Mar 31, 2014
Report on the Financial Statements
We have audited the accompanying financial statements of N.K.Industries
Ltd. which comprise the Balance Sheet as at March 31, 2014, the
Statement of Profit and Loss and the Cash flow statement for the year
then ended, and a summary of significant accounting policies and other
explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards notified under the Companies Act, 1956 ("the
Act) read with the General Circular 15/2013 dated 13th September 2013
of the Ministry of Corporate Affairs in respect of section 133 of the
Companies act,2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
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 but not for the
purpose of expressing an opinion on the effectiveness of companies
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion.
Basis for Qualified Opinion
1. We draw attention to Note 30 to the financial statements which
indicates that the company had incurred huge losses in past years,
including the financial year under audit and the company''s net worth is
negative. In spite of this in view of the management, the accounts have
been prepared on "Going Concern basis".
Further, a Winding up petition before the Hon''ble High Court of Gujarat
has been filed by Vemag Engineering Pvt. Ltd. for its dues of Rs 17.38
lacs. The aforesaid Debt is disputed by the Company, and has been
disclosed as a contingent liability (Refer note No 25 b of notes to
financial statements).Pending decision of the Hon''ble High Court of
Gujarat and considering the fact that the company is registered and
declared "Sick" by Hon''ble Board for Industrial & Financial
Reconstruction under SICA Act, the accounts have been prepared on
"Going concern basis".
2. The Company has entered into financial arrangement with National
Spot Exchange Ltd (NSEL) through trading and Clearing Member,
N.K.Proteins Ltd (Group Company) by way of purchase and sales of
various goods,without physical delivery of the goods, during the
previous fiscal year. Further although the balances of long term
creditors include the creditors resulting out of such transactions, the
liability of NSEL could not be ascertained due to the difference
between the balance as per the books of the company and balance due as
per the demand of NSEL through the trading and clearing member
N.K.Proteins Ltd. In view of the fact that matter is still under
reconciliation and under dispute, we are unable to quantify the amount
of liability or unable to make any comments on the same .Further NSEL
suspended the trading on 31st July 2013 and has moved an arbitration
petition in the H''onble Mumbai High Court for recovery of outstanding
amount from N.K. Proteins Limited, and has made the company a
Respondent The matter is pending with H''onble Bombay High Court. The
matter being Subjudice we are unable to comment on the same. (Refer
Note no 31 of notes to financial Statements)
3. The income tax department had carried out survey under section 133A
on the company along with other group companies. The investigation is
pending with Income Tax Department. Further, the Investigation by
Economic Offence Wing of Mumbai Police (EOW) is also in progress
against trading and clearing member N.K.Proteins Limited relating to
the issue. The matter being subjudice we are unable to comment on the
same. (Refer Note no 33 of notes to financial Statements)
4. Trade payables include amounts payable to third parties as
elaborated vide note no 31 above, and trade receivables include
receivable from third parties towards transactions through National
Spot Exchange Ltd (NSEL). The said balances as on date are subject to
confirmation by respective parties and reconciliation/adjustments if
any. The Balance amount of trade payables and receivables and other
loans and advances are also subject to confirmation and we are unable
to comment on the same. (Refer Note no 32 of notes to financial
Statements).
5. Sales Tax Department has completed the assessment for various
assessment years and raised demand of Rs 5423.55 lacs for the earlier
previous years and further an amount of Rs 130.88 Lacs for the year
under review making total demand of Rs 5554.43 Lacs. The company has
not made any provision for the above demand raised by the sales tax
authority in view of the fact that the company had preferred an appeal
before the appellate authority. Had the provision for sales tax would
have been made for the earlier years as well as for the year under
review, the loss for the current year would have been higher by Rs
130.77 Lacs and loss for the earlier year would have been higher by Rs
5423.55 Lacs and Liabilities would have been higher by Rs 5554.43 Lacs
(Refer Note no 36 of notes to financial Statements).
6. No provision for interest is made during the year on advances of Rs
2920.25 Lacs (P.Y. Rs 1171.60 Lacs), since the same is considered as
doubtful. (Refer Note no 28 of notes to financial Statements)
7. Impact, if any, of the rehabilitation scheme by operating agency
appointed by Hon''ble Board for Industrial & Financial Restructuring
(BIFR) is not ascertainable since the scheme is pending. (refer note
No.26 of notes to financial statements).
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion Paragraph, the financial
statements give the information required by the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
(ii) in the case of the Statement of Profit and Loss Account, of the
Loss for the year ended on that date and
(iii) 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"), as amended, issued by the Central Government of India in terms
of sub-section(4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the 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. in our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards notified under
the Companies Act,1956 ("the Act) read with the General Circular
15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs
in respect of section 133 of the Companies act,2013
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 the Auditors'' Report
Referred to in paragraph of our report of even date on the accounts of
N. K. Industries Limited for the year ended on 31st March 2014.
i) a) The company has maintained records showing full particulars,
including quantitative details & the situation of the fixed assets with
effect from 1st April 2008 onwards.
b) As explained to us, a major portion of the fixed assets has been
physically verified by the management during the year in accordance
with a phased programme of verification adopted by the Company. In our
opinion, the frequency of verification is reasonable having regard to
the size of the company & nature of its assets. In absence of
availability of fixed asset register prior to period 1st April 2008,we
are unable to comment on material discrepancies noticed on physical
verification of fixed assets & its effect in the books of accounts.
c) According to the information and explanation given to us, no Fixed
assets has been disposed off during the year and hence the question of
affecting going concern assumption does not arise.
ii) a) As explained to us, inventories were physically verified by the
management at reasonable intervals during the year.
b) In our opinion & according to the information & explanations given
to us, the procedures of physical verification of inventories followed
by the management were reasonable & adequate in relation to the size of
the company & nature of its business.
c) In our opinion and according to the information and explanations
given to us, the company is maintaining proper records of inventory.
The discrepancies noticed on verification between the Physical stocks
and the book records were not material.
iii) a) The company has granted interest free unsecured loans to five
companies covered in the register maintained under section 301 of the
Companies Act, 1956. The net worth of four companies is negative. The
said loans are doubtful for recovery. The maximum amount involved
during the year was Rs 2507.46 lacs and the year-end balance of such
loan was Rs 2507.46 lacs.
b) The loans are interest free loans and are considered doubtful of
recovery.
c) There is no stipulation for repayment of loan.
d) There is no stipulation in respect of repayment of loans granted,
therefore, the question of overdue amount thereon does not arise.
e) The company has not taken any loan from any company, firm or other
parties covered in the register maintained under section 301 of the
Companies Act, 1956.
iv) In our opinion and according to information given to us, there are
adequate internal control system commensurate with the size of the
company and the nature of its business, for the purchase of inventory
and fixed assets and for the sale of goods and services. There is no
continuing failure to correct major weaknesses in internal control
system;
v) (a) In our opinion and according to the information & explanations
given to us, the particulars of contracts or arrangements referred to
in section 301 of the Companies Act, 1956 have been entered in the
register required to be maintained under section 301 of the Companies
Act, 1956
(b) In our opinion, and according to information and explanation given
to us, the transactions of purchase of goods & materials, sales of
goods, materials,& services made in pursuance of contract or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 aggregating during the year Rs 5.00 Lacs or
more in respect of such parties have been made at prices which are
reasonable having regard to the prevailing market prices for such
goods, materials, fixed assets & services or the prices at which the
transactions for similar goods, materials, & services have been made
with other parties.
vi) The Company has not accepted any deposits from the public.
vii) In our opinion the Company has an in house internal audit system,
commensurate with the size of the Company and nature of its business,
however the same is required to be strengthened with regard to the
scope, reporting and its compliance.
viii) We have broadly reviewed the books of accounts maintained by the
company in respect of products where pursuance to the rules made by the
Central Government of India, the maintenance of Cost records has been
prescribed u/s 209(1) clause (d) of the Companies Act 1956 and we are
of the opinion that prima facie, the prescribed accounts & records have
been maintained. We have however, not made a detailed examination of
the records.
ix) a) According to the information and explanations given to us, the
company is generally regular in depositing with appropriate authorities
undisputed statutory dues including Provident Fund, Employees'' State
Insurance, Income- tax, Sales-tax, Wealth tax, Service tax,
Custom Duty, Excise Duty, Cess and any other material statutory dues
applicable to it. According to the information and explanations given
to us, no undisputed amount payable in respect of Income Tax, Sales
Tax, Wealth Tax, Service Tax, Excise Duty and Cess were in arrears as
at the end of the year, for a period of more than six months from the
date they become payable.
b) On the basis of records produced before us for our verification and
according to the information and explanations given to us, the details
of disputed, Sales Tax & Income Tax dues aggregating to Rs 5886.67 lacs
that have not been deposited as on 31st March, 2014 on account of
matters pending before appropriate authorities, the details of which
are as under.
a) Name of the Statute Nature of Dues Amount
(Rs in Lacs)
Income Tax Act Corporate Tax 30.26 Lacs
(upto 31/3/14)
Income Tax Act Corporate Tax 161.72 Lacs
Income Tax Act Corporate Tax 140.26 Lacs
Guj. Sales Tax Sales Tax 5423.55
(Net of payments)
Guj. Sales Tax Sales Tax 130.88
Name of the Statute Period to which Forum where dispute is
amount relates pending
Income Tax Act Block Assessment Gujarat HighCourt
from 1989 to 1999
Income Tax Act A.Y.2006-2007 CIT Appeal
Income Tax Act A.Y.2007-2008 CIT Appeal
Guj. Sales Tax F.Y. 1989-90, 90-91, Sales Tax Tribunal /
97-98 to 2001-02 Commercial Tax
Officer
Guj. Sales Tax F.Y. 2008-09 Commissioner of
Commercial Tax,
Appeal-I, Ahmedabad
x) In our opinion, the accumulated losses of the company as on 31st
March 2014 are more than the fifty percent of its net worth. The
company has incurred cash loss during the current financial year and
also during the immediately preceding financial year.
xi) As there are no loans taken by the company during the year, the
question of default in repayment does not arise.
xii) In our opinion and according to the information and explanation
given to us, no loans and advances have been granted by the company on
the basis of security by way of pledge of shares, debenture and other
securities.
xiii) According to the information & explanations given to us, the
company is not a chit fund or a nidhi /mutual benefit fund/society.
Therefore, the provisions of clause 4(xiii) of the Companies (Auditors
Report) Order, 2003, are not applicable to the company.
xiv) According to the information & explanations given to us, the
company is not dealing or trading in shares, Securities, debentures &
other investments. Therefore, the provisions of clause 4(xiv) of the
Companies (Auditors Report) Order, 2003, are not applicable to the
company.
xv) According to the information and explanations given to us, the
company has not given any guarantee for loans taken by others from bank
or financial institutions.
xvi) The Company has not raised any new term loans during the year.
xvii) Based on the information and explanations given to us and on an
overall examination of the balance sheet of the company, in our opinion
Rs 2155.40 lacs raised on Short term basis stands utilized for long
term investments.
xviii) The Company has not made any Preferential allotment of shares
during the year under review.
xix) The company has not issued any debentures during the year.
xx) The company has not raised any money by way of public issue during
the year.
xxi) According to the information and explanation given to us, no fraud
on the company has been noticed or reported during the course of our
audit. As regards frauds by the company is concerned, we have been
informed that the company has been made a joint respondent with N.K.
Proteins Limited (one of the group companies) in the Arbitration
Petition filed by National Spot Exchange Limited (NSEL) in Mumbai High
Court, in view of the fact that the investigations/litigations related
to the transactions with NSEL are still under progress and the matter
is subjudice, we are unable to give our comments under this head.
For PARIKH & MAJMUDAR
Chartered Accountants
FR No. 107525W
sd/-
[CA Dr HITEN PARIKH]
Place : Ahmedabad PARTNER
Date : 16th July, 2014 M. No. 40230
Mar 31, 2013
We have audited the accompanying financial statements of N.K.
Industries Ltd. ("the Company"), which comprise the Balance Sheet as at
March 31, 2013, and the Statement of Profit and Loss and cash flow
statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 Act. This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial 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
1. We draw attention to Note 25(i) in the financial statements which
indicate that the company had incurred huge losses in past years and
the company''s net worth is negative. In spite of this in view of the
management, the accounts has been prepared on Going Concern basis.
2. A Company has been buying and selling goods on National Spot
Exchange Limited (NSEL) through trading and clearing member, N.K.
Proteins Limited (Group Company). NSEL suspended the trading on 31st
July 2013 and has referred the matter for arbitration for recovery of
outstanding amount from NX. Proteins Limited, this company and other
clients. The matter is pending with Bombay High Court.
Further, income tax department carried out survey under section 133 A
on the company along with other group companies for investigating the
transactions with NSEL. The investigation is pending with Income Tax
Department.
Further, the investigation by EOW is also in progress.
a) The trading loss of Rs. 176.34 Crores (P.Y. Rs. 49.26 Crores)
represents the loss made on purchase and sales of commodities through
National Spot Exchange Ltd. without physical delivery of goods. (Refer
note No.250).
b) The Balances of Trade Creditors, Trade Debtors, Advances and Loans
(including in respect of transactions through National Spot Exchange
Limited) are Subject to confirmation (Refer note no.25K and 25L).
We are unable to give any opinion of the likely impact on the financial
statements of this transactions referred to in paragraph (2) above.
3. The company has not made provision for sales tax liabilities of
Rs.5423.55Lacs (Refer note no 25A). Had the provision would have been
made the Loss for the current year and accumulated Loss would have been
more by this amount and liabilities would have been more by this
amount.
4. No provision for interest is made during the year on advances of Rs.
1171.60 Lacs (P.Y. Rs.1011.98Lacs), since same is considered as
doubtful.
5. Impact if any of the rehabilitation scheme by operating agency
appointed by BIFR is not ascertainable since the scheme is pending
(refer note No. 25D)
6. Attention is invited to prior period adjustment of Rs. 104.54 Crore
(refer to Note No.25M)
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, excepts for the possible effects to the
matters described in the Basis for qualified opinion, the financial
statements give the information required by the Act in the manner so
required and give a true and fair view incofirmity with the accounting
principles genrally accepted in india.
a) In the case of the Balance Sheet, of the state of affairs of the
company as at 31st March,2013.
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 Statement on Companies (Auditor''s Report) Order,
2003 issued by the Central Government of India in terms of sub-section
(4A) of Section 227 of the Companies Act, 1956, we enclose in the
Annexure a statement on the matters specified in paragraph 4 and 5 of
the said Order.
2) As required by section 227(3) of the Act, we report that:
a) Except for the matter described in the basis for Qualified Opinion
paragraph, 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) Except for the matter described in the basis for Qualified Opinion,
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 matter described in the Basis for Qualified Opinion
paragraph, in our opinion Balance Sheet, Statement of Profit and Loss
and cash flow statement comply with the Accounting Standards referred
to in sub-section (3C) of section 211of the Companies Act, 1956;
e) On the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE TO THE AUDITORS'' REPORT
Referred to in paragraph of our report of even date on the accounts of
N. K. Industries Limited for the year ended on 3Ist March 2013.
0) (a) The Fixed Assets Register is not maintained by the company.
(b) The Fixed Assets are physically verified by the Management during
the year but as there is no fixed asset register is maintained,
therefore discrepancy, if any. could not be ascertained.
(c) During the year substantial part of fixed assets have not been
disposed off.
(ii) (a) As explained to us, the inventory has been physically verified
by the management at reasonable intervals. In our opinion the frequency
of verification is reasonable.
(b) The procedure of physical verification of stock followed by the
management is reasonable and adequate in relation to the size of the
company and the nature of its business.
(c) The company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
book records were not material.
(iii) (a) The company has granted interest free unsecured loans to five
companies covered in the register maintained under section 301 of the
Companies Act, 1956. The net worth of four companies is negative. We
are unable to express our opinion on recoverability of the same (Amount
outstanding Rsl007.46 Lacs (P.Y.966.07Lacs). The maximum amount
involved during the year was Rs.2507.46 lacs (P.Y.Rs. 966.07 lacs) and
the year-end balance of such loan was Rs.2507.46 lacs (P.Y. Rs. 966.07
lacs). The company has not granted any loan to firms or other parties
covered in the register maintained under section 301 of the Companies
Act, 1956.
(b) The loans are interest free loans and are considered doubtful of
recovery.
(c) There is no stipulation for repayment of loan.
(d) There is no stipulation in respect of loans granted therefore the
question of overdue amount does not arise.
(e) The company has not taken any loan from any company, firm or other
parties covered in the register maintained under section 301 of the
Companies Act, 1956.
(iv) In our opinion and according to information given to us, there an
adequate internal
control system commensurate with the size of the company and the nature
of its business, for the purchase of inventory and fixed assets and for
the sale of goods and services. There is no continuing failure to
correct major weaknesses in internal control system;
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered into
the register maintained under section 301 of the Companies Act, 1956,
have been so entered.
(b) According to the information and explanations given to us, in
respect of transactions (Includes transactions referred to in Note
No.25 O) referred to in section 301 of the Companies Act, 1956 made
with the company or firm in pursuance of contracts or arrangements, We
are unable to comment on prevailing market price in view of nature of
transaction and commodity.
(vi) The company has not accepted any deposit from any party throughout
the year.
Therefore, provisions of section 58A, 58AA or any other relevant
provisions of Companies Act, 1956 and the rules made there under are
not applicable.
(Vii) In our opinion, the company''s internal audit system needs to be
strengthened to make it commensurate with the size of the company and
nature of its business.
(viii) The company has carried on manufacturing activities on its own
only for two months during the year and therefore the management is of
the view that books of account and records Pursuant to rules prescribed
by Central Government under section 209(1 )(d) of Companies Act, 1956
in respect of all its manufacturing activities are not applicable.
Hence company has not maintained the cost accounting records for the
year.
(ix) (a) According to the Information and explanations given to us the
company is regular in depositing with appropriate authorities
undisputed statutory dues including Provident Fund, Employees'' State
Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom Duty,
Excise Duty, Cess and any other material statutory dues applicable to
It.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth
Tax, Service Tax, Excise Duty and Cess were In arrears as at the end of
the year, for a period of more than six months from the date they
become payable.
(C) According to the information and explanations given to us, there
are no disputed dues which are not deposited of sales tax/income
tax/wealth tax/service tax/custom duty/excise duty, or cess except
stated below:
Name of the Nature of Amount Period to Forum where
Statute Dues (Rs.in Lacs) which amount dispute is
relates pending
Income Tax Act Corporate 25.93 Lacs Block Assessment Gujarat
Tax (upto from 1989 to 1999 High
31/3/13) Court
Income Tax Act Corporate 161.72 A.Y.2006-2007 CIT Appeal
Tax Lacs
Income Tax Act Corporate 140.26 A.Y.2007-2008 CIT Appeal
Tax Lacs
Guj. Sales Tax Sales Tax 5423.55 F.Y. 1989-90, Sales Tax
(Net of 90-91, 97-98 Tribunal /
Officer to 2001-02 Commercial Tax
payments)
(x) In our opinion, the accumulated losses of the company as on 31st
March 2013 are more than the fifty percent of its net worth. It has
incurred cash loss during the current financial year. There was also
cash loss during the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the company
has settled the outstanding dues with Visnagar Nagarik Sahakari Bank
Ltd during the year. There is no other outstanding loan at the end of
the year.
(xii) According to the information and explanations given to us, the
company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(xiii) The company is not a chit fund or a nidhi / mutual benefit fund
/ society. Therefore provisions of clause of the Order are not
applicable to the company.
(xiv) According to the information and explanations given to us the
company is not dealing or trading in shares and securities. There are
no such shares or securities held by the company.
(xv) According to the information and explanations given to us, the
company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) The Company has not raised any new term loans during the year.
(xvii) Based on the information and explanations given to us and on an
overall examination of the balance sheet of the company, in our opinion
the short term fund raised are not utilized for acquiring fixed asset
or long term investment or vice-a-versa.
(xviii) The company has not made any preferential allotment of shares
to parties and companies covered in the Register maintained under
section 301 of the Companies Act, 1956 during the year.
(xix) The company has not issued any debentures and therefore the
creation of securities does not arise.
(xx) The company has not raised any money by public issue during the
year.
(xxi) According to information and explanations given to us, no fraud
on or by the company has been noticed or reported during the year.
FOR RAJIV SHAH & ASSOCIATES
Chartered Accountants
(FR NO.108454W)
sd/-
(RAJIV C SHAH)
Partner
M.No.: 043261
Place : Ahmedabad
Dated : 30th September 2013
Mar 31, 2012
1. We have audited the attached Balance Sheet of N.K.Industries Ltd.,
as at 31st March 2012 and also the Statement of Profit and Loss and the
Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company''s
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Statement on Companies (Auditor''s Report) Order,
2003 issued by the Central Government of India in terms of sub-section
(4A) of Section 227 of the Companies Act, 1956, we enclose in the
Annexure a statement on the matters specified in paragraph 4 and 5 of
the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
those books
(iii) The Balance Sheet, Statement of Profit and Loss & Cash Flow
Statement dealt with by this report are in agreement with the books of
accounts.
(iv) In our opinion, the Balance Sheet, Statement of Profit and Loss &
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 except referred to in para (vi) below.
(v) 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 is disqualified as on
31st March, 2012 from being appointed as director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
(vi) a) The accounts are prepared on the assumption of "Going Concern"
though the net worth is negative and reference is made to BIFR.
b) Attention is invited to Note No. (g) To Schedule 24 regarding non
provision of interest receivable on various advances amounting to
Rsl171.60 Lacs.
c) Balances of Debtors, Creditors, Unsecured Loans and Advances are
subject to confirmation.
(vii) Subject to above, in our opinion and to the best of our
information and according to the explanations given to us, the said
accounts give the information required by the Companies Act, 1956, in
the manner so required and give a true and fair view in conformity with
the accounting principles generally accepted in India;
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012 and
(b) In the case of the Statement of Profit and Loss, of the Loss for
the year ended on that date.
(c) In the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
Referred to in paragraph 3 of our report of even date on the accounts
of N. K. Industries Limited for the year ended on 31st March 2012.
(i) (a) The Fixed Assets Register is not maintained by the company.
(b) The Fixed Assets are physically verified by the Management during
the year but as there is no fixed asset register is maintained,
therefore discrepancy, if any, could not be ascertained.
(c) During the year substantial part of fixed assets have not been
disposed off.
(ii) (a) As explained to us, the inventory has been physically verified
by the management at reasonable intervals. In our opinion the frequency
of verification is reasonable.
(b) The procedure of physical verification of stock followed by the
management is reasonable and adequate in relation to the size of the
company and the nature of its business.
(c) The company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
book records were not material.
(iii) (a) The company has granted interest free unsecured loans to four
companies covered in the register maintained under section 301 of the
Companies Act, 1956. The net worth of these companies is negative. We
are unable to express our opinion on recoverability of the same. The
maximum amount involved during the year was Rs.966.07 lacs (P.Y.Rs.
798.09 lacs) and the year-end balance of such loan was Rs. 966.07 lacs
(P.Y. Rs. 798.09 lacs). The company has not granted any loan to firms
or other parties covered in the register maintained under section 301
of the Companies Act, 1956.
(b) The loans are interest free loans and are considered doubtful of
recovery.
(c) There is no stipulation for repayment of loan.
(d) There is no stipulation in respect of loans granted therefore the
question of overdue amount does not arise.
(e) The company has not taken any loan from any company, firm or other
parties covered in the register maintained under section 301 of the
Companies Act, 1956.
(iv) In our opinion and according to information given to us, there an
adequate internal control system commensurate with the size of the
company and the nature of its business, for the purchase of inventory
and fixed assets and for the sale of goods and services. There is no
continuing failure to correct major weaknesses in internal control
system;
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered into
the register maintained under section 301 of the Companies Act, 1956,
have been so entered.
(b) According to the information and explanations given to us, in
respect of transactions referred to in section 301 of the Companies
Act, 1956 made with the company or firm in pursuance of contracts or
arrangements. We are unable to comment on prevailing market price in
view of nature of commodity.
(vi) The company has not accepted any deposit from any party throughout
the year. Therefore, provisions of section 5 8A, 58AA or any other
relevant provisions of Companies Act, 1956 and the rules made there
under are not applicable.
(vii) In our opinion, the company''s internal audit system needs to be
strengthened to make it commensurate with the size of the company and
nature of its business.
(viii) We have broadly reviewed books of account and records maintained
by the company Pursuant to rules prescribed by Central Government under
section 209 91)(d) of Companies Act, 1956 in respect of all it''s
manufacturing activities. We are of the opinion that primafacia the
prescribed accounts and records have been made and maintained. The
contents of these accounts and records have not been examined by us.
(ix) (a) According to the information and explanations given to us the
company is regular in depositing with appropriate authorities
undisputed statutory dues including Provident Fund, Employees'' State
Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom Duty,
Excise Duty, Cess and any other material statutory dues applicable to
it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth
Tax, Service Tax, Excise Duty and Cess were in arrears as at the end of
the year, for a period of more than six months from the date they
become payable.
(c) According to the information and explanations given to us, there
are no disputed dues which are not deposited of sales tax/income
tax/wealth tax/service tax/custom duty/excise duty, or cess except
stated below:
Name of the Nature of Amount Period to Forum where
Statute Dues (Rs.in Lacs) which amount dispute is
relates pending
Income Tax Corporate 25.93 Lacs Block Gujarat
Act Tax (upto 31/3/12) Assessment High Court
from 1989
to 1999
Income Tax Corporate 161.72 Lacs A.Y.2006-2007 CIT Appeal
Act Tax
Income Tax Corporate 140.26 Lacs A.Y.2007-2008 CIT Appeal
Act Tax
Guj. Sales Sales 5423.55 (Net F.Y. 1989-90, Sales Tax
Tax Tax of payments) 90-91, 97-98 Tribunal /
to 2001-02 Commercial
Tax Officer
(x) In our opinion, the accumulated losses of the company as on 31st
March 2012 are more than the fifty percent of its net worth. It has
incurred cash loss during the current financial year. There was also
cash loss during the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the company had defaulted in repayment of term loan and
working capital dues in previous year of M/s. Kotak Mahindra Bank Ltd.
This is fully paid off at end of the year.
(xii) According to the information and explanations given to us, the
company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(xiii) The company is not a chit fund or a nidhi / mutual benefit fund
/ society. Therefore provisions of clause of the Order are not
applicable to the company.
(xiv) According to the information and explanations given to us the
company is not dealing or trading in shares and securities. There are
no such shares or securities held by the company.
(xv) According to the information and explanations given to us, the
company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) The Company has not raised any new term loans during the year.
(xvii) Based on the information and explanations given to us and on an
overall examination of the balance sheet of the company, in our opinion
the short term fund raised are not utilized for acquiring fixed asset
or long term investment or vice-a-versa.
(xviii) The company has not made any preferential allotment of shares
to parties and companies covered in the Register maintained under
section 301 of the Companies Act, 1956 during the year.
(xix) The company has not issued any debentures and therefore the
creation of securities does not arise.
(xx) The company has not raised any money by public issue during the
year.
(xxi) According to information and explanations given to us, no fraud
on or by the company has been noticed or reported during the year.
FOR RAJIV SHAH & ASSOCIATES
Chartered Accountants
(FR.NO. 108454W)
(RAJIV C SHAH)
Partner
M.No.: 043261
Place: Ahmedabad
Dated: 30/05/2012
Mar 31, 2010
1. We have audited the attached Balance Sheet of N.K. Industries Ltd.,
as at 31st March 2010 and also the Profit and Loss Account and the Cash
Flow Statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by 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 Companies (Auditors Report) Order,
2003 issued by the Central Government of India in terms of sub-section
(4A) of Section 227 of the Companies Act, 1956, we enclose in the
Annexure a statement on the matters specified in paragraph 4 and 5 of
the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
those books
(iii) The Balance Sheet, Profit and Loss Account & Cash Flow Statement
dealt with by this report are in agreement with the books of accounts.
(iv) In our opinion, the Balance Sheet, Profit and Loss Account & Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956 except referred to in para (vi) below.
(v) 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 is disqualified as on
31 st March, 2010 from being appointed as director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
(vi) a) The accounts are prepared on the assumption of "Going Concern"
though the net worth is negative and reference is made to BIFR. (Refer
Note No.:5 of Schedule- 21)
b) Attention is invited to Note No. 7 to Schedule 21 regarding non
provision of interest receivable on various advances amounting to Rs
821.65 Lacs which are considered doubtful.
c) Balances of Secured Loans, Debtors, Creditors, Unsecured Loans and
Advances are subject to confirmation. _
(vii) Subject to above, in our opinion and to the best of our
information and according to the explanations given to us, the said
accounts give the information required by the Companies Act, 1956, in
the manner so required and give a true and fair view in conformity with
the accounting principles generally accepted in India;
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 st March, 2010 and
(b) in the case of the Profit and Loss Account, of the Profit for the
year ended on that date.
(c) in the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 3 of our
report of even date on the accounts ot N. K. Industries Limited for
the year ended on 31st March 2010.
(i) (a) The Fixed Assets Register is not maintained by the company.
(b) The Fixed Assets are not physically verified by the Management
during the year. Therefore discrepancy, if any, could not be
ascertained.
(c) During the year substantial part of fixed assets have not been
disposed off.
(ii) (a) As explained to us, the inventory has been physically verified
by the management at reasonable intervals. In our opinion the
frequency of verification is reasonable.
(b) The procedure of physical verification of stock followed by the
management is reasonable and adequate in relation to the size of the
company and the nature of its business.
(c) The company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
book records were not material.
(iii) (a) The company has granted interest free unsecured loans to
three companies and one other party covered in the register maintained
under section 301 of the Companies Act, 1956.The maximum amount
involved during the year was Rs.978.44 lacs (RY.Rs. 651.53 lacs) and
the year-end balance of such loan was Rs.912.84 lacs (P.Y. Rs. 651.53
lacs).
(b) The loans are interest free loans and are considered doubtful of
recovery.
(c) There is no stipulation for repayment of loan.
(d) There is no stipulation in respect of loans granted therefore the
question of overdue amount does not arise.
(e) The company has taken interest free unsecured loans from two
parties covered in the register maintained under section 301 of the
Companies Act, 1956. The maximum amount involved during the year was
Rs, 55.00lacs (P.Y Rs. 277.24 lacs) and the year end balance of such
loan was Rs. 35.49 Lacs (P.Y. Rs.277.24 lacs). There are no loans
taken from firms or companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(f) The rate of interest and other terms and condition of such loan is
not prejudicial to the interest of the company
(g) There is no stipulation for repayment of loan taken.
(iv) 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 purchase of inventory and fixed assets and for
the sale of goods and services.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered into
the register maintained under section 301 of the Companies Act, 1956,
have been so entered. (b) According to the information and
explanations given to us, the transactions referred to in section 301
of the Companies Act, 1956 made with the company in pursuance of such
contracts or arrangements have been made at prices which are reasonable
having regards to the prevailing market prices at the relevant time.
(vi) The company has accepted deposit from two parties during the year
though the net worth of the company is negative. This is not in
conformity with the provisions of section 58A, 58AA or any other
relevant provisions of Companies Act, 1956 and the rules made
thereunder are not applicable.
(vii) In our opinion, the companys internal audit system needs to be
strengthened to make it commensurate with the size of the company and
nature of its business.
(viii) We are informed that maintenance of cost records are not
prescribed under section 209 (1 )(d) of the Companies Act, 1956
(ix) (a) According to the information and explanations given to us the
company is regular in depositing with appropriate authorities
undisputed statutory dues including Provident Fund, Employees State
Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom Duty,
Excise Duty, Cess and any other material statutory dues applicable to
it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth
Tax, Service Tax, Excise Duty and Cess were in arrears as at the end of
the year, for a period of more than six months from the date they
become payable except Income Tax dues of Rs. 70.23 lacs for the
accounting year 2007-08 which is fully paid on 12/04/2010.
(c) According to the information and explanations given to us, there
are no disputed dues which are not deposited of sales tax/income
tax/wealth tax/service tax/custom duty/excise duty, or cess except
stated below.
Name of the
Statute Nature of Amount Period to which Forum where
Dues (Rs.in Lacs) amount relates dispute is
pending
Income Tax Act Corporate 71.43 Lacs Block Assessment Gujarat High
Court
(including from 1989 to 1999
interest
upto
31/3/10) Tax
Guj. Sales Tax Sales Tax 4460.59 F.Y. 1989-90,
90-91, Sales Tax
Tribunal /
(Net of
98-99 to 2001
-02 & Commercial
Tax Officer
payments) 2003-04
(ix) !n our opinion, the accumulated losses of the company as on 31st
March 2010 are more than the fifty percent of its net worth. It has
incurred cash loss during the current financial year. There was no cash
loss during the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the company had defaulted in repayment of term loan and
working capital dues, amounting to Rs. 957.39 lacs, being balance
outstanding on 31 st March, 2010. The Company has entered into
compromise agreements under One Time Settlement scheme with all the
banks (except Visnagar Nagrik Sahkari Bank Ltd.). All the banks are
fully paid off as per the compromise settlements save and except M/s.
Kotak Mahindra Bank Ltd to whom the balance amount of Rs. 7.62 crores
is due to be paid in monthly installments by the end of August,2011.The
Visnagar Nagrik Sahakari Banks balance dues stood to Rs.179.84 lacs
which is under negotiation as per the settlement scheme of the
Government of Gujarat.
(xii) According to the information and explanations given to us, the
company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(xiit) The company is not a chit fund or a nidhi / mutual benefit fund
/ society. Therefore provisions of clause (xiii) of the Order are not
applicable to the company.
(xiv) According to the information and explanations given to us the
company is not dealing or trading in shares and securities. There are
no such shares or securities held by the company.
(xv) According to the information and explanations given to us, the
company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) The Company has not raised any new term loans during the year.
(xvii) The company has not made any preferential atlotment of shares to
parties and companies covered in the Register maintained under section
301 of the Companies Act, 1956 during the year.
(xviii) The company has not issued any debentures and therefore the
creation of securities or charges does not arise.
(xix) The company has not raised any money by public issue during the
year.
(xx) According to information and explanations given to us, no fraud on
or by the company has been noticed or reported during the year.
Place : Ahmedabad FOR CHANDULAL M. SHAH & CO
Dated : May 29, 2010 Chartered Accountants
(FRNO.101698W)
(K.H.Vasavada)
Partner
M.No.; 12322
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