Pearl Polymers

INDEPENDENT AUDITOR''S REPORT
 
To
 
THE MEMBERS OF
 
M/s PEARL POLYMERS LTD.
 
A-97/2, Industrial Area, Phase-II,
 
Okhla, New Delhi-110020
 
Dear Sir,
 
We have audited the accompanying financial statements of M/S PEARL POLYMERS LTD. (“the
Company”), which comprise the Balance Sheet as at March 31, 2016, and the Statement of Profit and Loss
for the year ended, Cash Flow Statement for the year ended, and a summary of 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 Section 134(5) of the
Companies Act, 2013 (“the Act”) with respect to the preparation and presentation of these
Financial Statements that give a true and fair view of the financial position, financial performance and cash
flows of the Company in accordance with the accounting principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014. 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.
 
Auditor''s Responsibility
 
Our responsibility is to express an opinion on these financial statements based on our audit.
 
We have taken into account the provisions of the Act, the accounting and auditing standards and matters
which are required to be included in the audit report under the provisions of the Act and the Rules made
there under.
 
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of
the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
 
An Audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
 
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion on the financial statement.
 
Opinion
 
In our opinion and to the best of our information and according to the explanations given to us, the
financial statements give the information required by the Act in the manner so required and give a true and
fair view in conformity with the accounting principles generally accepted in India:
 
i)    In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2016.
 
ii)    In the case of Profit & Loss Account, of the Loss of the Company for the year ended on that
date.
 
iii)    In the case of Cash Flow Statement, of the cash flows for the year ended on that date.
 
Report on Other Legal and Regulatory Requirements
 
1.    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 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 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 accounts as required by law have been kept by the Company so far as
appears from our examination of those books;
 
c)    The Balance Sheet, Statement of Profit and Loss, and cash flow statement dealt with by this Report
are in agreement with the books of account;
 
d)    In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement
comply with the Accounting Standards notified under the Act which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.
 
e)    On the basis of written representations received from the directors as on March 31, 2016 and taken
on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, 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”; and
 
g)    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:
 
i.    The Company has disclosed the impact of pending litigations on its financial position in its
Financial Statements-Refer Note 33 to the financial statements;
 
ii.    The Company did not have any long term contracts including derivative contracts for which there
were any material foreseeable losses.
 
iii.    There has been no delay in transferring amount required to be transferred to the Investor
Education and Protection Fund by the company.
 
Annexure - A to the Auditors'' Report
 
The Annexure referred to in Independent Auditors'' Report to the members of the Company on the financial
statements for the year ended 31 March 2016, we report that:
 
i)    (a) The Company has maintained proper records showing full particulars, including quantitative
details and situation of fixed assets.
 
(b)    As explained to us, all the assets have not been physically verified by the management during the
year but there is a regular programme of verification which, in our opinion, is reasonable having regard to
the size of the company and the nature of its assets. No material discrepancies were noticed on such
verification.
 
(c)    According to the information and explanations given to us and on the basis of our examination of
the records of the Company, the title deeds of immovable properties are held in the name of the Company.
 
ii)    (a) As explained to us, the inventories have been physically verified by the management at
reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable having
regard to the size of the Company and the nature of its business.
 
(b)    In our opinion and according to the information and explanations given to us, the procedures of
physical verification of inventories followed by the management are reasonable and adequate in relation to
the size of the Company and nature of the business.
 
(c)    In our opinion and according to the information and explanations given to us, the company has
maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on
physical verification of the inventories having regard to the size of the operations of the company.
 
iii)    As explained to us, the company had not granted any loans, secured or unsecured, to any
companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under
section 189 of the Act.
 
iv)    The company has not granted any loan, made any investments, provided any guarantee and security
within the meaning of section 185 and 186 of the Companies Act, 2013.
 
v)    In our opinion and according to the information and explanations given to us, the Company has not
accepted any deposits in contravention of Directives issued by Reserve Bank of India and the provisions of
section 73 to 76 or any other relevant provisions of the Act and the rules framed there under, where
applicable. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve
Bank of India or any court or any other tribunal.
 
vi)    As explained to us, The Central Government has not prescribed the maintenance of cost records
under section 148(1) of the Act, for any of the activities such as engaged in the production of goods or
providing services by the Company.
 
vii)    (a) According to the records of the company the company is generally regular in depositing with
appropriate authorities
 
undisputed statutory dues including provident fund, investor education protection fund, employees'' state
insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, Cess and other material
statutory dues applicable to it.
 
According to the information and explanations given to us, no undisputed amounts payable in respect of
income tax, wealth tax, Service Tax, sales tax, custom duty, excise duty and Cess were in arrears, as at
31st March, 2016 for a period of more than six months from the date they became payable.
 
(b) According to the information and explanations given to us, the dues of sales tax, income tax, excise
duty and Cess that have not been deposited with appropriate authorities on account of any dispute and the
forum where the disputes are pending are given below:-
 

 

 

 

 
Name of the Statute
 
 

 
Nature of the Dues
 
 

 
Amount
 
fln’Lakhs)
 
 

 
Period to which the amount relates
 
 

 
Forum where the dispute is pending
 
 
 

 

 
The Central Excise Act, 1944
 
 

 
Producing and clearing dutiable and non-dutiable product under Notification No.4/97
 
 

 
370.59
 
 

 
March 1997 to June 1997
 
 

 
Supreme Court of India
 
 
 

 

 
The Central Excise Act, 1944
 
 

 
Interest on differential duty paid in respect of supplementary invoices
 
 

 
0.40
 
 

 
January 2001 to April 2003
 
 

 
CESTAT
 
 
 
 
 
The Central Excise Act, 1944 Disallowance of Cenvat Credit on 5.14    July 2004 to    Commissioner of the
supply of pet chips    August 2004    Customs & Central Excise (Appeals), Mumbai ill
 
The Central Excise Act, 1944 Service Tax demand on 0.04    Jnauray 2005 to Assistant Commissioner
transportation- Abatement not    March 2005    of Central Excise CBD allowed    Belapur.
 
The Central Excise Act, 1944 Interest demand on reversed    0.21 2014-2015 Assistant Commissioner cenvat
credit pointed out in EA    of Central Excise Mumbai 2000 Audit.
 
The Central Excise Act, 1944 Interest on late payment of duty    0.61 2014-2015 Assistant Commissioner
pointed out in EA 2000 Audit.    of Central Excise Mumbai
 
The Sales Tax Act    Sales tax assessment VAT demand 102.67    2005-2006    Appeal Commissioner of Sales
Tax
 
The Sales Tax Act    Sales tax assessment CST 123.84    2005-2006    Appeal Commissioner of demand   
Sales Tax
 
The Sales Tax Act    Sales tax assessment CST 11.85    2008-2009    Appeal Commissioner of demand   
Sales Tax
 
The Sales Tax Act    Exemption given for business    9.88    2002-03    Dt.Commissioner of expansion
under FAVC is not    Commercial Taxes,
 
supported by ‘C’ Forms    Bangalore
 
The Central Excise Act, 1944 Demand raised on wrong    4.41    April''06-Dec’09 CESTAT, Bangalore
computation of assessable value
 
The Income Tax Act, 1961    Demand u/s 271(1 )(c)    3.74    AY 2009-10    Appeal pending before CIT(A),
Delhi
 
The Income Tax Act, 1961    Demand u/s 143(3)    17.49    AY 2010-11    Appeal pending before ITAT
 
The Income Tax Act, 1961    Demand u/s 143(3)    44.12    AY 2011-12    Rectification filled before
Assessing Officer, Delhi
 
The Income Tax Act, 1961    Demand u/s 271(1)    1.29    AY2011-12    Appeal pending before CIT(A)
Delhi
 
viii)    According to the information and explanations given to us, and the records of the companies
examined by us, the Company has not defaulted in repayment of loans or borrowings to a financial institution
and banks.
 
ix)    The Company has not raised any money by way of initial public offer or further public offer Order
is not applicable.
 
x)    Based upon our audit procedures performed and according to the information and explanations given
to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or
reported during the course of our audit.
 
xi)    According to the information and explanations give 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 approvals mandated by the provisions of section 197 read with Schedule V to the Act.
 
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)    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)    According to the information and explanations give 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)    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.
 
xvi)    The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act
1934.
 
Annexure - B to the Auditors'' Report
 
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the
Companies Act, 2013
 
We have audited the internal financial controls over financial reporting of M/s Pearl Polymers Limited
(“the Company”) as of 31 March 2016 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 Company''s management 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 (''ICAI''). These
responsibilities include the design, implementation and maintenance of adequate internal financial controls
that were operating effectively for ensuring the orderly and efficient conduct of its business, including
adherence to company''s policies, 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.
 
Auditors'' Responsibility
 
Our responsibility is to express an opinion on the Company''s internal financial controls over financial
reporting 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”) and the Standards on
Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the
extent applicable to an audit of internal financial controls, both applicable to an audit of Internal
Financial Controls and, both issued by the Institute of Chartered Accountants of India. 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 was
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 judgment, including the assessment of the risks of material
misstatement of 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 controls 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
 
1)    pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company;
 
2)    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 authorizations of management and directors
of the company; and
 
3)    provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company''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 financial reporting, including
the possibility of collusion or improper management 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.
 
Opinion
 
In our opinion, the Company has, in all material respects, an adequate internal financial controls system
over financial reporting and such internal financial controls over financial reporting were operating
effectively as at 31 March 2016, 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.
 
Place: New Delhi                                                     For Sehgal Mehta & Co.
 
Date: 30.05.2016                                                   Chartered Accountants
 
                                                                               FRN-003330N
 
                                                                               (CA Naresh Khanna)
 
                                                                              Partner M.No. 081482