We have audited the accompanying Ind AS financial statements of Eastern Silk Industries
Limited ("the Company"), which comprise the balance sheet as at 31st March 2024, and the
statement of Profit and Loss, statement of changes in equity and statement of cash flows for the
year then ended, and notes to the financial statements, 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,
except for the possible effects of the matter described in the "Material Uncertainty Related to
Going Concern, Basis for Qualified Opinion and the Emphasis of Matter paragraphs" the
aforesaid Ind AS 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, of the state of affairs of the Company as at March 31, 2024 and loss, changes
in equity and its cash flows for the year ended on that date.
Material Uncertainty Related to Going Concern
Pursuant to an application made by Export Import Bank of India one of the financial creditors, the
Hon'ble National Company Law Tribunal, Kolkata Bench ("Adjudicating Authority"), vide its order
dated 31st January, 2024, approved the resolution plan dated 02.01.2023 and addendums dated
04.02.2023 and 25.02.2023 submitted by the Resolution Applicant Baumann Dekor Private
Limited. As per the terms of Section 31 of the Code, the Approved Resolution Plan shall be binding
on the Company, its employees, members, creditors and other stakeholders involved in the
Resolution Plan.
The above conditions indicate the existence of material uncertainty that may cast significant
doubt about the company's ability to continue as a going Concern. However, the financial
statements of the company have been prepared on a going concern basis for the reason stated in
Note No. 29 to the Ind AS Financial Results.
Basis for Qualified Opinion
We draw attention to
a) Note No. 29 to the Ind AS financial results which states that In compliance with the
approved Resolution Plan and order from the Hon'ble National Company law Tribunal,
the accounting adjustments have been carried out related to extinguishment of liabilities
/ claims and write off of impaired and/or doubtful assets during the Financial Year
ending 31.03.2024. The net impact of the same Rs 11793.06 lakhs has been transferred
to the Capital Reserve Account as per the approved Resolution plan. The cancellation of
existing share capital and infusion of new capital is in progress and its effect will be taken
in accounts on finalisation. The above adjustments are subject to reversal in the event of
non compliance with the terms of Resolution plan.
b) Note No. 37 to the Ind AS financial results which states that 'No Lien Term Deposit' with
the consortium bankers for \ 2,400.00 Lakhs towards 5% deposit of the amount
outstanding against the offer of one-time settlement were made, of which '. 392.59
Lakhs have been appropriated by few banks towards recovery of their overdue interest.
The same has not been recognized by the company and no adjustment has been made
and the principal amount of deposit is continued to be shown as 'No Lien Term Deposit
without accounting for interest accruals. Also no confirmation has been received from the
said banks.
c) Note No. 36 to the Ind AS financial results which states that Confirmation of bank
balances of all bank accounts at Kolkata as on 31.03.2024 is under process of acquiring
and reconciling.
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.
Emphasis of Matter
We draw attention to
a) Note No. 31 to the Ind AS financial results which states that In terms of Ind AS-12,
further Deferred Tax Assets (DTA) of INR 1,577.05 Lakhs is required to be recognized
during the year. The Company has so far recognized DTA aggregating INR 4,572.98
Lakhs. Earlier recognitions were made based on future profitability and projections.
The Company is of the opinion that net DTA of INR 4,572.98 Lakhs as recognized in
the books is sufficient for future income and as such, the current year's DTA has not
been recognized. Our opinion is not modified in this matter. Our opinion is not
modified in respect of the above matters.
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.
There are no key audit matters to communicate other than the matters those are described
under the Material Uncertainty Related to Going Concern, Basis for Qualified Opinion and
Emphasis of Matter paragraphs.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors and Management Committee is responsible for the
preparation of the other information. The other information comprises the information included
in the Management Discussion and Analysis, Board's Report including Annexures to Board's
Report, Business Responsibility Report, Corporate Governance and Shareholder's Information,
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.
When we read the other information and if, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to
communicate the matter with those charged with governance.
Responsibilities of Management and Those Charged With Governance for the Financial
Statements
The Company's Board of Directors and Management Committee is responsible for the matters
stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation
of these financial statements that give a true and fair view of the financial position, financial
performance, changes in equity 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. 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 statement
that give a true and fair view and are free from material misstatement, whether due to fraud or
error.
In preparing the 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.
Those Board of Directors and Management Committee are also responsible for overseeing the
Company's financial reporting process.
Auditor's Responsibilities for the Audit of the 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 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 Companies
Act, 2013, 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 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.
Materiality is the magnitude of misstatements in the financial statements that, individually or in
aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user
of the 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 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
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" statement on the matters specified in paragraphs 3 and 4 of
the Order, to the extent applicable.
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 purposes of our audit.
b) In our opinion, except for the effect of the matters described under the Material
Uncertainty Related to Going Concern, Basis for Qualified Opinion and Emphasis of
Matter paragraphs, 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 Balance Sheet, the Statement of Profit and Loss, Statement of Changes in Equity and
the Cash Flow Statement dealt with by this Report are in agreement with the books of
account.
d) In our opinion, except for the effect of the matters described under the Material
Uncertainty Related to Going Concern, Basis for Qualified Opinion and Emphasis of
Matter paragraphs, the aforesaid financial statements comply with the Indian
Accounting Standards specified under Section 133 of the Act, read with relevant rules
thereunder.
e) The matters described under the Material Uncertainty Related to Going Concern, Basis
for Qualified Opinion and Emphasis of Matter paragraphs, may have an adverse effect
on the functioning of the company.
f) On the basis of the written representations received from the directors as on March
31,2024 taken on record by the Board of Directors, none of the directors is disqualified
as on March 31,2024 from being appointed as a director in terms of section 164(2) of
the Act.
g) The qualification relating to maintenance of accounts & other matters connected
therewith are as stated in the basis for qualified opinion paragraph above.
h) 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". Our report expresses an unmodified opinion on the adequacy
and operating effectiveness of the Company's internal financial controls over financial
reporting
0 With respect to the other matters to be included in the Auditor's Report in accordance
with the requirements of 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 remuneration paid by the Company to its directors during the year is in
accordance with the provisions of section 197 of the Act.
j) 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 Ind AS Financial Statements - Refer Note No. 29 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 delay in transferring amounts which are required to be transferred
to the Investor Education and Protection Fund by the Company due to closure of
Dividend Account for the Year 2009 & 2010 by the HDFC Bank Ltd. during the F.Y.
2016-17 resulting in non-transfer of the unclaimed amount for the year 2009 & 2010
to the Investors Education & Protection Fund - Refer Note No.32 to the Ind AS
financial statements.
iv. a (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;
b) 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
c) Based on such audit procedures that the auditor has 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 11(e), as
provided under (a) and (b) above, contain any material mis-statement.
v. In our opinion and based on the information and explanation provided to us, no
dividend has been declared or paid during the year by the company.
vi. Based on our examination and information and explanations provided to us, the
accounting software used by the company for maintaining its books of account does
not support the feature of recording audit trail (edit log) facility.
For B. K. SHROFF & CO.
Chartered Accountants
Firm Registration No.: 302166E
(L. . Shroff)
Partner
Membership No.: 060742
UDIN:24060742BKCMBI9683
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