Mar 31, 2014
We have audited the accompanying financial statements of Kothari
Industrial Corporation Limited ("the Company"), which comprise the
Balance Sheet as at March 31, 2014, 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 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") read with the General
Circular 15/2013 13th dated September 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013
and in accordance with the accounting principles generally accepted in
India. This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the financial statements that give a true and fair
view and are free from material misstatement, whether due to fraud or
error.
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
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. 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.
Basis for Qualified Opinion
The Company has not provided for the following amounts in the accounts
:-
a) Interest payable to a trade creditor amounting to Rs.161.33 lacs
and interest payable on an advance amounting to Rs.74.39 lacs.
b) Any further amount payable to State Bank of India (Assignee : Kotak
Mahindra Bank) in addition to the liability provided for in the books
of accounts (grouped under Long-term borrowings) since the said sum
has not been finally quantified.
c) The effect of such non-provision of (a)and (b) above on the profit
or loss of the Company as well as on the true and fair view of the
state of affairs of the Company as at 31st March 2014 is not
ascertainable.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us except for the effect/ possible effects of
the matters described in the "Basis for Qualified Opinion"
paragraph, the aforesaid financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted
in India:
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2014; b) In the case of the Statement of 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.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2) As required by section 227(3) of the Act, we report that:
a) Except for the effect of the matters described in para "Basis for
Qualified Opinion", we have obtained all the information and
explanations which to the best of our knowledge and belief were
necessary for the purpose of our audit;
b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books.
c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account.
d) Except for the matters described in para "Basis for Qualified
Opinion", in our opinion, the Balance Sheet, Statement of Profit and
Loss and Cash Flow Statement comply with the Accounting Standards
referred to in subsection (3C) of section 211 of the Companies Act,
1956 read with the general circular 15/2013 dated 13th September, 2013
of the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013.
e) On the basis of 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.
ANNEXURE TO INDEPENDENT AUDITORS'' REPORT
Referred to in paragraph 1 under the heading "Report on other Legal
and Regulatory Requirements" Section of our report even date.
1. In Respect of Fixed Assets:
a) the company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets on
the basis of available information.
b) as explained to us, fixed assets have been physically verified by
the management at reasonable intervals; no material discrepancies were
noticed on such verification.
c) in our opinion and according to the information and explanations
given to us, the company has not disposed off substantial part of its
fixed asset during the year and the going concern status is not
affected.
2. In Respect of Inventories:
a) inventories have been physically verified during the year by the
management at reasonable intervals. In our opinion the frequency of
verification is reasonable.
b) in our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
c) On the basis of our examination of the records of inventory, we are
of the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed during physical verification
between the physical stocks and the book records were not material.
3. a) The company has not granted any loans, secured/unsecured, from
companies, firms (or) other parties listed in the register maintained
under Section 301 of the Companies Act, 1956.
b) The company has not taken any loans during the year from parties
listed in the register maintained 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 with regard to purchases of inventory, fixed assets and with
regard to the sale of goods. During the course of our audit, no major
weakness has been noticed in the aforesaid internal controls.
5. a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, the
particulars of contracts or arrangements referred to in section 301 of
the Act have been entered in the register required to be maintained
under that section.
b) As per information & explanations given to us and in our opinion,
the company has not made any transactions exceeding the value of five
lakhs rupees in pursuance of contract or arrangements entered in the
register maintained u/s 301 of the Companies Act. 1956.
6. The Company has not accepted any deposits from public. Hence the
directions issued by the Reserve Bank of India and the provisions of
Section 58A and 58AA of the Companies Act 1956 and the Companies
(Acceptance of Deposits) Rules, 1975 do not apply.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the cost records maintained by the company
pursuant to the companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government of India under Section 209(1)(d)
of the Companies Act, 1956, and are opinion that prima facie, the
prescribed accounts and records have been made and maintained. We
have, however not made a detailed examination of the records with a
view to determine whether they are accurate or complete.
9. a) The Company is not regularly depositing undisputed statutory
dues including provident fund, service tax, income tax (tax deducted
at source), professional tax and property tax.
b) According to the information and explanations given to us, the
extent of arrears outstanding as on 31st March 2014 for a period of
more than six months from the date they became payable, as certified
by the Management is as under :-
Service Tax 18.88
Income Tax (TDS) 25.50
Provident Fund 1.01
Professional Tax 14.07
Property Tax 42.18
c) According to the information and explanations given to us, details
of disputed Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise
Duty, Value Added Tax and Cess which have not been deposited on
account of disputes are given below.
10 The Company has accumulated losses at the end of the financial year
which are more than 50% of its net worth of the Company. The Company
has incurred cash loss during the current year as well in the
immediate preceding financial year also.
11. Based on our examination of the books and on the information and
explanation given by the management, the company has defaulted in
repayment of dues to financial institutions and banker(s) and the
matter is pending adjudication before the Hon''ble Debt Recovery
Tribunal, Chennai.
12. The company has not granted loans and 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. Therefore, clause 4(xiii) of the Companies
(Auditor''s Report) Order, 2003 is not applicable to the Company.
14. Based on our examination of the records and evaluation of the
related internal controls, we are of the opinion that proper records
have been maintained of the transaction and contracts in relation to
shares, debentures and other instruments and timely entries have been
made in those records. We also report that the company has held the
shares, securities in its own name
15. The Company has not given any guarantee for loans taken by others
from bank or financial institutions during the year.
16. According to the information and explanations given to us, the
Company has not taken any term loan during the year.
17. According to the information and explanations given to us and on
an overall examination of the financial statement of the Company,
funds raised on short term basis have, prima facie, not been utilized
for long term investment.
18. 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.
19. During the period covered by our audit report, the Company has not
issued any debentures.
20. The Company has not raised any money by way of public issues
during the year.
21. Based upon the audit procedures performed and based on the
available 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 M/s. B.B.Naidu & Co.
Chartered Accountants
Firm Reg.No:002291S
(A.Sekar)
Place: Chennai Partner
Date: 28th May 2014 Membership No. :18784
Mar 31, 2012
We have audited the attached Balance Sheet of M/s Kothari Industrial
Corporation Ltd., Chennai - 600034 as of 31st March, 2012, Statement of
Profit and Loss for the year ended on that date annexed thereto and the
Cash Flow statement for the year ended on that date. 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.
1. 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 misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
2. As required by the Companies (Auditor's Report) Order, 2003 and
amended by the Companies (Auditor's Report) (Amendment) Order, 2004,
issued by the Central Government 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.
3. Attention is invited, without qualifying our Report to note no.1 to
the accounts mentioning the reasons by the management for presenting
the accounts on principles applicable to a "Going Concernà and
regarding note no.17 regarding non-provisioning of interest on mortgage
loans payable to an institution and a lender which are presently not
quantifiable since the matters are under negotiation / appeals.
4. Further to our comments in the annexure referred to above, we state
that:
(i) In our opinion, proper books of account as required by law have
been maintained so far as appears from the examination of those books
(ii) The Balance Sheet and the Statement of Profit and Loss and the
Cash Flow Statement referred to in this report are in agreement with
such books of account referred to in paragraph (i) above.
(iii) In our opinion, the Balance Sheet, the Statement of Profit and
Loss and Cash Flow Statements dealt with this report comply with the
Accounting Standards referred to in Section 211 (3c) of the Companies
Act, 1956.
(iv) In our opinion, the said accounts together with the accounting
policies and notes on accounts and read with para 3 above, give the
information required under the Companies Act, 1956 in the manner
required.
5. On the basis of 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 are disqualified as on 31st March,
2012 from being appointed as a Director in terms of clause(g) of
sub-section(l) of Section 274 of the Companies Act, 1956. '
6. We report that the financial statements give a true and fair view
on the following:
(i) the Balance Sheet gives the state of the company's affairs as at
31st March, 2012
(ii) the Statement of Profit & Loss gives the Profit for the year.
(iii) the Cash flow statement for the year ended 31st March, 2012, of
the cash flows for the year ended on that date.
ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE
PERIOD ENDED 31.03.2012
1) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) All the fixed assets have been physically verified by the
Management in a phased manner according to the Company's procedure.
(c) During the year the Company has not disposed of any major part of
its fixed assets affecting the going concern aspect of the Company.
2) (a) The inventories have been periodically physically verified
during the year by the Management and in our opinion, the frequency of
verification is reasonable.
(b) The procedures of physical verification of inventories followed by
the Management are reasonable and adequate in relation to the size of
the company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed during physical verification
between the physical stocks and the book records were not material.
3) (a) The Company has not granted any loan during the year to any
party listed in the Register maintained under Section 301 of the
Companies Act.1956.
(b) The company has not taken any loan during the year from parties
listed in the register maintained 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 with regard to purchases of inventory and fixed assets and
with regard to the sale of goods and there are no major weaknesses in
such internal control.
5) Based on the Register maintained under Section 301 of the Companies
Act, transactions exceeding the value of five lakh rupees in respect of
any party during the year have been made at prices which are reasonable
having regard to prevailing market prices at the relevant time.
6) The Company has not accepted any deposits from the public during the
year.
7) The internal audit is being carried out by an external firm of
Chartered Accountants, which in our opinion is commensurate with the
size of the company -and nature of its business.
8) We have broadly reviewed the cost records maintained by the Company
pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1 )(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been made and maintained. We have,
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
9) (a) According to the records of the Company, the company has not
deposited with appropriate authorities undisputed statutory dues i.e.,
Income Tax (Tax Deducted at Source) and Provident Fund aggregating to
Rs.84.60 lakhs.
(b) According to the information and explanation given to us, no
undisputed amounts payable in respect of income-tax, sales-tax, customs
duty and excise duty were outstanding as at 31sl March 2012 for a
period of more than six months from the date they became payable.
(c) According to the records of the company, there are statutory dues
which have not been deposited on account of disputes with statutory
authorities, as furnished below:
Details
of Dispute Nature of Forum of
Dispute Period Amount
Dispute Rs.in
Lakhs
I - Tamilnadu TNGST &CST
D.C.C.T. Appeals 1988-89 to 872.97
Branch Transfer
of Fertilisers
STAT and 1991-92
Non-receipt of ÃC' Forms
and High Court Stay
Disputed tax on sulphur loan
II - Karnataka
Turnover tax on NPK Mixture KST STAT -
Stay 1996-97 3.87
III - Kerala
Disputed
rate of tax KGST STAT -
Stay 2001-02 0.05
Total 876.89
Remanded back to
Assessing Authorities : D.C.C.T. Appeals, 1985-86 to 77.42
Branch Transfer of fertilizers, TNGST & CST STAT and High Court
Non-receipt of ÃC' Forms and Disputed Taxes
10) The Company has accumulated losses at the end of the financial year
which are more than 50% of its net worth of the Company. The Company
has not incurred cash loss during the current year but has incurred
cash loss in the immediate preceding financial year.
11) Based on our examination of the books and on the information and
explanation given by the management, the company has defaulted in
repayment of dues to financial institutions and banker(s) and the
matter is pending adjudication before the Hon'ble Debt Recovery
Tribunal, Chennai. .
12) The Company has not granted loans and advances on the basis of
security by way of pledge of shares and other securities.
13) In our opinion, according to the information and explanation given
to us. the nature of activities of the company does not attract in
special statute applicable to Chit Fund and Nidi/Mutual Benefit Fund /
Societies.
14) Based on our examination of the records and evaluation of the
related internal controls, we are of the opinion that proper records
have been maintained of the transaction and contracts in relation to
shares, debentures and other instruments and timely entries have been
made in those records. We also report that the company has held the
shares, securities in its own name.
15) The company has not given guarantee for loans taken by others from
banks and financial institutions during the year. -
16) Accordingly to the information and explanations given to us, the
Company has not taken any term loan during the year.
17) 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. However, the Company has raised short term loans and
utilized the same for repaying long term debts.
18) Based on our examination of record and the information provided to
us by the Management we report that the company has not made
preferential allotment of shares to parties and companies covered in
the register maintained under Sec.301 of the Act.
19) The Company has not issued any debentures during the year.
20) The Company has not raised any money by public issues during the
period covered by our audit.
21 ) Based upon the audit procedures performed and based on the
available 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 B.B. NAIDU & CO
Regn.No.002291S
Chartered Accountants
A.SEKAR
Place:Chenrtai Partner
Date : 29.05.2012 Membership No.18784
Mar 31, 2010
We have audited the attached Balance Sheet of M/s Kothari Industrial
Corporation Ltd., Chennai - 600034 as of 31st March, 2010, the Profit
and Loss Account for the year ended on that date annexed thereto and
the Cash Flow statement for the year ended on that date. 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.
1. 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 misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
2. As required by the Companies (Auditors Report) Order, 2003 and
amended by the Companies (Auditors Report) (Amendment) Order, 2004,
issued by the Central Government 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.
3. Attention is invited, without qualifying our Report to note no.1 in
Schedule No.16 to the accounts mentioning the reasons by the management
for presenting the accounts on principles applicable to a "Going
Concern".
4. Further to our comments in the annexure referred to above, we state
that:
(i) In our opinion, proper books of account as required by law have
been maintained so far as appears from the examination of those books
(ii) The Balance Sheet and Profit and Loss Account and the Cash Flow
Statement referred to in this report are in agreement with such books
of account referred to in paragraph (i) above.
(iii) In our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statements dealt with this report comply with the Accounting
Standards referred to in Section 211 (3c) of the Companies Act, 1956 .
(iv) In our opinion, the said accounts together with the accounting
policies and notes on accounts and read with para 4 above, give the
information required under the Companies Act, 1956 in the manner
required.
5 On the basis of 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 are disqualified as on 31st March,
2010 from being appointed as a Director in terms of clause (g) of
sub-section(l) of Section 274 of the Companies Act, 1956.
6. We report that
(i) the Balance Sheet gives a true and fair view of the state of the
companys affairs as at 31st March, 2010
(ii) the Profit & Loss Accounts gives true and fair view of the loss
for the year.
(iii) In the case of the Cash flow Statement for the year ended 31st
March, 2010, the cash flows for the year ended on that date.
ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE
PERIOD ENDED 31.03.2010
1. (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b)AII the fixed assets have been physically verified by the Management
in a phased manner according to the Companys procedure.
2. (a) The inventories have been periodically physically verified
during the year by the Management which in our opinion, the frequency
of verification is reasonable.
(b)The procedures of physical verification of inventories followed by
the Management are reasonable and adequate in relation to the size of
the company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed during physical verification
between the physical stocks and the book records were not material.
3. (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable.
(b)The procedure of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company has maintained proper records of inventory. The
discrepancies noticed on verification between the physical stock and
the book records were not material and the same has been properly dealt
with in the accounts.
4. (a) The Company has not granted any loan during the year to any
party listed in the Register maintained under Section 301 of the
Companies Act. 1956.
b) The Company has not taken any loan from parties listed in the
register maintained under section. 301 of the Companies Act 1956.
5. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business with regard to purchases of inventory and fixed assets and
with regard to the sale of goods and there are no major weaknesses in
such internal control.
6 Based on the Register maintained under Section 301 of the Companies
Act transactions exceeding the value of five lakh rupees in respect of
any party during the year have been made at prices which are reasonable
having regard to prevailing market prices at the relevant time.
7. The Company has not accepted any deposits from public during the
year
8. The internal audit is being carried out by an external firm of
Chartered Accountants, which in our opinion is commensurate with the
size of the company and nature of its business.
9. The maintenance of cost records under Section 209(1 )(d) of the
Companies Act, 1956 does not apply to any of the products of the
company.
10. (a) According to the records of the Company, the company has not
fully deposited with appropriate authorities undisputed statutory dues
i.e., Income Tax amounting to Rs.8.77 lakhs.
(b) According to the information and explanation given to us, no
undisputed amounts payable in respect of income-tax, sales-tax, customs
duty and excise duty were outstanding as at 31.3.2010 for a period of
more than six months from the date they became payable.
(c) According to the records of the company, there are dues of sales
tax, income-tax, customs duty/wealth-tax, excise duty/cess which have
not been deposited on account of disputes with statutory authorities,
which is furnished below:
Details of Dispute Nature of Forum of Dispute Period Amount
Dispute Rs. in
Lakhs
Tamilnadu TNGST &CST D.C.C.T. Appeals 1988-89 872.97
Branch Transfer of to
Fertilisers STAT and 1991-92
Non-receipt of
C Forms and High Court Stay
Disputed tax on
sulphur loan
II - Kamataka
Turnover tax on
NPK Mixture KST STAT - Stay 1996-97 3.8
III - Kerala
Disputed rate
of tax KGST STAT - Stay 2001-02 0.05
Total 876.89
REMANDED BACK TO
ASSESSING
AUTHORITIES D.C.C.T. Appeals, 1985-86
to 77.42
Branch Transfer of
fertilizers, TNGST & CST STAT and High
Court 1997-98
Non-receipt of
C Forms and
Disputed Taxes
11. The Company has accumulated losses, however such accumulated
losses of the Company are not more than its net worth as at the end of
the financial year. The Company has incurred cash losses during the
current financial year.
12. Based on our examination of the books and on the information and
explanation given by the management, the company has defaulted in
repayment of dues to financial institutions and banker(s) and the
matter is pending adjudication before the Honble Debt Recovery
Tribunal, Chennai.
13. The Company has not granted loans and advances on the basis of
security by way of pledge of shares and other securities.
14. In our opinion, according to the information and explanation given
to us. the nature of activities of the company does not attract in
special statute applicable to Chit Fund and Nidi/Mutual Benefit Fund /
Societies.
15. Based on our examination of the records and evaluation of the
related internal controls, we are of the opinion that proper records
have been maintained of the transaction and contracts in relation to
shares, debentures and other instruments and timely entries have been
made in those records. We also report that the company has held the
shares, securities in its own name.
16. The company has not given guarantee for loans taken by others from
banks and financial institutions during the year.
17. 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.
18. Based on our examination of record and the information provided to
us by the Management we report that the company has not made
preferential allotment of shares to parties and companies covered in
the register maintained under Sec.301 of the Act.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money by public issues during the
period covered by our audit.
21. Based upon the audit procedures performed and based on the
available 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 B.B. NAIDU & CO
Regn.No.002291S
Chartered Accountants
A.SEKAR
Place:Chennai Partner
Date : 24.08.2010 Membership No. 18784
Jun 30, 2003
We have audited the attached Balance Sheet of Kothari Industrial
Corporation Limited as at 30th June 2003 and Profit & Loss Account of
the Company for the period ended on that date annexed thereto both of
which we have signed under reference to this report. 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.
We have conducted our audit in accordance with auditing standards
generally accepted in India. The 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.
1. We have broadly obtained all the information and explanations,
excepting Granite Division (refer note no. 10(ii) ), which to the best
of our knowledge and belief were necessary for the purpose of our
audit.
2. In our opinion, proper books of account as required by law, have
been kept by the Company with the exception of those relating to
Granite Division so far as appears from our examination of those books.
3. The Balance Sheet and the Profit and Loss Account and Cash Flow
Statement dealt with by this Report are in agreement with such books
referred to in Paragraph 2 above.
4. In our opinion, the Balance Sheet and Profit and Loss Account and
Cash flow statement dealt with by this report comply with the
Accounting Standards referred in sub-section (3 C) of section 211 of
the Companies Act 1956. With the exception of non observance of accrued
basis of accounting referred to in this specific qualifications listed
in para 7 of this report.
5. In view of the Company not having redeemed the debentures and
repaid the term loan to
financial institutions and certain matured fixed deposits for a period
exceeding three years, we report that all the Directors are
disqualified as on 30.6.2003 from being appointed as Directors in any
other Public Limited Company in terms of Section 274(1) (g) of the
Companies Act, 1956. The Company has been advised by counsel that there
is no bar from the defaulting Directors of the Company from being
reappointed Directors in the same defaulting Company.
6. In our opinion, the said accounts together with the accounting
policies and notes in Schedule No. 17, give the information required
under the Companies Act, 1956 in the manner so required.
7. Attention is invited to
i) Note No. 7(ii) relating to non provision for disputed sales tax
demands aggregating to Rs.891.97 lacs
ii) Non provision for power tariff consequent to withdrawal of
concessional power tariff relating to earlier years Rs.328.73 lacs
(note 7(iii)
iii) An amount of Rs.659.77 lacs is due by a public company which is
under liquidation. (Note 12(b) (i)) and overdue amount of Rs.842.58
lacs (Note 12(b)(iii)) both being related parties.
iv) The advances referred to in para (iii) above have been to companies
with which there is no direct business nexus and the end use of these
amounts by the receipient companies which, we are informed, are
controlled by the promoters, his family members and associates, have
not been made known to us to comment on the propriety of these
transactions or the recoverability of these amounts.
v) Non provision for potential liability for unfulfilled export
obligation pertaining to textile division amounting to Rs. 84.07 lacs.
(Note 7(vii))
vi) Non provision for Overdue and Penal interest and other charges in
respect of certain Non Convertible Debentures, which have become
overdue for redemption. (Note 3(i)). Consequentially, the bank
borrowings and outstanding liability to debenture holders, are
understated in the Balance Sheet.
vii) Non incorporation of the transactions of the Granite Division
during the year. (Note 10(ii)).
viii)The Company has yet to give effect to the order of City Civil
Court, Chennai regarding refund of share monies. (Note 2(v)&(vi))
ix) The Company has not given effect to the consent decree filed with
Supreme Court regarding disputed share allotment (Note 2 (vii))
x) The liability on account of shortfall. between the realisable value
of certain leased machineries of Kothari Mill No.2 repossessed by the
leasing company and the amount that would become ultimately payable,
has not been quantified and provided for. (Note 17(a)).
xi) The Suspension of construction activities at Brewery Project in
Andhra Pradesh (Note 18(i))
xii) Legal possession of certain plantation lands acquired is over due
and yet to be registered by the company (Sch 5 Note 2)
xiii)We have not audited the unpaid dividend bank accounts of the
company in the absence of complete details / bank statements and the
consequential payments to the Investor Education and Protection Fund.
xiv)Non provision of interest on certain unsecured advances to related
parties (Note 16(iii).
xv) Non provision of diminution in the value of investment in
subsidiary M/s. Kothari (Madras) International Limited (Note No.19).
xvi)The company has not conducted Audit Committee meetings during the
period.
xvii)Advances include Rs.273.70 Lacs due from Kothari Group Employees
Gratutity Fund representing Gratutity paid directly to employees by the
Company. In the absence of ascertainment of the quantum of gratutity
liability either on acturial basis or otherwise, it has not been
possible
to ascertain whether the gratutity liability has been recognised in
full in the accounts and whether the amount of Rs.273.70 lacs shown as
due from the Gratuity fund is recoverable in the absence of the
accounts of the fund made available to us.
8. a. We are unable to express any opinion on
(i) the quantum of liability relating to item (i), (ii), (v) in
paragraph (7),
ii) the realisability of the amounts referred to in paragraph (7) (iii)
& (iv) above and
iii) the effect of impact of significant matters mentioned in paragraph
(7) (vi),(vii), (viii), (ix) ,(x), (xi), (xii) and (xv) the quantum
thereof not having been quantified or estimated by the company
iv) The effect of unadjusted shortfall between the revalued assets and
the reduced Revaluation Reserve on account of periodical utilisation of
the Reserve in the earlier years for absorbing capital losses on
disposal of certain divisions in the past years amount not quantified
by the management.
b. Considering developments which have taken place after the Balance
Sheet date referred to in Note No. 26 and erosion in networth besides
the exposure of the company in regard to guarantees issued by the
company which might devolve on the company we are unable to express any
opinion on the financial viability of the company. The future
profitability would depend upon further financial assistance /
restructuring scheme in the absence of which the presentation of the
accounts on principles applicable to a going concern in our opinion is
inappropriate.
c. The future survival of the Company would depend upon the successful
resolution of certain winding up petitions filed by certain creditors
before the various courts.
9. In view of our observations in paragraphs (7) and (8) above, and
the consequent effect thereof on the Reserves and the Loss for the
period both being not quantifiable, we
are unable to express our opinion on the true and fair view in the case
of :-
(a) the Balance Sheet as at 30th June 2003 of the state of the
Companys affairs as at 30th June 2003;
(b) the Profit and Loss Account for the period ended 30th June 2003 the
Loss for the period ended on that date; and
(c) the Cash flow statement for the period ended 30th June 2003 the
cashflows for the period ended on that date.
10. The company has not prepared Corporate Governance report and
Management Discussion and Analysis report for our verification.
In terms of the Manufacturing and Other Companies (Auditors Report)
Order, 1988 and on the basis of such checks as we considered
appropriate, we further state that:
1. a. The Company has maintained records
showing quantitative details and situation of fixed assets at divisions
which are being updated to include additions/deductions during the
period. All the assets have not been physically verified by the
management during the year. However there is a regular programme of
verification (with the exception of Granite Division) 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.
b. No fixed assets have been revalued during the year.
2. a. As explained to us, the stocks of finished goods, raw materials,
stores and spares at all locations (with the exceptions of Granite
Division) have been physically verified by the Management at reasonable
periods and those at stock points/third parties with reference to
independent confirmations wherever received. The bulk stock of certain
raw materials/ Finished goods in the Fertiliser Division are being
verified during the lean period when such Stocks are less in quantity:
b. In our opinion, the procedures of physical
verification of stocks followed by the management are reasonable and
adequate in relation to the size of the Company and the nature of its
business.
c. In our opinion, the discrepancies noticed on verification between
the physical stocks and the Book stocks, which were not material, were
properly dealt with in the books of account after review.
d. The valuation of raw materials, semi- finished goods and stores has
been at cost. Stocks of Finished goods comprising of Fertilisers have
been valued this year at lower of Cost and net realisable value. Tea is
valued as in the previous year at since net realised/ realisable value
being a plantation product.
3. a. In our opinion, the rates of interest and the terms and
conditions of loans obtained from companies, firms or other parties
listed in the registers maintained under Section 301 of the Companies
Act are prima facie not prejudicial to the interests of the Company. In
view of the deletion of the Section 370 of the Companies Act there is
no requirement to make a statement in this regard.
b. Loans and advances in the nature of loans, have been given to
planter customers and employees who are repaying the principal amounts
as stipulated and also are generally regular in payment of interest
wherever applicable. Loans and advances includes overdue amount of
Rs.120.99 lacs given to a public limited company under liquidation,
listed in the register maintained under Section 301 of the Companies
Act,1956, and Rs.1502.35 lacs to two companies, which are Related
Parties, including one company which is under liquidation. There are no
stipulations regarding time of repayment of these loans and no portion
of Interest nor principal have been recovered during the year. These
balances have not been confirmed.
4. In our opinion and according to the information and explanations
given to us during the course of our audit, the internal
control procedures for the purchase of materials, stores, packing
materials, components, plant and machinery, equipment and other assets
and with regard . to sale of goods are adequate considering the size
of the Company and the nature of its business (Except Granite
division).
5. In our opinion and according to the information and explanations
given to us, the transactions of purchase of goods and materials and
sale of goods, materials and services, made in pursuance of contracts
or arrangements entered in the registers maintained under Section 301
of the Companies Act, 1956 and aggregating during the period to
Rs.50000 or more in respect of each party have been made at prices
which are reasonable having regard to prevailing market prices for such
goods, materials or services or the prices at which transactions for
similar goods, materials or services have been made with other parties.
6. Unserviceable or damaged stores, raw materials and trading stocks
are determined at the close of the period and adequate amounts are
being written off after review in the accounts. (Except Granite
division).
7. The Company has complied with the provisions of Section 58A of the
Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules
1975, with regard to the deposits accepted from the public, with the
exception certain delay in repayment of matured deposits together with
interest amounting to Rs.0.46 lacs, (since paid)
8. In our opinion, reasonable records have been maintained by the
Company for the sale and disposal of realisable scrap and by- products.
9. The internal audit was carried out by an external firm of Chartered
Accountants and is commensurate with the size of the Company and the
nature of its business.
10.According to the records produced and information given to us, we
have seen that prima facie the cost records and the accounts as
prescribed by the Central Government for Fertilisers, and Sulphuric
Acid under Section 209(1)(d) of the Companies Act, 1956 have been made
and maintained by the Company and no examination of such records and
accounts has been carried out by us. Since Fertiliser and Sulphuric
Acid Plants were not functioning during the period, no cost audit
report was filed.
11. There have been delays in remitting Provident Fund and Employees
State Insurance dues with appropriate authorities. The company has
continued the default in remittances of these payments.
12.According to the information and explanations given to us, no
undisputed amounts payable in respect of income tax, sales tax, customs
duty and excise duty were outstanding as at 30th June 2003 for a period
of more than six months from the date they became payable, with the
exception of income tax amounting to Rs.2.57 lacs which has since been
remitted.
13. In the absence of full details relating to certain expenses we are
unable to affirm that no personal expenses of employees or directors
have been charged to revenue account, other than those payable under
contractual obligations or in accordance with generally accepted
business practice.
14. Without taking into the cumulative financial impact of the
qualificatory remarks in the Audit report, we are unable to express our
opinion that the Company is not a sick industrial company within the
meaning of Clause (o) of sub-section (i) of Section 3 of the Sick
Industrial Companies (Special Provisions) Act, 1985.
For M K DANDEKER & CO FOR B B NAIDU & CO
Chartered Accountants Chartered Accountants
K J DANDEKER B SURENDER
Membership No.18533 Membership No.6020
Partner Partner
Place : Chennai
Date : 3rd September 2005