Auditor Issues Disclaimer on Q3 FY2021 Results Amidst AIFL's Liquidation and Recent Sale
Auditors issued a disclaimer on AIFL's Q3 FY2021 results due to severe financial irregularities and lack of evidence. The company, under liquidation since 2020, was sold via e-auction in December 2024, and a new board was nominated in March 2025.
The auditor's disclaimer on financial results, coupled with the company being under a long-standing liquidation process, its recent sale through e-auction, and the nomination of a new board, signifies a fundamental and highly adverse change in the company's status and operations, impacting all stakeholders significantly.
The auditor's disclaimer of opinion, citing pervasive lack of audit evidence, suspected fraudulent transactions, non-compliance with statutory obligations, and the company's ongoing liquidation and eventual sale, indicates a severe and negative financial and operational state.
N.K. Sarraf & Associates, Chartered Accountants, issued a disclaimer of opinion on Ashapura Intimates Fashion Limited's (AIFL) unaudited standalone financial results for the quarter ended December 31, 2020. The auditors stated they were unable to obtain sufficient appropriate audit evidence to provide an audit opinion, concluding that the financial statements might contain material misstatements and were not prepared in accordance with Indian Accounting Standards (Ind AS) due to pervasive issues. The primary reasons for the disclaimer include: * Unavailability of relevant supporting documents for opening balances as of April 1, 2020. * Multiple irregularities and suspected fraudulent transactions noted during the year ended March 31, 2018. * Inability to reconcile trade payables, other payables, and various receivables due to lack of confirmations and necessary information. * Failure to deposit various statutory dues (PF, ESIC, GST, TDS, Income Tax) for financial years 2018-2019 and 2019-2020, with no provision for potential interest and penalties. * Trade receivables and advances to suppliers appearing fraudulent, with significant doubt on closing balances due to lack of confirmations. * Contravention of Sections 185 and 186 of the Companies Act, 2013, regarding interest-free loans to subsidiaries and directors. * Absence of supporting data or records for closing inventory, making it impossible to comment on its existence, accuracy, and completeness. * Inability to comment on contravention of Sections 177 and 188 of the Companies Act, 2013, regarding related party transactions. * Share application money of ₹2.70 crore received in FY2017-18 still pending allotment as of December 31, 2020, contravening Section 73 of the Companies Act, 2013. * Lack of actuarial valuation for employee benefits as required by Ind AS 19. * Incomplete details or documentation regarding pending litigations, claims, or proceedings against the Company. * Non-availability of necessary information for compliance with applicable Ind AS, deferred tax liability/assets, and fixed assets register. * Inability to perform foreign currency restatements due to lack of reconciliation and information. * Lack of adequate data and records for secured and unsecured borrowings and certain other liabilities.
For the quarter ended December 31, 2020, AIFL reported: * Total Income: ₹3.73 lakh * Total Expenses: ₹159.74 lakh * Net Loss for the period: ₹159.74 lakh * Basic and Diluted Earnings Per Share: (₹0.63)
Due to the suspension of the Board of Directors' powers, the financial results were authenticated and signed by the Management. The company has been undergoing Corporate Insolvency Resolution Process (CIRP) since June 28, 2019, and was admitted for liquidation on October 5, 2020. An e-auction for the company was conducted on December 21, 2024, where M/s. Grow House Agro Limited was declared the successful bidder on December 23, 2024, with an Earnest Money Deposit of ₹2.13 crore. A sale certificate was issued on March 1, 2025, and a new Board of Directors was nominated on the same date. These events raise significant doubt about the company's ability to continue as a going concern.
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Ashapura Intimates Fashion Limited filed this with the NSE as a statutory disclosure, categorised under quarterly results. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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