Management's Responsibility for the Financial Statement:
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 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 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 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 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 financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Director, 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 statements.
Opinion:
The accumulated losses have eroded entire net worth of the Company and have made the Company financially sick. Based on the Audited Balance Sheet as on 30.09.2008 a reference u/s15 (1) of SIC (SP) Act, 1985 has been filed by Company with the BIFR and the same has been registered as case no. 27/2009 on 30.07.2009. The BIFR vide its order of hearing held on 06.01.2010 declared the Company a SICK INDUSTRIAL COMPANY in terms of section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985 and appointed IDBI as the operating agency (OA). As informed by the management, there is no manufacturing/business activity in the Company after 31.10.2006. The management of the Company is making positive efforts for rehabilitation of the Company and in course of that, has already done the OTS of loan accounts of State Bank of India, IFCI, IDBI, MPAVN and MPSIDC and the OTS with Madhya Pradesh Financial Corporation is under process. The Company has paid in full of OTS amount to SBI, IDBI and IFCI and has also made substantial payment to MPAVN and MPSIDC towards the OTS, attention is also invited to Note 15.
Subject to above, in our opinion and to the best of information and according to the explanation given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give true and fair views in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, its profit and its cash flows for the year ended on that date.
Report on Other Legal and regulatory Requirement:
As required by the Companies (Auditor's Report) Order,2015 ("the Order") issued by Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraph 3 and 4 of the said Order.
As required by section 143(3) of the Act, we report that:
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.
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.
The Balance Sheet, the Statement of Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of Accounts.
In our opinion the aforesaid financial statements comply with the Accounting Standards specified under section 133 of Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
On the basis of written representations received from the directors as on March 31st, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31st, 2015 from being appointed as the directors in terms of section 164(2) of the Act.
With respect to the other matter 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 explanation given to us:
The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 14.
The Company did not have any long-term contracts including derivative contracts for which there were material foreseeable losses;
There was no such amount required to be transferred to the Investor Education and Protection Fund by the Company, hence the matter of delay does not arise.
Annexure to the Auditor's Report
(Referred to in our report of even date)
1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
(b) Due to seizer of the premises by the Provident Fund Authorities, fixed assets of the Company could not be physically verified by the management of the Company during the year and therefore, we are unable to express our opinion in this regard.
2. (a) The inventory of Tools & Spares lying in the stores of the Company has been physically verified by the management of the Company from time to time during the year and no discrepancy was found during such verification. The portion of the inventory in respect of the stocks lying in the machine shop of the factory could not be physically verified by the management during the year due to the seizer of the factory premises by the Provident Fund Authorities.
(b) The procedures of physical verification followed by the management in respect of the inventory of Tools & Spares lying in the stores of the Company are reasonable in relation to the size of the Company and nature of its business. Whereas, in respect of the stock lying in the machine shop of the factory, we have relied upon the undertaking given by the management about their un-ability in physical verification due to the seizer of the factory premises by the Provident Fund Authorities.
(c) The management of the Company has not noticed any discrepancy between the physical stock and book records in respect of inventory of Tools and Spares lying in the stores of the Company. The inventories of stocks lying in the machine shop of the factory could not be physically verified due to the seizer of factory premises by the Provident Fund Authorities for which the management of the Company is of the opinion that the same remained unchanged during the year. In this respect we had relied upon the undertaking given by the management of the Company.
3. According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms or parties covered in the register maintained under section 189 of the Act.
4. There is no manufacturing and business activity in the Company after 31st October, 2006 and also due to the seizer of factory premises of the Company by the Provident Fund Authorities there was no need to commensurate any internal control procedure for the purchase of inventory and fixed assets and for the sale of goods. During the course of audit, we have observed that there has not been any purchase of inventory and fixed assets and sale of goods during the year.
5. In our opinion and according to information and explanation given to us the Company has not accepted any deposit from the public in accordance of section 73 to 76 of the Act and Rules framed thereunder during the year.
6. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Govt. for the maintenance of cost records under sub-section (1) of section 148 of the Act. Having no manufacturing activities in the Company the maintenance of cost records is not applicable.
7. (a) Owing to the financial sickness, in the operative years, the Company has been irregular in depositing
with the appropriate authorities even the undisputed statutory dues like EPF contribution, ESIC contribution, Commercial Tax, Income Tax and Excise Duty. However, after the grant of installment facility the Company is regular in payment of installments of Provident Fund dues and also positive about the payment of other dues subject to getting installment facility from the respective Authorities. The status of unpaid dues as on 31.03.2015 is as under:-
Nature of Dues Amount (Rs. In Lakhs)
Provident Fund Contribution (Net of Installment payments made) 65.43
E.S.I.C Contribution 62.50
Commercial Tax 165.63
Income Tax Demand 149.11
Excise Duty 48.51
Assessment Year Assessed demand (Rs. In Lacs.)
1999-2000 16.64
2001- 2002 27.72
2002- 2003 48.09
2005- 2006 267.81
2006- 2007 205.35
TOTAL 565.61
(c) As per the information and explanation given by the management, no amount is required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and the rules made there under.
8. The net worth of the Company has already been eroded during the year ended on 30.09.2005 and there were further cash losses incurred by the Company during the years ended on 30.09.2006 to 31.03.2014.
9. As per the records of the Company and based on our audit procedures, during the year, the Company has not made any payment of dues to Madhya Pradesh Financial Corporation. The OTS of loans is pending.
10. According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from the banks and financial institutions.
11. In our opinion, the Term Loan taken in past have been used for the purpose for which they were raised.
12. Based on the audit procedure performed and the information and explanation given by the management we report that no fraud on or by the Company has been noticed or reported during the course of our audit.
For, O.T. Gandhi & Co. Chartered Accountants F.R. Number: 001120C Sameep Gandhi (Partner) M.No.411107 Place: Indore Date: 30th May, 2015