Mar 31, 2015
Report on the Financial Statements
1. We have audited the acCompanying standalone financial statements of
Euro Ceramics Limited ("the Company"), which comprise the Balance Sheet
as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow
Statement for the year then ended, and a summary of the significant
accounting policies and other explanatory information.
Management's Responsibility for the standalone financial statements
2. 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 standalone financial statements to
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.
Auditors' Responsibility
3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
4. We have taken into account the provisions of the Act and the Rules
made there under including the Accounting Standards and matters which
are required to be included in the audit report.
5. We have conducted our audit in accordance with the Standards on
Auditing specified under section 143(10) of the Act and other
applicable authoritative pronouncements issued by the Institute of
Chartered Accountants of India. Those Standards and pronouncements
require that we comply with the ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence
about the amounts and the 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 the 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 the 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.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Qualified Opinion
8. In our opinion and to the best of our information and according to
the explanations given to us, except for the matters illustrated and
described in the Basis for Qualified Opinion herein below, 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
loss and its cash flows for the year ended on that date.
Basis for Qualified Opinion
1. The attention is invited to note no.33 to the financial statements,
towards the fact that the Company's financial facilities/arrangements
including Term Loans, Working Capital Facilities and Non Fund Based
Credit Facilities have expired and the accounts with the Banks have
turned into Non Performing Assets since more than 2 years.
The Company is unable to renegotiate, restructure or obtain replacement
of financing arrangements and the banks have initiated legal
proceedings for the recovery from the Company u/s. 19 of the Debt
Recovery Tribunal (DRT), u/s. 13(2) of the Securitization &
Reconstruction of Financial Assets & Enforcement of Security (Second)
Interest (SARFAESI) Act, 2002 and winding up petition at Mumbai High
Court. In addition to this, the Group has been continuously incurring
substantial losses since past few years and as on March 31, 2015, the
Company's current liabilities exceed its current assets by Rs.
43,777.81 lacs. Further, the networth of the Company has fully eroded
and the Company has filed for registration u/s. 15(1) of the Sick
Industrial Companies (Special Provisions) Act, 1985, before the Hon'ble
Board for Industrial & Financial Reconstruction.
All the above events indicate a material uncertainty that casts a
significant doubt on the Company's ability to continue as a going
concern and therefore it may be unable to realize its assets and
discharge its liabilities in the normal course of business. The
financial results do not disclose the fact that the fundamental
accounting assumption of going concern has not been followed.
2. Further attention is also invited to note no.34 to the financial
statements, the Company on the basis of registration filed u/s. 15(1)
of the Sick Industrial Companies (Special Provisions) Act, 1985, before
the Hon'ble Board for Industrial & Financial Reconstruction, and the
hearings for which are in process for determination of sickness; has
not provided for interest on financing facilities amounting to Rs.
8,758.47 lacs for the year ending March 31, 2015, subject to
reconciliation with banks. Had the same been provided, the loss for
the year ending March 31, 2015, would have increased by Rs. 8,758.47
lacs. The corresponding liabilities would also have increased by Rs.
8,758.47 lacs as at March 31, 2015.
3. The Company has not provided for impairment or diminishing value of
its assets/investment as per 'Accounting Standard 28 Â Accounting for
Impairment of Assets' as notified under the Companies (Accounting
Standards) Rules, 2006 read with the General Circular 15/2013 dated
September 30, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013. The effect of such Impairment
or diminishing value has not been quantified by the management and
hence the same is not ascertainable.
Report on other legal and regulatory requirements
9. As required by 'the Companies (Auditor's Report) Order, 2015',
issued by the Central Government of India in terms of sub-section (11)
of section 143 of the Act (hereinafter referred to as 'the Order'), 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, we give in the Annexure a statement on the
matters specified in paragraphs 3 and 4 of the Order.
10. 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, 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, Statement of Profit and Loss, and the Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d) In our opinion, the aforesaid standalone financial statements comply
with the Accounting Standards specified under section 133 of the Act,
read with rule 7 of the Companies (Accounts) Rules, 2014, except for as
stated in basis for qualifications above.
e) On the basis of the written representations received from the
directors as on March 31, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2015
from being appointed as director in terms of section 164 (2) of the
Act.
f) 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 knowledge and belief
and according to the information and explanations given to us:
i) The Company has disclosed the impact, if any, of pending litigations
as at March 31, 2015, on its financial position in its standalone
financial statements except as stated in basis for qualifications
above;
ii) The Company has made provision as at March 31, 2015 as required
under the applicable law or Accounting Standards for material
foreseeable losses, if any, on long-term contracts including derivative
contracts except as stated in basis for qualifications above;
iii) There has been delay in transferring unclaimed dividend amounting
to Rs. 25,303/- pertaining to financial year 2006-07 into the Investor
Education and Protection Fund, by the Company during the year ended
March 31, 2015.
(Referred to in paragraph 9 of the Independent Auditors' Report of even
date to the members of Euro Ceramics Limited on the standalone
financial statements as of and for the year ended March 31, 2015)
(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 us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regards to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
physical verification.
(2) In respect of its Inventories:
a) The inventories have been physically verified during the year by the
management. In our opinion, the frequency of such 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 respective entities and the nature of their businesses.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(3) In respect of loans, secured or unsecured, granted by the Company
to companies, firms or other parties covered in the register maintained
under section 189 of the Act:
a) According to the information and explanation given to us, the
Company has granted loan to party covered in the register maintained
under section 189 of the Act.
b) In our opinion and according to the information and explanations
given to us, there are no stipulations made regarding repayment of
principal amount and interest. Hence we are unable to comment as to
regularity of repayments of principal and interest amount.
(4) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the respective entities and the nature of their
businesses with regards to purchases of inventory, fixed assets and
with regards to the 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 aforesaid internal control system.
(5) In our opinion and according to the information and explanations
given to us, the Company during the year has not accepted any deposits
from the public within the meaning of section 73 & 76 of the Act and
the Rules framed there under to the extent notified. Further in respect
of deposits accepted by the Company before the commencement of this
Act, within the meaning of section 74 & 75 of the Act and the Rules
framed there under to the extent notified, the principal amount of such
deposits and interest due thereon remained unpaid even after expiry of
one year from such commencement. However, the Company duly filed an
application within the meaning of section 74(2) with the Company Law
Board requesting to allow further time for compliance. However the
final decision of the Tribunal as required under section 75 (1) of the
Act is still awaited.
(6) The Central Government of India has not specified the maintenance
of cost records under sub-section (1) of section 148 of the Act for any
of the products of the Company.
(7) In respect of Statutory Dues:
a) According to the information and explanation given to us and the
records of the Company examined by us, in our opinion the Company has
been facing liquidity stress since past few years due to which there
were delays in depositing various undisputed statutory dues with
appropriate authorities including provident fund, employee's state
insurance, income tax, sales tax, wealth tax, service tax, duty of
customs, duty of excise, value added tax, cess and other material
statutory dues, as applicable to it and there are no arrears of
outstanding statutory dues as at the yearend for a period of more than
six months from the date they became payable except service tax payable
amounting to Rs. 9.81 lacs.
b) According to the information and explanation given to us and the
records of the Company examined by us, there are no dues of sales tax,
wealth tax, service tax, duty of customs, duty of excise, value added
tax, as at March 31, 2015, which have not been deposited on account of
any dispute. However there are dues of income tax which have not been
deposited on account of a dispute which are as under:
Amount Period to Forum
Name of the Nature of Dues
Statute Rs. which the where the
amount dispute is
relates pending
Income Tax Demand arisen 207.76 Financial Assessing
pursuant to lacs Year officer
assessment 2011-12
c) There has been delay in transferring unclaimed dividend amounting to
Rs. 25,303/- pertaining to financial year 2006-07 into the Investor
Education and Protection Fund, by the Company during the year ended
March 31, 2015.
(8) The Company has accumulated losses at the end of financial year and
also had the same at the end of the immediately preceding financial
year. However the Company has not incurred cash loss during the
financial year covered by our audit but had incurred cash losses in the
immediately preceding financial year. The accumulated losses of the
Company have exceeded its net worth.
(9) In our opinion and according to the information and explanations
given to us the Company has defaulted in repayment of loans and
interests dues to the banks and financial institution. The principal
outstanding of Term Loans and Cash Credit facilities amounts to Rs.
45,453.37 lacs and overdue interest (not provided) calculated based on
last sanction letters amounts to Rs. 18,044.93 lacs as at March 31,
2015, subject to reconciliation with the banks. The period of default
is more than 2 years.
(10)According to the information and explanations given to us, the
Company has given the guarantee for loans taken by its subsidiary from
bank. The terms and conditions of the same are not prejudicial to the
interest of the Company. However in our opinion the said subsidiary has
been continuously incurring losses and its net worth has been fully
eroded and there is substantial doubt whether the said subsidiary would
be able to repay its liabilities or realize its assets.
(11)In our opinion, the term loans are being applied for the purpose
for which they were obtained.
(12)According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For Deepak Maru & Co.
Chartered Accountants
ICAI Firm Registration No. 115678W
Jaymin P. Shah
Place: Mumbai Membership No. 118113
Date: May 30, 2015 Partner
Mar 31, 2014
We have audited the accompanying financial statements of Euro Ceramics
Limited ("the Company"), which comprise the Balance Sheet as at March
31, 2014, the Statement of Profit and Loss and the Cash Flow Statement
for the year then ended, and a summary of the significant accounting
policies and other explanatory information.
Management''s Responsibility for the Financial Statements
The Company''s 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 notified under the Companies
Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th
September, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013 and in accordance with the
accounting principles generally accepted in India. 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 the
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 the 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 the 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, but not for the purpose of expressing an opinion on
the effectiveness of the Company''s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by the 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.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the matters illustrated and
described in the Basis for Qualified Opinion herein below, 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 as at March31,2014;
b) in the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date, and
c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Basis for Qualified Opinion
1. The attention is invited to the fact that the Company''s financial
facilities/arrangements have expired and the same are overdue for
repayment as under:
Sr. Name of the Bank Over due Since
No.
i State Bank of India December2012
ii TheCosmosCo.-Op.BankLtd. April 2012
iii ICICI Bank Ltd. October 2012
iv Bank Of lndia April 2012
v Indusind Bank October 2012
The Company is unable to renegotiate, restructure or obtain replacement
of financing arrangements and the banks have initiated legal
proceedings for the recovery from the Company u/s. 19 of the Debt
Recovery Tribunal (DRT) and u/s. 13(2) of the Securitization &
Reconstruction of Financial Assets & Enforcement of Security (Second)
Interest (SARFAESI) Act, 2002. In addition to this, the Company has
been continuously incurring substantial losses since past few years and
as on March 31, 2014, the Company''s current liabilities exceed its
current assets by Rs. 40,519.46 lacs. Further, the net worth of the
Company has fully eroded and during the year the Company has filed for
registration u/s. 15(1) of the Sick Industrial Companies (Special
Provisions) Act, 1985, before the Hon''ble Board for Industrial &
Financial Reconstruction.
All the above events indicate a material uncertainty that casts a
significant doubt on the Company''s ability to continue as a going
concern and therefore it may be unable to realize its assets and
discharge its liabilities in the normal course of business. The
financial results do not disclose the fact that the fundamental
accounting assumption of going concern has not been followed.
2. The Company on the basis of registration filed u/s. 15(1) of the
Sick Industrial Companies (Special Provisions) Act, 1985, before the
Hon''ble Board for Industrial & Financial Reconstruction, and the
hearings for which are in process for determination of sickness; has
not provided for interest on financing facilities amounting to 6,426.05
lacs for the year ending March 31, 2014. Had the same been provided,
the loss for the year ending March 31, 2014, would have increased by
Rs. 6,426.05 lacs. The corresponding liabilities would also have
increased byRs.Rs. 6,426.05 lacs as at March 31,2014.
3. The Company has not provided for impairment or diminishing value of
its assets/investment as per ÂAccounting Standard 28 - Accounting for
Impairment of Assets'' as notified under the Companies (Accounting
Standards) Rules, 2006 read with the General Circular 15/2013 dated
13th September, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013. The effect of such Impairment
or diminishing value has not been quantified by the management and
hence the same is not ascertainable.
4. As on March 31,2014, the Company has investment in equity shares of
wholly owned subsidiary Euro Merchandise (India) Limited amounting to
142.50 lacs and also an outstanding of Rs. 146.29 lacs. The Company has
also issued corporate guarantee to Bank amounting to Rs. 1620 lacs in
respect of the said subsidiary Company (as enlisted in contingent
liabilities in note no.22 to accounts). As per the latest audited
financial statements of Euro Merchandise (India) Limited the net worth
of the company has fully eroded, it has been continuously incurring
heavy losses and the cash flows are under severe stress. No provision
has been made in the financial statements of the company for depletion
in value of investment and the amount receivable by the company both
totaling to Rs. 288.79 lacs.
All the above events indicate a material uncertainty that casts a
significant doubt on the Subsidiary Company''s ability to continue as
a going concern and therefore it may be unable to realize its assets
and discharge its liabilities in the normal course of business
The Company in its financial statements has not provided for the same.
Had such provision been made, the profits before tax for the year would
have been lower to that extent. The effect of the same has not been
quantified by the management and hence the same is not ascertainable.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor''s 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 purposes of our
audit;
b) 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;
c) The Balance Sheet, Statement of Profit and Loss, and the Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and
the Cash Flow Statement comply with the Accounting Standards notified
under the Act read with the General Circular 15/2013 dated 13th
September, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013.
e) On the basis of the written representations received from the
directors as on March 31, 2014 taken on record by the Board of
Directors, all the directors are disqualified as on March 31, 2014 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 " Report on other legal
and regulatory requirements" of Our Report of Even Date)
(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 us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regards to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
physical verification.
c) In our opinion, the Company has not disposed off a substantial part
of its fixed assets during the year.
(2) In respect of its Inventories:
a) The inventories have been physically verified during the year by the
management. In our opinion, the frequency of such 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) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(3) In respect of loans, secured or unsecured, taken or granted by the
Company from/to companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956:
a) According to the information and explanation given to us, the
Company has taken unsecured loans from twenty two parties covered in
the register maintained under section 301 of the Companies Act, 1956.
The maximum amount involved during the year was Rs. 2,567.12 lacs and
the year end balance of loans taken from such parties was Rs. 2,408.17
lacs.
b) According to the information and explanation given to us, the
Company has granted loans to one party covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year was Rs. 7,770.02 lacs and the year-end
balance of loans given to such parties was Rs. 7,765.70 lacs.
c) In our opinion, the rate of interest and other terms and conditions
on which loans mentioned above have been taken/granted are not, prima
facie, prejudicial to the interest of the Company.
d) There are no stipulations made regarding repayment of principal
amount. However the payment of interest is overdue.
(4) In respect of contracts or arrangements referred to in section 301
of the Companies Act, 1956:
a) In our opinion, and according to 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 aggregating during the year to Rs. 5 Lacs
or more in respect of each party, have been made at prices which are
reasonable having regard to the prevailing market prices at the
relevant time.
(5) The company during the year has not accepted deposits within the
meaning of public deposits under the provisions of section 58A or
section 58AA read with Companies (Acceptance of Deposits) Rules, 1975.
(6) 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 with
regards to purchases of inventory, fixed assets and with regards to the
sale of goods and services. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of
these areas.
(7) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(8) 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(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the
prescribed cost records have been made and maintained. We have,
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
(9) In respect of Statutory Dues:
a) According to the information and explanation given to us, the
Company during the year has been facing liquidity stress due to which
there were delays in payment of various statutory dues with appropriate
authorities including undisputed statutory dues such as Income tax,
Sales tax, VAT, Wealth tax, Custom duty, Excise Duty, Tax
deducted/collected at source, Provident Fund, Employees'' State
Insurance, Profession Tax, Cess and other material statutory dues
applicable to it and there are no arrears outstanding as at the year
end for a period of more than six months from the date they became
payable except Service Tax payable amounting to Rs. 9.70 lacs.
b) According to the information and explanation given to us, there are
no dues of Income tax, Sales Tax, VAT, Wealth tax, Customs duty, Excise
duty and cess, which have not been deposited on account of any dispute.
(10) The Company has accumulated losses at the end of financial year
and also had the same at the end of the immediately preceding financial
year. Further the Company has incurred cash losses during the financial
year covered by our audit and also during the immediately preceding
financial year. The accumulated losses of the Company have exceeded its
net worth.
(11) In our opinion and according to the information and explanations
given to us the Company has defaulted in repayment of loans and
interests dues to the banks and financial institution. The principal
outstanding of Term Loans and Cash Credit facilities amount to Rs.
45,475.67 lacs and overdue interest amounts to Rs. 9,286.46 lacs as at
March 31, 2014, subject to reconciliation with the banks. The period of
default ranges around 24 months.
(12) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(13) The company is not a chit fund or a nidhi/mutual benefit
fund/society. Hence the provisions of clause 4(xiii) of the Companies
(Auditor''s Report) Order, 2003 are not applicable to the Company.
(14) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor''s Report)
Order, 2003 are not applicable to the Company.
(15) According to the information and explanations given to us, the
Company has given the guarantee for loans taken by its subsidiary from
bank. The terms and conditions of the same are not prejudicial to the
interest of the Company. However in our opinion the said subsidiary has
been continuously incurring losses and its net worth has been fully
eroded and there is substantial doubt whether the said subsidiary would
be able to repay its liabilities or realize its assets.
(16) In our opinion, the term loans are being applied for the purpose
for which they were obtained.
(17) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company and after
placing reliance on the reasonable assumptions made by the company for
classification of long term and short term usages of funds, we are of
the opinion that, prima facie funds raised on short-term basis have
been utilized for long-term investment.
(18) 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.
(19) The Company has not issued any debentures during the year and
hence creation of security also does notarise.
(20) The Company has not raised any money by way of public issues
during the year.
(21) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For Deepak Maru & Co.
Chartered Accountants
ICAI Firm Regn. No:115678W
Jaymin P. Shah
Partner
Mem.No.118113
Place: Mumbai
Date: May 30,2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of Euro Ceramics
Limited ("the Company"), which comprise the Balance Sheet as at March
31, 2013, the Statement of Profit and Loss and the Cash Flow Statement
for the year then ended and a summary of the significant accounting
policies and other explanatory information.
Management''s Responsibility for the Financial Statements
The Company''s 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 the
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 the 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 the 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 the 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.
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:
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2013;
b) in the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date, and
c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor''s 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 w&re necessary for the purposes of our
audit;
b) 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,
c) The Balance Sheet, Statement of Profit and Loss, and the Cash Flow
Statement dealt with by this Report are in agreementwith the books of
account;
d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and
the Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the Companies Act, 1956.
e) On the basis of the written representations received from the
directors as on March 31, 2013 taken on record by the Board of
Directors, all the directors are disqualified as on March 31, 2013 from
being appointed as a director in terms of clause (g) of sub-section (1)
of Section 274 of the Act.
f) As mentioned in Note ''A'' of the significant accounting policies of
the Company that the financial statements of the Company having been
prepared on a going concern basis, notwithstanding the fact that its
net worth has eroded. The appropriateness of the said basis is
inter-alia dependent on the Company''s ability to infuse requisite funds
for meeting its obligations, rescheduling of debts.
g) As on March 31, 2013, the Company has investment in equity shares of
wholly owned subsidiary Euro Merchandise (India) Limited amounting to
71,42,50,000/- and also an outstandingof 72,66,31,649/-. The Company
has also issued corporate guarantee to Bank amounting to
716,20,00,000/-. As per ''the latest audited financial statements of
Euro Merchandise (India) Limited the net worth of the company has
completely eroded and the cash flows are under stress. No provision has
been made in the financial statements of the company for depletion in
value of investment and the amount receivable by the company totaling
to Rs. 4,08,81,649/-. Had the provision for the same been made, the
profits before tax for the year would have been lower to that extent.
Annexure to the Auditor''s Report
(referred to in Paragraph 3 of Our Report of Even Date)
(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 us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regards to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
physical verification.
c) In our opinion, the Company has not disposed off a substantial part
of its fixed assets during the year.
(2) In respectof its Inventories:
a) The inventories have been physically verified during the year by the
management. In our opinion, the frequency of such 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) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(3) In respect of loans, secured or unsecured, taken or granted by the
Company from / to companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956:
a) According to the information and explanation given to us, the
Company has taken unsecured loans from eighteen parties covered in the
register maintained under section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs. 23,48,45,315/- and the
year end balance of loans taken from such parties was Rs. 21,80,80,315/-.
b) According to the information and explanation given to us, the
Company has granted loans to one party covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year was Rs.72,64,85,400/- and the year-end
balance of loans given to such parties wasRs.70,79,02,861/-.
c) In our opinion, the rate of interest and other terms and conditions
on which loans mentioned above have been taken / granted are not, prima
facie, prejudicial to the interest of the Company.
d) In the absence of stipulations in respect of the terms of payment of
principal amount and interest for the loans taken/granted, it is not
possible to comment whether the principal and interest payments are
regular.
(4) In respect of contracts or arrangements referred to in section 301
of the Companies Act, 1956:
a) In our opinion, and according to 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 aggregating during the year to Rs. 5 Lacs or
more in respect of each party, have been made at prices which are
reasonable having regard to the prevailing market prices at the
relevant time.
(5) The company during the year has accepted deposits within the
meaning of public deposits under the provisions of section 58A read
with Companies (Acceptance of Deposits) Rules, 1975 in the nature of
unsecured loans. In our opinion, there has been non- compliance to the
provisions of section 58A with respect to maintenance of liquid assets,
maximum permissible rate of interest allowed to be paid / payable (in
some of the cases) and filing of return as required under the said
rules. The Company has not accepted deposits within the meaning of
public deposits underthe provisions of section 58AA.
(6) 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 with
regards to purchases of inventory, fixed assets and with regards to the
sale of goods and services. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of
these areas.
(7) In ouropinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(8) 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(1 )(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the
prescribed cost records have been made and maintained. We have,
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
(9) InrespectofStatutoryDues:
a) According to the information and explanation given to us, the
Company during the year has been facing liquidity stress due to which
there were delays in payment of various statutory dues with appropriate
authorities including undisputed statutory dues such as Income tax,
Sales tax, VAT, Wealth tax, Custom duty, Excise Duty, Tax
deducted/collected at source, Provident Fund, Employees'' State
Insurance, Profession Tax, Cess and other material statutory dues
applicable to it and there are no arrears outstanding as at the year
end for a period of more than six months from the date they became
payable except Service Tax payable amounting to Rs. 9,69,839/-.
b) According to the information and explanation given to us, there are
no dues of Income tax, Sales Tax, VAT, Wealth tax, Customs duty, Excise
duty and cess, which have not been deposited on account of any dispute.
(10) The Company has accumulated losses at the end of financial year
and also had the same at the end of the immediately preceding financial
year. Further the Company has incurred cash losses during the financial
year covered by our audit and also during the immediately preceding
financial year. The accumulated losses of the Company have exceeded 50%
of its net worth.
(11) In our opinion and according to the information and explanations
given to us the Company has defaulted in repayment of loans and
interests dues to the banks and financial institution. Estimated unpaid
overdues in respect of principal outstanding amount to Rs. 2,35,87,725/-
and overdue interest amounts to Rs. 30,91,89,985/- as at March 31,2013.
(12) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(13) The company is not a chit fund or a nidhi/mutual benefit
fund/society. Hence the provisions of clause 4(xiii) of the Companies
(Auditor''s Report) Order, 2003 are not applicable to the Company.
(14) in our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order,
2003 are not applicable to the Company.
(15) According to the information and explanations given to us, the
Company has given the guarantee for loans taken by its subsidiary from
banks. The terms and conditions are not prejudicial to the interest of
the Company.
(16) In our opinion, the term loans are being applied for the purpose
for which they were obtained.
(17) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company and after
placing reliance on the reasonable assumptions made by the company for
classification of long term and short term usages of funds, we are of
the opinion that, prima facie funds raised on short-term basis have
been utilized for long-term investment.
(18) 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.
(19) According to the information and explanations given to us, during
the year covered by our audit report, the Company has issued
Compulsorily Convertible Debentures (CCDs) to two of its Bankers
according to the approved scheme of Corporate Debt Restructuring (CDR)
to be converted into even number of Equity Shares within eighteen
months from the date of issue. The Company has issued 51,59,705 CCDs
with a Face Value of Rs. 24.42/- each aggregating to Rs.12,59,99,997/-.
However no security has been created against the said Debentures.
(20) The Company has not raised any money by way of public issues
during the year.
(21) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For DEEPAK MARU & CO.
Chartered Accountants
Firm Regn No:115678W
(CA JAYMIN P. SHAH)
Place: Mumbai Mem. No:118113
Date: May 30, 2013
Mar 31, 2012
1) We have audited the attached Balance Sheet of Euro Ceramics Limited
as at March 31,2012, the Statement of Profit and Loss and the Cash Flow
Statement for the year ended on that date annexed thereto (all together
referred to as the 'financial statements'). 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 our audit in accordance with the 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 from material misstatements. 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 presentation of the
financial statement. We believe that our audit provides a reasonable
basis for ouropinion.
3) As required by the Companies (Auditor's Report) Order, 2003 as
amended by the Companies (Auditor's Report) (Amendment) 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 3
above, 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 purposes 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. In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report are in compliance with
the Accounting Standards referred to in Sub-Section (3C) of Section 211
of the Companies Act, 1956;
e. On the basis of written representations received from the
Directors, and taken on record by the Board of Directors, as on March
31,2012, we report that none of the Directors is disqualified as on
March 31, 2012 from being appointed as a Director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
f. Without qualifying attention is drawn to the following:
(i) Regarding the financial statements of the Company having been
prepared on a going concern basis, the appropriateness of which is
inter-alia dependent on successful implementation of the scheme
approved by the Corporate Debt Restructuring Cell as envisaged in Note
no.22 of the financial statements and as also that in the opinion of
the management, no impairment provision is considered necessary.
(ii) Note no.30 of the financial statements in respect of Net Deferred
Tax Liability recognized in the earlier years of Rs 15,23,92,056/- being
carried forward in the Balance Sheet and expected to reverse in
foreseeable future, on the basis of management's view regarding future
profits and the Restructuring Scheme approved by the CDR Cell. However,
we are unable to express an opinion as to when and to what extent the
aforesaid net deferred tax liability would reverse in the near future.
(iii) Note no.9 of the financial statements on the financial
statements, regarding investment in a subsidiary, carried at
Rs 1,42,50,000/- which may require provisioning for the
other-than-temporary diminution in the value of investments in the
subsidiary in accordance with Accounting Standard 13 - Accounting for
Investment is yet to be quantified and determined by the Management
particularly when such subsidiary has negative net worth. We are,
therefore, unable to comment on the adequacy, or otherwise, of the
provision for the other-than-temporary diminution in the value of
investment in the subsidiary as at March 31, 2012, and the
consequential effects on the reported amounts under carrying value of
investments, profit before tax, balance in profit and loss account and
earnings per share in the financial statements.
g. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read with significant
accounting policies and notes thereon give the information required by
the Companies Act, 1956, in the manner so required and present 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 March 31,2012;
ii) in the case of the Statement of Profit and Loss, of the loss of the
company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure To The Auditor's Report
(referred to in Paragraph 3 of Our Report of Even Date)
(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 us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regards to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
physical verification.
c) In our opinion, the Company has not disposed off a substantial part
of its fixed assets during the year.
(2) In respect of its Inventories:
a) The inventories have been physically verified during the year by the
management. In our opinion, the frequency of such 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) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(3) In respect of loans, secured or unsecured, taken or granted by the
Company from / to companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956:
a) According to the information and explanation given to us, the
Company has taken unsecured loans from eleven parties covered in the
register maintained under section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs 35,23,60,664/- and the
year end balance of loans taken from such parties was Rs 24,17,93,373/-.
b) According to the information and explanation given to us, the
Company has granted loans to four parties covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year was Rs 73,95,43,809/- and the year-end
balance of loans given to such parties was Rs 73,76,93,809/-.
c) In our opinion, the rate of interest and other terms and conditions
on which loans mentioned above have
been taken / granted are not, prima facie, prejudicial to the interest
of the Company.
d) In the absence of stipulations in respect of the terms of '
payment of principal amount and interest for the loans taken/granted,
it is not possible to comment whether the principal and interest
payments are regular.
(4) In respect of contracts or arrangements referred to in section 301
of the Companies Act, 1956:
a) In our opinion, and according to 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 aggregating during the year toRs 5 Lacs or
more in respect of each party, have been made at prices which are
reasonable having regard to the prevailing market prices at the
relevant time.
(5) The company during the year has accepted deposits within the
meaning of public deposits under the provisions of section 58A read
with Companies (Acceptance of Deposits) Rules, 1975 in the nature of
unsecured loans. In our opinion, there has been non-compliance to the
provisions of section 58A with respect to maintenance of liquid assets,
maximum permissible rate of interest allowed to be paid / payable (in
some of the cases), rate of brokerage allowed to be paid / payable (in
some of the cases) and filing of return as required under the said
rules. The Company has not accepted deposits within the meaning of
public deposits under the provisions of section 58AA.
(6) 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 with
regards to purchases of inventory, fixed assets and with regards to the
sale of goods and services. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of
these areas.
(7) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business
(8) 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(1 )(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the
prescribed cost records have been made and maintained. We have,
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
(9) In respect of Statutory Dues: '
a) According to the information and explanation given to us, the
Company during the year has been facing liquidity stress due to which
there were delays in payment of various statutory dues with appropriate
authorities including undisputed statutory dues such as Income tax,
Sales tax, VAT, Wealth tax, Custom duty, Excise Duty, Tax
deducted/collected at source, Provident Fund, Employees' State
Insurance, Profession Tax, Cess and other material statutory dues
applicable to it and there are no arrears outstanding as at the year
end for a period of more than six months from the date they became
payable except Service Tax payable amounting to Rs 9,69,839/.
b) According to the information and explanation given to us, there are
no dues of Income tax, Sales Tax, VAT, Wealth tax, Customs duty, Excise
duty and cess, which have not been deposited on account of any dispute,
except the following:
Name of Nature of Amount Period to Forum where
the Statute the dues (Rs ) which the the dispute
amount is pending
relates
Income Tax Income 4,82,210/- F.Y. Commissioner
Act-1961 Tax 2007-08 of Income Tax
(Appeals)-39,
Mumbai
(10) The Company has accumulated losses at the end of financial year
but did not have the same at the end of the immediately preceding
financial year. Further the Company has incurred cash losses during the
financial year covered by our audit but not in the immediately
preceding financial year. The accumulated losses of the Company have
exceeded 50% of its net worth.
(11) There have been defaults in repayment of dues to the banks during
the year, which have been subsequently either rescheduled by way of
Corporate debt restructuring package (CDR) or repaid upto the date of
our report except certain loan ofRs 5,12,16,379/-including overdue
interest of Rs 12,16,379/- (defaults for the period exceeding six
months) to certain bank who did not opt for CDR scheme. The management,
as explained, is negotiating with the bank and confident of an amicable
restructuring/settlement.
(12) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(13) The company is not a chit fund or a nidhi/mutual benefit
fund/society. Hence the provisions of clause 4(xiii) of the Companies
(Auditor's Report) Order, 2003 are not applicable to the Company.
(14) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor's Report) Order,
2003 are not applicable to the Company.
(15) According to the information and explanations given to us, the
Company has given the guarantee for loans taken by its subsidiary from
banks. The terms and conditions are not prejudicial to the interest of
the Company.
(16) In our opinion, the term loans are being applied for the purpose
for which they were obtained.
(17) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company and after
placing reliance on the reasonable assumptions made by the company for
classification of long term and short term usages of funds, we are of
the opinion that, prima facie funds raised on short-term basis have
been utilized for long-term investment.
(18) 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
theAct.
(19) According to the information and explanations given to us, during
the year covered by our audit report, the Company has not issued any
Debentures.
(20) The Company has not raised any money by way of public issues
during the year.
(21) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For DEEPAK MARU & CO.
CHARTERED ACCOUNTANTS
Firm Regn. No.115678W
JAYMIN P. SHAH
Place: MUMBAI (Partner)
Date: August 27, 2012 M.NO. 118113
Mar 31, 2011
1) We have audited the attached Balance Sheet of Euro Ceramics Limited
as at March 31,2011 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 annexed thereto (all together referred to as the 'financial
statements'). 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 our audit in accordance with the 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 from material misstatements. 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
presentation of the financial statement. We believe that our audit
provides a reasonable basis for our opinion.
3) As required by the Companies (Auditor's Report) Order, 2003 as
amended by the Companies (Auditor's Report) (Amendment) 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 3
above, we report as follows:
a. We have 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, proper books of account as required by law have
been kept by the Company so far as appears from our examination of such
books;
c. The Balance Sheet and Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books
ofaccount;
d. In our opinion, the Balance Sheet and Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Sub-Section (3C) of Section 211 of
the Companies Act, 1956;
e. On the basis of written representations received from the
directors, and taken on record by the Board of Directors, as on March
31, 2011, we report that none of the directors is disqualified as on
March 31, 2011 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
f. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read with significant
accounting policies, notes to accounts give the information required by
the Companies Act, 1956, in the manner so required and present 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 March 31,2011;
ii) in the case of the Profit and Loss Account, of the profit of the
company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure To The Auditor's Report
(Referred to in paragraph 3 of our report of even date)
(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 us, the management during the year at reasonable
interval has physically verified the assets and no material
discrepancies were noticed on such verification.
c) The Company has not disposed off any substantial part of the fixed
assets during the year.
(2) In respect of its Inventories:
a) The inventory has been physically verified during the year by the
management. In our opinion, the frequency of such 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) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(3) In respect of Loans Taken/Granted:
a) According to the information and explanation given to us, the
Company has taken unsecured loans from sixteen parties covered in the
register maintained undersection 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs. 2,840.24 Lacs and the
year end balance of loans taken from such parties was Rs. 1,006.84
Lacs.
b) According to the information and explanation given to us, the
Company has granted loans to six parties covered in the register
maintained undersection 301 of the Companies Act, 1956 The maximum
amount involved during the year was Rs. 1,701.69 Lacs and the year end
balance of loans given to such parties was Rs. 419.14 Lacs.
c) In our opinion, the rate of interest and other terms and conditions
on which loans mentioned above have been taken / granted are not, prima
facie, prejudicial to the interest of the Company.
d) In the absence of stipulations in respect of the terms of payment of
principal amount and interest for the loans taken/granted! it is not
possible to comment whether the principal and interest payments are
regular.
(4) lnrespectofregistermaintainedu/s.301 of the Companies Act, 1956:
a) In our opinion and according to information and explanations given
to us, the particulars of contracts or arrangements referred to in
section 301 of the Companies Act, 1956 have been so entered in the
register required to be maintained underthatsection.
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 aggregating during the year to Rs. 5 Lacs
or more in respect of each party, have been made at prices which are
reasonable having regard to the prevailing market prices at the
relevant time.
(5) In our opinion the company has complied with the provisions of
section 58Aand section 58AAread with Companies (Acceptance of Deposits)
Rules, 1975 in respect of deposits accepted in the nature of unsecured
loans taken, amounting to Rs. 2,833.00 Lacs raised by the company
during the year and the Company has filed the copy of Statement in lieu
of Advertisement and necessary particulars as required with the
Registrar of Companies Mumbai.
(6) In our opinion and according to the information and explanations
given to us, there is an adequate internal control procedure
commensurate with the size of the Company and the nature of its
business with regards to purchases of inventory, fixed assets and with
regards to the sale of goods. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of
these areas.
(7) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business
(8) We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under section 209(1 )(d) of the Companies
Act, 1956 for its Aluminium Division and are of the opinion that prima
facie, the prescribed accounts and records have been made and
maintained.
(9) In respect of Statutory Dues:
a) The Company is generally regular in depositing with appropriate
authorities undisputed statutory dues including Income tax, Sales tax,
VAT, Wealth tax, Custom duty, Excise Duty, Tax deducted/collected at
source, Provident Fund, Employees' State Insurance, Profession Tax,
Cess and other material statutory dues applicable to it and there are
no arrears outstanding as at the year end for a period of more than six
months from the date they became payable, except for some instances of
delays in depositing them with the appropriate authorities during the
year which were not material.
b) According to the information and explanation given to us, there are
no dues of Income tax, Sales Tax, VAT, Wealth tax, Customs duty, Excise
duty and cess, which have not been deposited on account of any dispute,
except the following:
Name of Nature of Amount Period to Forum where
the Statute the dues (Rs.) which the the dispute
amount is pending
relates
Income Tax Income Tax 4.82 Lacs F.Y. 2007-08 Commissioner
of Act-1961
Income Tax
(Appeals)-39,
Mumbai
(10) The Company neither has any accumulated losses at the end of
financial year nor did it have the same at the end of the immediately
preceding financial year. Further the Company has not incurred any cash
losses during the financial year covered by our audit but the Company
had incurred cash loss to the tune of Rs.1,856.83 Lacs in the
immediately preceding financial year.
(11) In our opinion and according to the information and explanations
given to us, there has been delay in repayment of the loans and
interest which were outstanding as on March 31, 2011, due to the
lenders amounting to Rs. 1234.52 Lacs, paid by the Company
subsequently.
An amount of Rs. 658.30 Lacs outstanding as on March 31, 2011, in
respect of loans and interest due to the lenders, are not paid till
date.
(12) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(13) The company is not a chit fund or a nidhi/mutual benefit
fund/society Hence the provisions of clause 4(xiii) of the Companies
(Auditor's Report) Order, 2003 are not applicable to the Company.
(14) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor's Report) Order,
2003 are not applicable to the Company.
(15) According to the information and explanations given to us, the
Company has given following guarantees for loans taken by its
subsidiary Euro Merchandise (India) Ltd. from banks, however the terms
of issue of said guarantee are not prejudicial to the interest of the
Company:
Sr. Date of Guarantee Amount Guarantee on
No. Guarantee Favouring (Rs.) Account of
1. 13-09-2007 The Cosmos 3,220 Lacs Working Capital,
Co-op. Bank Term Loan and
Ltd. Letter of Credit
limit.
2. 30-01-2010 ABN Amro 30 Lacs Business Term Loan
BankN.V.
TOTAL 3,250 Lacs
(16) In our opinion, the term loans are being applied for the purpose
for which they were obtained.
(17) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company and after
placing reliance on the reasonable assumptions made by the company for
classification of long term and short term usages of funds, we are of
the opinion that, prima facie no funds raised on short- term basis have
been utilized for long-term investment.
(18) 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
theAct.
(19) According to the information and explanations given to us, during
the year covered by our audit report, the Company has not issued any
Debentures.
(20) The Company has not raised any money by way of public issues
during the year.
(21) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of ouraudit.
For Deepak Maru & Co.
Chartered Accountants
FirmRegn.No.115678W
Jaymin P. Shah
(Partner)
M.No. 118113
Place : Mumbai
Date : August 12, 2011
Mar 31, 2010
1) We have audited the attached Balance Sheet of Euro Ceramics Limited
as at March 31, 2010 and also the Profi t and Loss Account for the year
ended on that date and the Cash Flow Statement for the year ended on
that date annexed thereto (all together referred to as the financial
statements) . These fi nancial statements are the responsibility of
the Companys Management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2) We have conducted our audit in accordance with the auditing
standards generally accepted in India. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the fi nancial statements are free from material misstatements. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the fi nancial statements. An audit also
includes assessing the accounting principles used and signifi cant
estimates made by management, as well as evaluating the overall
presentation of the fi nancial statement. We believe that our audit
provides a reasonable basis for our opinion.
3) As required by the Companies (Auditors Report) Order, 2003 as
amended by the Companies (Auditors Report) (Amendment) 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 specifi ed in paragraphs 4 and 5 of the said
Order.
4) Further to our comments in the Annexure referred to in paragraph 3
above, we report as follows:
a. We have 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, proper books of account as required by law have
been kept by the Company so far as appears from our examination of such
books;
c. The Balance Sheet and Profi t and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d. In our opinion, the Balance Sheet and Profi t and Loss Account and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Sub- Section (3C) of Section 211 of
the Companies Act, 1956;
e. On the basis of written representations received from the
directors, and taken on record by the Board of Directors, as on 31st
March, 2010, we report that none of the directors is disqualifi ed as
on 31st March, 2010 from being appointed as a director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act,
1956;
f. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read with Signifi cant
accounting policies, notes to accounts give the information required by
the Companies Act, 1956, in the manner so required and present 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 31st March, 2010;
ii) in the case of the Profi t and Loss Account, of the loss of the
company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash fl ows for the
year ended on that date.
Annexure To The Auditors Report (Referred to in paragraph 3 of our
report of even date)
1) In respect of Fixed Assets:
a The Company has maintained proper records showing full particulars
including quantitative details and situation of its fi xed assets.
b As explained to us, the management during the year at reasonable
interval has physically verifi ed the assets and no material
discrepancies were noticed on such verifi cation.
c The Company has not disposed off any substantial part of the fi xed
assets during the year.
2) In respect of its Inventories:
a The inventory has been physically verifi ed during the year by the
management. In our opinion, the frequency of such verifi cation is
reasonable.
b In our opinion and according to the information and explanations
given to us, the procedures of physical verifi cation 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 In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verifi cation between the
physical stocks and the book records were not material.
3) In respect of Loans Taken / Granted:
a According to the information and explanation given to us, the Company
has taken unsecured loans from eleven parties covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year was Rs.49,81,96,976/- and the yearend
balance of loans taken from such parties was Rs.9,82,33,102/-.
b According to the information and explanation given to us, the Company
has granted loans to four parties covered in the register maintained
under section 301 of the Companies Act, 1956. The maximum amount
involved during the year was Rs.30,02,74,609/- and the year-end balance
of loans given to such parties was Rs.14,18,19,409/-.
c In our opinion, the rate of interest and other terms and conditions
on which loans mentioned above have been taken / granted are not, prima
facie, prejudicial to the interest of the Company.
d In the absence of stipulations in respect of the terms of payment of
principal amount and interest for the loans taken/granted, it is not
possible to comment whether the principal and interest payments are
regular.
4) In respect of register maintained u/s. 301 of the Companies Act,
1956:
a In our opinion, and according to information and explanations given
to us, the particulars of contracts or arrangements referred to in
section 301 of the Companies Act, 1956 have been so entered in the
register required to be maintained under that section.
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 aggregating during the year to Rs.
5,00,000/- or more in respect of each party, have been made at prices
which are reasonable having regard to the prevailing market prices at
the relevant time.
5) In our opinion the company has complied with the provisions of
section 58A and section 58AA read with Companies (Acceptance of
Deposits) Rules, 1975 in respect of deposits accepted in the nature of
unsecured loans taken, amounting to Rs.18,69,00,000/- raised by the
company during the year and the Company has fi led the copy of
Statement in lieu of Advertisement and necessary particulars as
required with the Registrar of Companies Mumbai.
6) In our opinion and according to the information and explanations
given to us, there is an adequate internal control procedure
commensurate with the size of the Company and the nature of its
business with regards to purchases of inventory, fi xed assets and with
regards to the sale of goods. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of
these areas.
7) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business
8) We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 for its Aluminium Division and are of the opinion that prima
facie, the prescribed accounts and records have been made and
maintained.
9) In respect of Statutory Dues:
a The Company is generally regular in depositing with appropriate
authorities undisputed statutory dues including Income tax, Sales tax,
VAT, Wealth tax, Custom duty, Excise Duty, Tax deducted/collected at
source, Provident Fund, Employees State Insurance, Cess and other
material statutory dues applicable to it and there are no arrears
outstanding as at the year end for a period of more than six months
from the date they became payable, except for some few instances of
delays in depositing them with the appropriate authorities during the
year which were not material.
b According to the information and explanation given to us, there are
no dues of Income tax, Sales Tax, VAT, Wealth tax, Customs duty, Excise
duty and cess, which have not been deposited on account of any dispute.
10) The Company neither has any accumulated losses at the end of fi
nancial year nor did it have the same at the end of the immediately
preceding fi nancial year but has incurred cash losses during the fi
nancial year covered by our audit to the tune of Rs.18,56,82,497/- and
to the tune of Rs.1,65,75,992/- in the immediately preceding fi nancial
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 any
of the banks or fi nancial institutions during the year.
12) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis or security by
way of pledge of shares, debentures and other securities.
13) The company is not a chit fund or a nidhi/ mutual benefi t
fund/society. Hence the provisions of clause 4(xiii) of the Companies
(Auditors Report) Order, 2003 are not applicable to the Company.
14) In our opinion, the Company is not dealing in or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
2003 are not applicable to the Company.
15) According to the information and explanations given to us, the
Company has given following guarantees for loans taken by its
subsidiary Euro Merchandise (I) Ltd. from banks, however the terms of
issue of said guarantee are not prejudicial to the interest of the
Company:
Sr. Date of Guarantee Guarantee on
No. Amount (Rs.)
Guarantee Favouring account of
The Cosmos
Co-op. Bank Working Capital,
Term Loan
13-09-2007 32.2 crores
Ltd. and Letter of
Credit limit.
Business Term Loan
2 30-01-2010 ABN Amro Bank
N.V. 0.3 crores
TOTAL 32.5 crores
16) In our opinion, the term loans are being applied for the purpose
for which they were obtained.
17) According to the information and explanations given to us and on an
overall examination of the balance sheet of the Company and after
placing reliance on the reasonable assumptions made by the company for
classifi cation of long term and short term usages of funds, we are of
the opinion that, prima facie no funds raised on short-term basis have
been utilized for long- term investment.
18) 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.
19) According to the information and explanations given to us, during
the year covered by our audit report, the Company has not issued any
Debentures.
20) The Company has not raised any money by way of public issues during
the year.
21) According to the information and explanations given to us, no fraud
on or by the Company has been noticed or reported during the course of
our audit.
For DEEPAK MARU & CO.
CHARTERED ACCOUNTANTS
Firm Regn. No.115678W
JAYMIN P. SHAH
(Partner)
M.NO. 118113
Place: MUMBAI
Date: October 29, 2010.