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Auditor Report of Golden Tobacco Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Golden Tobacco Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 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.

Managements Responsibility for the Standalone 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 respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 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 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 the 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.

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,

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2015;

(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 of the Company for the year ended on that date.

Emphasis of Matter:

Without qualifying, we draw attention to the following:

(a) the appropriateness or otherwise of the preparation of these standalone financial statements on a going concern basis, in view the Company's net worth having been entirely eroded as also the restrictions placed by the Hon'ble Supreme Court to deal with the properties of the Company and also by the Gujarat High Court particularly in respect of Vile Parle property. The Company has however, prepared the financial statements on a going concern basis as the management is hopeful to turn around the Company's business performance and expects favourable decision by the aforesaid courts and consequential early finalization of Modified Draft Rehabilitation Scheme (MDRS), inter alia, providing for early disposal of Company's surplus properties. (Refer note no. 25.(10) of the standalone financial statements)

(b) The Company's Revised MDRS submitted to the Monitoring Agency for their consideration, which is pending and consequential impact, if any, including provisions/reliefs and payment of interest on various advances taken by the Company, etc. as and when the scheme is sanctioned (Refer note no. 25(1 )(1.1) (c) of the standalone financial statements).

(c) There is substantial diminution in the carrying value of certain long term investments, particularly in respect of quoted investments- the diminution being Rs. 2,12,32,345 (Previous year Rs. 3,55,10,361) as compared to its market value which, in the opinion of the management is temporary and no provisioning is considered necessary at this stage as the same are long term and of strategic in nature (Refer note no.9.1 of the standalone financial statements).

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 3 and 4 of the Order.

2. 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, the 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.

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a 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 information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements. (Refer note no.25(1) (1.1) (a) to (e) and 25 (7) (a) of the standalone financial statements)

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF GOLDEN TOBACCO LIMITED ON THE STANDALONE FINANCIAL STATEMENTS

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we state that:

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

(b) The Company has carried out physical verification its fixed assets during the year. In our opinion, the frequency of verification is reasonable considering the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification except a Flat having Gross Book Value of Rs. 66,44,825 (Net Book Value: Rs. 37,27,501) as on March, 2015 which, as explained by the Management, is in the wrongful possession of the family member of an ex-employee for a long time. The Company had already initiated legal proceedings against the said ex- employee and on his demise; the names of his family members were substituted. The Company is pursuing litigation so that the flat can be vacated at the earliest. We are, however, unable to comment as to when the said flat would be released to the Company and on the ultimate realisability of the carrying value thereof.

2. (a) The inventories of the Company at its major locations have been physically verified by the management at reasonable intervals during the year. Inventory lying with third parties and in-transit as on 31st March, 2015 have been verified by the management with reference to confirmation or statement of account or correspondence obtained from the third parties and /or subsequent receipt of inventory.

(b) In our opinion, the procedures of physical verification of inventory 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 inventory and the discrepancies noticed between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. During the year, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased and sold are of the special nature in respect of which suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control systems commensurate with the size of the Company and nature of its business for purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the aforesaid internal control systems.

5. In our Opinion and according to the information and explanations given to us, the Company has not accepted any public deposits within the meaning of Section 73 to 76 or any other relevant provisions of the Act and rules framed thereunder.

6. On the basis of records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Central Government under Section 148 (1) of the Act have been maintained. However, we are not required to and thus have not carried out any detailed examination of such accounts and records, with a view to ascertain whether these are accurate and complete.

7. (a) The Company is generally regular in depositing undisputed statutory dues 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 any other material statutory dues applicable to the Company with the appropriate authorities. No undisputed amounts payable in respect of the aforesaid statutory dues were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.

(b) According to the records of the Company, there are no dues of Income Tax, Sales Tax, Service tax, Duty of Customs, Wealth Tax, Duty of Excise, Value Added Tax, Cess which have not been deposited on account of any dispute except the following :

NAME OF THE STATUTES NATURE OF PERIOD TO WHICH DUES IT RELATES

Tamilnadu General Sales Tax 1993-98 Sales Tax Act, 1959

The Kerala Value Sales Tax 2008-09 to Added Tax Act, 2003 2009-10

The Bihar Tax on Entry of Entry Tax 2003 to 2011 Goods into Local Areas for Consumption, Use or Sale therein Act, 1993

The Tamilnadu Tax on Entry Entry Tax Various Year of Goods into Local Areas Act, 2001

The Uttar Pradesh Tax on Entry Tax Various Years Entry of Goods into Local Areas Act, 2007

The Income Tax Act, 1961 Income Tax 1984-85 to 2007-08

1984-85 to 1986- 87 & 2008-09

1987- 88 to 1991-92

Central Excise Act, 1944 Excise Duty 1979,1986,1997 and 1998

2000,2003 and 2004

1983,1994,1995,1999,

2002,2003,2007 and 2011

1979 to 2011

NAME OF THE STATUTES AMOUNT FORUM WHERE (IN Rs.) DISPUTE IS PENDING

Tamilnadu General 261,308 Sales Tax Sales Tax Act, 1959 Appellate Tribunal- Coimbatore

The Kerala Value 913,736 Commissioner Sales Added Tax Act, 2003 Tax- Kochi

The Bihar Tax on Entry of 13,70,39,667 High Court-Bihar Goods into Local Areas for Consumption, Use or Sale therein Act, 1993

The Tamilnadu Tax on Entry 3,03,59,060 Supreme Court of Goods into Local Areas Act, 2001

The Uttar Pradesh Tax on 70,13,122 Joint Commissioner Entry of Goods into Local Sales Tax Areas Act, 2007

The Income Tax Act, 1961 1,149,564,577 Income tax Appellate Tribunal/ Bombay High Court

829,269,559 Income Tax Commissioner (Appeals)

102,557,479 Assessing Officer

Central Excise Act, 1944 29,58,17,161 Supreme Court of India

3,39,67,596 High Court, Mumbai

39,83,07,219 Customs, Excise, Service Tax Appellate Tribunal

10,138,752 Commissioner of Central Excise

c) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

8. The accumulated losses of the Company at the end of the financial year are more than 50% of its net worth. The Company has incurred cash losses during the current financial year as well as in the immediately preceding financial year.

9. In our opinion and according to the information and explanations given to us and based on the documents and records produced before us there has been no default in repayment of dues to banks except for a delay ranging from 3-90 days of v69,500,000 towards principal and Interest of Rs. 1,04,76,746. There are no dues to financial institutions or debenture holders.

10. According to the information and explanations given to us, the terms and conditions on which the Company had given guarantee for loans taken by others from banks and financial institutions are, prima facie, not prejudicial to the interest of the Company.

11. Based on the information and explanations given to us by the management, the Company has not obtained any term loans during the year. Therefore, the provisions of the clause 4 (xi) of the Order are not applicable to the Company.

12. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing standards in India and according to the information and explanations given to us, 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.

For LODHA & CO. Chartered Accountants Firm Registration No. 301051E R. P. Baradiya Place : Mumbai Partner Date : May 25, 2015 Membership No. 44101


Mar 31, 2014

We have audited the accompanying financial statements of GOLDEN TOBACCO LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement of the Company 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") 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. 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. 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, 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 without qualified of the cash flows for the year ended on that date.

Emphasis of Matter:

Without qualifying, we draw attention of the following:

(a) The Company''s Revised Modified Draft Rehabilitation Scheme (MDRS) submitted to the BIFR and consequential recording of reliefs etc. as and when the scheme is sanctioned (Refer note no. 25(1)(1.1) (e)).

(b) There is substantial diminution in the carrying value of certain long term investments, particularly in respect of quoted investments- the diminution being Rs. 3,55,10,361 as compared to its market value which, in the opinion of the management is temporary and no provisioning is considered necessary at this stage as the same are long term and of strategic in nature (Refer note no.9.1).

(c) Overdue advances of Rs. 9,99,70,868 and an investment of Rs. 2,31,20,000 in Western Express Industries Limited (WEIL), a wholly owned subsidiary company which has accumulated losses far in excess of its paid up capital and reserves & surplus.

As explained, the management is hopeful of recovering/realizing the same in due course of time in view of expected revival of activities/ developments in the said subsidiary (Refer note no. 10.1).

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor'' 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 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 comply with the Accounting Standards referred to in sub-section (3C) of section 211 of 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 and taken on record by the Board of Directors, none of the directors is 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.

ANNEXURE REFERRED TO IN POINT 1 UNDER THE PARAGRAPH "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF GOLDEN TOBACCO LIMITED (''THE COMPANY'')

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

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

(b) During the year, the management has physically verified the fixed assets, except certain Plant & Machineries having Gross Book Value of Rs. 17,65,70,450 crores (Net Book Value: Nil) as on March 31, 2014 lying with third party which could neither be physically verified nor confirmed in view of dispute with the said party. The verification was in accordance with a phased programme which, in our opinion, is considered reasonable having regard to the size of the Company and nature of its assets. The discrepancies noticed on such verification have been dealt with in the books of account except a Flat having Gross Book Value ofRs. 66,44,825 (Net Book Value: Rs. 39,18,323) as on March, 2014 which, as explained by the Management, is in the wrongful possession of the family member of an ex- employee for a long time. The Company had already initiated legal proceedings against the said ex- employee and on his demise; the names of his family members were substituted. The Company is pursuing litigation so that the flat can be vacated at the earliest. We are, however, unable to comment as to when the said flat would be released to the Company and on the ultimate realisability of the carrying value thereof.

(c) During the year, no substantial part of the fixed assets has been disposed off by the Company.

2. (a) The inventories of the Company at its major locations have been physically verified by the management at reasonable intervals during the year. Inventory lying with third parties and in-transit as on 31st March, 2014 have been verified by the management with reference to confirmation or statement of account or correspondence obtained from the third parties and /or subsequent receipt of inventory.

(b) In our opinion, the procedures of physical verification of inventory 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 inventory and the discrepancies noticed between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. The Company has not taken / granted any loans, secured or unsecured, from / to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that purchase of certain items of fixed assets and inventory are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, 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. 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 we have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under the said Section have been so entered .

b) In our opinion, and according to the information and explanations given to us, there are no transactions made in pursuance of contracts and arrangements referred to in (a) above exceeding the value of Rs. 5 lacs with any party during the year.

6. The Company has not accepted any fixed deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Act and rules framed thereunder.

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

8. On the basis of records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Central Government under Section 209 (1) (d) of the Act have been maintained. However, we are not required to and thus have not carried out any detailed examination of such accounts and records, with a view to ascertain whether these are accurate and complete.

9. (a) According to the information and explanations given to us and according to the books and records as produced and examined by us and also considering the Revised Modified Draft Rehabilitation Scheme filed (awaiting sanction), the 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 material statutory dues as applicable have generally been regularly deposited by the Company during the year with the appropriate authorities and there were no arrears as at 31st March, 2014 for a period of more than six months from the date they became payable.

(b) According to the records of the Company and the information and explanations given to us by the management, there are no amounts in respect of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute except for the amounts mentioned below:

NAME OF THE STATUTES NATURE OF PERIOD TO WHICH AMOUNT DUES IT RELATES (IN )

Tamilnadu General Sales Tax 1993-98 261,308 Sales Tax Act, 1959

The Uttar Pradesh Value Sales Tax 2007-08 & 2008-09 10,63,182 Added Tax Act, 2008

The Kerala Value Sales Tax 2009-10 10,32,670 Added Tax Act, 2003

The Bihar Tax on Entry Entry Tax 2003-2011 13,70,39,667 of Goods into Local Areas for Consumption, Use or Sale therein Act, 1993

The Tamilnadu Tax on Entry Tax Various Year 3,03,59,060 Entry of Goods into Local Areas Act, 2001

The Entry Tax Act, 1976 - Entry Tax 2006-2013 44,19,012 Madhya Pradesh

The Uttar Pradesh Tax on Entry Tax Various Year 60,66,890 Entry of Goods into Local Areas Act, 2007

The Income Tax Act, 1961 Income Tax 1984-85 to 1,148,381,207 2007-08

1984-85 to 86-87 & 829,269,559 2008-09

1987-88 to 102,557,479 1991-92

Central Excise Act, 1944 Excise Duty 1979,1986,199 29,58,17,161 and 1998 2000,2003 and 2004 5,12,64,858

1983,1994,1995, 1999, 542,52,96,632 2002,2003,2007 and 2011 1979 to 2011 10,876,096

NAME OF THE STATUTES FORUM WHERE DISPUTE IS PENDING

Tamilnadu General Sales Tax Appellate Tribunal- Coimbatore Sales Tax Act, 1959

The Uttar Pradesh Value Sales Tax Appellate Tribunal Added Tax Act, 2003

The Kerala Value Commissioner Sales Tax- Kochi Added Tax Act, 2003

The Bihar Tax on Entry High Court- Bihar of Goods into Local Areas for Consumption, Use or Sale therein Act, 1993

The Tamilnadu Tax on Supreme Court Entry of Goods into Local Areas Act, 2001

The Entry Tax Act, 1976 Supreme Court Madhya Pradesh

The Uttar Pradesh Tax on Joint Commissioner Sales Tax Entry of Goods into Local Areas Act 2007

The Income Tax Act 1961 Income tax Appellate Tribunal

Income Tax Commissioner (Appeals) Assessing Officer

Central Excise Act 1944 Supreme Court of India

High Court, Mumbai

Customs, Excise, Service Tax Appellate Tribunal

Commissioner of Central Excise

10. The accumulated losses of the Company at the end of the financial year are more than 50% of its net worth. The Company has incurred cash losses during the current financial year as well as in the immediately preceding financial year.

11. The Company has not defaulted in repayment of dues to banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 As the Company is not a chit fund or a nidhi /mutual benefit fund/society, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14 As the Company is not dealing or trading in shares, securities, debentures and other investments, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loan was applied for the purposes for which it was obtained.

17. According to the information and explanations given to us and on overall examination of the Cash flow statement and balance sheet of the Company and on the basis of financial position at the year end, the funds raised on short-term basis have not been used for long term investment except for long term borrowing of Rs. 81,01,28,183 taken in the past and invested in long-term assets, have now become overdue.

18. 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 Act or in the recent past.

19. The Company has not raised any money by way of issue of debentures.

20. The Company has not raised any money by way of public issue during the year or in the recent past.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, 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.

For LODHA & COMPANY Chartered Accountants Firm Registration No. 301051E

R. P. Baradiya Place : Mumbai Partner Date : May 27, 2014 Membership No. 44101


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of GOLDEN TOBACCO LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year then ended and a summary of the significant accounting policies and other explanatory information.

Managements'' Responsibility for the Financial Statements

The Companys'' 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 inclu des 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 auditors'' judgment, including the assessment of the risks of m aterial 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 Companys'' 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 for the year ended on that date.

Emphasis of Matter:

Without qualifying, we draw attention to the following:

(a) There is substantial diminution in the carrying value of certain long term investments, particularly in respect of quoted investments- the diminution being Rs. 3,45,31,403 as compared to its market value which in the opinion of the management, is temporary and no provisioning is considered necessary at this stage as the same are long term and of strategic in nature. (Refer note no.9.1)

b) The Company has given an advances of Rs. 9,94,60,043 and made an investment of Rs. 2,31,20,000 in Western Express Industries Limited (WEIL), a wholly owned subsidiary company which has accumulated losses far in excess of its paid up capital and reserves & surplus. As explained, the management is hopeful of recovering/realizing the same in due course of time in view of expected revival of activities/development in the said subsidiary. (Refer note no. 10.1)

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2003 ("the Order") issued by the Central Gove rnment 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 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 comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

(e) On the basis of the written representations received from the directors as on 31st March, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF THE GOLDEN TOBACCO LIMITED

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

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

(b) During the year, the management has physically verified the fixed assets in accordance with a phased programme which, in our opinion, is considered reasonable having regard to the size of the Company and nature of its assets. The discrepancies noticed on such verification have been dealt with in the books of account except a Flat-Gross Block of Rs. 66,44,825 (Net Block Rs. 40,34,532) as on 31st March, 2013 which, as explained by the Management, is in the wrongful possession of the family member of an ex- employee fo r a long time. The Company had already initiated legal proceedings against the said ex- employee and on his demise, the names of his family members were substituted. The Company is pursuing litigation so that flat can be vacated at the earliest. We are, however, unable to comment as to when the said flat would be released to the Company and on the ultimate realisability of the carrying value thereof.

(c) During the year, no substantial part of the fixed assets has been disposed off by the Company.

2. (a) The inventories of the Company at its major locations have been physically verified by the management at reasonable intervals during the year. Inventory lying with third parties and in-transit as on 31st March, 2013 have been verified by the management with reference to confirmation or statement of account or correspondence obtained from the third parties and /or subsequent receipt of inventory.

(b) In our opinion, the procedures of physical verification of inventory 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 inventory and the discrepancies noticed between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. The Company has not taken or granted any loans, secured or unsecured, from / to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that purchase of certain items of fixed assets and inventory are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, 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. 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 we have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under the said Section have been so entered .

b) In our opinion, and according to the information and explanations given to us, there are no transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs 5 lacs with any party during the year.

6. The Company has not accepted any fixed deposits from the public within the meaning of Section 58A, 58AA or any other relevant provisions of the Act and rules framed thereunder.

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

8. On the basis of records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Central Government under Section 209 (1) (d) of the Act have been maintained. However, we are not required to and thus have not carried out any detailed examination of such accounts and records, with a view to ascertain whether these are accurate and complete.

9. (a) According to the information and explanations given to us and according to the books and records as produced and examined by us and also considering the Modified Draft Rehabilitation Scheme filed (awaiting sanction), the undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees ''State In surance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues as applicable have generally been regularly deposited by the Company during the year with the appropriate authorities and there were no arrears as at 31st March, 2013 for a period of more than six months from the date they became payable.

*stay granted by respective forums

10. The accumulated losses of the Company at the end of the financial year are more than 50% of its net worth. The Company has incurred cash losses during the current financial year as well as in the immediately preceding financial year.

11. The Company has not defaulted in repayment of dues to banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 As the Company is not a chit fund or a nidhi /mutual benefit fund/society, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14 As the Company is not dealing or trading in shares, securities, debentures and other investments, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loan was applied for the purposes for which it was obtained.

17. According to the information and explanations given to us and on overall examination of the Cash flow statement and balance sheet of the Company and on the basis of financial position at the year end, the funds raised on short-term basis have not been used for long term investment except for long term borrowing of Rs. 76,01,14,418 taken in the past and invested in long-term assets, have now become short-term as the same are falling due within one year.

18. 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 Act or in the recent past.

19. The Company has not raised any money by way of issue of debentures.

20. The Company has not raised any money by way of public issue during the year or in the recent past.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, 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.

For LODHA & COMPANY

Chartered Accountants

Firm Registration No. 301051E

A.M. Hariharan

Place: Mumbai Partner

Date : May 23, 2013 Membership No. 38323


Mar 31, 2012

1. We have audited the attached Balance Sheet of Golden Tobacco Limited as at 31st March, 2012, the Statement of Profit and Loss and also the 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 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 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 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (herein after referred to as the 'Act'), 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 accordance with the consistent practice followed by the Company, no provision has been made in the accounts in respect of the estimated total liability for future payment of gratuity of Rs. 4,87,29,868 determined on the basis of actuarial valuation as on March 31,2012. The accounting method of providing gratuity liability as and when due is not in accordance with the accounting method prescribed in Accounting Standard 15 of "Accounting for Employee Benefits" issued by Companies (Accounting Standards) Rules, 2006. (Refer Note 7.1 in notes to financial statements);

(c) Certain Trade Receivables and Loans & Advances aggregating to Rs. 6,05,07,890 which, have been classified by the Management as 'considered good' are, in our opinion, doubtful of recovery and are therefore required to be provided for as doubtful debts. (Refer Note 12.1 and 14.1 in notes to financial statements);

(d) Subject to what is stated in paragraph 4(b) above, 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;

(e) 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;

(f) Subject to what is stated in paragraph 4(b) above, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards prescribed by Companies (Accounting Standards) Rules, 2006, to the extent applicable;

(g) On the basis of written representations received from Directors as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a Director of the Company in terms of Section 274(1)(g) of the Act;

(h) We further report that, without considering the matter referred to in clause 1(b) of the Annexure to this report, the effect of which could not be determined, had the observations made by us in paragraph 4(b) and 4(c) above been considered, the loss for the year would have been Rs. 39,97,15,410 (as against reported loss figure ofRs.29,04,77,652), accumulated losses would have been Rs. 1,04,01,96,524(as against reported figure of Rs. 93,09,58,766), Assets would have been Rs. 3,44,50,50,289(as against reported figure of Rs3,50,55,58,179) and Equity and Liabilities would have been Rs. 3,55,42,88,047(as against reported figure ofRs3,50,55,58,179);

(i) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements subject to our comments in paragraph 4(h) above and read together with Note 25.1 regarding contingent liabilities, Note 10.1 regarding amount invested in and advances due from a subsidiary Company, Note 9.1 regarding carrying value of certain long term investments and other accompanying notes 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 31st March, 2012;

(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.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of Auditors' Report of even date on the financial statements for the year ended and as at 31st March, 2012 of Golden Tobacco Limited)

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

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

(b) During the year, the management has physically verified the fixed assets generally in accordance with a phased programme which, in our opinion needs to be strengthen to be reasonable having regard to the size of the Company and nature of its assets. The discrepancies noticed on such verification have been dealt with in the books of account except a Flat-Gross Block ofRs.66,44,825 (Net Block Rs.41,50,744) as on 31st March, 2012 which, as explained by the Management, is in the wrongful possession of the family member of an ex- employee for a long time. The Company has already initiated legal proceedings against the said ex- employee and on his demise, the names of his family members were substituted. The Company is rigorously following litigation so that flat can be vacated at the earliest. We are, however, unable to comment as to when the said flat would be released to the Company and on the ultimate realisability of the carrying value thereof (Refer Note no. 8 (d) of the financial statements).

(c) During the year, no substantial part of the fixed assets has been disposed off by the Company.

2. (a) The inventories of the Company at all its locations have been physically verified by the management at reasonable intervals during the year. Inventory lying with third parties and in-transit as on 31st March, 2012 have been verified by the management with reference to confirmation or statement of account or correspondence obtained from the third parties and /or subsequent receipt of inventory.

(b) In our opinion, the procedures of physical verification of inventory 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 inventory and the discrepancies noticed between the physical stocks and the book records were not material considering the operations of the Company and have been properly dealt with in the books of account.

3. The Company has not taken or granted any loans, secured or unsecured, from / to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanation given to us, having regard to the explanations that purchase of certain items of fixed assets and inventory are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, 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. 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 we have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under the said Section 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 and arrangements referred to in (a) above and exceeding the value of Rs 5 lacs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any fixed deposits from the public within the meaning of Section 58A, 58AAorany other relevant provisions of the Act and rules framed thereunder.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business with respect to coverage of area such as, human resource department, statutory dues and banks etc.

8. On the basis of records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Central Government under Section 209 (1) (d) of the Act have been maintained. However, we are not required to and thus have not carried out any detailed examination of such accounts and records, with a view to ascertain whether these are accurate and complete.

9. (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, the 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 material statutory dues as applicable have generally been regularly deposited by the Company during the year with the appropriate authorities and there were no arrears as at 31st March, 2012 for a period of more than six months from the date they became payable.

(b) According to the records of the Company and the information and explanations given to us by the management, there are no amounts in respect of income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess that have not been deposited with the appropriate authorities on account of any dispute except for the amounts mentioned below:

NAME OF THE NATURE OF PERIOD TO WHICH STATUTES DUES IT RELATES

Tamilnadu General Sales Sales Tax 1993-98 Tax Act, 1959

Employees'State E.S.I.C. Various Years Insurance Act, 1948

Entry Tax (Bihar) Entry Tax Various Years

Entry Tax (Madars) Entry Tax Various Year

Entry Tax - Madhya Pradesh Entry Tax Various Years

Entry Tax (Luknow) Entry Tax Various Year

Income Tax Act,1961 Income Tax Various Years

Central Excise Act, 1944 Excise Duty Various Years

NAME OF THE STATUTES AMOUNT FORUM WHERE (IN RS.) DISPUTED

Tamilnadu General Sales 6,88,531 Sales Tax Commissioner Tax Act,1959 (Appeals)

Employees' State Insurance Act,1948 19,17,978 Deputy Regional Officer

Entry Tax (Bihar) 13,70,39,667 High Court

Entry Tax (Madars) 3,03,59,060 Supreme Court

Entry Tax-Madhya Pradesh 44,19,012 Supreme Court

Entry Tax (Luknow) 68,66,890 Joint Commissioner Sales Tax

Income Tax Act,1961 74,40,52,749 Income tax Appellate Tribunal

84,42,41,328 Income Tax Commissioner (Appeals)

48,82,91,307 Assessing Officer

Central Excise Act,1944 30,17,57,160 Supreme Court

5,03,56,013 High Court

39,59,84,327 Customs, Excise, Service Tax Appellate Tribunal

2,63,74,237 Commissioner

10. The accumulated losses of the Company at the end of the financial year are more than 50% of its net worth after considering, interalia, the matters referred in para 4 (b) and 4(c) of the auditors' report and without considering the matters referred to in clause

1(b) herein above, the effect of which could not be determined. The Company has incurred cash losses during the current financial year as well as in the immediately preceding financial year.

11. The Company has not defaulted in repayment of dues to banks and debenture holder.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. As the Company is not a nidhi /mutual benefit fund/society, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. As the Company is not dealing or trading in shares, securities, debentures and other investments, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loan was applied for the purposes for which it was obtained.

17. According to the information and explanations given to us and on an overall examination of the Cash Flow statement and Balance Sheet of the Company, in our opinion, the funds raised on short-term basis have, prima facie, not been used for long term investment.

18. 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 Act or in the recent past.

19. The Company has not raised any money by way of issue of debentures.

20. The Company has not raised any money by way of public issue during the year or in the recent past.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, 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.

For LODHA & CO.

Chartered Accountants

A. M. Hariharan

Partner

Place: Mumbai Membership No.38323

Dated: May 25,2012 Firm Registration No.: 301051E

 
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