Sep 30, 2013
We have audited the attached Balance Sheet of KEMROCK INDUSTRIES AND
EXPORTS LIMITED (the ''Company'') as on 30th September 2013, the
Statement of Profit and Loss and the Cash Flow Statement for the 15
month period then ended and a summary of the significant accounting
policies and other explanatory information.
MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956 (the ''Act'') 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 misstatements,
whether due to fraud or error.
AUDITORS'' RESPONSIBILITY
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatements.
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 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 the 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 aforesaid financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs on the
Company as at 30th September 2013.
(b) In the case of the Statement of Profit and Loss, of the loss of the
Company for the 15 months period ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows of the
Company for the 15 months period ended on that date.
EMPHASIS OF MATTER
1. We draw attention to Note 5 of the accompanying financial
statements in respect of material uncertainty about the Company''s
ability to continue as a going concern which is in part dependent on
the successful outcome of the discussions with Financial
Institutions/Financers, regarding fresh funding, takeover of existing
funding, re-scheduling and/or restructuring of loans by existing
Lenders. Our opinion is not qualified in respect of this matter.
2. We draw attention to capitalization of Lease Hold Land (Period: 30
years), amounting to Rs. 295.31 Crores (Out of which Rs. 2.46 Crores
were amortized during the audit period. The documents evidencing the
allotment of the said land was received by the Company in July 2013.
However, pending execution of allied requisite agreements/deeds,
physical possession of the said land has not been handed over to the
Company. We are of the opinion that the stipulated lease hold period
of 30 years shall initiate upon execution of requisite documents and
handover of physical possession of the said land. Hence, the Net Block
is understated, Depreciation and Amortization is overstated and loss is
overstated by an amount of Rs.2.46 Crores.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Company''s (Auditor''s Report) Order, 2003 (the
''Order''), as amended by Companies (Auditors'' Report) (Amendment) Order,
2004 issued by the Central Government of India in terms of sub-section
(4A) of section 227 of the Act and according to the information and
explanations given to us and on the basis of such checks as we
considered appropriate, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Act.
2. As required in terms of sub-section (3) of Section 273 of the Act,
we report that:
(i) We have obtained all information and explanations which, to the
best of knowledge and belief, were necessary for the purpose of our
audit.
(ii) 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
these books.
(iii) The Balance Sheet and Profit and loss account dealt with by this
report are in agreement with the books of account.
(iv) In our opinion, the Balance Sheet and Profit & Loss Account dealt
with by this report comply with the Accounting Standards referred to in
Sub-section (3C) of Section 211 of the Act.
3. On the basis of the written representations received from the
Directors, as on 30th September 2013 and taken on record by the Board
of Directors, we report that none of the Director is disqualified as on
30th September 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 ''Report on Other Legal and
Regulatory Requirements'' section of our report of even date Re: Kemrock
Industries and Exports Limited (''the Company'')
1. FIXED ASSETS
(a) The company has maintained proper records showing full particulars
including quantitative details and situations of fixed assets of the
company. However, maintenance of further elaborate records in respect
of capitalization of materials utilized in Research and Developments,
Trial runs, Prototypes and Certifications is advisable and recommended.
(b) As explained to us, the Company has a programme for physical
verification of fixed assets in accordance with which the fixed assets
have been physically verified during the year by the Management. In our
opinion, the frequency of physical verification is reasonable. Having
regard to the size of the operations of the Company and on the basis of
explanations received, in our opinion, the net discrepancies found on
physical verification were not material.
(c) The Company has not disposed off any fixed assets during the year.
(d) The disclosure requirements as required by AS-10 are made in the
necessary area.
2. INVENTORIES
(a) As informed to us the stock of finished goods, stores and spare
parts and raw material of the Company have been physically verified by
the management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedure of physical verification of inventory
followed by the management is reasonable and adequate in relation to
the size of the company and nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company is maintaining proper records of inventory. As
explained to us, there was no material discrepancies noticed on
physical verification of inventories as compared to the book records.
(d) Pending updating of records and reconciliation, book balances as at
30th September 2013 have been adopted.
(e) The disclosure requirements as required by AS-2 are made in the
necessary area.
3. LOANS
In respect of the loans, secured or unsecured, granted or taken by the
Company to / from Companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956:
(a) The Company has given loans to 7 Subsidiaries. In respect of the
said loans, the maximum amount involved during the year was Rs. 23.64
Crores and the year-end balance is Rs. 23.33 Crores. The Company has
taken loans from 4 Subsidiaries. In respect of the said loans, maximum
amount involved during the year was Rs. 59.21 Crores and the year-end
balance is Rs.55.59 Crores
(b) In our opinion and according to the information and explanations
given to us, terms and conditions for such loans are prima facie not
prejudicial to the interest of the Company. However, each such loan is
interest free.
(c) The loans given / taken by the Company is long term loans.
According to the information and explanations given to us, no repayment
was due in respect of the principal portion till the balance sheet
date.
4. INTERNAL CONTROL SYSTEM
In our opinion and according to the information and explanations given
to us, having regard to the explanations that a few items purchased are
of special nature and suitable alternative suppliers are not readily
available for obtaining comparable price quotations, there are adequate
internal control systems commensurate with the size of the company and
the nature of its business, for the purchase of inventory and fixed
assets and for the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weaknesses in the internal control system.
5. CONTRACTS (OR) ARRANGEMENTS
(a) To the best of our knowledge and belief and according to the
information and explanations given to us, we are of the opinion that
the particulars of contracts or arrangements that need to be entered
into the register maintained under Section 301 of the Companies Act,
1956 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs in
respect of any party during the year have been made at prices which
appear reasonable as per information available with the Company.
6. PUBLIC DEPOSITS
The Company has not accepted any deposits from the public and hence
compliance with the directives issued by the Reserve Bank of India and
Companies Act, 1956 and the Rules framed there under are not
applicable. Accordingly, the provisions of clause 4(vi) of the Order
are not applicable.
7. INTERNAL AUDIT SYSTEM
The Company has an internal audit system. However, there is substantial
scope for strengthening and increasing the coverage so as to be
commensurate with the size and nature of its business.
8. COST AUDIT RECORDS
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 maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate of complete.
9. STATUTORY DUES
(a) According to the information and explanations given to us,
undisputed amounts payable in respect of statutory dues including
Provident Fund, Investor Education and Protection Fund, Employees''
State Insurance, Income Tax, Value Added Tax, Wealth Tax, Service Tax,
Customs Duty, Excise Duty, Cess and other material statutory dues
applicable to the Company have not been regularly deposited with the
appropriate authorities and there are multiple instances of serious
delays. Undisputed amounts payable in respect of Provident Fund (Rs.
39.43 Lakhs), Professional Tax (Rs. 9.30 Lakhs), Value Added Tax/
Central Sales Tax (Rs. 41.18 Lakhs), Service Tax (Rs. 149.31 Lakhs),
Tax Collected at Source/Tax Deducted at Source (Rs. 291.61 Lakhs) and
Wealth Tax (Rs. 0.50 Lakhs) were outstanding for a period of more than
six months from the date they became payable (excluding applicable
interest in all cases).
(b) Details of dues of Income Tax, Value Added Tax, Wealth Tax, Service
Tax, Customs Duty, Excise Duty and Cess which have not been deposited
as on 30th September 2013 on account of disputes are given below:
Name of the Nature of Dues Amount Period to which
Statute (Rs. in the amount
Lakhs) relates
Service Tax Applicability of Service 32.17 2009-2010
Tax on Intellectual
Property
Central Excise Payment of Cess on DTA Sales 72.83 2009-2010
Act
Service Tax / Cenvat Credit Eligibility 2.73 2009-2010
Central Excise
Act
Central Excise Refund of Duty inadvertently 5.57 2009-2010
Act unit paid on sales to
situated in SEZ
Service Tax Service Tax Refund under 1.54 2011-2012
41 of 2007 Notification
Central Excise Availment of Cenvat Credit 40.37 2010-2011
Act on Capital Goods
Service Tax/ Availment of Cenvat Credit 0.92 2011-2012
Central Excise of Service Tax paid on
Act Courier Services
Service Tax/ Availment of Cenvat Credit 33.42 2010-2011
Central Excise of Service Tax paid on
Act CHA Services
Service Tax/ Availment of Cenvat Credit 7.20 2011-2012
Central Excise on of Service Tax paid
Act CHA Services
Service Tax/ Availment of Cenvat Credit 9.05 2011-2012
Central Excise of Service Tax paid on CHA
Act Services
Service Tax/ Availment of Cenvat Credit 2.48 2011- 2012
Central Excise of Service Tax paid on CHA
Act Services
Income Tax Act Income Tax including 66.89 2007-2008
interest / penalty
Income Tax Act Income Tax including 36.45 2009-2010
interest / penalty
Income Tax Act Income Tax including 3.98 2005- 2006
interest / penalty
Name of the Forum where Dispute is pending
Statute
Service Tax Additional Commissioner
Central Excise Commissioner
Act
Service Tax / Assistant Commissioner
Central Excise
Act
Central Excise Commissioner
Act
Service Tax Assistant Commissioner
Central Excise Joint Commissioner
Act
Service Tax/ Superintendent
Central Excise
Act
Service Tax/ Joint Commissioner
Central Excise
Act
Service Tax/ Joint Commissioner
Central Excise
Act
Service Tax/ Additional Commissioner
Central Excise
Act
Service Tax/ Assistant Commissioner
Central Excise
Act
Income Tax Act Tribunal
Income Tax Act Tribunal
Income Tax Act Tribunal
10. ACCUMULATED LOSSES
The Company has accumulated losses as at the end of the financial year
and has not incurred cash losses in the current financial year.
11. DUES TO FINANCIAL INSTITUTIONS / BANKS
Based on our audit procedures and as per the information and
explanations given by the Management, the Company has defaulted in
repayment of loans and interest to banks and financial institutions.
The total amount of interest due and unpaid amounted to Rs. 208.39
crores. The over dues relates to the period January 2012 to September
2013.
12. LOANS BY PLEDGE OF SHARES
Based on our examination of the records and the information and
explanations given to us, 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. CHIT FUND COMPANY
In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore, the provisions of clause (xiii) of
Paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not
applicable to the Company.
14. TRADING IN SHARES
In our opinion and according to the information and explanations given
to us, the Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of clause
(xiv) of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003
are not applicable to the Company.
15. GUARANTEES
In our opinion and according to the information and explanations given
to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions. Therefore, the provisions
of clause (xv) of Paragraph 4 of the Companies (Auditor''s Report)
Order, 2003 are not applicable to the Company.
16. TERM LOANS APPLICATION
In our opinion and according to the information and explanations given
to us by the Management, term loans taken during the period covered
under this audit, have been applied for the purpose for which they were
obtained, wherever specified by the Bank in the relevant sanction
letters. According to the information and explanations given to us,
amounts have been given as advance to foreign entity ''Hazel Business
Corporation''.
17. BORROWED FUNDS USAGE
In our opinion and according to the information and explanation given
to us and on an overall examination of the Balance Sheet of the
Company, we report that generally no funds raised on short term basis
have been used for long term investment by the Company.
18. PREFERENTIAL ALLOTMENT OF SHARES
According to the information and explanations given to us, the Company
has not made any preferential allotment of shares to parties and
companies covered in the register maintained under Section 301 of the
Companies Act, 1956. Therefore, the provisions of clause (xviii) of
Paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not
applicable to the Company.
19. DEBENTURES
In our opinion and according to the information and explanations given
to us, during the period covered by our audit report, the Company has
not issued debentures. Therefore, the provisions of clause (xix) of
Paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not
applicable to the Company.
20. PUBLIC ISSUE
In our opinion and according to the information and explanations given
to us, the company has not raised any money from public issues.
Therefore, the provisions of clause (xx) of Paragraph 4 of the
Companies (Auditor''s Report) Order, 2003 are not applicable to the
Company.
21. FRAUD AND INTENTIONAL MISREPRESENTATIONS
To the best of our knowledge and belief and 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 R. A. Amin & Co.
Chartered Accountants
FRN: 100334W
Hiren Amin
Place: Vadodara Proprietor
Date: 16th January, 2014 M.N. 111009
Jun 30, 2010
1. We have audited the attached Balance Sheet of KEMROCK INDUSTRIES
AND EXPORTS LIMITED (the "Company") as at 30th June, 2010 and the
Profit & Loss Account and Cash Flow Statement for the 15 months ended
on that date, annexed thereto. These financial 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 conducted our audit in accordance with auditing standards
generally accepted in India. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of 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 the 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 (Auditors Report) Order, 2003 as
amended by the Companies (Auditors Report) (Amendment) Order, 2004
(the "Order") issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, (the "Act") 1956,
we enclose in the Annexure a statement on the matters specified in
paragraph 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 purpose of our
audit.
b. In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books.
c. The Balance Sheet and Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
d. In our opinion, and to the best of our information and according to
the explanations given to us, the Balance Sheet and the Profit and Loss
Account and Cash Flow Statement dealt with by this report read together
with the notes thereon comply with Accounting Standards referred to in
sub-section (3C) of section 211 of the Companies Act, 1956, to the
extent applicable.
e. On the basis of written representations received from the Directors
and taken on record by the Board of Directors, we report that none of
the Directors is disqualified from being appointed as director as on
30th June,2010 in terms of clause (g) of sub-section( I) of section 274
of the Act.
f. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
other notes thereon give the information required by the Companies Act,
1956 in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India,
i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 30th June, 2010;
ii) In the case of the Profit and Loss Account, of the profit of the
Company for the period ended on that date and
iii) In the case of Cash Flow Statement, of the cash flows for the
period ended on that date.
Annexure referred to in Paragraph 3 of our report of even date.
I. (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) The fixed assets are physically verified by the management at
reasonable intervals. In our opinion and according to the information
and explanations given to us in respect of assets physically verified
during the year, the discrepancies noticed were not material and have
been properly dealt with in the books of account.
(c) There was no substantial disposal of fixed assets during the year.
2. (a) In our opinion and according to the information and
explanations given to us, the inventories have been physically verified
by the management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedure of physical verification of inventories
followed by the management is 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 inventory and
no material discrepancies were noticed on physical verification.
3. As informed to us, the Company has neither taken nor given any loan
secured or unsecured from/to parties listed under Section 301 of the
Companies Act, 1956.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets and with regard
to sale of goods.
During the course of audit, no major weakness has been noticed in the
internal controls.
5. (a) In our opinion and according to the information and
explanations given to us, the transactions that needs to be entered
into 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, transactions exceeding Rs. 5 lacs have been made at a
price which are reasonable having regard to the prevailing market
prices at the relevant time.
6. The Company has not accepted any deposits during the year from the
public within the meaning of the provisions of Section 58A and 58AA or
any other relevant provisions of the Companies Act, 1956 and rules made
there under. Therefore the provision of clause (vi) of para 4 of the
order are not applicable.
7. In our opinion, the Company has an Internal Audit System
commensurate with the size of the Company and the nature of its
business.
8. We have broadly reviewed 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(l)(d) of the Companies
Act, 1956. We are of the opinion that prima facie the prescribed
accounts and records have been maintained. We have, not, however, made
a detailed examination of the records with a view to determine whether
they are accurate or complete.
9. (a) According to the information and explanations given to us and
the records examined by us, the company is regular in depositing with
appropriate authorities undisputed statutory dues including provident
fund, investor education and protection fund, employees state
insurance, income tax, sales tax, wealth tax, service tax, custom duty,
excise-duty, cess and other statutory dues wherever applicable.
According to the information and explanations given to us, no
undisputed arrears of statutory dues were outstanding as at 30th June,
2010 for a period of more than six months from the date they became
payable.
(b) According to the information and explanations given to us, the
statutory dues which have not been deposited on account of disputes and
the forum where the disputes are pending are as under:
Under Income Tax Act, 1961 :
Nature of Assessment Amount Forum where
Dues Year (Rs. in dispute is
Lakhs) pending
Income Tax 2006-07 28.46 Income Tax
Assessment Appellate Tribunal,
Ahmedabad
10. The Company has no accumulated losses as at 30th June, 2010. The
Company has not incurred any cash losses during the financial year
covered by our audit and the immediately preceding financial year.
11. Based on the information and explanations given by the management,
we are of the opinion that the Company has not defaulted in repayment
of dues to the financial institutions or bank. (There are no debenture
holders)
12. Based on the examination of the records and the information and
explanations given to us, the Company has not granted any loans and /
or advances on the basis of security by way of pledge of shares,
debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi / mutual
benefit fund / society. The provisions of clause 4 (xiii) of the order
are not applicable to the Company.
14. In our opinion and according to the information and explanations
given to us, the Company is not dealing or trading in shares,
securities, debentures and other investments.
15. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
16. According to the information and explanations given to us the
Company has obtained term loans from banks and they have been applied
for the purpose for which they were obtained.
17. According to the information and explanations given to us and based
on our examination of the books of accounts, short term funds raised by
the Company have not been used for long term investment.
18. The Company has not made any preferential allotment of shares /
warrants to parties and companies covered in the register maintained
under section 301 of the Companies Act, 1956.
19. The Company has not issued any secured debentures.
20. The Company has not raised monies by public issue during the year
however the company has made GDR issue during the period.
21. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
was noticed or reported during the course of our audit.
For H.K.Shah & Co.,
Chartered Accountants
Firm Reg. No. 109583/W
H.K.Shah
Place: Asoj, Vadodara Partner
Date: August 27,2010 M. No. 42758
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