Mar 31, 2014
We have audited the accompanying financial statements of KITPLY
INDUSTRIES LIMITED which comprise the Balance Sheet as at March 31,
2014 and the Statement of Profit and Loss and Cash Flow Statement for
the year then ended, and a summary of significant accounting policies
and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India, Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgments, 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 accounting
policies used and the reasonableness of the accounting estimates made
by management, as well as evaluating the overall presentation of the
financial statements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Option
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 Balance Sheet, of the state of affairs of
the Company as at March 31, 2014;
b) in the case of the Profit and Loss, of the loss 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
We draw attention to the following Notes to the Financial Statements
which describes the following matters related to the Company:
a) Note 40 which describes that the Company's net worth has been fully
eroded. Also considering below-mentioned point (b) and (c) under
emphasis of matter paragraph along with this point, there is a clear
indication that there is existence of a material uncertainty that may
cast significant doubt about the Company's ability to continue as a
going concern, which is dependent on establishing profitable operations
in line with the Company's business plans, as well as satisfactory
settlement of disputes and litigation in favour of the Company.
Further, the Company has made a reference to the Hon'ble Board for
Industrial & Financial Reconstruction (BIFR) pursuing to the provisions
of Sick Industrial Companies (Special Provisions) Act, 1985 and it has
also been registered u/s 15(1) of Sick Industrial Companies (Special
Provisions) Act, 1985. As described in the above note, the Company is
hopeful for working out a rehabilitation scheme, in view of which, the
accompanying financial statements have been prepared under the going
concern assumption, and consequently, no adjustments, if any, have been
made in the financial statements.
b) Note 39(c) which descries that no provision has been made for
interest amounting to Rs, 425.27 lacs (including Rs, 84.36 lacs for the
year) and liquidated damages of Rs,170.89 lacs claimed by certain
lenders. In view of pending disposal of the suits filed by the above-
mentioned lenders as well the Company in this matter, no liability
thereof is considered payable.
c) Note 38 which descries that no provision is made for demand from a
lender amounting to Rs, 3,210.37 lacs towards principal and interest on
withdrawal of One Time Settlement entered in earlier years, due to
alleged non fulfillment of agreed conditions by the Company.
However, the above amount, in the opinion of the management is not
payable as the Company has fully complied with payment term as per CDR
(Corporate Debt Restructuring) terms and the Company has also been
legally advised that the above demand is not tenable.
d) Note 42 which descries that no provision has been made for interest
amounting Rs, 60 lacs on loan ofRs, 400 lacs from an unsecured creditor
since the same is disputed by the Company and the matter is subjudice.
Moreover, according to BIFR's (Board for Industrial and Financial
Reconstruction) summary record of proceedings of the hearing held on
21.09.2012 and 11.02.2013 against Miscellaneous Application No.
341/2012, Case No. 23/2012 made by the Company, the company is
restrained from making any payment to unsecured creditors without prior
approval of the Board till next date of hearing. At present a stay
order has been granted on the sickness of the company by Hon'ble AAIFR.
e) Note 4 (A) (b) to (g) of the financial statements which describes
that the Company has failed to pay agreed installments towards
redemption of various Debentures which were due in 2013-14 due to the
sickness of the Company.
Our opinion is not qualified in respect of the above matters.
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 said
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 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 Companies Act, 1956.
(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 Companies Act, 1956.
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets were physically verified by the management in the
previous year in accordance with a planned programme of verifying them
once in three years which, in our opinion, is reasonable having regard
to the size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(c) The Company has not disposed of any substantial part of its fixed
assets so as to affect its going concern status.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) 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 is maintaining proper records of inventory and no
material discrepancies were noticed on such physical verification.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured to
Companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956
(b) The Company has taken loans inform of debentures from two parties
covered in the register maintained under section 301 of the Act. The
maximum outstanding amount of such loans during the year and the year-
end balance due to such parties was Rs, 1,103.20 lacs (including Rs,
880 lacs not bearing interest).
(c) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(d) As per stipulations, the above loans have not become due for
repayment and thus, there has been no default on the part of the
company. Further, interest on the above loans, wherever applicable, was
not due for payment during the year.
(iv) 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 Company and the nature of its business, for the
purchase of fixed assets, inventory and for the sale of goods. During
the course of our audit, we have neither come across nor have we been
infirmed of any major weakness or continuing failure to correct of
major weaknesses in the aforesaid internal control systems of the
company.
(v) (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 above 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 such contracts or
arrangements and exceeding the value of Rupees five lacs have been
entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, directives issued by Reserve Bank Of India and the
provisions of sections 58A, 58AA or any other relevant provisions of
the Act, and the rules framed there under, to the extent applicable,
have not been complied with in respect of loan of Rs, 400 lacs taken
from a party. We are informed by the management that no order has been
passed by the Company Law Board, National Company Law Tribunal or
Reserve Bank Of India or any Court or any other Tribunal.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of accounts 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 Act in
respect of its products and are of the opinion that prima facial, the
prescribed accounts and records have been made and maintained.
(ix) (a) According to the information and explanations given to us, the
Company is not regular in depositing 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 with the appropriate authorities. Moreover there have
been serious delays in a large number of cases and also certain amounts
are not yet paid as indicated in (b) below.
(b) According to the information and explanations given to us,
undisputed dues in respect of Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Income tax, Wealth tax,
Service tax, Sales tax, Customs duty, Excise duty, Cess and other
material statutory dues which were outstanding, at 31st March, 2014 for
a period of more than six months from the date they became payable are
as follows :
Name of Nature of Amount
the Statute the Dues (Rs, in lacs)
Central Sales Sales Tax Liability 35.54
Tax/Maharashtra
Sales Tax Act
Entry Tax Act Entry Tax Liability 0.83
Chhattisgarh
Uttar Pradesh Purchase Tax 2.63
Sales Tax Act Liability
Income Tax Act, Tax Deducted at 102.57
1961 Source (TDS) &
Interest thereon
Fringe Benefit Tax 49.54
& Interest thereon
Employees Provident Fund 76.39
Provident Fund Act Dues
Employees State ESI 4.53
Insurance Act
Sales Tax on Professional Tax 3.58
Employment
Central Excise Excise Duty & 1499.56
and Customs
Act, 1944 Interest thereon
Value Added Tax Value Added Tax 173.61
Payable
Name of the Statute Period to Due Date
which the
amount relates
Central Sales 2002-13 to 2004-15 &
Tax/Maharashtra 2009-10 to 2011-12
Sales Tax Act
Entry Tax Act 2010-11 & 2011-12 Subsequent month
Chhattisgarh after accrual
Uttar Pradesh 2013-14
Sales Tax Act
Income Tax Act, 2008-09- to 2012-14
1961
2007-08 to 2012-14 Quarterly after
(only interest part) accrual
Employees
Provident Fund Act 2009-10 to 2013-14 Subsequent month
after accrual
Employees State 2010-11 to 2012-14
Insurance Act
Sales Tax on 2004-05 to 2013-14
Central Excise 1995-96 to 1999-2000 Subsequent month
and Customs & 2002-03 to 2013-14 after accural
Act, 1944
Value Added Tax 2005-06 to 2013-14
(c) According to the records of the Company, the dues outstanding in
respect of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service
Tax, Excise Duty & Cess on account of any dispute, are as follows : -
Name of Nature of Amount
the Statute the Dues (Rs, in lacs)
Central Excise and Differential Excise Duty 559.17
Customs Act, 1944
Denial of benefit of 330.02
Exemption
Service Tax on GTA 35.21
Cenvat Credit reversal on 18.25
Non-Excisable Product
Differential Excise Duty 5.07
U.P. Sales Tax / U.P. Purchase Tax/Form C & F 107.75
VAT Act / Central Pending / Various Other
Sales Tax Act, 1956 matters
Name of the Statute Period to which the Forum where
amount relates dispute is pending
Central Excise and 1980-81 to 1984-85 & CESTAT, Kolkata
Customs Act,1944 1994-95 to 1996-97
2007-08 to 2010-11 CESTAT, Kolkata
2004-05 to 2005-06 CESTAT, Kolkata
2000-01 CESTAT, Delhi
This case was
pending under
CESTAT, Meerut until
immediately
preceding previous
year but as
2005-06 explained by the
Management such
case was decided in
previous year
U.P.Sales Tax/U.P Asst. Comm/Dy.
vat aCT/cENTRAL Various Years
sALES tAX aCT,1956 Comm./Joint Comm./
Member Tribunal
Bench/High Court
(x) The Company's accumulated losses at the end of the financial year
are more than fifty percent of its net worth and it has incurred cash
losses in the current and immediately preceeding financial year.
(xi) Dues ofRs, 41.64 lacs (including interest on debentures
aggregating to Rs, 31.10 lacs recalled by the lenders, have been
disputed by the Company as stated in Note 38 to the accompanying
financial statements and hence we are unable to comment whether there
is a default in respect of the above recalled dues. Read with the
above, based on our audit procedures and as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to financial institutions, banks or debenture holders
except Rs, 3,780.88 lacs (including interest Rs, 1,758.48 lacs) towards
certain debentures which have become due for repayment on 31st March,
2014.
(xii) According to the information and explanations given to us and
based on the documents and records produced 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.
(xiii) In our opinion, the Company is not a chit fund or a Nidhi/
Mutual Benefit Fund/society and therefore, the provisions of sub clause
(a), (b), (c) and (d) of clause (xiii) of paragraph 4 of the Order are
not applicable to the Company.
(xiv) In our opinion, the Company is not dealing 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.
(xv) According to the information and explanations provided to us, the
Company has not granted any Guarantee for loans taken by others from
banks or financial institutions.
(xvi) Based on the information and explanations given to us by the
management, the term loans raised during the immediately preceding
previous years by the Company have been were applied for the purpose
for which these loans were obtained, where such end use has been
stipulated by the lenders. However, during the previous year, no term
loans were raised by the Company
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
covered in the Register maintained under section 301 of the Companies
Act, 1956. Accordingly the provision of clause (xviii) of paragraph 4
of the Order is not applicable to the Company.
(xix) According to the information and explanations given to us, the
Company had created security in respect of debentures issued in earlier
years and outstanding during the year.
(xx) The Company has not raised any money through a public issue during
the year. Therefore, the provision of clause (xx) of paragraph 4 of the
Order is not applicable to the Company.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the the Company has been noticed or reported
during the year.
For Krishanu Bhattacharyya & Associates
Chartered Accountants
FRN: 324327E
CA Krishanu Bhattacharyya
Place : Kolkata Partner
Date: November 30, 2014 M. No. 059934
Mar 31, 2013
We have audited the accompanying financial statements of of the Balance
Sheet as at 31st March, 2013 and the Statement of Profit and Loss and
Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
accounting principles generally accepted in India, including 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.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit we conducted our audit in accordance with
the Standards on auditing issued by the Institute of Chartered
Accountants of India, those standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statement, 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. 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.
Basis for qualified opinion
(a) As indicated in Note No. 36 to the financial statements, no
provision has been made towards interest and redemption premium
amounting to Rs,2,200.00 lacs (including Rs,1,200.00 lacs for the year)
and Rs,4687.51 lacs (including Rs,2,192.57 lacs to be adjsuted against
Securities Premium account) respectively on debentures of Rs,12,000.00
lacs, on and from 1st April, 2011 for the reasons mentioned therein.
(b) As indicated in Note No. 37 to the financial statements, no
provision has been made for interest amounting to Rs,60.00 lacs on loan
of Rs,400.00 lacs from an unsecured creditor since the same is disputed
by the Company and the matter is subjudice.
Had the impact of above items been considered, loss for the year would
have been Rs,5,918.11 lacs as against the reported loss of Rs,1,163.17
lacs.
Our audit opinion on the financial statements for the previous year was
also qualified in respect of the item (a) above.
Qualified option
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matters stated
in the Basis for Qualified Opinion paragraph, the financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India :
a) in the case of Balance Sheet, of the state of affairs of the Company
as at 31st March, 2013;
b) in the case of Statement of Profit and Loss, of the loss for the
year ended on that date; and
c) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
Emphasis of Matter
We draw attention to the following Notes to the financial statements
a) As stated in Note No. 35, the Company's net-worth has been fully
eroded and we also draw reference to paragraphs (b) and (c) below.
Taken together, these conditions indicate the existence of a material
uncertainty that may cast significant doubt about the Company's ability
to continue as a going concern, which is dependent on establishing
profitable operations in line with the Company's business plans as well
as satisfactory settlement of disputes/litigation in favour of the
Company Further, the Company has made a reference to the Hon'ble Board
for Industrial & Financial Reconstruction (BIFR) pursuant to the
provisions of Sick Industrial Companies (Special Provisions) Act, 1985
and it has also been registered u/s 15(1) of Sick Industrial Companies
(Special Provisions) Act, 1985. As indicated in the above note, the
Company is hopeful of working out a rehabilitation scheme, in view of
which, the accompanying financial statements have been prepared under
the going concern assumption, and consequently, no adjustments, if any,
have been made in the financial statements.
b) Note No. 34(c) regarding non-provision of interest amounting to Rs,
425 27 lacs (including Rs, 84.36 lacs for the year) and liquidated
damages of Rs, 170.89 lacs claimed by certain lenders. Pending disposal
of the suits filed by the above lenders as well the Company in the
above matter no liability thereof is considered payable.
c) Note No. 33 regarding non-provision of demand from a lender
amounting to Rs, 3,210.37 lacs towards principal and interest on
withdrawal of One Time Settlement entered in earlier years, due to
alleged non fulfillment of agreed conditions by the Company. However,
the above amount, in the opinion of the management is not payable and
the Company has also been legally advised that the above demand is not
tenable.
Our opinion is not qualified in respect of the above matters.
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 said
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 appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit and Loss
and Cash Flow Statement dealt with by this report are in agreement with
the books of account;
(d) Except for the matters stated in the Basis for Qualified Opinion
paragraph, 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 March 31, 2013, and taken on record by the Board of
Directors, none of the directors is 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.
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets were physically verified by the management in the
previous year in accordance with a planned programme of verifying them
once in three years which, in our opinion, is reasonable having regard
to the size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) 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 is maintaining proper records of inventory and no
material discrepancies were noticed on such physical verification.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act.
Accordingly, the provisions of clauses 4 iii (a) to (d) of the Order
are not applicable to the Company.
(b) The Company has taken loans in the form of debentures from two
parties covered in the register maintained under section 301 of the
Act. The maximum outstanding amount of such loans during the year and
the year-end balance due to such parties was Rs, 1,077.60 lacs
(including Rs, 880 lacs not bearing interest).
(c) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(d) As per stipulations, the above loans have not become due for
repayment and thus, there has been no default on the part of the
company. Further, interest on the above loans, wherever applicable,
was not due for payment during the year.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the company in respect of these areas.
(v) (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 above 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 such contracts or
arrangements and exceeding the value of Rupees five lakhs have been
entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, directives issued by the Reserve Bank of India and the
provisions of sections 58A, 58AA or any other relevant provisions of
the Act, and the rules framed there under, to the extent applicable,
have not been complied with in respect of loan of Rs,400 lacs taken
from a party. We are informed by the management that no order has been
passed by the Company Law Board, National Company Law Tribunal or
Reserve Bank of India or any Court or any other Tribunal.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of accounts 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 Act in
respect of its products and are of the opinion that prima facia, the
prescribed accounts and records have been made and maintained.
(ix) (a) 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 have not been regularly deposited
with the appropriate authorities and there have been serious delays in
a large number of cases and also certain amounts are not yet paid as
indicated in (b) below.
(b) According to the information and explanations given to us,
undisputed dues in respect of provident fund, investor education and
protection fund, employees' state insurance, income-tax, wealth-tax,
service tax, sales-tax, customs duty, excise duty, cess and other
material statutory dues which were outstanding, at the year end for a
period of more than six months from the date they became payable are as
follows :
Name of Nature of Amount
the statute the dues (Rs, in lacs)
Central Sales Sales Tax Liability 35.54
Tax/Maharashtra
Sales Tax Act
Entry Tax Act Entry Tax 0.83
Chhattisgarh Liability
Uttar Pradesh Purchase Tax 2.63
Sales Tax Act Liability
Income Tax Act, Tax Deducted at 113.47
1961 Source &
Interest thereon
Fringe Benefit Tax 44.44
& Interest thereon
Employees Provident Fund 62.11
Provident Fund Act Dues
Employees State ESI 3.98
Insurance Act
State Tax on Professional Tax 3.37
Employment
Central Excise and Excise Duty & 1435.53
Customs Act, 1944 Interest thereon
Value Added Tax Value Added Tax 173.53
Payable
Name of the Atatute Period to Due Date
which the amount
relates
Central Sales 2002-03 to Subsequent month
Tax/Maharashtra 2004-05 & after accrual
Sales Tax Act 2009-10 to
2011-12
Entry Tax Act 2009-11 & 2011-12 Subsequent month
after accrual
Uttar Pradesh 2002-03
Sales Tax Act Subsequent month
after accrual
Income Tax Act, 2008-09 to Quarterly after
2012-13 accrual
1961
Employees
Provident Fund Act 2009-10 to 2012-13 Subsequent month
after accrual
Employees State 2010-11 to 2012-13 Subsequent month
after accrual
Insurance Act
State Tax on 2004-05 to 2012-13 Subsequent month
after accrual
Employment
Central Excise and 1995-96 to 1999-2000 Subsequent month
& 2002-13 to 2012-13 after accrual
Customs Act, 1944
Value Added Tax 2005-06 to 2012-13 Subsequent month
after accrual
(c) According to the records of the Company, the dues outstanding in
respect of sales tax, income tax, customs duty, wealth tax, service
tax, excise duty & cess on account of any dispute, are as follows : -
Name of Nature of Amount
the statute the dues (Rs, in lacs)
Central Excise and Differential Excise Duty 559.17
Customs Act, 1944
Denial of benefit of 330.02
Exemption
Differential Excise Duty 5.07
Service Tax on GTA 35.21
Cenvat Credit reversal on 18.25
Non-Excisable Product
U.P. Sales Tax/U.P. Purchase Tax/C/F Forms 107.75
Vat Act/Central Pending/Various Other
Sales Tax Act, 1956 Matters
Name of the Statute Period to which the Forum where
amount relates dispute is pending
Central Excise and 1980-81 to 1984-85 & CESTAT, Kolkata
Customs Act,1944 1994-95 to 1996-97
2007-08 to 2010-11 CESTAT, Kolkata
2005-06 CESTAT, Meerut
2004-05 to 2005-06 CESTAT, Kolkata
2000-01 CESTAT, Delhi
U.P.Sales Tax/U.P Various years Asst. Comm/Dy.
Vat Act/Central Comm./Joint Comm./
Sales Tax Act,1956 Member Tribunal
Bench/High Court
(x) The Company's accumulated losses at the end of the financial year
are more than fifty percent of its net worth and it has incurred cash
losses in the current and immediately preceding financial year.
(xi) Dues of Rs, 41.64 lacs (including interest on debentures
aggregating to Rs, 31.10 lacs recalled by the lenders, have been
disputed by the Company as stated in Note 33 to the accompanying
financial statements and hence we are unable to comment whether there
is a default in respect of the above recalled dues. Read with the
above, based on our audit procedures and as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to financial institutions, banks or debenture holders
except Rs, 3,780.88 lacs (including interest Rs, 1,758.48 lacs) towards
certain debentures which has become due for repayment on 31st March,
2013.
(xii) According to the information and explanations given to us and
based on the documents and records produced 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.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society and therefore, the provisions of clause 4 (xiii)
of the Order are not applicable.
(xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Order are not applicable.
(xv) According to the information and explanations provided to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) Based on the information and explanations given to
us by the management, term loans were applied for the purpose for which
these loans were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short- term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
during the year to parties or companies covered in the register
maintained under section 301 of the Act.
(xix) According to the information and explanations given to us, the
Company had created security in respect of debentures issued in earlier
years and outstanding during the year.
(xx) The Company has not raised any money through a public issue during
the year.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the year.
For S. R. BATLIBOI & CO.
Chartered Accountants
Firm Registration Number : 301003E
per R. K. Agrawal
Place : Kolkata Partner
Dated : May 30, 2013 Membership No. 16667
Mar 31, 2012
1. We have audited the attached Balace Sheet of Kitply Industries
Limited as at 31st March, 2012 and also the Statement of Profit and
Loss and 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 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 (Auditor's Report) Order, 2003 (as
amended) 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. Without qualifying our opinion, attention is drawn to the following
Notes :-
a. As stated in Note 35, the Company's net-worth has been fully eroded
and we also draw reference to paragraphs 4 (b) and 4 (c) below and the
related notes in the financial statements. Taken together, these
conditions indicate the existence of a material uncertainty that may
cast significant doubt about the Company's ability to continue as a
going concern, which is dependent on establishing profitable operations
in line with the Company's business plans, as well as satisfactory
settlement of disputes/litigation in favour of the Company. Further,
the Company has made a reference to the Hon'ble Board for Industrial &
Financial Reconstruction (BIFR) pursuant to the provisions of Sick
Industrial Companies (Special Provisions) Act, 1985 and it has since
been permitted to be registered u/s 15(1) of Sick Industrial Companies
(Special Provisions) Act, 1985. These mitigating factors have been more
fully discussed in Notes 33, 34(c) and 35 to the accompanying financial
statements, in view of which the accompanying financial statements have
been prepared under the going concern assumption, and consequently, no
adjustments, if any, have been made to the carrying values of assets
and liabilities.
b. Note 34 (c) regarding non-provision of interest amounting to Rs.
34,090,685 (including Rs. 8,436,000 for the year) and overdue interest
and liquidated damages of Rs. 17,088,575 claimed by certain lenders. The
above lenders have also filed petition before the Hon'ble Guwahati High
Court under the relevant provisions of the Companies Act, 1956 for the
winding up of the Company due to non-payment of above dues. However,
the Company has also filed a suit in the court for specific performance
and pending its disposal, no liability thereof is considered payable.
c. Note 33 regarding non-provision of demand from a lender amounting
to Rs. 321,037,000 towards principal and interest on withdrawal of One
Time Settlement entered in earlier years, due to alleged non
fulfillment of agreed conditions by the Company. However, the above
amount, in the opinion of the management is not payable and the Company
has also been legally advised that the above demand is not tenable.
5. Attention is drawn to Note 38 regarding non provision of interest
and redemption premium amounting to Rs.100,000,000 and 268,788,913
respectively on debentures of Rs. 1,200,000,000 held by India Debt
Management Private Limited, effective from 1st April, 2011 for the
reasons mentioned therein. Had the above liability been considered in
the accounts, loss for the year would have been Rs. 1,191,506,948 as
against the reported loss of Rs. 1,041,975,342 and reserves & surplus as
at the balance sheet date would have been (-) Rs. 3,799,083,644 as
against the reported figure of (-) Rs. 3,430,294,731.
6. Further to our comments in the Annexure referred to above, we
report that :
i. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes 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
those books and proper returns adequate for the purposes of our audit
have been received from sales branches not visited by us;
iii. 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;
iv. 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 referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956;
v. On the basis of the written representations received from the
directors, as on 31st March, 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 in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts except for the effect
of our observation stated in para (5) above, give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India :
a) in the case of balance sheet, of the state of affairs of the Company
as at 31st March, 2012;
b) in the case of statement of profit and loss, of the loss for the
year ended on that date; and
c) in the case of cash flow statement, of the cash flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
(REFERRED TO IN OUR REPORT OF EVEN DATE TO THE MEMBERS OF KITPLY
INDUSTRIES LIMITED AS AT AND FOR THE YEAR ENDED 31ST MARCH, 2012)
(i) (a) The Company has maintained proper records
showing full particulars, including quantitative details and situation
of fixed assets.
(b) Fixed assets have been physically verified by the management during
the year and no material discrepancies were identified on such
verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) (a) The management has conducted physical
verification of inventory at reasonable intervals during the year.
(b) The procedures of physical verfication 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 is maintaining proper records of inventory and no
material discrepancies were noticed on such physical verification.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956. Accordingly, the
provisions of clauses 4 iii (a) to (d) of the Order are not applicable
to the Company.
(b) The Company has taken loans in the form of debentures from two
parties covered in the register maintained under section 301 of the
Companies Act, 1956. The maximum outstanding
amount of such loans during the year was Rs. 107,760,421 and the year-end
balance due to such parties was Rs. 107,760,421(including Rs. 88,000,000
not bearing interest)
(c) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(d) As per stipulations, the above loans have not become due for
repayment and thus, there has been no default on the part of the
company. Further, interest on the above loans, wherever applicable,
was not due for payment during the year.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the company in respect of these areas.
(v) (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
Companies Act, 1956 that need to be entered into the register
maintained under the above 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 such contracts or
arrangements and exceeding the value of Rupees five lakhs have been
entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, directives issued by the Reserve Bank of India and the
provisions of sections 58A, 58AA or any other relevant provisions of
the Companies Act, 1956, and the rules framed there under, to the extent
applicable, have not been complied with in respect of loan of 400 lacs
taken from a party. We are informed by the management that no order has
been passed by the Company Law Board, National Company Law Tribunal or
Reserve Bank of India or any Court or any other Tribunal.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed the maintenance of cost records under
clasue (d) of sub- section (1) of section 209 of the Companies Act,
1956 for the products of the Company.
(ix) (a) 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 have not been
regularly deposited with the appropriate authorities and there have been
serious delays in a large number of cases and also certain amounts are
not yet paid as indicated in (b) below.
(b) According to the information and explanations given to us,
undisputed dues in respect of provident fund, investor education and
protection fund, employees' state insurance, income-tax, wealth-tax,
service tax, sales-tax, customs duty, excise duty, cess and other
material statutory dues which were outstanding, at the year end for a
period of more than six months from the date they became payable are as
follows :
Name of Nature of Amount Period to Due Date
the
statute the dues (Rs.in lacs) which the
amount
relates
Central
Sales Sales Tax
Liability 28.97 2002-03, Subsequent month
Tax/
Maharashtra 2003-04,
2004-05, after accrual
Sales
Tax Act 2009-10 &
2010-11
Entry Tax
Act Entry Tax 0.82 2010-11 &
2011-12 Subsequent month
Chhatt
isgarh Liability after accrual
Uttar
Pradesh Purchase
Tax 2.63 2002-03 Subsequent month
Sales
Tax Act Liability after accrual
Income
Tax Act, Tax Deducted at 81.25 2008-09,
2009-10, Subsequent month
1961 Source & 2010-11 &
2011-12 after accrual
Interest
thereon
Fringe
Benefit
Tax 39.35 2007-08 to Quarterly after
& Interest
thereon 2011-12 accrual
Employees
Provident
Fund 47.01 2009-10,
2010-11 & Subsequent month
Provident
Fund Act Dues 2011-12 after accrual
Employees
State ESI 1.26 2010-11 &
2011-12 Subsequent month
Insurance
Act after accrual
State
Tax on Professional Tax 3.29 2007-08 to Subsequent month
Employment 2011-12 after accrual
Central
Excise
and Excise Duty & 357.90 1999-2000,
2002-03 Subsequent month
Customs
Act, 1944 Interest
thereon to 2011-12 after accrual
Value
Added
Tax Value
Added
Tax 31.63 2009-10,
2010-11 & Subsequent month
Payable 2011-12 after accrual
(c) According to the records of the Company, the dues outstanding in
respect of sales tax, income tax, customs duty, wealth tax, service
tax, excise duty & cess on account of any dispute, are as follows : -
Name of Nature of Amount Period to
which the Forum where
the
statute the dues (Rs.in
lacs) amount
relates dispute is
pending
Central
Excise
and Differential
Excise Duty 559.17 1980-81 to
1984-85 & CESTAT,
Kolkata
Customs
Act, 1944 1994-95 to
1996-97
Denial of
benefit of 330.02 2007-08 to
2010-11 CESTAT,
Kolkata
exemption
Differential
Excise Duty 5.07 2005-06 CESTAT,
Meerut
Service
Tax on GTA 35.21 2004-05 to
2005-06 CESTAT,
Kolkata
Cenvat
Credit
reversal on 18.25 2000-01 CESTAT,
Delhi
Non-Excisable
Product
Excise
duty on 1,023.46 1995-1996 to Supreme
Court
prelaminated
Particle 1999-2000
Board
U.P.
Sales
Tax/U.P. Purchase
Tax/C/F
Forms 107.75 Various years Asst.
Comm/Dy.
Vat Act/
Central Pending/
Various
Other Comm./
Joint
Comm./
Sales
Tax Act,
1956 Matters Member
Tribunal
Bench/High
Court
(x) The Company's accumulated losses at the end of the financial year
are more than fifty percent of its net worth and it has incurred cash
losses in the current and immediately preceeding financial year.
(xi) Dues of Rs. 1,835,368,119 (including interest and redemption
premium) pertaining to debentures aggregating to Rs. 1,203,110,000
recalled by the lenders, have been disputed by the Company as stated in
Notes 33 and 38 to the accompanying financial statements and hence we
are unable to comment whether there is a default in respect of the
above recalled dues. Read with the above, based on our audit procedures
and as per the information and explanations given by the management,
the Company has not defaulted in repayment of dues to financial
institutions, banks or debenture holders.
(xii) According to the information and explanations given to us and
based on the documents and records produced 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.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society and therefore, the provisions of clause 4 (xiii)
of the Order are not applicable.
(xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Order are not applicable.
(xv) According to the information and explanations provided to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which these
loans were obtained.
(xvii) According to the information and explantions given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short- term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
during the year to parties or companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, the
Company had created security in respect of debentures issued in earlier
years and outstanding during the year.
(xx) The Company has not raised any money through a public issue during
the year.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the the Company has been noticed or reported
during the year.
For S. R. BATLIBOI & CO.
Firm Registration
Number : 301003E
Chartered Accountants
22, Camac Street
Block , 3rd Floor per R.K.Agrawal
Kolkata 700 016 Partner
Dated : May 30, 2012 Membership No.16667
Mar 31, 2010
1. We have audited the attached Balance Sheet of Kitply Industries
Limited (the Company) as at March 31, 2010, and also the Profit and
Loss Account and the Cash Flow Statement for the year 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. 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 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) 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. Without qualifying our opinion, attention is drawn to the following
Notes on Schedule 20:
a) Note No. 6 regarding the preparation of accounts as per the going
concern assumption in spite of full erosion of the Companys net worth
as on the Balance Sheet date since the management has strategic plan
for the revival of the Company and is hopeful of improvement in its
financial health in the near future.
b) Note No. 4(a) regarding adjustment of the balance of Rs. 21864.44
lacs arisen due to restructuring of certain assets and liabilities in
the year 2008-09 and lying credited in the ÃBusiness Reorganisation
Reserve AccountÃ, with the debit balance of Profit & Loss Account
during the current year, for the reasons mentioned in the above Note
and as envisaged in the scheme of arrangement filed with the Honble
Guwahati High Court, which is pending approval as on date.
c) Note No. 4(c) regarding non-provision of interest amounting to Rs.
172.19 lacs (including Rs. 84.36 lacs for the year) and disputed
overdue interest and liquidated damages of Rs. 170.89 lacs claimed by
certain lenders. The Company has filed a suit in the court for specific
performance and pending its disposal, no liability thereof is
considered payable.
5. Further to our comments in the Annexure referred to above, we
report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes 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
those books and proper returns adequate for the purposes of our audit
have been received from sales branches not visited by us;
iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of accounts;
iv) In our opinion, the Balance Sheet, Profit & 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;
v) On the basis of the written representations received from the
directors, as on 31st March, 2010, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2010 from being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956;
vi) In our opinion, and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India;
(a) in the case of Balance Sheet, of the state of affairs of the
Company as at March 31, 2010;
(b) in the case of Profit and Loss Account, of the loss for the year
ended on that date; and
(c) in the case of Cash Flow Statement, of the Cash Flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(REFERRED TO IN OUR REPORT OF EVEN DATE TO THE MEMBERS OF KITPLY
INDUSTRIES LIMITED AS AT AND FOR THE YEAR ENDED 31ST MARCH, 2010)
(i) (a) The Company is in the process of updating the records showing
full particulars including quantitative details and situations of fixed
assets.
(b) As informed, Fixed assets have been physically verified by the
management during the year. However, pending updation of the book
records, the reconciliation between book and physical balances could
not be carried out. Therefore, we are unable to comment on the
discrepancies, if any, between the physical and book records.
(c) There was no substantial disposal of fixed assets during the year.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) 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 is maintaining proper records of inventory and no
material discrepancies were noticed on such physical verification.
(iii) (a) As informed, the Company has not granted any loans, secured
or unsecured to companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956.
Hence, the provisions of clauses 4 iii (b) to (d) of the Companies
(Auditors Report) Order, 2003 (as amended) are not applicable.
(b) The Company has taken loans from two parties covered in the
register maintained under Section 301 of the Companies Act, 1956. The
maximum outstanding amount of such loans during the year was Rs.
1055.64 lacs and the year-end balance due to such parties was Rs.
1055.64 lacs.
(c) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(d) As per stipulations, the above loans have not become due for
repayment and thus, there has been no default on the part of the
Company. Further, interest on the above loans, wherever applicable, was
not due for payment during the year.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, no major weakness has been noticed in
the internal control system in respect of these areas. During the
course of our audit, we have not observed any continuing failure to
correct major weakness in the internal control system of the company.
During the year, the Company has not rendered any services and hence,
this clause is not applicable with respect to such area.
(v) (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 Companies Act, 1956 that
need to be entered into the register maintained under the above
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 such contracts or
arrangements exceeding the value of Rupees five lakhs have been entered
into during the financial year at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) As informed, the Company has not accepted any deposit from the
public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of Section 209 of the Companies Act, 1956 for
the products of the Company.
(ix) (a) Undisputed statutory dues including provident fund, investor
education and protection fund, or employees state insurance,
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
duty have generally been deposited in due time with appropriate
authorities though there have slight delays in a few cases, except for
excise duty for earlier years, tax deducted at source and Fringe
Benefit Tax where there have been serious delays and which are not yet
paid as indicated in (b) below.
Further, since the Central Government has till date not prescribed the
amount of cess payable under Section 441 A of the Companies Act,1956,
we are not in a position to comment upon the regularity or otherwise of
the company in depositing the same.
(b) According to the information and explanations given to us,
undisputed dues in respect of provident fund,
investor education and protection fund, employees state insurance,
income-tax, wealth-tax, service tax, sales-tax, customs duty, excise
duty and other statutory dues which were outstanding, at the year end
for a period of more than six months from the date they became payable
are as follows:
Name of Nature of Amount Period to Due Date Since Paid
the the dues (Rs. in
statute lacs) which the (Rs. in
amount lacs)
relates
Central
Sales Sales Tax
Liability 27.70 2002-03, Subsequent
month --
Tax/
Maharashtra 2003-04 & after
accrual
Sales Tax
Act 2004-05
Uttar
Pradesh Purchase Tax 2.63 2002-03 Subsequent
month --
Sales
Tax Act Liability after
accrual
Income
Tax Act, Tax Deducted
at 154.10 2008-09 & Subsequent
month --
1961 Source &
Interest 2009-10 after
accrual
thereon
Fringe
Benefit Tax 30.00 2007-08 to Quarterly
after --
& Interest
thereon 2009-10 accrual
Employees Provident
Fund 23.91 2009-10 Subsequent
month Since Paid
Provident
Fund Act Dues after
accrual Rs. 8.04
lacs
Employees
State ESI 0.97 2009-10 Subsequent
month Since Paid
Insurance
Act after
accrual Rs. 0.97
lacs
State
tax on Professional
Tax 3.66 2004-05 to Subsequent
month --
Employment 2009-10 after
accrual
Central
Excise
and Excise Duty & 178.00 2002-03 to Subsequent
months --
Customs
Act, 1944 Interest
thereon 2009-10 after
accrual
(c) According to the records of the Company, the dues outstanding in
respect of sales tax, income tax, custom duty, wealth tax, service tax,
excise duty & cess on account of any dispute, are as follows :-
Name of Nature of Amount Period to Forum where
the statute the dues (Rs. in which the dispute is
lacs) amount pending
relates
Central
Excise and Differential
Excise 555.70 1980-81 to
1984-85 & CESTAT,
Kolkata
Customs
Act, 1944 Duty 1994-95 to
1996-97
Differential
Excise 5.07 2005-06 CESTAT,
Meerut
Duty
Service Tax on 35.21 2004-05 to
2005-06 CESTAT,
Kolkata
GTA
Cenvat on Non- 18.25 2000-01 CESTAT,
Delhi
Excisable
Product
U.P. Sales
Tax/U.P. Purchase Tax/C/F 147.37 1991-92,
1993-94 to Asst.
Comm/Dy.
Vat Act/
Central Forms 1996-97,
1998-99 to Comm./Joint
Comm./
Sales Tax
Act, 1956 Pending/Various 2001-02,
2005-06 to Member
Tribunal
Other Matters 2006-07,
2008-09 to Bench/High
Court
2009-10.
(x) The Companys accumulated losses at the end of the financial year
are more than fifty percent of its net worth and it has incurred cash
losses in the current and immediately preceding financial period.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders except for default in payment of
interest to debenture holders amounting to Rs.262.47 lacs which has
become due on 31st March, 2010.
(xii) According to the information and explanations given to us and
based on the documents and records produced 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.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society and therefore, the provisions of clause
4(xiii) of the Order are not applicable.
(xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable.
(xv) According to the information and explanations provided to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which these
loans were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short -term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
during the year to parties or companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) The Company has not issued any debentures during the year.
However, according to the information and explanations given to us, the
Company has already created security in respect of debentures issued in
earlier years and outstanding during the year.
(xx) The Company has not raised any money through a public issue during
the year.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For S. R. BATLIBOI & CO.
Firm Registration Number : 301003E
Chartered Accountants
22, Camac Street
Block C, 3rd Floor
Kolkata 700 016
Dated : 31st May, 2010
Per R. K. Agrawal
Partner
Membership No. 16667
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