loss for the year ended March 31,
2024 and on the carrying value of bank balance as on that date.
Our opinion is not modified in respect of these above matters.
3. Information other than the Financial Statements and Auditor’s Report Thereon
The Company’s Board of Directors and Management is responsible for the preparation of the other
information. The other information comprises the information obtained at the date of this auditor’s
report, but does not include the 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 during the course of our 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. We have nothing
to report in this regard.
4. Responsibility of Management and Those Charged with Governance for the Standalone
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 and presentation of these standalone financial statements that give a
true and fair view of the financial position, financial performance, total comprehensive income,
change in equity and cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Indian Accounting Standards specified under Section 133
of the Act, read with rule 7 of Companies (Accounts) Rules, 2014 and the companies (India
Accounting Standards) Rules 2015, as amended.
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.
In preparing the standalone 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.
5. Auditor’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone 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 scepticism 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 Act, we are
also responsible for explaining our opinion on whether the company has adequate internal
financial controls system 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 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 standalone financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Materiality is the magnitude of the misstatements in the financial statements that, individually or
in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user
of the standalone 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 consolidated 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 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.
6. Report on Other Legal and Regulatory Requirements
1. In our opinion, the provision of 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 Act,
2013 are applicable to the company. Refer “Annexure A”, a statement on the matters specified
in the paragraph 3 & 4 of the order.
2. As required by section 143(3) of the Act, based on our audit 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 purpose 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss including Other
Comprehensive Income, the Standalone Statement of Changes in Equity and the Standalone
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 Indian
Accounting Standards specified under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules 2014;
e) On the basis of written representations received from the directors as on 31 March, 2024
taken on record by the Board of Directors, none of the directors is disqualified as on 31
March, 2024 from being appointed as a director in terms of Section 164(2) of the Act;
f) In our opinion, the provisions of section 143(3)(i) of Companies Act, 2013 with respect to
reporting about the adequacy of the internal financial controls are applicable. Refer,
“Annexure B”, a separate report on adequacy of internal financial controls.
g) With respect to the other matters to be included in the Auditor’s Report in accordance with
the requirement of Section 197(16) of the Act, as mentioned, in our opinion and to the best
of our information and according to the explanation given to us, no remuneration were
provided to its directors during the current year.
h) With respect to 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 disclosed the impact of pending litigations on its financial position
in its standalone financial statements. Refer Note No. 22(R) Provisions and Contingent
Liabilities to the Standalone Financial Statements.
ii. Based on the assessment made by the company, there are no material foreseeable losses
on its long-term contracts that may require any provisioning.
iii. There were no amounts which were required to be transferred to the Investor Education
and Protection Fund by the Company.
iv.
a) The management has represented that, to the best of its knowledge and belief, as
disclosed in Note No. 30(vi) 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 persons or entities, including
foreign entities (“Intermediaries”), with the understanding, whether recorded in
writing or otherwise, that the Intermediary shall:
• directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Company or any of such subsidiaries
(“Ultimate Beneficiaries”) or
• provide any guarantee, security or the like to or on behalf of the Ultimate
Beneficiaries.
b) The management has represented, that, to the best of its knowledge and belief, as
disclosed in Note No. 30(vii) to the accounts, no funds have been received by the
Company from any persons or entities, including foreign entities (“Funding
Parties”), with the understanding, whether recorded in writing or otherwise, that the
Company shall:
• directly or indirectly, lend or invest in other persons or entities identified in any
manner whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Funding
Party or
• provide any guarantee, security or the like from or on behalf of the Ultimate
Beneficiaries.
c) Based on such audit procedures as considered reasonable and appropriate in the
circumstances, nothing has come to our notice that has caused us to believe that the
representations under sub-clause (iv)(a) and (iv)(b) contain any material mis¬
statement.
v. The company has not paid/declared any dividend during the year and hence compliance
of section 123 of the Act is not applicable.
vi. Based on our examination which included test checks, the company, has used an
accounting software for maintaining its books of account which has a feature of
recording audit trail (edit log) facility and the same has operated throughout the year
for all relevant transactions recorded in the software. Further, during the course of our
audit we did not come across any instance of audit trail feature being tampered with.
FOR H T K S & CO
CHARTERED ACCOUNTANTS
CA. HARISHANKAR TOSNIWAL
(PARTNER)
M. NO. : 055043
FRN : 111032W
PLACE : SURAT
DATE : 28-05-2024
UDIN : 24055043BKBGOE1964
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