Mar 31, 2014
1. Report on the Financial Statements
We have audited the accompanying financial statements of MURLI
INDUSTRIES LIMITED, which comprise the Balance Sheet as at 31st March
2014, and the Statement of Profit and Loss for the period of nine
months ended, and a summary of the significant accounting policies and
other explanatory information.
2. Management''s Responsibility for the Financial Statements
The Company''s Management is responsible for the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India
including Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956. 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.
3. 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 the
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement. An audit involves performing procedures to
obtain audit evidence about the amounts and the disclosures in the
financial statements. The procedures selected depend on the auditor''s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers the
internal control relevant to the Company''s preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by the Management,
as well as evaluating the overall presentation of the financial
statements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
4. Basis of Qualified Opinion
i. As mentioned in note no. 48, forming an integral part of the
financial statements of the company have been prepared on the going
concern basis notwithstanding the fact that the networth of the company
is completely eroded and the company has a negative networth of (Rs.
418.14 crores) as on balance sheet date. (Note No. 49) The company may
be restrained from any excavation of limestone from mines since
''Royalty on limestone'' amounting to Rs. 9.33 Crores remains to be paid
to the government. (Note No.51) The Sales Tax Department has attached
the movable & immoveable properties & assets of the Cement Unit of the
company, for the recovery of its Statutory Sales Tax Dues (including
interest) worth Rs. 63.08 Crores. All such moveable & immovable assets
are listed separately by the Sales Tax Department and prohibited their
transfer, sale, mortgage, gift, transfer etc. At the same time Royalty
on Limestone & Sales Tax is refundable under Mega Project PSI, 2007
subject to payment of liability. (Note No. 57) The consortium banks
have also recalled their debts to the company. The borrowings
outstanding to the consortium banks as at 31.03.2014 have been
classified as long term without taking cognizance of the recall of
loans by bank. This is deviation from requirements of the new Schedule
VI of the Companies Act. The appropriateness of the going concern
basis is interalia dependent on the company''s ability to infuse
requisite funds for meeting its obligations, rescheduling of its debts,
other liabilities and resuming normal operations, (Note No.50) & on the
decision and order of the BIFR.
ii. As mentioned in note no. 31 and 32, the company has not complied
with Accounting Standards-15 (Employee Benefits) & Accounting
Standards-11(Effects of changes in Foreign exchange Rates). Amount
remains to be unascertained for both.
iii. As mentioned in note no. 39, the balances of trade receivables and
payables, lenders, loans and advances & deposits are subject to
confirmation / reconciliation and subsequent adjustments if any. As
such, we are unable to express any opinion as to effect thereof on the
financial statements of the period under audit.
iv. As mentioned in note no. 44, regarding recognition of deferred tax
credit on account of unabsorbed losses and depreciation, up till date
is Rs. 226.95 crores( last balance sheet date Rs. 226.95 Crores). This
does not satisfy the virtual certainty test for recognition of deferred
tax credit as laid down in Accounting Standard-22. As such we do not
express our opinion on the reasonability of recognition of the income.
v. The company has written off a sum of Rs. 43.39 Crores (also refer
Pt. No. (ii) (c) of the Annexure to the Auditor''s Report) pertaining to
the stock of Soya bean have been written off under the head ''Quality
Rebate & Shortages'' in the profit & loss account.
vi. Advances given to suppliers of machineries amounting to Rs. 11.06
Crores should have been written off on account of the violations of the
conditions mentioned under the agreement and as informed by supplier of
machinery.
vii. The Company has Capitalized expenses to the tune of Rs. 25.40
Crores in ''Pulp Mill Unit'' till the date of last balance sheet, which
also appears as on the balance sheet date, the same should have been
written off to the Profit & Loss Account. As a result of above the
negative reserves of the company on the balance sheet date is
understated by Rs. 25.40 Crores.
viii. The company has no policy of ascertaining impairment losses,
which is in contravention of Accounting Standard 28. As such, we are
unable to express any opinion as to effect thereof on the financial
statements of the period under audit.
ix. All loan accounts of the company from Banks except vehicle loan
accounts have been treated as Non Performing Assets (NPAs) by the
respective banks due to non payment of dues, the consortium banks have
recalled their debts to the company. The company has recorded the
interest on these accounts for the period till 31st March 2014 @10.50%
p.a. instead of the actual payable amount which varies from 10.50% to
18% p.a. The difference between the exact interest as chargeable by the
bank and interest accounted for by the company remains unquantifiable.
As such non current liabilities are overstated and current liabilities
are understated. The amount of over/ under statement remains to be
unascertained.
x. The Company has liability outstanding in respect of FCCB (Foreign
Currency Convertible Bonds) issued of US$ 5.5 million the due date of
payment of which was 6th of Feb, 2012. The lenders have not exercised
option for conversion. Hence the amount is payable at the agreed
enhanced value. The amount outstanding in respect of the same is being
shown in the balance sheet at original conversing rate of Rs. 43.94 per
US$ as at the time of actual receipt of the amount. The actual
liability due in respect of the same as per terms comes to 149.81% of
US$5.5 Million i.e. US$ 8.27 Million and the rate as on 31st March 2014
being Rs. 59.9376 per US$ (Rs. 59.52 per US $ as on 30.06.2013), the
liability in respect of the same is understated by Rs. 25.22 Crores
(Rs. 24.88 Crores as on 30.06.13). As such loss of the company is under
stated to that extent. The redemption reserve in respect of repayment
of the same has also not been created.
The company has a liability of 7.52 Million USD($) as external
commercial borrowing which has been booked @ 45.05 per USD($), the
interest liability on the same is LIBOR 3.9% (4.2% 3.9%), the
liability on account of the same comes to Rs. 3.65 Crores. Moreover the
liability on account of difference in foreign exchange has also not
been accounted for amounting to Rs. 11.19 Crores (Rs. / USD as on
31.03.2014 is 59.9356). Total liability on this account amounting to
Rs. 14.84 Crores has not been provided.
xi. Accounting Standard -5, Net Profit or loss for the period, Prior
Period Items & change in accounting policies requires the company to
disclose the nature & amount of Prior period items to be disclosed
separately in a manner that their impact on current profit or loss can
be perceived. The company has not complied with the provisions thereby
inflating the current period''s losses by Rs. 23.78 crores.
xii. The company has recognized the Mega Vat Receivable under the head
''Short Term Loans & Advances'' even though the pre-condition as
mentioned under the Eligibility Certificate of its being paid prior to
its claim has not been complied with.
The consequential effect of sub para [i, ii, iii, viii, ix & xii] above
on the assets and liabilities as at 31st March 2014 and loss for the
period of nine months ended 31st March 2014 are not ascertainable. Had
the effect of above as stated in sub para [iv ,v, vi, vii, x & xi] been
given, the loss for the period under audit would have been increased by
Rs. 31.01Crores towards the current financial year of nine months & Rs.
252.35 Crores pertaining to prior periods and the negative networth
would have been increased by Rs. 283.86 Crores.
5. Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the matters described in the Basis
of Qualified Opinion Paragraph as mentioned above read together with
the other notes, give information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with the principles generally accepted in India;
i. In the case of the Balance Sheet, of the state of affairs of the
Company as on 31st March, 2014;
ii. In the case of the Profit and Loss Account, of the loss for a
period of nine months ended on that date; and
iii. In the case of cash flow statement, of the cash flows for a period
of nine months ended on that date.
6. Emphasis of Matter Attention is drawn to :
a. The company has not shown the amounts of loans maturing shortly
under the sub-head "Current Maturities of Long Term Loans" under "Other
Current Liabilities", but the same are shown under the head "Long Term
Borrowings" under "Non Current Liabilities" Similarly the company has
not disclosed the details of loans and their terms and conditions
including repayment etc including defaults. This is deviation from
requirements of the new Schedule VI of the Companies Act.
b. The company has an investment of Rs. 0.05 Crores in each of four,
wholly owned subsidiaries namely Murli Cement Limited, Murli Cement
(Karnataka) Limited, Murli Cement (Maharashtra) Limited, Murli Cement
(Rajasthan) Limited. The company has not complied with Accounting
Standard 21 by presenting the Consolidated Financial Statements. As
explained these companies have not started operations as such
Consolidated Financial Statements have not been prepared.
c. The non-current assets of the company as on balance sheet date
include a sum of Rs. 33.03 Crores (Rs. 31.07 Crores as on last balance
sheet dated 30.06.2013) spent on Rajasthan, Karnataka, Gujarat which
includes land. These should have been part of fixed assets.
d. The apparent casting error of Re 1 is on account of rounding off
effect, appropriate formula for which is being implemented in the
sysytem.
7. Report on Other Legal and Regulatory Requirements
A. 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.
B. As required by Section 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
b. In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books.
c. The Balance Sheet and the Statement of Profit and Loss, dealt with
by this Report are in agreement with the books of account.
d. In our opinion, the Balance Sheet and the Statement of Profit and
Loss comply with the Accounting Standards referred to in sub-section
(3C) of section 211 of the Act.
e. On the basis of the written representations received from the
directors as on 31st March, 2014 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2014
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Act;
ANNEXURE TO THE AUDITOR''S REPORT
(AS REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)
(I) a) The company has not maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
b) Physical verification of the same has not been carried out by the
management.
c) During the period under audit, the Company has not disposed off any
of its assets.
(ii) a) As explained to us, Physical verification of inventory has been
conducted by the management at reasonable intervals.
b) As also certified by management 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 nature of its business.
c) As informed by the management the company is in process of making
adequate records of inventory. Except for Soyabean, pending updating
of records and reconciliation, book balances as at March 31,2014 have
been adopted. As of now the company is having records, which are not
adequate. Material discrepancies were noticed at the time of physical
verification. It is observed that the management has written off a sum
of Rs. 43.39 Crores on account of shortage observed in the raw material
(soya bean) stock.
As per the documents produced by the management and the explanations
given by them, the process carried out for the physical verification of
the stock is commensurate with the size & nature of the company; but as
far as the valuation of the same is considered, the management was
unable to explain the exact basis for the valuation hence we are unable
to express our opinion on the same and hence there is a diversion to
compliance of Accounting Standard 2.
(iii) a) The company has granted interest free unsecured loan to
companies, firms or other parties covered in the register maintained
u/s.301 of the Act. The amount involved is Rs. 7.98 Crores and the
number of party involved are four.
b) The rate of interest and other terms and conditions of the unsecured
loans given by the Company mentioned in (a) above are prima facie
prejudicial to the interest of the Company, since these loans are
interest free and no specific terms have been specified for their
repayment.
c) As per the information and explanation given by the management,
there are no specific terms and conditions for repayment of principal
and interest due there on.
d) As there is no specific repayment due dates, there are no over dues
shown.
e) The company has taken unsecured loan from companies, firms and other
parties concerned in the register maintained u/s 301 of the Act. The
amount involved in the transactions is Rs. 7.28 Crores & number of
parties involved is 34.
f) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and interest due thereon; hence, prima facie it seems that the terms of
accepting the loan are not prejudicial to the interest of the company.
(iv) In our opinion and according to the information and explanations
given to us, the internal control systems needs to be strengthened
considering the size of the company and the nature of its business.
(v) a) The company has entered into the Register of Contracts &
arrangements referred to in section 301 of the Companies Act, 1956.
b) The transactions in pursuance of such contracts have been made at
prices which are reasonable having regard to prevailing market prices
at the relevant time.
(vi) The company has not accepted any deposits during the period under
audit from Public within the meaning of Section 58A, Section 58AA or
any other relevant provisions of the Companies Act, 1956 and the rules
made there under.
(vii) The company has not appointed internal auditor for period of this
audit report. This is a violation of section 227 of the Companies Act,
1956 and further the company is a listed company. We are unable to
ascertain whether the company has monitored internal control policies
and processes. In absence of internal audit system, the completeness,
adequacy and independence will have a bearing of efficacy of internal
control system and audit risk.
(viii) We have broadly reviewed the cost records maintained by the
company pursuing to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government u/s. 209(1)(d) of the Companies
Act, 1956 and our of the opinion that primafacie the prescribed cost
records have been maintained. However, no cost auditor''s report has
been provided to us. We have, however, not made a detailed examination
of the cost records with a view to determine whether they are accurate
or complete.
(ix) According to the information and explanation given to us in
respect of statutory dues :
a) The company has generally not been regular in depositing the
undisputed statutory dues which are as follows:
Statute Amount (Rs. Crores)
Service Tax 1.02
Employees Share of Provident Fund 0.31
Employer''s Share of Provident Fund 0.89
Professional Tax 0.90
Excise Duty 1.73
VAT & CST 46.54
b) Details of dues of Income-tax, Sales Tax, Custom Duty, Excise Duty
and Cess which have not been deposited as on 31st March, 2014 on
account of disputes are given below:
Sr. Particulars Amount (Rs. in crores) Pending Since
No.
1 Central Excise & Customs 0.12 2002
2 Commission on FCCB 0.43 2008
3 Central Excise & Customs 0.39 2008
4 Central Excise & Customs 2.37 2007
5 Central Excise & Customs 3.43 2009
6 Central Excise & Customs 0.28 2010
7 SEBI Not Ascertainable 2011-2012
8 Income Tax (A.Y -07-08) 0.67 2011-2012
9 Income Tax (A.Y -08-09) 20.02 2011-2012
10 Income Tax (A.Y -09-10) 4.48 2011-2012
11 Interest on VAT 5.65 2011-2012
12 Central Excise & Customs 1.77 2013
Sr. Particulars Forum
No.
1 Central Excise & Customs High Court, Nagpur
2 Commission on FCCB CESTAT, Mumbai
3 Central Excise & Customs CESTAT, Mumbai
4 Central Excise & Customs High Court, Nagpur
5 Central Excise & Customs CESTAT, Mumbai
6 Central Excise & Customs CESTAT, Mumbai
7 SEBI SEBI
8 Income Tax (A.Y -07-08) ITAT
9 Income Tax (A.Y -08-09) CIT(A)
10 Income Tax (A.Y -09-10) CIT(A)
11 Interest on VAT Appeal (for interest)
12 Central Excise & Customs
(x) At the end of the period under audit, the company has accumulated
losses of Rs. 432.56 crores. The cash losses of the company during the
period of nine months under audit are Rs. 183.14 crores. The networth
of the company is completely eroded and the company has a negative
networth of (Rs. 418.14 crores) as on balance sheet date.
(xi) The company has defaulted in repayment of dues to financial
institutions and banks amounting to Rs. 1435.01 crores.
(xii) The company has not granted any loans and/or advances on the
basis of securities by way of pledge of shares, debentures and other
securities.
(xiii) The provisions of any special statute applicable to chit fund
and nidhi/mutual benefit fund/societies are not applicable to the
company.
(xiv) The company is not a dealer or trader in shares, securities,
debentures and other investments.
(xv) The Company has given Guarantee to SICOM Ltd. on behalf of Nandlal
Enterprises Ltd. for an Inter Corporate Deposit of Rs. 20 crores. The
company has assigned rights on the limestone mining lease awarded to
the company, admeasuring 42.16 hectares of land. The terms of the
guarantee are prejudicial to the interest of the company.
(xvi) As per the information and explanations given, the company has
received forced loan amounting to Rs. 4.08 Crores, during the year on
account of encashment of Bank Guarantee by WCL on cancellation of fuel
supply agreement.
(xvii) As in the past the company has continued to use short term loans
for long term purposes.
(xviii) During the period under audit the company has not made
preferential allotment of shares to parties or companies covered in the
Register maintained u/s 301 of the Act.
(xix) The company has outstanding FCCBs (bonds) amounting to Rs. 24.17
crores (as per balance sheet amount) which have already become due in
February 2012 which are not secured. The details in respect of same are
pointed out in sub point no "x" in Basis of Qualified Opinion.
(xx) The company has not raised any money through a public issue during
the period under audit.
(xxi) Based on the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the company has been noticed or reported during the period under audit.
FOR DEMBLE RAMANI & CO.
Chartered Accountants
Registration No. 102259W
NAGPUR Anand Deshpande
Dated : 29th May, 2014 Partner
M. No.033618
Jun 30, 2013
1. Report on the Financial Statements
We have audited the accornpanyingfinancial statements of MURLI
NDUSTRIES LIMITED, which comprise the Balance Sheet as at 30th June
2013, and the Statement of Profit and Loss for the period of fifteen
months then ended, and a summary of the significant accountingpolicies
and other explanatory information.
2. Management''sResponsibilityforthe Financial Statements
The Company''s Management is responsible for the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India
including Accounting Standards referred to in sub- section (3C) of
section 211 of the Companies Act, 1956. 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.
3. 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 the
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement. An audit involves performing procedures to
obtain audit evidence about the amounts and the disclosures in the
financial statements. The procedures selected depend on the auditor''s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers the
internal control relevant to the Company''s preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by the Management,
as well as evaluating the overall presentation of the financial
statements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
4. Basis of Qualified Opinion
i. As mentioned in note no. 48, the financial statements of the company
have been prepared on the going concern basis notwithstanding the fact
that the networth of the company is completely eroded and the company
has a negative networth of (Minus Rs.189.82 crores) as on balance sheet
date. The appropriateness of the said basis is interalia dependent of
the Company''s ability to infuse requisite funds for meeting its
obligations, reschedulement of its debts and resuming normal
operations.
ii. As mentioned in note no. 31 and 32, the company has not complied
with Accounting Standards-15 (Employee Benefits) & Accounting
Standards-11(Effects of changes in Foreign exchange Rates).
iii. As mentioned in note no. 39, the balances of trade receivables and
payables, lenders and loans and advances are subject to confirmation /
reconciliation and subsequent adjustments if any. As such, we are
unable to express any opinion as to effect thereof on the financial
statements of the period under audit.
iv. As mentioned in note 43, the Company has Capitalized expenses to
the tune of Rs.3.16 Crores incurred in ÂPulp Mill Unit'', instead of
charging these expenses to Profit & Loss A/c. As a result of above the
loss of the Company for the period of fifteen months ended 30th June,
2013 is understated by Rs. 3.16 Crores.
v. As mentioned in note 44 regarding recognition of deferred tax credit
on account of unabsorbed losses and depreciation during the year
amounting to Rs. 88.76 crores (last year 138.19 crores) total amount
recognized up till date is Rs. 226.95 crores. This does not satisfy the
virtual certainty test for recognition of deferred tax credit as laid
down in Accounting Standard-22. As such we do not express our opinion
on the reasonability of recognition of the income. As such loss after
tax for the period under audit is understated by Rs.88.76 crores. The
networth of the company is overstated by Rs.226.95 crores as on balance
sheet date.
vi. As mentioned in note 45, the company has not ascertained impairment
loss on account of inoperative Pulp Unit from last some years.
vii. The company has no policy of ascertaining impairment losses, which
is in contravention of Accounting Standard 28. As such, we are unable
to express any opinion as to effect thereof on the financial statements
of the period under audit.
viii. All loan accounts of the company from Banks except from IDBI Bank
and vehicle loan accounts have been treated as Non Performing Assets
(NPAs) by the respective banks due to non payment of dues. The company
has recorded the interest on these accounts for the period till 30th
June 2013 @10.50% p.a. instead of the actual payable amount which
varies from 10.50% to 18% p.a. The difference between the exact
interest as chargeable by the bank and interest accounted for by the
company remains unquantifiable. As such non current liabilities are
overstated and current liabilities are understated. The amount of over/
under statement remains unascertained.
ix. The Company has liability outstanding in respect of FCCB (Foreign
Currency Convertible Bonds) issued of US$ 5.5 million the due date of
payment of which was 6th of Feb, 2012. The lenders have not exercised
option for conversion. Hence the amount is payable at the agreed
enhanced value. The amount outstanding in respect of the same is being
shown in the balance sheet at original conversation rate of Rs.43.94
per US$ as at the time of actual receipt of the amount. The actual
liability due in respect of the same as per terms comes to 149.81% of
US$5.5 Millon i.e. US$ 8.27 Million and the rate as on 30th June 2013
being Rs.59.52 per US$, the liability in respect of the same is
understated by Rs.24.88 Crores. As such loss of the company is under
stated to that extent. The redemption reserve in respect of repayment
of the same has also not been created.
x. Accounting Standard - 5, Net Profit or loss for the period, Prior
Period Items & change in accounting policies requires the company to
disclose the nature & amount of Prior period items to be disclosed
separately in a manner that their impact on current profit or loss can
be perceived. The Company has not complied with the provisions thereby
inflating the current period''s losses by Rs. 7.16 crores.
xi. As per the requirements of Accounting Standard - 26 VIntangible
AssetsÂ, any deferred revenue expenditure is to be written off in the
Profit & loss Statement, since they do not meet the definition of an
Vasset under AS-26, The Company has not written off its expenses
amounting to Rs.12.90 Crores.
The consequential effect of sub para[ii, iii, vi, vii & viii ] above on
the assets an liabilities as at 30th June 2013 and loss for the period
of fifteen months ended 30th June 2013 are not ascertainable. Had the
effect of above as stated in sub para [iv,v, ix ,x & xi ] have been
given, the loss for the period under audit would have been higher by
Rs.122.54 Crores.
5. Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the matters described in the Basis
of Qualified Opinion Paragraph as mentioned above read together with
the other notes, give information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with the principles generally accepted in India;
i. In the case of the Balance Sheet, of the state of affairs of the
Company as on 30th June, 2013;
ii. In the case of the Profit and Loss Account, of the loss for a
period of fifteen months ended on that date; and
iii. In the case of cash flow statement, of the cash flows for a period
of fifteen months ended on that date.
6. Emphasis of Matter Attentionisdrawnto:
a. The company has not shown the amounts of loans maturing shortly
under the sub-head VCurrent Maturities of Long Term Loans under VOther
Current LiabilitiesÂ, but the same are shown under the head VLongTerm
Borrowings under VNon Current Liabilities Similarly the company has
not disclosed the details of loans and their terms and conditions
including repayment etc including defaults. This is deviation from
requirements of the new Schedule VI of the CompaniesAct.
b. The company has an investment of Rs. 0.05 Crores in each of four,
wholly owned subsidiaries namely Murli Cement Limited, Murli Cement
(Karnataka) Limited, Murli Cement (Maharashtra) Limited, Murli Cement
(Rajasthan) Limited. The company has not complied with Accounting
Standard 21 by presenting the Consolidated Financial Statements. As
explained these companies have not started operations as such
Consolidated Financial Statements have not been prepared.
c. The non-current assets of the company include a sum of Rs. 31.07
Crores spent on Rajasthan, Karnataka which includes land. These should
have been part of fixed assets.
7. Report on Other Legal and Regulatory Requirements
A. As required by the Companies (Auditor''s Report) Order, 2003 (Vthe
OrderÂ) 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.
B. As required by Section 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
b. In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books.
c. The Balance Sheet and the Statement of Profit and Loss, dealt with
by this Report are in agreement with the books of account.
d. In our opinion, the Balance Sheet and the Statement of Profit and
Loss 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 30th June, 2013 taken on record by the Board of
Directors, none of the directors is disqualified as on 30th June, 2013
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Act.
ANNEXURE TO THE AUDITOR''S REPORT
(AS REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)
(I) a) The company has not maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
b) Therefore, physical verification of the same has not been carried
out;
c) During the period under audit, the Company has not disposed off any
of its assets
(ii) a) As explained to us, Physical verification of inventory has been
conducted by the management at reasonable intervals.
b) As also certified by management 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 nature of its business.
c) As per the documents produced by the management and the explanations
given by them, the process carried out for the physical verification of
the stock is commensurate with the size & nature of the company; but as
far as the valuation of the same is considered, the management was
unable to explain the exact basis for the valuation hence we are unable
to express our opinion on the same and hence there is a diversion to
compliance of Accounting Standard 2.
(iii) a) The company has granted interest free unsecured loan to
companies, firms or other parties covered in the register maintained
u/s.301 of the Act. The amount involved is Rs.2.44 Crores and the
number of party involved are two.
b) The rate of interest and other terms and conditions of the unsecured
loans given by the Company mentioned in (a) above are prima facie
prejudicial to the interest of the Company, since these loans are
interest free and no specific terms have been specified for their
repayment.
c) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and interest due thereon.
d) As there is no specific repayment due dates, there are no over dues
shown.
e) The company has taken unsecured loan from companies, firms and other
parties concerned in the register maintained u/s 301 of the Act. The
amount involved in the transactions is Rs.6.81 Crores & no. of parties
involved is 34.
f) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and interest due thereon; hence, prima facie it seems that the terms of
accepting the loan are not prejudicial to the interest of the company.
(iv) In our opinion and according to the information and explanations
given to us, the internal control systems needs to be strengthened
considering the size of the company and the nature of its business.
(v) a) The company has entered into the Register of Contracts &
arrangements referred to in section 301 of the Companies Act, 1956.
b) The transactions in pursuance of such contracts have been made at
prices which are reasonable having regard to prevailing market prices
at the relevant time.
(vi) The company has not accepted any deposits during the period under
audit from Public within the meaning of Section 58A, Section 58AA or
any other relevant provisions of the Companies Act, 1956 and the rules
made there under.
(vii) The company has not appointed internal auditor for period of this
audit report. This is a violation of section 227 of the Companies Act,
1956 and further the company is a listed company. Vfe are unable to
ascertain whether the company has monitored internal control policies
and processes. In absence of internal audit system, the completeness,
adequacy and independence will have a bearing of efficacy of internal
control system and audit risk.
(viii) We have broadly reviewed the cost records maintained by the
company pursuing to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government u/s. 209(1)(d) of the Companies
Act, 1956 and our of the opinion that primafacie the prescribed cost
records have been maintained. However, no cost auditor''s report has
been provided to us. We have, however, not made a detailed examination
of the cost records with a view to determine whether they are accurate
or complete.
(ix) According to the information and explanation given to us in
respect of statutory dues :
a) The company has generally not been regular in depositing the
undisputed statutory dues e.g. Provident Fund, Excise Duty including
VAT amounting to Rs.43.37 Crores.
b) Details of dues of Income-tax, Sales Tax, Custom Duty, Excise Duty
and Cess which have not been deposited as on 30th June, 2013 on account
of disputes are given below:
(x) At the end of the period under audit, the company has accumulated
losses of Rs.204.25 crores. The cash losses of the company during the
period of fifteen months under audit are Rs. 243.07 crores. The
networth of the company is completely eroded and the company has a
negative networth of (Minus Rs.189.82 crores) as on balance sheet date.
(xi) The company has defaulted in repayment of dues to financial
institutions and banks; details.
(xii) The company has not granted any loans and/or advances on the
basis of securities by way of pledge of shares, debentures and other
securities.
(xiii) The provisions of any special statute applicable to chit fund
and nidhi/mutual benefit fund/societies are not applicable to the
company.
(xiv) The company is not a dealer or trader in shares, securities,
debentures and other investments.
(xv) The Company has given Guarantee to SICOM Ltd. on behalf of Nandlal
Enterprises Ltd. for an Inter Corporate Deposit of Rs. 20 crores. The
company has assigned rights on the limestone mining lease awarded to
the company, admeasuring 42.16 hectares of land. The terms of the
guarantee are prejudicial to the interest of the company.
(xvi) In our opinion and as per the information and explanations given,
VNo new Term Loans have been raised during the period under audit.
(xvii) As in the past the company has continued to use short term loans
for long term purposes.
(xviii) During the period under audit the company has not made
preferential allotment of shares to parties or companies covered in the
Register maintained u/s 301 of the Act.
(xix) The company has outstanding FCCBs (bonds) amounting to Rs24.17
crores (as per balance sheet amount) which have already become due in
February 2012 which are not secured. The details in respect of same are
pointed out in sub point no Vviii in Basis of Qualified Opinion.
(xx) The company has not raised any money through a public issue during
the period under audit.
(xxi) Based on the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the company has been noticed or reported during the period under audit.
FOR DEMBLE RAMANI & CO.
Chartered Accountants
Registration No. 102259W
NAGPUR Anand Deshpande
Dated- 29-08-2013 Partner
M. No.033618
Mar 31, 2012
1. We have audited the attached Balance Sheet of MURLI INDUSTRIES
LIMITED Nagpur as on 31st March 2012, the Profit and Loss Account and
also the cash flow statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We have conducted our audit in accordance with the auditing
standards generally accepted in India. These standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosure in the financial statement. 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 statement on the COMPANIES (AUDITOR'S REPORT)
ORDER, 2003 as amended by amendment order 2004 issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of The
Companies Act, 1956, we enclose in the Annexure a statement on the
matter specified in the paragraphs 4 & 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph
(3) above, we report that,
a. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the 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 it appears from our examination of
such books,
c. The Balance Sheet and Profit and Loss Account referred to in this
report are in agreement with the books of account,
d. In our opinion, the Balance Sheet, Statement of Profit & Loss & the
Cash Flow dealt with by this report are in compliance with the
accounting standards referred to in sub-section (3C) of Section 211 of
The Companies Act, 1956, except for Accounting Standard -2 (Valuation
of Inventories), Accounting Standards-5 (Net Profit or Loss for the
period, Prior Period Items And Change in Accounting Policies),
Accounting Standards-11 (Effects of changes in foreign exchange rates),
Accounting Standards-12 (Accounting for Government Grants), Accounting
Standards-15 (Employee Benefits) which have not been followed.
e. We draw attention to :
I. To note 31 & 32, the company has not complied with Accounting
Standards-15 (Employee Benefits) & Accounting Standards-11(Effects of
changes in Foreign Exchange Rates).
ii. To note 44, the Company has Capitalized expenses to the tune of Rs.
2.46 Crores incurred in ÃPulp Mill Unit', instead of charging these
expenses to Profit & Loss A/c. As a result of above the loss of the
Company for the year ended 31st March, 2012 is understated by Rs. 2.46
Crores.
iii. The Company had issued FCCB (Foreign Currency Convertible Bonds)
of $ 23 Million in the month of February 2007, of which bonds amounting
to $ 8.5 Million were converted into equity shares in the year 2007
itself and $ 9 Million were bought back on 31st of December 2009; the
due date for the balance $ 5.5 Million was 6th of Feb, 2012. The
company has not created any reserve for its redemption.
iv. The company has not shown an amount of Rs. 317.13 Crores under the
sub-head "Current Maturities of Long Term Loans" under "Other Current
Liabilities", Similarly the company has not disclosed the details of
loans and their terms and conditions including repayment etc including
defaults amounting to Rs. 229.04 Crores, this is not in compliance with
the requirements of the new Schedule VI of the Companies Act, 1956.
v. Accounting Standard à 5, Net Profit or loss for the period, Prior
Period Items & change in accounting policies requires the company to
disclose the nature & amount of Prior period items to be disclosed
separately in a manner that their impact on current profit or loss can
be perceived. The Company has not complied with the provisions there by
inflating the current year losses by Rs. 3.75 Crores.
vi. During the year, the company has invested Rs. 0.05 Crores in each
of four, wholly owned subsidiaries namely Murli Cement Limited, Murli
Cement (Karnataka) Limited, Murli Cement (Maharashtra) Limited, Murli
Cement (Rajasthan) Limited. The company has not complied with
Accounting Standard 21 by presenting the Consolidated Financial
Statements. As explained these companies have not started operations as
such Consolidated Financial Statements have not been prepared. vii.
The non-current assets of the company include a sum of Rs. 31.07
Crores spent on Rajasthan, Karnataka. The Company has to give negative
lien on the lands of Rajasthan & Karnataka. These should have been part
of Fixed Assets. viii. As per the requirements of Accounting Standard
à 26 "Intangible Assets", any deferred revenue expenditure is to be
expensed off in the Profit & loss Statement, since they do not meet the
definition of an "asset" under AS-26. The Company has not expensed off
its expenses amounting to Rs. 17.21 Crores. f. Subject to sub point
(d) & (e), in our opinion and to the best of our information and
according to the explanations given to us, the said Balance Sheet,
Profit and Loss Account and Cash Flow Statement read together with the
significant accounting policies and notes to 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
principles generally accepted in India;
I. In the case of the Balance Sheet, of the state of affairs of the
Company as on 31st March, 2012; ii. In the case of the Profit and Loss
Account, of the loss for the year ended on that date; and iii. In the
case of cash flow statement, of the cash flows for the year ended on
that date. 5. On the basis of the written representation 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.
ANNEXURE TO THE AUDITOR'S REPORT (As Referred to in paragraph 3 of our
Report of even Date)
(i) a) The company is in process of streamlining proper records showing
full particulars, including quantitative details and situation of fixed
assets.
b) Therefore, physical verification of the same has not been carried
out;
c) During the year, the Company has not disposed off any of its assets.
As such going concern status of the Company is not affected.
(ii) a) As explained to us, Physical verification of inventory has been
conducted by the management at reasonable intervals.
b) As certified by management 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 nature of its business.
c) As per the documents produced by the management and the explanations
given by them, the process carried out for the physical verification of
the stock is commensurate with the size & nature of the company; but as
far as the valuation of the same is considered, the management was
unable to explain the exact basis for the valuation hence we are unable
to express our opinion on the same as to compliance of Accounting
Standard 2.
(iii) a) The company has granted interest free unsecured loan to
companies, firms or other parties covered in the register maintained
u/s 301 of the Act. The amount involved is Rs. 2.47 Crores and the
number of parties involved are two.
b) The rate of interest and other terms and conditions of the unsecured
loans given by the Company mentioned in (a) above are prima facie
prejudicial to the interest of the Company, since these loans are
interest free and no specific terms have been specified for their
repayment.
c) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and interest due thereon.
d) As there is no specific repayment due dates, there are no over dues
shown.
e) The company has taken unsecured loan from companies, firms and other
parties concerned in the register maintained u/s 301 of the Act. The
amount involved in the transactions are Rs. 7.24 Crores & no. of
parties involved is 32.
f) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and interest due thereon; hence, prima facie it seems that the terms of
accepting the loan are not prejudicial to the interest of the company.
(iv) In our opinion and according to the information and explanations
given to us, the internal control systems needs to be strengthened
considering the size of the company and the nature of its business.
(v) a) The company has entered into the Register of Contracts &
Arrangements referred to in section 301 of the Companies Act, 1956.
b) The transactions in pursuance of such contracts have been made at
prices which are reasonable having regard to prevailing market prices
at the relevant time.
(vi) The company has not accepted any deposits during the year from
Public within the meaning of Section 58A, Section 58AA or any other
relevant provisions of the Companies Act, 1956 and the rules made
thereunder.
(vii) The internal audit system of the Company needs to be
strengthened, in order to be commensurate with the size & nature of the
business of the Company. Further it is suggested that the management
should take prompt corrective actions in respect of important
suggestions pointed in Internal Audit Report.
(viii) We have broadly reviewed the cost records maintained by the
company pursuing to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government u/s 209(1)(d) of the Companies
Act, 1956 and our of the opinion that prima-facie the prescribed cost
records have been maintained. We have, however, not made a detailed
examination of the cost records with a view to determine whether they
are accurate or complete.
(ix) According to the information and explanation given to us in
respect of statutory dues :
a) The company has generally been regular in depositing the undisputed
statutory dues e.g. Provident Fund, Custom Duty, Excise Duty, Cess, TDS
except VAT amounting to Rs. 27.49 Crores.
b) Details of dues of Income-Tax, Sales Tax, Custom Duty, Excise Duty
and Cess which have not been deposited as on 31st March, 2012 on
account of disputes are given below:
Sr.
No. Particulars Amount
(Rs. in crores) Pending Since Forum
1 Central Excise
& Customs Dept 0.12 2002 High Court,
Nagpur
2 Commission on
FCCB 0.43 2008 CESTAT, Mumbai
3 Excise 0.39 2008 CESTAT, Mumbai
4 Capital Goods
Import 2.37 2007 High Court,
Nagpur
5 Offcut Sales 3.43 2009 CESTAT, Mumbai
6 Offcut Sales 0.28 2010 CESTAT, Mumbai
7 SEBI Not Ascertainable 2011-2012 SEBI
8 Income Tax
(A.Y -07-08) 0.67 2011-2012 ITAT
9 Income Tax
(A.Y -08-09) 20.02 2011-2012 ITAT
10 Income Tax
(A.Y -10-11) 7.39 2011-2012 ITAT
(x) The company does not have accumulated losses at the end of the
financial year.
(xi) The company has defaulted in repayment of dues to financial
institutions and banks; details of which have been shown below:
Default Amount
Name of the Financial
Institute/Bank Principal
(Rs. Crores) Interest
(Rs. Crores) Default since
IFCI (Suit File) 96.50 15.69 Jan-11
The interest due to consortium landers amounting to Rs. 14.84 crores
for the period January 2012 to March 2012 have been paid in the
financial Year 2012-13
(xii) The company has not granted any loans and/or advances on the
basis of securities by way of pledge of shares, debentures and other
securities.
(xiii) The provisions of any special statute applicable to chit fund
and nidhi/mutual benefit fund/societies are not applicable to the
company.
(xiv) The company is not a dealer or trader in shares, securities,
debentures and other investments.
(xv) The Company has given Guarantee to SICOM Ltd. on behalf of Nandlal
Enterprises Ltd. for an Inter Corporate Deposit of Rs. 20 crores. The
company has assigned rights on the limestone mining lease awarded to
the company, admeasuring 42.16 hectares of land.
(xvi) In our opinion and as per the information and explanations given,
"No new Term Loans" have been raised during the year except for funding
of interest as per CDR Scheme.
(xvii) As in the past the company has continued to use short term loans
for long term purposes.
(xviii) During the year the company has made preferential allotment of
shares to parties or companies covered in the Register maintained u/s
301 of the Act, the price at which shares have been issued is not
prejudicial to the interest of the Company.
(xix) The company does not have any outstanding debentures during the
year.
(xx) The company has not raised any money through a public issue during
the year.
(xxi) Based on the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the company has been noticed or reported during the financial year
under Audit.
FOR DEMBLE RAMANI & CO.
Chartered Accountants
Registration No. 102259W
Anand Deshpande
NAGPUR Partner
Dated -31-08-2012 M. No. 033618
Mar 31, 2011
1. We have audited the attached Balance Sheet of MURLI INDUSTRIES
LIMITED Nagpur as on 31st March 2011, the Profit and Loss Account and
also the cash flow statement for the year ended on that date annexed
there to. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We have conducted our audit in accordance with the auditing
standards generally accepted in India. These standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosure in the financial statement. 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 statement on the COMPANIES (AUDITOR'S REPORT)
ORDER, 2003 as amended by amendment order 2004 issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of The
Companies Act, 1956, we enclose in the Annexure a statement on the
matter specified in the paragraphs 4 & 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph
(3) above, we report that,
(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the 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 it appears from our examination of
such books,
(c) The Balance Sheet and Profit and Loss Account referred to in this
report are in agreement with the books of account,
(d) We draw attention to note 9 of part A of Schedule S', the Company
has not provided for retirement of employees as per AS-15.
(e) We draw attention to note (vi) of part B of Schedule 'S', the
company has not complied with AS-11 regarding 'Foreign Exchange
Transactions' & also we draw attention to Note (xii) of part B Schedule
'S', the Company has not made any Provision for Deferred Tax Liability.
(f) We also draw attention to note (vii) of part B of Schedule 'S'. The
Company has maintained excise and service tax records in manual as well
as computerized formats. The manual records relating to some of the
units have been audited and accepted by the Excise department. However,
the amounts reflected in the records maintained on computer, which are
incorporated in the balance sheet, are pending reconciliation with the
manual records. The impact of the same on the profitability of the
company remains unquantifiable.
(g) We draw attention to note (xx) of part B of schedule 'S', The
Company has Capitalized expenses to the tune of Rs. 3.49 Crores
incurred in 'Pulp Mill Unit'. Instead of charging these expenses to
Profit & Loss A/c, the Company has capitalized the same and will be
depreciated over the period of time. As a result of above the loss of
the Company for the year ended 31st March, 2011 is understated by Rs.
3.49 Crores.
(h) In our opinion and subject to point no. (d), (e), (f) & (g) above
and in point no.(ii)(c) mentioned in the annexure to this report, the
Profit & Loss Account, Balance Sheet & Cash Flow Statement comply with
the accounting standards referred to in sub-section (3C) of Section 211
of The Companies Act, 1956;
(i) In our opinion and to the best of our information and according to
the explanations given to us, the said Balance Sheet, Profit and Loss
Account and Cash Flow Statement read together with the significant
accounting policies and notes to 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 principles generally
accepted in India;
(I) In the case of the Balance Sheet, of the state of affairs of the
Company as on 31st March, 2011;
(II) In the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
(III) In the case of cash flow statement, of the cash flows for the
year ended on that date.
5. On the basis of the written representation received from the
Directors as on 31st March 2011 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March 2011 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 the Auditors Report
(As Referred to in paragraph 3 of our Report of even Date)
(i) a) The company is in process of streamlining proper records showing
full particulars, including quantitative details and situation of fixed
assets.
b) Therefore, physical verification of the same has not been carried
out;
c) During the year, the Company has not disposed off any of its assets.
As such going concern status of the Company is not affected.
(ii) a) As explained to us, Physical verification of inventory has been
conducted by the management at reasonable intervals.
b) In our opinion and on the basis of certificate of member of ICWA 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 nature of its business.
c) As informed to us, the company is maintaining proper records of
inventory. The company's inventories, as stated in the management's
certificate, have been valued at average price which constitutes the
departure from the AS-2.
(iii) a) The company has granted interest free unsecured loan to
companies, firms or other parties covered in the register maintained
u/s.301 of the Act. The amount involved is Rs.1,64,93,173 and the
number of party involved are two.
b) The rate of interest and other terms and conditions of the unsecured
loans given by the Company mentioned in (a) above are prima facie
prejudicial to the interest of the Company, since these loans are
interest free and no specific date has been specified for their
repayment.
c) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and Interest due thereon.
d) As there is no specific repayment due dates, there are no overdue.
e) The company has taken unsecured loan from companies, firms and other
parties concerned in the register maintained u/s 301 of the Act. The
amount involved in the transactions is Rs.653.28 Lacs & no. of parties
involved are 32.
g) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and Interest due thereon; hence, prima facie it seems that the terms of
accepting the loan are prejudicial to the interest of the company.
(iv) In our opinion and according to the information and explanations
given to us, the internal control systems needs to be strengthened
considering the size of the company and the nature of its business.
(v) a) The company has entered into the Register the Contracts &
arrangements referred to in section 301 of the Companies Act, 1956. b)
The transactions in pursuance of such contracts have been made at
prices which are reasonable having regard to prevailing market prices
at the relevant time.
(vi) The company has not accepted any deposits during the year from
Public within the meaning of Sections 58A, Section 58AA or any other
relevant provisions of the Companies Act, 1956 and the rules made there
under.
(vii)The internal audit system of the Company needs to be strengthened,
in order to be commensurate with the size & nature of the business of
the Company. Further it is suggested that the management should take
prompt corrective actions in respect of important suggestions pointed
in Internal Audit Report.
(viii) As informed to us, the company has maintained cost records in
pursuance to section 209 (1) (d) of the Companies Act, 1956 for the
respective products of the company.
(ix) a) According to the information and explanations given to us and
as per our observations of the records, except Professional Tax, Income
Tax, TDS , VAT and Wealth Tax there is no major delay in depositing
undisputed statutory dues.
b) As informed to us, there is a dispute with Central Excise & Customs
Department involving an amount of Rs. 7.02 Crores.
Particulars Figure in Rs. Pending
Since Forum
Central Excise & Customs
Payment 1206834 2002 High Court,Nagpur
Commission on FCCB 4338466 2008 CESTAT Mumbai
Excise 3866335 2008 CESTAT Mumbai
Capital Goods Import 23692405 2007 High Court, Nagpur
Offcut sales 34348897 2009 CESTAT Mumbai
Offcut sales 2804176 2010 CESTAT Mumbai
(x) The Company does not have accumulated losses at the end of the
financial year.
(xi) The company has defaulted in repayment of dues to financial
institutions and banks; hence the bankers have agreed for restructuring
of debt under CDR mechanism. The company does not have borrowing by way
of debentures.
(xii) The Company has not granted any loans and/or advances on the
basis of securities by way of pledge of shares, debentures and other
securities.
(xiii) The provisions of any special statute applicable to chit fund
and nidhi/mutual benefit fund/societies are not applicable to the
Company.
(xiv) The Company is not a dealer or trader in shares, securities,
debentures and other investments.
(xv) The Company has given Guarantee to SICOM Ltd. on behalf of
Nandlal Enterprises Ltd. for an Inter Corporate Deposit of Rs. 20
crores. The company has assigned rights on the limestone mining lease
awarded to the company, admeasuring 42.16 hectares of land.
(xvi) In our opinion and as per the information and explanations given,
The Term Loan raised during the year has been applied for the purpose
for which it has been raised.
(xvii) On the basis of overall examination of the balance sheet of the
Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on short-term
basis, which have been used for long-term purposes.
(xviii) During the year Company has made preferential allotment of
shares to parties or companies covered in the register maintained u/s
301 of the Act. The price at which shares have been issued is not
prejudicial to the interests of the Company.
(xix) The Company does not have any outstanding debentures during the
year.
(xx) The Company has not raised any money through a public issue during
the year.
(xxi) Based on the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the financial year
under Audit.
FOR DEMBLE RAMANI & CO.,
Chartered Accountants
Registration No. 102259W
Place : NAGPUR Anand Deshpande, Partner
Date : 12.09.2011 Membership No. 033618
Mar 31, 2010
1. We have audited the attached Balance Sheet of MURLI INDUSTRIES
LIMITED, Nagpur as on 31 st March 2010, the Profit and Loss Account as
also 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 have conducted our audit in accordance with the auditing
standards generally accepted in India. These standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is freefrom material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosure in the financial statement. 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 ouropinion.
3. As required by the statement on the COMPANIES (AUDITORS REPORT)
ORDER, 2003 as amended by amendment order 2004 issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of The
Companies Act, 1956, we enclose in the Annexure a statement on the
matter specified in the paragraphs 4 & 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph
(3) above, we report that,
(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessaryforthe 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 it appears from our examination of
such books,
(c) The Balance Sheet and Profit and Loss Account referred to in this
report are in agreement with the books of account,
(d) Without qualifying our opinion we draw attention to note (xviii)of
Schedule S B, The Company has Capitalized expenses to the tune ofRs.
549 Lacs incurred in Pulp Mill Unit. Instead of charging these
expenses to Profit & Loss A/c., the Company has capitalized the same
and will be depreciated over the period of time. As a result of above
the profit of the Company for the year ended 31 st March, 2010 is
higherbyRs. 549 Lacs.
(e) We draw attention to note (iv) of ScheduleS B The Company has
not complied with AS-11 regarding Foreign Exchange Transactions &
also we draw attention to Note (ix) of Schedule S
(f) We also draw attention to note 9 of Schedule , the Company has
not provided for retirement of employees as perAS-15.
(g) In our opinion and subject to point no. (d) & (e) above, the Profit
& Loss Account, Balance Sheet & Cash Flow Statement comply with the
accounting standards referred to in sub-section (3C) of Section 211 of
The CompaniesAct, 1956;
(h) In our opinion and to the best of our information and according to
the explanations given to us, the said Balance Sheet, Profit and Loss
Account and Cash Flow Statement read together with the significant
accounting policies and notes to accounts, give the information
required by the Companies Act, 1956in the manner so required and
giveatrueandfairviewin conformitywiththe principles generally accepted
in India; i) lnthecaseofBalance Sheet, of thestate of
affairsoftheCompanyason 31st March, 2010; ii)
InthecaseoftheProfitandLoss Account, of the profit for the year ended
on that date and iii) I n the Case of Cash Flow Statement, of the cash
flows forthe year ended on that date.
5. On the basis of the written representation received from the
Directoas on 31 st March 2010and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31 st March 2010 for being appointed as a Director in terms of clause
(g) of sub section (1) of Section 274 of the Companies Act, 1956;
Annexure to the Auditors Report
(As Referred to in paragraph 3 of our Report of even Date)
(i) a) The Company is in the process of streamlining proper records
showing full particulars, including quantitative details and situation
of fixed assets.
b) As per information given to us, the Company have regular programme
for physical verification of fixed assets. During the year, the
management has carried out physical verification of fixed assets of the
company, no material discrepancies were noticed on such verification.
c) During the year, the Company has not disposed any of its assets, As
such going concern status of the Company is not affected.
(11) a) As explained to us, physical, verification of inventory has
been conducted by the management at reasonable intervals.
b) In our opinion and according to the information and explanation
given to us, procedures of physical verification of inventory followed
by the management are reasonable and adequate in relation to the size
of the company and nature of its business.
c) As informed to us, the Company is maintaining proper records of
inventory. It was further informed that the discrepancies noticed on
physical verification of stock were not material in relation to the
operations of the Company and have been properly dealt with in the
books of the Company.
(iii) a) The Company has granted interest free unsecured loan to
companies, firms or other parties covered in the register maintained
u/s.301 of the Act. The amount involved is Rs. 1,14,03,573/- and the
number of party involved is one.
b) The rate of interest and other terms and conditions of the unsecured
loans given by the Company are not prima facie prejudicial to the
interest of the Company. However, the Company has granted an interest
freeunsecuredtoanofRs.1,14,03,573/-toMurUTyres Ltd.
c) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and interest due thereon.
d) As there is no specific repayment due dates, there are no overdues.
e) The Company has taken unsecured loan from companies, firms and other
parties concerned in the register maintained u/s 301 of the Act. The
amount involved in the transactions is Rs. 469.05 Lacs & number of
parties involved is 31.
f) The rate of interest and other terms and conditions of the unsecured
loans taken by the Company are not
prima facie prejudicial to the interest of the Company.
g) As per the information and explanations given by the management,
there are no specific terms and conditions for repayment of principal
and interest due thereon.
iv) In our opinion and according to the information and explanation
given to us, the internal control systems needs to be strengthened
considering the size of the company and the nature of its business.
(v) a) The company has entered in its register the contracts &
arrangements referred to in section 301 of the
CompaniesAct, 1956. b) The transactions in pursuance of such contracts
have been made at prices which are reasonable having
regard to prevailing market prices at the relevant time. (vi) The
company has not accepted any deposits during the year from Public
within the meaning of Sections
58A, Section 58AAor*ny other relevant provisions of the Companies Act,
1956 and the rules made there
under.
(vll) The internal audit system of the Company needs to be strengthened
commensurate with the size and nature of the business of the Company.
(viii) The Company has maintained cost records in pursuance to section
209 (1) (d) of the Companies Act, 1956 for the respective products of
the Company, however no detailed examination of such records has been
carried out.
(ix) a) According to the information and explanation given to us and as
per our observations of records, except Professional Tax there is no
major delay in depositing undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,
Cess and other statutory dues wherever applicable with the appropriate
authorities.
b) As informed to us, there is a dispute with Central Excise & Customs
Department involving an amount of
Rs. 12.06 Lacs.
Particulars Amount in Rs. Pending Since Forum
Central Excise
& Customs
Payment 12,06,834/- 2002 High
Court, Nagpur
(x) The Company does not have accumulated losses at the end of the
financial year.
(xi) The Company has not defaulted in repayment of dues to a financial
institution and bank. The Company does not have borrowing by way of
debentures.
(xii) The Company has not granted any loans and/or advances on the
basis of securities by way of pledge of shares, debentures and other
securities.
(xiii) The provisions of any special statute applicable to chit fund
and nidhi/mutual benefit fund/societies are
not applicable to the Company. (xiv) The Company is not a dealer or
trader in shares, securities, debentures and other investments. (xv)
The Company has given Guarantee to SICOM Ltd. on behalf of Nandlal
Enterprises Ltd. for an Inter
Corporate Deposit ofRs.20crores.
(xvi) In our opinion and as per the information and explanations given,
the term loan raised during the year has been applied forthe purpose
for which it has been raised.
(xviii) During the year Company has made preferential allotment of shares
to parties or companies covered in the register maintained u/s 301 of the
Act. The price at which shares have been issued is not prejudicial
to the interests of the Company.
(xx) The Company has not raised any money through a public issue during
the year.
(xxi) Based on the audit procedures performed and information and
explanation given by the management, we report that no fraud on or by the
Company has been noticed or reported during the financial year under
Audit.
For Demble Ramani a Co., Chartered Accountants
Registration No. 102259W
Place : Nagpur
Date : 16-08-2010 Anand Despande, Partner