We have audited the accompanying Ind AS Financial Statement of Supreme Engineering Limited (Formerly known as Supreme Heatreaters Private Limited) (“the Company”), which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss (including the Statement of Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and notes to the Ind AS Financial Statement, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS Financial Statement give the information required by the Companies Act, 2013, as amended (“the Act”) in the manner so required and give a true and fair view in conformity with the Ind AS & accounting principles generally accepted in India:
a) In the case of the balance sheet, of the state of affairs of the Company as at March 31,2024; and
b) In the case of the statement of profit and loss, of the loss including other comprehensive income for the year ended on that date.
c) In the case of the statement of cash flows, of the cash flows for the year ended on that date.
d) In the case of the statement of changes in equity, of the changes in equity share capital and other equity for the year ended on that date.
Basis for opinion
We have conducted our audit of the Ind AS Financial Statement in accordance with the Standards on Auditing (“SAs”) as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the Ind AS Financial Statement’ 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 Ind AS Financial Statement under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS Financial Statement.
Emphasis of Matter
We draw attention to the fact that;
• The Company is required to get cost audit conducted as per the requirement of section 148 of the Companies Act, 2013. However, the same has not been conducted from the financial year 2020-21 and onwards.
• The Company had Secured Loans account which has turned NPA on 19th August 2021 and has stopped servicing the borrowing repayment and interest from that day. The Company has incurred a net loss of Rs. 1101.51 Lakhs during the year ended March 31, 2024 and, as of that date; the company’s current liabilities exceeded its total assets making its Net worth being reduced by Rs. 1085.32 Lakhs. The Company’s current liabilities borrowings have become NPA and Net worth is further reduced to Rs. -8743.49 Lakhs from Rs. - 7993 Lakhs which has resulted further erosion of the net worth of the company. In spite of these events or conditions which may cast a doubt on the ability of the company to continue as a going concern, the management is of the opinion that going concern basis of accounting is appropriate in view of the restructuring in process of the loans and the wide asset base the company carries.
The Management is responsible for assessing the Company’s ability to continue as a going concern, including whether the use of the going concern basis of accounting is appropriate. The use of the going concern basis of accounting is appropriate unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Management is also responsible for disclosing a material uncertainty of which management becomes aware related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
The Company's net worth is negative and it continues to incur losses. We were informed that the Company is in the process of raising funds through equity allotment and also by selling non core assets of the company which in the opinion of the management will enable the Company to have positive networth and support to have a turnaround.
The Company is also in the process of identifying strategic business partners and alternative business plans to improve the performance of the Company. The Company’s ability to generate positive cash flows depends on the successful implementation of such alternative business plans. The above factors cast a significant uncertainty on the Company’s ability to continue as a going concern. Pending the resolution of the above uncertainties, the Company has prepared the aforesaid statement on a going concern basis.
• The company has not provided accrued interest, charges, penalty or any other charges from the date of being classified as Non-Performing Assets and the impact of the same on the financial result and statement remain unaccounted for.
• The Company is required to file Audit report under the Income tax Act 1961 and file corresponding Return under the act; however, the same has not been done for AY 20-21 and AY 21-22.
• The Company has not paid the statutory tax dues like TDS (paid for FY 22-23), PF, Professional Tax and Income tax etc. that has become overdue and remain unpaid. Interest, Penalty in respect of the same has remained unascertained and unaccounted.
• The Company has Trade Receivables including Advances, Trade Payables including Advances to Suppliers and Others, Recoverable Advances in Cash or Kind, Borrowings, Cash Credit account in bank etc. includes balances which remain outstanding for a substantial period. The reported Financials may have consequential / subsequent impact which remains unascertained.
• The company has incurred losses in the processing of its stock which was found to be irrecoverable which has led to the stock value being diminished. The valuation of Stock is done at Net Realizable Value. This has led to the value of stock losses to the tune of Rs. 5.58 crores.
• The demand notice issued by the income tax department for Rs. 908.61 lakh for AY 2018-
2019 has been appealed by the company before the CIT(A). At present the matter is pending with the CIT(A) and final order / proceeding is pending.
• The demand notice is issued by the GST department for interest payable amount to Rs.5.52 lakhs of financial year 2017-18 on 3i/os/2022.The company has filed an appeal against this order.
• The demand notice is issued by the GST department for Rs. 571.17 lakhs for FY 2018-2019 on 03/11/2022. The company has received the rectification order and has filed a writ petition before the Bombay High Court on 11/10/2023.
Our opinion is not modified in respect of above matters.
Other Information
The Company’s Board of Directors is responsible for the other information. The other information comprises the Board of Directors' Report, but does not include the Ind AS Financial Statement and our Auditor’s report thereon.
Our opinion on the Ind AS 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 the Ind AS Financial Statement, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the Ind AS Financial Statement 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. We have nothing to report in this regard.
Management’s Responsibility for the Ind AS Financial Statement
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 Ind AS Financial Statement 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 accounting principles generally accepted in India, Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS Financial Statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Ind AS Financial Statement, the 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.
Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the audit of the Ind AS Financial Statement
Our objectives are to obtain reasonable assurance about whether the Ind AS Financial Statement 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 Ind AS Financial Statement.
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 Ind AS Financial Statement, 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 i43(3)(i) of the Act, 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 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 Ind AS Financial Statement 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 Ind AS Financial Statement, including the disclosures, and whether the Ind AS Financial Statement 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 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
1. As required by the Companies (Auditors Report) Order, 2020 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.
2. As required by section 143(3) of the Act, we report that:
a) We have reasonably sought and obtained 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 appears from our examination of those books.
c) The balance sheet, the statement of profit and loss including the statement of other comprehensive income, the statement of cash flows and Statement of Changes in Equity dealt with in this report are in agreement with the books of account.
d) In our opinion, the aforesaid Ind AS Financial Statement comply with the Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. Since the Company has become NPA, IND AS23 on Borrowing Cost is not applied.
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) 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) In our opinion, the managerial remuneration for the year ended 31st March 2024 has been provided by the Company to its directors in accordance with the provisions of Section 197 read with Schedule V of the Act;
h) With respect to the other matters to be included in Auditors 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 explanations given to us:
i) The Company does not have any pending litigations which would impact its financial position;
ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
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, other than as disclosed in the notes to the financial statements 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, 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.
b) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the financial statements, 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, 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.
c) Based on the audit procedures performed that have been 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 (i) and (ii) of Rule n, as provided under (a) and (b) above, contain any material misstatement.
v) The Company has not declared or paid any dividend during the year and has not proposed
a final dividend for the year.
vi) Based on the audit tests and procedures performed, in respect of financial year ended 31st
March 2024, The Company used Tally Prime (Gold), an accounting software for maintaining books of accounts. The Audit trail feature has not been enabled at the
database level for the said accounting software to keep a log of any direct data changes and it did not operate throughout the year.
For S R Dhariwal and Co
Chartered Accountants^'^^^v FRN: 102466W
^iral K Saboo
Partner M. No. 158054
UDIN: 24158054BKEMZL2145 Date: 28/08/2024 Place: Mumbai
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