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Auditor Report of Empee Distilleries Ltd.

Mar 31, 2015

Report on Financial Statements

We have audited the accompanying financial statements of Empee Distilleries Limited("the Company"), which comprise the Balance Sheet as at March 31, 2015, and the Statement of Profit and Loss for the period from 01.10,2013 to 31,03,2015 along with the Cash Flow statement annexed thereto, 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 reference to the preparation of the standalone financial statements that give a true and fair view of the financial position, financial performance and cash flow 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these standalone 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 thereunder. 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 misstatements.

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 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 controls 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 directors, 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 standalone financial statements.

Basis for Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 31,2015, and its profit and its cash flow for the period from 01.10.2013 to 31.03.2015 except:-

a. The company has made an investment of Rs.1.59 Crores and given share application money of Rs. 140.36 Crores to Its subsidiary Empee Sugars and Chemicals Limited towards promoters share. The subsidiary company Empee Sugars and Chemicals Limited is incurring losses and has been registered under BIFR as a sick company. This may result in diminution in the value of Investments for which no provision is considered. Refer Note No.2(12.1) to the Balance Sheet.

b. The Board of Directors at their meeting held on 25.10.2014 has withdrawn the Composite scheme of Arrangement among the company and Empee Sugars and Chemicals Limited and Apollo Wind Energy Private Limited and their respective shareholders with effect from April 01, 2011. Asper the provisions of Hon''ble High court of Madras no application is required to be filed to withdraw the company petition. However the company has filed an application before Hon''ble High Court of Andhra Pradesh, which is pending for orders to withdraw the said amalgamation. Hence, no effect is given for scheme of amalgamation in the accounts.

Qualified Opinion

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company for the 18 months period ended as at March 31, 2015;

b) in the case of the Profit and Loss Account, of the Loss for the 18 months period ended on that date; and

c) In the case of the cash flow statement, of the cash flows for the 18 months period ended on the date

Report on Other Legal and Regulatory Requirements:-

1, As required by the Companies (Auditor''s Report) Order, 2015 ("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 statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 143(3) of the Act, we report that:

a) We have 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 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) Except for the effects / possible effects of the matters described in the Basis of Qualified Opinion, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in 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, 2015, and taken on record by the Board of Directors, none of the directors Is disqualified as on March 31, 2015, from being appointed as a director in terms of Section (2) of section 164 of the Companies Act, 2013.

f) With respect to the other matters to be included in the 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 the explanations given to us:-

i. The company does not have any pending litigations which would impact its financial position except as stated in the basis of opinion paragraph;

it. The company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. A sum of Rs.29,400/- required to be transferred to the Investor Education and Protection fund by the company has been transferred during the year;

Annexure to Independent Auditors'' Report

(Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" of our Report of even date)

As required by the Companies (Auditor''s Report) Order, 2015 issued by the Central Government in terms of section 143 (11) of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company, as we considered appropriate and according to the information and explanations given to us during the course of the audit, we report that,

1.a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, 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 physical verification.

2.a) The inventories have been physically verified during the year by the management In our opinion, the frequency of verification is reasonable.

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 the nature of its business.

c) The company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to book records.

3. a) The company has taken interest free loan from its Subsidiary Companies amounting to 24.89 Crores without stipulation as to the repayment of principal and interest.

b) in the light of (a) we do not comment on the principai amount and interest or other conditions or security of loans,

c) in the light of (a) we do not comment on the reasonable steps have been taken by the company for recovery of the principal and interest,

4. in our opinion and according to the explanations given to us the internal control procedure of the Company are commensurate with the size of the company and the nature of its business with regards to Fixed Assets other assets and with regard to the sale of Services. No instance of continuing failure to correct major weakness in interna! control was noticed.

5. The Company has not accepted any deposits from the public. Therefore the provisions of section 73 to Section 76 of the Companies Act 1956 and rules framed there under are not applicable.

6. We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(l)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7.a) According to the records of the company, there have been no delay in depositing the undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service tax, Cess and other statutory dues except In respect of Dividend Distribution tax amounting to Rs.25.84 Lakhs, Income tax of Rs.8.28 crore for the FY 2011-2012, Rs.1.77 crore for the FY 12- 13 with the appropriate authorities.

b) According to the information and explanations given to us and the records of the company examined by us, except the following there are no dues of Income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess which have not been deposited on account of any dispute except as stated here under:- Amount Period to which the Forum where dispute

SI.No Name of the statue Nature of dues amount inLacs

1 Income Tax Act, 1961 Income Tax 190.00

2 Income Tax Act, 1961 Income Tax 24.49

3 Income Tax Act, 1961 Income Tax 346.09

4 Income Tax Act, 1961 Income Tax 154.10

5 Income Tax Act, 1961 Income Tax 496.25

SI.No Name of the statue Period to Which Forum where dispute the amount relates is pending

1 Income Tax Act, 1961 2005-06 Income Tax Appellate Tribunal

2 Income Tax Act, 1961 2008-09 Commissioner of Income Tax(Appeals)

3 Income Tax Act, 1961 2009-10 Commissioner of Income Tax (Appeals)

4 Income Tax Act, 1961 2010-11 Commissioner of Income Tax (Appeals)

5 Income Tax Act, 1961 2012-13 Commissioner of Income Tax (Appeals)

c) The company is required to transfer amount of Rs.29,400/- to investor education and protection fund as per the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred.

8. The Company does not have accumulated losses at the end of the financial year. The company has not Incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

9. Based on our audit procedures and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions and banks after restructuring of the loans.

10. The company has not given guarantee for loans taken by others. In our opinion and according to the information and explanations given to us and based on the information available, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

11. According to the records of the company, the company has obtained a fresh term loan of Rs.4.20 Crore during the financial year and the same has been utilised for the stated purpose.

12. According to information and explanations furnished to us no fraud on or by the company has been noticed or reported during the year.

For Venkalesh& Co., Chartered Accountants F.R.No.0046365

Place: Chennai CA Dasaraty V Date: 23.05.2015 M.No.026336 Partner


Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of M/s Empee Distilleries Ltd ("the company"), which comprises the Balance Sheet as at September 30, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for 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 Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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 that give a true and fair view 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 qualified audit opinion.

Basis for Qualified Opinion

a) The company has made an investment of Rs.1.59 Crores and given share application money of Rs.140.36 Crores to its subsidiary Empee Sugars and Chemicals Limited towards promoters share for its Integrated Sugar Complex at Ambasamudram. The plant is partly functional and subsidiary company is incurring losses. This may result in diminution in the value of investments. Refer Note No.2 (12.1) to the Balance Sheet.

b) The composite scheme of arrangement among the company and Empee Sugars and Chemicals Ltd and Apollo Wind Energy Private Limited and their respective shareholders with effect from April 01, 2011 for amalgamation and with effect from April 01, 2012 for demerger has been sanctioned by the Honorable High Court of Madras vide its order dated 24th October, 2013. However, similar sanction by the Honorable High Court of Andhra Pradesh is still pending. Hence, no effect is given for scheme of amalgamation in the accounts.

c) The Provision for Taxation has been made under section 115JB of the Income Tax Act, 1961. Refer Note No.2 (10.1) to the Balance Sheet.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2013;

(b) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date; and

(c) in the case of the 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 (Auditors'' Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. We have 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 account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us;

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. Except for the effects / possible effects of the matter described in the Basis for Qualified Opinion, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Act;

e. On the basis of the written representations received from the directors as on September 30,2013, and taken on record by the Board of Directors, none of the directors is disqualified as on September 30, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

(Referred to in paragraph 1 under the heading of " Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Empee Distilleries Ltd., on the financial statement for the year ended Septmeber 30, 2013)

i) In respect of Fixed Assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, 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 physical verification.

c) In our opinion, the company has not disposed off its fixed assets during the year and the going concern status of the company is not affected

ii) In respect of its Inventories:

a) The inventories has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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 the nature of its business.

c) The company has maintained proper records of inventories. As explained to us, there was no material discrepancies noticed on physical verification of inventories as compared to book records.

iii) In respect of loans and advances, secured or unsecured, granted or taken by the company to / from companies, firms, or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 :

a) The company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the Register maintained under section 301 of the Companies Act, 1956. Accordingly, the requirements of Clauses (iii)(b), (c) and (d) of paragraph 4 of the Order are not applicable.

b) The company has not taken any loans during the year from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the requirements of Clauses (iii)(f) and (g) of paragraph 4 of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956 :

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5 Lakhs in respect of each party during the year have been made at prices which appear reasonable as per the information available with the company

vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (vi) of Paragraph 4 of the Order are not applicable to the Company.

vii) The internal audit system of the company needs to be strengthened with regard to the coverage of areas and periodicity to be commensurate with the size and nature of its business.

viii) According to the information and explanations given to us, the Central Government has not prescribed the Maintenance of cost records under section 209(1)(d) of the Companies Act, 1956.

ix) In respect of statutory dues :

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues have been generally regularly deposited with the appropriate authorities.

b) According to the information and explanations given to us and the records of the company examined by us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at September 30, 2013 for a period of more than six months from the date of becoming payable.

x) The Company does not have accumulated losses at the end of the financial year. The company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions and banks. The company has approached its lenders for reschedulement of such loans.

xii) In our opinion and according to the information and explanations given to us and based on the information available, no loans and advance have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the company is not chit fund or nidhi / mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the company.

xv) According to the information and explanations given to us and based on the documents and records produced to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the company were applied for the purposes for which the loans were obtained.

xvii) On the basis of review of utilization of funds on an over all basis, in our opinion, the funds raised on short term basis have not been used for long term investment

xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

xix) The company has not issued any debentures during the year.

xx) The company has not raised any money by public issues during the year.

xxi) During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management.

Place: Chennai For D Sampathkumar & Co.,

Date : 11.11.2013 Chartered Accountants

(Firm Registration No :003556S)

M Thiyagarajah

(Partner)

M.No: 018460


Mar 31, 2011

1. We have audited the attached Balance Sheet of M/s. EMPEE DISTILLERIES LIMITED, as at 31st March 2011 and also the Profit & Loss Account and cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 and as amended by the Companies (Auditor's Report) Order, 2004 issued by the Central Government of India, in terms of sub-section (4A) of Section 227 of the Companies Act, 1956; we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the annexure referred to in paragraph III above, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the purpose of our audit;

ii) In our opinion, the Company has kept proper books of account as required by law, so far, as it appear from our examination of such books;

iii) The Financial Statements dealt with by this Report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet and the Profit and Loss Account dealt with by this Report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors as on 31st March, 2011, and taken on record by the Board, we report that none of the directors is disqualified as on 31st March, 2011, from being appointed as a Director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read together with the attached schedules and notes forming part of accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) In the case of Balance Sheet, of the state of affairs of the Company as on 31st March 2011;

(b) In the case of the Profit and Loss account, of the Profit for the year ended on that date.

(c) In the case of the Cash flow statement of the cash flows for the year ended on that date

ANNEXURE TO AUDITOR'S REPORT (Referred to in para (iii) of our report of even date)

(1) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of all fixed assets.

(b) Physical verification of fixed assets was carried out by the management during the year as per its programme of verification which, in our opinion is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion do not constitute a substantial part of the fixed assets of the company and such disposals have, in our opinion not affected the going concern status of the company.

(2) In respect of its inventories:

(a) As explained to us, the inventory has been physically verified by the Management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanations given to us, in our opinion, the Company has maintained proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and the book records were not material, having regard to the size of the operation of the company.

(3) According to the information and explanations given to us with regard to loans, secured or unsecured, granted or taken by the Company to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, we report as follows:

(a) During the year the company has been granted unsecured loan to parties covered under section 301 said above. The maximum amount involved at any time during the year and the year end balance of the loan granted is Rs. 5108.11 Lacs

(b) In our opinion, the rate of interest and other terms and conditions on which loan has been granted are not prima facie prejudicial to the interest of the company.

(c) The principal amounts, are repayable on demand and there is no repayment schedule. No rate of interest has been charged during the year.

(d) As at the end of the financial year, there is no overdue amount in excess of Rs.1 lakh in respect of loans

(4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to its sale of goods and services. Further on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the above said internal control system.

(5) In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needs to be entered into the register, maintained under the said section have been so entered.

(b) Where the transactions made in pursuance of contracts entered in the register maintained under section 301 of the Companies Act, 1956, and exceeding the value of Rupees five Lacs in respect of any party during the year have been made at prices which are reasonable having regard to the relevant market prices at the relevant time.

(6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits attracting the provisions of section 58 A and 58 AA of the Companies Act, 1956 or any other relevant provisions of the Act. The guidelines issued with regard to the acceptance of deposits are not applicable to the Company.

(7) In our opinion, the Company has its internal audit system to commensurate with the size and nature of its business.

(8) To the best of our knowledge, and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

(9) In respect of statutory dues:

(a) According to the records of the Company and the information and explanations given to us, the Company was regular in depositing the undisputed statutory dues including provident fund, employees state insurance, income-tax deducted at source and service tax. However, the dues have been deposited during the year itself and there are no arrears existing in this regard.

(b) There is a disputed liability in regard to Statutory dues as detailed below :

Particulars Period to which Forum where Rs. (In Lacs) the matter pertains dispute is pending

Disputed Income Tax 2005-06 Appellate Tribunal Rs.270.82

Disputed Income Tax 2008-09 Commissioner of Income Tax Rs.53.51

Disputed Income Tax 2009-10 Commissioner of Income Tax Rs.42.24

(10) The Company does not have accumulated losses as at 31.03.2011.The company has not incurred any cash losses during the current year.

(11) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and other financial institutions.

(12) In our opinion and according to our examination of records of the Company, no loans or advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

(13) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore the provisions of sub-clause (xiii) are not applicable to the Company.

(14) The Company is not dealing in or trading in shares, securities, debentures and other investments and accordingly, the provisions of sub-clause (xiv) are not applicable to the Company.

(15) Based on our audit and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(16) Based on our audit and according to the information given to us, the term loans availed by the company have been applied for the purposes for which the loans were obtained.

(17) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, no funds were raised on short-term basis have not been used for long-term investment.

(18) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

(19) During the year the Company has not raised any money through issue of debentures.

(20) During the year the Company has not raised any money through public issue.

(21) According to the information and explanations given to us, based upon the audit procedures performed and representations made by the management we report that no fraud on or by the company has been noticed or reported during the course of our audit.

K S Aiyar & Co

Chartered Accountants

Regn No 100186 W.

S Kalyanaraman Date: 11/8/2011 Partner

Place: Chennai Membership No 200565




Mar 31, 2010

I have audited the attached Balance Sheet of M/s.EMPEE DISTILLERIES LIMITED as at 31st March, 2010 and also the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the management of the Company. My responsibility is to express an opinion on these financial statements based on my audit.

1.1 have conducted my audit in accordance with auditing standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

2. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of section 227(4A) of The Companies Act,1956,1 enclose in the Annexure Statement on the matters specified in paragraphs 4 and 5 of the said Order.

3. Further to our comments in the Annexure referred to above, I state that:

(i) I have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of my audit;

(ii) In my opinion, proper books of account as required by law have been kept by the Company so far as appears from my examination of those books;

(iii)The Balance Sheet and Profit and Loss Account and Cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In my opinion, the Balance Sheet and the Profit and Loss Account dealt with by this report comply with the mandatory accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

(v) In my opinion and based on information and explanation given to me, none of the Directors are disqualified as on 31.3.2010 from being appointed as Director in terms of clause (g) of sub-section(1) of section 274 of the Act;

(vi) In my opinion and to the best of my information and according to the explanations given to me, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956 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 the Balance Sheet, of the state of affairs of the Company as at 31sl March, 2010,

ii) ii) in the case of the Profit & Loss Account, of the PROFIT for the year ended on that date, and

iii) in the case of the Cash Flow Statement, of the Cash Flow for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS REPORT TO THE MEMBERS OF EMPEE DISTILLERIES LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31.3.2010

On the basis of the information and explanations given to me and the books and records examined by me in the normal course of my audit and to the best of knowledge and belief:

1. In respect of Fixed Assets

a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) As explained to me, the fixed assets have been physically verified by the Management during the year in a phased periodical manner, which in my opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies there noticed on such physical verification.

c) In my opinion, the Company has not disposed of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of inventories:

a) As explained to me, inventories have been physically verified by the Management at regular intervals during the year.

b) In my opinion and according to the information and explanations given to me, the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

c) The Company has maintained proper records of inventories. As explained to me, there was no material discrepancies noticed on physical verification of inventory as compared to the books of accounts.

3) In respect of Loans, secured or unsecured, granted or taken by the Company to / from Companies, Firms or other parties covered in the Register maintained in the Section 301 oftheCompaniesAct, 1956.

The Company has granted loans to the Companies under the same management. In my opinion and according to the information and explanation given to me, the terms and conditions are not prejudicial to the interests of the Company.

4) In my opinion and according to the information and explanations given to me, there are adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of my audit, I have not observed any major weakness in internal controls.

5) In respect of transactions covered under section 301 of the Companies Act, 1956.

In my opinion and according to explanations given to me, the particulars of contracts or arrangement referred to in section 301 of the Companies Act have been entered in the Register required to be maintained under that section.

6) The Company has not accepted any deposits from the public.

(7) In my opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business.

(8) The Central Government has not prescribed maintenance of cost record under section 209 (1) (d) of the Companies Act, 1956 for the products of the Company.

(9) In respect of statutory dues there are no undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, Income tax, Wealth tax, Sales tax, Customs Duty, Service tax, excuse duty, cess and other statutory dues outstanding as at 31.3.2010 fora period of more than 6 months from the date of becoming payable.

(10) The Company has no accumulated loss as on 31.3.2010.

(11) Based on audit procedures and according to the information and explanations given to me, I am of the opinion that the Company has not defaulted in the repayment of dues to Financial Institutions, Banks, etc.

(12) In my opinion and according to the information and explanation given to me, I am of the opinion that the company is not trading in securities, debentures and other investments.

(13) In my opinion the Company is not a Chit Fund a Nidhi Mutual Benefit Fund / Society. Therefore clause 4(xiii) of the Companies (Auditors Report) order, 2003 is not applicable to the Company.

(14) The Company has given guarantee for loans taken by its subsidiary from Banks. I am of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

(15) The Company has obtained and utilized the term loan for which purpose the term loan was sanctioned.

(16) The company has not utilised the funds raised for short term purpose for long term investment.

(17) During the year the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(18) The Company has not issued any debentures during the year. Hence the question of creating securities in respect of the same does not arise.

(19) The Company has not raised money byway of public issue during the year.

(20) In my opinion and according to the information and explanation given to me, no fraud on or by the Company has been noticed or reported during the year that causes the financial statements to be materially misstated.

Sd/- R.RAJAGOPALAN Place: Chennai Chartered Accountant

Date: 29.5.2010 MembershipNo.018422

 
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