Mar 31, 2016
To
The Members of ABG Shipyard Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of ABG Shipyard Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31st, 2016, 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 Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act 2013 (the ''Act'') with respect to the preparation of these standalone 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 the Accounting Standards specified in section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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 standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We have conducted our audit in accordance with the Standards on Auditing specified under section 143 (10) of the Act. 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 financial control relevant to the Company''s preparation and fair presentation of the financial statements that give a true and fair view 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 Company''s Directors, 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. Note No. 11 to the financial statements. Due to prolonged suspension of construction activities of some of the Plant Assets in Dahej Shipyard facilities, expenses incurred and capitalized so far on those assets, related advances given to suppliers and contractors, the physical condition of these assets under construction require technical evaluation to determine impairments or write off, if any. However, in the view of the management, the suspension of construction activities of these assets is temporary in nature and assets under construction are not obsolete, and the company will be able to resume construction activities in the near future and hence no provision is required to be made. Management has informed us that the recoverable amount of Assets within the meaning of Accounting Standard 28 is more than their carrying value and as such no amount needs to be recognized in the financial statements for impairment loss. We have not been able to validate this assertion in the absence of internal exercise or external valuation report of an independent agency and the uncertainty of resumption of future operations/results of operations thereafter. Further, in absence of physical verification of Fixed Assets and capital work in progress at Dahej Shipyard, we are unable to comment on the carrying value of Plant Assets at Dahej Shipyard.
2. Note No. 17 (c) to the financial statements which details various loans, advances and receivables from related parties. In respect of these loans, advances and receivables the deliverables and receipts are outstanding for a long time. Absence of recoveries from these parties since several years indicates the existence of material uncertainty that may cast doubts on the recoverability of the loans and advances. However, in the view of the management no provision is required considering that these entities are related parties and as such the balances are considered good and recoverable by the management. As such loans are interest free, and there is no stipulation of repayment date we consider that, prima facie, the terms and conditions of such loans are prejudicial to the interest of the Company. We are unable to comment on the recoverability of loans and advances and ascertain the impact, if any, on the financial statements.
3. Note No.18 to the financial statements, regarding subsidy receivable. The Company had recognized for subsidy under Ship Building Subsidy Scheme in earlier years, out of which subsidy of Rs. 49,964.89 Lacs is still receivable as on 31st March, 2016. The receipt of aforesaid Subsidy is dependent upon completion of vessels and compliance with other terms and conditions of the Ship Building Subsidy Scheme of the Government of India. In view of the uncertainty involved with respect to availability of working capital as required for completion of vessels and continuing default in CDR terms as well as low key operations at Surat and no operation at Dahej, there is a material uncertainty of completion of vessels and realization of the subsidy. The Company has not made provision for the possible impact of the recoverability of the same.
4. Note No. 39 to the financial statements. The Financial statements have been prepared assuming that the company will continue as a going concern. The Company has defaulted in repayment of loans and covenants of the CDR scheme of lenders. There has been suspension of operations at Dahej unit and low key operation at Surat unit. Further, there are civil and criminal proceedings pending before Judicial Authorities seeking compensations, liquidation of the Company and punishment to Directors/ Officers of the company. The company has suffered recurring losses and its net worth has eroded. All these conditions indicate a significant doubt about the going concern. The Financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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 above, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March, 2016, and its loss and its cash flows for the year ended on that date.
Emphasis of matters
We draw attention to:
1. Note No. 12(d) to the financial statements. The Company has investments in subsidiaries and related parties amounting to Rs. 22,012.51 Lacs as on the balance sheet date. In absence of availability of the audited financial statements of the investee companies, we are unable to ascertain or quantify whether any provision is required to be made for the impairment of these investments. In the view of the management the investments are long term in nature and there is no permanent diminution in the value of investments requiring adjustment to the financial statements.
2. i) Note No. 14(b) to the financial statements. The company follows accounting practice of recognizing revenue under Accounting
Standard 7 on the basis of estimated cost, cost so far incurred and estimated profit or loss out of shipbuilding contracts. The cost estimates are done by company and we have relied on the same. A technical evaluation was carried out by the Company, of the inventory of Ships and Rigs under construction and the valuation of Work in progress recognized as per AS 7 as well as for the future foreseeable losses in the current economic scenario. The technical evaluation has been done in phases and is not completed for rigs and certain ships. Hence, we are unable to comment on further impairment, if any, which may pertain to the values of rigs and certain ships as appearing in books of Accounts as Work in Progress. In the view of the management, adequate provision for estimated future foreseeable losses is provided in the books of accounts.
ii) Note No. 14(c) to the financial statements. The Company has concluded Rig building contract with respect to two rigs. The Company is in the process of negotiating the final settlement with these customers. Pending settlement, company continues to show a sum of Rs 175,221.86 Lacs as inventory of rigs under the head Work in Progress and as advance received under Progress Money from customers. The impact of this, on the net current asset is Nil.
3. Note No. 17 (d) to the financial statements which details various advances to certain parties that are outstanding for a long time. In respect of these advances, no materials or services have been received by the company. Reduction of company''s activity, aged outstanding, and absence of balance confirmation of outstanding from these parties, indicates the existence of material uncertainty that may cast doubts on the recoverability of these advances or deliverables against the same. However, in the view of the management, no provision is required to be done as such balances are considered good and recoverable.
4. Note No. 40(2) to the financial statements. The Company has not provided Managerial Remuneration for the managing director after October 2015 as it would then exceed the provision of section 197 read with Schedule V to the Companies Act, 2013.
5. The company has defaulted in repayment of loans and covenants of CDR schemes of lenders. As regards contingency related to âcompensation payable in lieu of Bank Sacrificeâ the outcome is materially uncertain and cannot be determined in terms of its monetary impact on the financial statements. The Company''s Management is of the view that the company is an operative Company and such contingency may not arise
6. Loan statements pertaining to certain Loans from some banks and financial institutions representing book balances of Rs 89,198.57 Lacs, have not been received and reconciled. Further, due to pending clarification and confirmation from some banks for certain current/cash credit accounts, entries have not been reconciled. Hence the effect, if any, of such pending reconciliations, on financial statements remains unascertained.
7. Some customers, creditors as well as Statutory Authorities have initiated legal proceedings against the company, which may result in compensation, interest and penalties. The possible impact of the same on financial result cannot be ascertained, pending such outcome.
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor''s Report) Order, 2016(âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by section143(3) of the Act, we report that:
a) Except for the matters described in the basis for qualified opinion paragraph above, we have sought and 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 effects of the matter described in the basis for qualified opinion paragraph above, 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 effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the accounting standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) The matters described in the Basis for Qualified Opinion and the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.
f) On the basis of written representations received from the directors, except one director, as on March 31, 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of the Act. We are unable to comment on the eligibility of the one director from whom the written representation has not been received.
g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B.
h) In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:
i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note No. 28 to the Financial Statements.
ii) Subject to our comment in Emphasis of Matter paragraph, point no. 2 the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long- term contracts including derivative contracts.
iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:
i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Fixed
Assets;
(b) The Fixed Assets of the company are substantially located in two Shipyards i.e., Surat and Dahej. Fixed Assets situated at Surat, have been physically verified in a phased manner by the management during the year as per the program of verification. As informed to us, no material discrepancies were noticed between book records and physical verification at Surat. In our opinion, the verification at Surat was reasonable having regard to the size of the Company and nature of its Asset. However we were informed that no physical verification of Fixed Assets has been carried out at Dahej. Such Assets at Dahej constitutes approx 84% of the Total Gross Block of fixed assets, hence we are unable to comment whether there exists any material discrepancies between the physical balance and book balance.
(c) The title deeds of immovable properties are held in the name of the Company, except for certain freehold lands at Dahej having gross block value of Rs 72.93 Lacs and net book value of Rs 72.93 Lacs is yet pending registration with concerned authorities. We have not been provided with information regarding status of pending registration of immovable properties at Surat & Kolkata, hence we are unable to comment on same.
ii. According to the information and explanations given to us, the inventory has been physically verified during the year by the management at its Surat Shipyard. The frequency of verification is reasonable and adequate in relation to the size of the Company and the nature of its business and on the basis of the records of inventory. However as the physical verification had not been carried out during the year under reporting at Dahej Shipyard and inventories lying with Customs Authorities/ Bonded Warehouse, we are unable to make any comment on the same as to whether any discrepancy exists between book balance and physical balance of those inventories.
iii. The Company has not updated register under section 189 of the Companies Act, 2013 hence we cannot rely on the same. The company has given interest free loans to various group companies and attention is drawn to note no. 17 of the Financial Statements.
As such loans are interest free, and there is no stipulation of repayment date, we consider that prima facie the terms and conditions of such loans are prejudicial to the interest of the Company.
As there is no stipulation as to repayment date of principal amount, hence clause (iii) (b) & (c) of the order are not commented on.
iv. According to the information and explanations given to us, the Company has not given loans covered under section 185. The Company had loans to certain parties covered under section 186 of the Companies Act, 2013, in respect of which no interest has been charged, which is not in compliance with section 186 of the Companies Act, 2013.
v. In our opinion and according to the information and explanations given to us, there are no deposits accepted from the public, hence paragraph 3(v) of the Order is not applicable.
vi. We could not review the cost records maintained by the Company pursuant to the Section 148(1) of the Companies Act, 2013 due to non availability of such records for our review, and hence we are unable to give our opinion as to prima facie, whether the prescribed cost records have been maintained.
vii. (a) According to the records of the Company, there has been instances of inordinate delays and defaults during the financial year in depositing with appropriate authorities, the undisputed statutory dues including Provident Fund, Income-tax, Tax Deducted at Source, Sales-tax, Wealth-tax, Service tax, Profession Tax, Custom duty, Excise duty, Cess and other statutory dues applicable to it.
The following undisputed statutory dues are outstanding for a period of more than six months as on March 31, 2016, from the date they became payable:
Name of the Statue |
Nature of Dues |
Financial Year |
Amount in Rs. lacs |
The Income Tax Act, 1961 |
Income Tax |
2003-04 to 2009-10 (Assessment by Settlement Commission), 2011-12 & 2012-13 |
4,466.29 |
The Income Tax Act, 1961 |
Tax Deducted at Source, Tax Collected at Source, interest thereon. |
2013-14, 2014-15 & 2015-16 |
460.03 |
The Finance Act, 1994 |
Service Tax |
2015-16 |
18.73 |
Gujarat Vat Act, 2003 |
Gujarat VAT |
2013-14 & 2015-16 |
543.13 |
Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 |
Provident Fund |
2015-16 |
298.66 |
Profession Tax Act, 1975 |
Profession Tax |
2012-13, 2013-14, 2014-15 & 2015-16 |
39.23 |
(b) According to information and explanation given to us, the following dues have not been deposited by the Company on account of disputes:
Name of the Statute |
Nature of Dues |
Financial Year |
Amount in Rs. Lacs |
Forum where dispute is pending |
The Finance Act, 1994 |
Service Tax |
2004-05 to 2010-11 |
1,350.18 |
CESTAT |
Income Tax Act, 1961 |
Income Tax |
2010-11 |
271.58 |
CIT (Appeal) |
Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 |
Provident Fund |
2014-15 |
415.51 |
Assistant Provident Fund Commissioner & Recovery Officer |
viii. According to the information and explanation given to us and as per the books of account, the Company has defaulted in respect of dues to financial institutions, bank, Government or debenture holders during the financial year. The period and the amount of defaults are as under:
Particulars |
Amount of defaults as at the balance sheet data (in Lacs) |
Period of defaults (days) |
i) Name of the lenders |
||
Banks: |
||
Andhra Bank |
472.99 |
1-367 |
Bank of Baroda |
1,889.34 |
1-337 |
Bank of India |
3,020.31 |
337 |
Canara Bank |
239.65 |
1-519 |
Central Bank of India |
140.05 |
1-184 |
Dena Bank |
1,866.25 |
1-214 |
Deutsche Bank |
9,184.59 |
1-1078 |
Development Credit Bank |
4,318.49 |
1070 |
Exam Bank |
1,814.08 |
1-122 |
ICICI Bank |
15,392.7 |
1-367 |
IDBI Bank |
656.11 |
1-61 |
Indian Bank |
358.51 |
1-944 |
Indian Overseas Bank |
2875.77 |
1-337 |
Lakshmi Vilas Bank |
143.04 |
1-184 |
Oriental Bank of Commerce |
1,336.86 |
1-123 |
Punjab and Sind Bank |
547.47 |
1-721 |
Punjab National Bank |
2,749.72 |
1-337 |
Royal Bank of Scotland |
3,744.92 |
710 |
South Indian Bank |
701.24 |
1-426 |
State Bank of Patiala |
448.33 |
1-732 |
State Bank of Travancore |
93.39 |
1-184 |
Standard Chartered Bank |
1,416.34 |
847 |
Syndicate Bank |
2,334.37 |
1-245 |
Yes Bank |
40.80 |
1 |
Financial Institution : |
||
Industrial Finance Corporation Of India Limited |
1,551.08 |
1-244 |
SICOM Limited |
14,654.04 |
1-822 |
ii) Debentures |
||
Life Insurance Corporation of India |
6,633.18 |
1-853 |
No independent specific confirmation from lenders of above defaults has been provided to us the management. ix. The Company has not raised money by way of initial public offer, further public offer or debt instruments during the year. Due to invocation of certain bank guarantees, the loans and overdrafts from banks have been increased which were utilized for meeting commitments under such guarantees.
x. In our opinion and on the basis of information and explanations provided by the Management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit. However some creditors have issued notices and commenced legal proceedings against the Company alleging fraud for hypothecation of inventory with lenders, without clear title due to non clearance of their dues. Further, Directorate of Revenue Intelligence, Mumbai has also alleged fraud by the Company''s employees pertaining to certain imports and issued a showcase as to why penalty should not be levied on the Company. The management is of the view that no fraud has been noticed by the Company or has been done on the Company.
xi. The Company has paid/provided for managerial remuneration in accordance with requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
xii. In our opinion and according to the information and explanation given to us, the Company is not a Nidhi Company, hence paragraph 3(xii) of the Order is not applicable
xiii. In our opinion and according to the information and explanation given to us, as the register under section 189 has not been updated, we are unable to comment on compliance by the company with section 177 and Section 188 of the Companies Act, 2013 with respect to transactions with the related parties. Details of related party transaction have, however, been disclosed in the Financial Statements as required by the Accounting Standard 18.
xiv. The Company has made preferential allotment or private placement of shares during the year under audit as per the Corporate Debt Restructuring agreement by converting funded interest term loan, and no fresh amounts were raised. The requirements of section 42 of the Companies Act 2013 have been complied with in respect of such allotments.
xv. In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them.
xvi. According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
Report on the Internal Financial Controls under Clause (f) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of ABG Shipyard Limited (âthe Companyâ) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditors'' Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
According to the information and explanation given to us and based on our audit the following material weakness has been identified as the adequacy and operative effectiveness of the Company''s internal financial controls over financial reporting as at 31st March 2016.
1. The Company''s internal controls on with regard to timeliness and in consolidating the information from remote location and reconciliation of accounts were not operating effectively.
2. The Company had no internal audit department which could carry on internal audit and risk assessment functions.
3. The Company lacks trained personal for their secretarial and legal compliance which could potentially result in failure to comply with laws and regulations in a timely manner.
A ''material weakness'' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis.
In our opinion, except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial control over financial reporting and such internal financial control over financial reporting were operating effectively as of 31st March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
We have considered the material weaknesses identified and report above in determining the nature, timing, and extent of audit test applied in our audit of the 31st March, 2016 standalone financial statements of the Company and this material weaknesses do not affect our opinion on the standalone financial statements of the Company.
For Nisar & Kumar
Chartered Accountants
Firm No. 107117W
M.N.Ahmed
Partner M. No. 18380
Place: Mumbai
Date: 30th May, 2016
Mar 31, 2015
We have audited the accompanying standalone financial statements of
ABG Shipyard Limited ("the Company"), which comprise the Balance Sheet
as at March 31st, 2015, 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 Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act 2013 (the 'Act') with respect to
the preparation of these standalone 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 the Accounting
Standards specified in section 133 of the Act read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, 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 standalone financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.
We have conducted our audit in accordance with the Standards on
Auditing specified under section 143 (10) of the Act. 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 financial control relevant
to the Company's preparation and fair presentation of the financial
statements that give a true and fair view in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on whether the Company has in place an
adequate internal financial controls system over financial reporting
and operating effectiveness of such Controls. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by the Company's
Directors, 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
The Company has not charged any interest on the loans given to few
parties, which is not in Compliance with section 186 of Companies Act
2013.The consequential impact of the same on Financial Statement, is
unascertainable. Our audit opinion is qualified in respect of the same
matter.
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 above, the aforesaid
financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India of the state of
affairs of the Company as at 31st March, 2015, and its loss and its
cash flows for the year ended on that date.
Emphasis of matters
We draw attention to the following matters in the notes to the
financial statements
1. Note No. 14 (b) and (c) to the financial statements which
describes the technical evaluation of the inventory of Ships and Rigs
under construction, the valuation of Work in progress recognized as per
AS 7 and for the future foreseeable losses in the current economic
scenario. In view of Company's Directors, adequate provision for
estimated future foreseeable losses provided in the books of accounts.
2. Note No. 17 (c) to (e) to the financial statements which details
various loans, advances and receivables from related parties. In
respect of these loans, advances and receivables the deliverables and
receipts are outstanding since long. In view of Company's Directors,
considering these entities are related entities, no provision is
required as such balances are considered good and recoverable.
3. Note No. 17 (d) to the financial statements which details advances
to certain companies. In respect of these advances the deliverables and
receipts are outstanding since long. In view of Company's Directors, no
provision is required to be done as such balances are considered good
and recoverable.
4. Note No. 18 to the financial statements which describes the
Company's subsidy receivable from the Government of India amounting to
Rs. 500 Crores out of which 345 Crores is for under construction
contracts and the compliance with government regulations on the basis
of which the receipt of the aforesaid Subsidy is dependent.
5. Note No. 4 to the financial statements which describes the delays
and/or defaults in payment of interest and other CDR scheme compliance.
The defaults are reported in Note No. 4C of financial statements. The
Company's Management is of the view that the company is an operative
Company and will be able to meet its obligations to lenders as well as
customers/creditors In view of the same the Company is considered as a
going concern.
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor's Report) Order, 2015("the
Order") issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Companies Act, 2013, we give in
the Annexure a statement on the matters specified in paragraphs 3 and
4 of the Order, to the extent applicable.
2. As required by section143(3) of the Act, we report that:
a) We have sought and 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 effects of the matter described in the basis for
qualified opinion paragraph above, 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 effects of the matter described in the Basis for
Qualified Opinion paragraph above, In our opinion, the aforesaid
standalone financial statements comply with the accounting standards
specified under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014.
e) The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the Company.
f) On the basis of written representations received from the directors
as on March 31, 2015 and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2015, from being
appointed as a director in terms of section 164 (2) of the Act.
g) In our opinion and to the best of our information and according to
the explanations given to us, we report as under with respect to other
matters to be included in the Auditor's Report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules, 2014
i) The Company has disclosed the impact of pending litigations on its
financial position in its financial statements as referred to in Note
No. 27 to the Financial Statements.
ii) Subject to our comment in Emphasis of Matter para, point No.1 and
Note No.14 (c) of Financial Statements the Company has made provision,
as required under the applicable law or accounting standards, for
material foreseeable losses, if any, on long- term contracts including
derivative contracts.
iii) There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure referred to in paragraph 1 Our Report of even date to the
members of ABG Shipyard Limited on the financial statement of the
company for the year ended 31st March, 2015
On the basis of such checks as we considered appropriate and according
to the information and explanations given to us during the course of
our audit, we report that:
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets;
(b) The fixed assets have been physically verified in a phased manner
by the management during the year as per the program of verification
which, in our opinion, is reasonable having regard to the size of the
Company and nature of its assets. As informed to us, no material
discrepancies were noticed between book records and physical verification;
ii. (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable;
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business;
(c) On the basis of the records of inventory, we are of the opinion
that the Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii. The company has granted interest free unsecured loans to company
and fi rm covered in the register maintained under section 189 of the
Companies Act.
(a) As the loan is interest free, and there is no stipulation of
repayment date prima facie the terms and conditions are prejudicial to
the interest of the company.
(b) A there is no stipulation as to repayment date of principal amount,
hence clause (iii)(b) of the order does not apply.
iv In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and the nature of its business with
regards to purchase of inventory, fixed assets and with regards to the
sale of goods and services. During the course of our audit, we have not
observed any continuing failure to correct major weakness in internal
control.
v. The Company has not accepted any deposits from the public covered
under Section 73 to 76 of the Companies Act, 2013.
vi. We have broadly reviewed the cost records maintained by the Company
pursuant to the Section 148(1) of the Companies Act, 2013 and are of
the opinion that prima facie, the prescribed cost records have been
maintained. We have, however, not made a detailed examination of the
cost records with a view to determine whether these are accurate or
complete.
vii. (a) According to the records of the Company, the Company has been
generally late during the financial year in depositing with
appropriate authorities undisputed statutory dues including Provident
Fund, Income-tax, Tax Deducted at Source, Sales-tax, Wealth-tax,
Service tax, Profession Tax, Custom duty, Excise duty, Cess and other
statutory dues applicable to it.
The following undisputed statutory dues are outstanding for a period of
more than six months as on March 31, 2015, from the date they became
payable:
Name of the
Statute Nature of Dues Financial Year Amount in
Rs. Crores
The Income
Tax Act, 1961 Income Tax
(incl. interest) 2012-13 & 2013-14 46.07
The Income Tax
Act, 1961 Tax Deducted at
Source 2014-15 0.06
Gujarat Vat Act.
2003 Gujarat VAT 2013-14 3.37
Profession
Tax Act, 1975 Profession Tax 2012-13 & 2013-14 0.23
(b) According to information and explanation given to us, the following
dues have not been deposited by the Company on account of disputes:
Name of the
Statute Nature of Dues Financial
Year Amount in
Rs. Forum where
dispute is
pending
Crores
The Finance
Act, 1994 Service Tax 2004-05 to 13.5 Appellate
Tribunal
2010-11
The Customs
Act, 1962 Custom Duty 2012-13 14.42 Appellate
Tribunal
(c) The amount required to be transferred to investor education and
protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules made there under has been
transferred to such fund within time.
viii. The Company does not have accumulated losses at the end of the
financial year. The Company has incurred cash loss during the financial
year covered by our audit and also in the immediately preceding
financial year.
ix. Instances of delay between 1 to 712 days were noticed in repayment
of principal and interest to banks, financial institutions and
debenture holders during the year amounting to Rs.260.46crores and
Rs.81.15 crores respectively.
x. According to the information and explanations given to us, the
Company has given guarantees for credit facilities taken by body
corporates from banks and financial institutions, the terms and
conditions whereof in our opinion are not prima facie prejudicial to
the interest of the Company.
xi. In our opinion and according to the information and explanations
given to us, on the overall basis, term loans have been applied for the
purposes for which they were obtained.
xii. Based upon the information and explanations given by the
management and audit procedures performed, we report that no fraud on
or by the Company has been noticed or reported during the course of our
audit nor have we been informed of any such instance by the Management.
For NISAR & KUMAR For GMJ & Co
Chartered Accountants Chartered Accountants
FRN. 107117W FRN. 103429W
CA ATUL. JAIN
CA M. N. AHMED
Partner
Partner
M. No. 037097
M No.018380
Place: Mumbai
Date : 26th May 2015
Mar 31, 2014
We have audited the accompanying financial statements of ABG Shipyard
Limited ("the Company"), 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 referred to in sub section (3C) of section 211
of the Companies Act, 1956 ("the Act") which shall continue to apply in
respect of section 133 of the Companies Act, 2013 in terms of General
Circular 15/2013 dated September 13, 2013 issued by the Ministry of
Corporate Affairs. 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 misstatements.
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 judgement, 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 to 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.
Emphasis of matter
Without qualifying our report we draw attention to:
Note no. 4D wherein as explained Corporate Debt Restructuring (CDR)
scheme has been approved by the Corporate Debt Restructuring Empowered
Group (CDR EG) on March 24, 2014 and applicable with effect from August
1, 2013. The CDR proposal has been partly implemented as on March 31,
2014. The outstanding liabilities of the Company have been
substantially restructured under the aegis of CDR Scheme, which extends
till June 2023.
Foot note no. 3 of note no. 38 whereby managerial remuneration paid by
the Company exceeds the limits prescribed under Schedule XIII of the
Companies Act, 1956 and the same is subject to approval from Central
Government. The Company is yet to apply to the Central Government for
seeking such approval.
Opinion
In our opinion and to the best of our knowledge and according to the
information and explanations given to us, 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, of the loss of
the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
b. in our opinion, proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Act which shall continue to apply in respect of section 133 of the
Companies Act, 2013 in terms of General Circular 15/2013 dated
September 13, 2013 issued by the Ministry of Corporate Affairs.
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, we
report that 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 Act.
Annexure to Independent Auditor''s Report
(Referred to in paragraph 8 under the heading of "Report on Other Legal
and Regulatory Requirements" of our report of even date)
As required by the Companies (Auditor''s Report) Order, 2003 (as
amended) ("the Order")issued by the Central Government of India in
terms of Section 227 (4A) of the Companies Act, 1956, on the matters
specified in paragraphs 4 and 5 of the said Order, we further report
that:
i.) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets;
(b) The fixed assets have been physically verified in a phased manner
by the management during the year as per the program of verification
which, in our opinion, is reasonable having regard to the size of the
Company and nature of its assets. As informed to us, no material
discrepancies were noticed between book records and physical
verification;
(c) During the year, the Company has not disposed off any substantial
part of fixed assets, which would affect the going concern of the
Company.
ii.) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable;
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business;
(c) On the basis of the records of inventory, we are of the opinion
that the Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii.) (a) As informed, during the year under audit the Company has
granted interest free unsecured loan to two Companies covered under
section 301 of the Companies Act, 1956. The year-end balance of loan
granted to such companies was Rs. 239.91 crores. Maximum balance
outstanding during the year was Rs. 296.22 crores.
(b) As the loan is interest free, and there is no stipulation of
repayment date prima facie the terms and conditions are prejudicial to
the interest of the Company.
(c) As there is no stipulation as to repayment date of principal
amount, hence clause 4(iii)(c) and (d) of the Order does not apply.
(d) As informed, during the year under audit the Company has taken
interest free unsecured loan from two Companies covered under section
301 of the Companies Act, 1956. The year-end balance of loan taken from
such companies was Rs. 113.15 crores. Maximum balance outstanding
during the year was Rs. 172.53 crores
(e) In our opinion the terms and conditions of such loans are not prima
facie pre judicial to the interest of the Company.
(f) As there is no stipulation as to repayment date of principal
amount, hence clause 4(iii)(g) of the Order does not apply.
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, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weakness in internal control.
v.) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the contracts or arrangements that need to be entered
into the register maintained under section 301, of the Companies Act,
1956 have been so entered.
(b) The price at which such contract or arrangement is entered is
reasonable compared to prevailing market price.
vi.) The Company has not accepted any deposit from the public during
the year.
vii.) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii.) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether these are accurate or complete.
ix.) (a) According to the records of the Company, the Company has been
generally late during the financial year in depositing with appropriate
authorities undisputed statutory dues including Provident Fund,
Income-tax, Tax Deducted at Source, Sales-tax, Wealth-tax, Service tax,
Profession Tax, Custom duty, Excise duty, Cess and other statutory dues
applicable to it.
The following undisputed statutory dues are outstanding for a period of
more than six months as on March 31, 2014, from the date they became
payable:
Name of the Nature of Financial Year Amount in
Statute Dues Rs. Crores
The Income Tax Income Tax(incl. 2011-12 & 2012-13 59.20
Act, 1961 interest)
The Income Tax Tax Deducted at Source 2012-13 & 2013-14 7.21
Act, 1961
Employees'' Provident Fund 2012-13 & 2013-14 3.87
Provident Fund
and Miscellane-
ous Provisions
Act, 1952
Profession Tax Profession Tax 2012-13 & 2013-14 0.09
Act, 1975
(b) According to information and explanation given to us, the following
dues have not been deposited by the Company on account of disputes:
Name of the Nature of Financial Year Amount in Forum where dispute
Statute Dues Rs. Crores is pending
The Finance Service 2004-05 to 13.50 Appellate Tribunal
Act, 1994 Tax 2010-11
The Customs Custom 2012-13 14.43 Appellate Tribunal
Act, 1962 Duty
The Income Income 2003-04 to 3.24 Commissioner of
Tax Act, Tax 2005-06 Income Tax(Appeal)
1961
x.) The Company does not have accumulated losses at the end of the
financial year. The Company has incurred cash loss during the financial
year covered by our audit. The Company has not incurred cash loss
during the immediately preceding financial year.
xi.) Instances of delay between 1 to 567 days were noticed in repayment
of principal and interest to banks, financial institutions and
debenture holders during the year amounting to Rs. 1,915.68 crores and
Rs. 214.95 crores respectively.
During the year Company has undergone a debt restructuring process for
its outstanding debts, the same being approved by the Corporate Debt
Restructuring Empowered Group (CDR EG) on March 24, 2014 and applicable
with effect from August 1, 2013. The CDR proposal has been partly
implemented as on March 31, 2014. Accordingly the defaults mentioned
exclude the defaults incurred by the Company after the cut-off date of
August 1, 2013 upto March 31, 2014.
xii.) Based on our examination of documents and records, the Company
has not granted any 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/ nidhi/ mutual benefit fund/
society, to which the provisions of special statute relating to chit
fund are applicable. Accordingly, paragraph 4 (xiii) of the Order is
not applicable to the Company.
xiv.) The Company is not engaged in dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
xv.) According to the information and explanations given to us, the
Company has given guarantees of Rs. 2,275.76 crores for credit
facilities taken by body corporates from banks and financial
institutions, the terms and conditions whereof in our opinion are not
prima facie prejudicial to the interest of the Company.
xvi.) In our opinion and according to the information and explanations
given to us, on the overall basis, term loans have been applied for the
purposes for which they were obtained.
xvii.) According to the information and explanations given to us and
based on an overall examination of the financial statements of the
Company, in our opinion, funds raised on short term basis have not been
used for long-term purpose.
xviii.) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Companies Act, 1956. Accordingly, the provisions of paragraph 4(xviii)
of the Order are not applicable to the Company.
xix.) According to the information and explanations given to us and on
the basis of records made available, we report that security has been
created in respect of debentures issued.
xx.) The Company has not raised any money by public issues during the
year. Accordingly, paragraph 4(xx) of the Order is not applicable.
xxi.) Based upon the information and explanations given by the
management and audit procedures performed, we report that no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For Nisar & Kumar
Chartered Accountants
F. R. No. 107117W
M. N. Ahmed
(Partner)
M. No. 18380
Place: Mumbai
Date : 30th May, 2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of ABG Shipyard
Limited ("the Company"), which comprise the Balance Sheet as at March
31, 2013, 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 referred to in sub section (3C) of section 211
of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatements.
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 judgement, 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 to 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.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(ii) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. Attention is drawn to Note no. 38 whereby the Company has applied
the principles of Accounting Standard 30 issued by The Institute of
Chartered Accountants of India.
3. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
b. in our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Act. Attention is drawn to point no. 2 above whereby the Company
has not adopted AS 30 fully but applied the principles of hedging as
per AS 30 where there are firm commitments payable and receivable;
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, we report that none of the Directors is disqualified as on
March 31, 2013, from being appointed as a director in terms of clause
(g) of sub- section (1) of section 274 of the Act.
Annexure to Independent Auditor''s Report
(Referred to in paragraph 1 under the heading of "Report on Other Legal
and Regulatory Requirements" of our report of even date)
As required by the Companies (Auditor''s Report) Order, 2003 (as
amended) ("the Order") issued by the Central Government of India in
terms of Section 227 (4A) of the Companies Act, 1956, on the matters
specified in paragraphs 4 and 5 of the said Order, we further report
that:
i.) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets;
(b) The fixed assets have been physically verified in a phased manner
by the management during the year as per the program of verification
which, in our opinion, is reasonable having regard to the size of the
Company and nature of its assets. As informed to us, no material
discrepancies were noticed between book records and physical
verification;
(c) During the year, the Company has not disposed off any substantial
part of fixed assets, which would affect the going concern of the
Company.
ii.) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable;
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business;
(c) On the basis of the records of inventory, we are of the opinion
that the Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii.) As informed, during the year under audit the Company has neither
granted nor taken any loans, secured or unsecured to or from companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956. Accordingly, the provisions of clause
4(iii)(b)(c)(d)(f) and (g) of the Order are not applicable.
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, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weakness in internal control.
v.) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the contracts or arrangements that need to be entered
into the register maintained under section 301, of the Companies Act,
1956 have been so entered.
(b) The price at which such contract or arrangement is entered is
reasonable compared to prevailing market price.
vi.) The Company has not accepted any deposit from the public during
the year.
vii.) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii.) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether these are accurate or complete.
ix.) (a) According to the records of the Company, the Company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax,
Wealth-tax, Service tax, Custom duty, Excise duty, Cess and other
statutory dues applicable to it. However, instances of delay in deposit
of Tax Deducted at Source and Employees Profession Tax have been
noticed during the year under audit.
The following undisputed statutory dues are outstanding for a period of
more than six months as on March 31, 2013, from the date they became
payable:
x.) The Company does not have accumulated losses at the end of the
financial year. The Company has not incurred any cash loss during the
financial year covered by our audit and in the immediately preceding
financial year.
xi.) Instances of delay between 1 to 182 days were noticed in repayment
of principal and interest to banks during the year amounting to Rs.
952.68 crores and Rs. 199.92 crores respectively.
xii.) Based on our examination of documents and records, the Company
has not granted any loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.
xiii.) The Company is not a chitfund/ nidhi/ mutual benefit fund/
society, to which the provisions of special statute relating to
chitfund are applicable. Accordingly, paragraph 4 (xiii) of the Order
is not applicable to the Company.
xiv.) The Company is not engaged in dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
xv.) According to the information and explanations given to us, the
Company has given guarantees of Rs. 2113.64 crores for credit facilities
taken by body corporates from banks and financial institutions, the
terms and conditions whereof in our opinion are not prima facie
prejudicial to the interest of the Company.
xvi.) In our opinion and according to the information and explanations
given to us, on the overall basis, term loans have been applied for the
purposes for which they were obtained.
xvii.) According to the information and explanations given to us and
based on our examination of the books of account of the Company, short
term funds to the extent of approximately Rs. 122.65 crores have been
used for long term purposes.
xviii.) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Companies Act, 1956. Accordingly, the provisions of paragraph 4(xviii)
of the Order are not applicable to the Company.
xix.) According to the information and explanations given to us and on
the basis of records made available, we report that security has been
created in respect of debentures issued.
xx.) The Company has not raised any money by public issues during the
year. Accordingly, paragraph 4(xx) of the Order is not applicable.
xxi.) Based upon the information and explanations given by the
management and audit procedures performed, we report that no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For Nisar & Kumar
Chartered Accountants
F. R. No. 107117W
M. N. Ahmed
Place: Mumbai (Partner)
Date: 30th May, 2013 M. No. 18380
Mar 31, 2012
1. We have audited the attached Balance Sheet of ABG SHIPYARD LIMITED,
as at 31st March, 2012, 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 over all financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion
3. As required by the Companies (Auditor's Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956 of India, we
enclose in the annexure a statement on the matters specified in
paragraphs 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 purposes of our
audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(iii) The Balance Sheet the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this report are in agreement with the
Books of account;
(iv) In our opinion, the Balance Sheet, the Statement of Profit and
Loss and the Cash Flow Statement dealt with by this report comply with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956;
(v) On the basis of written representations received from the
directors, as on 31st March, 2012, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2012, from being appointed as a director in terms of clause
(g) of sub- section (1) of section 274 of the Companies Act, 1956.
5. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the notes
thereon and attached thereto, give in the prescribed manner the
information required by the Companies Act, 1956 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 31st March, 2012;
(ii) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to Auditor's Report
(Referred in paragraph 3 of our report of even date to the members of
ABG Shipyard Limited on the financial statements for the year ended
31st March, 2012)
As required by the Companies (Auditor's Report) Order, 2003 (as
amended) ("The Order") issued by the Central Government of India in
terms of Section 227 (4A) of the Companies Act, 1956, on the matters
specified in paragraphs 4 and 5 of the said Order, we further report
that:
i.) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets;
(b) The fixed assets have been physically verified in a phased manner
by the management during the year as per the program of verification
which, in our opinion, is reasonable having regard to the size of the
Company and nature of its assets. As informed to us no material
discrepancies were noticed between book records and physical
verification;
(c) During the year, the Company has not disposed off any substantial
part of fixed assets, which would affect the going concern of the
Company.
ii.) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable;
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business;
(c) On the basis of the records of inventory, we are of the opinion
that the Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii.) As informed, during the year under audit the Company has neither
granted nor taken any loans, secured or unsecured to or from companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956. Accordingly, the provisions of clause
4(iii)(b)(c)(d)(f) and (g) of the order are not applicable.
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, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct
major weakness in internal control.
v) (a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the contracts or arrangements that need to be entered into
the register maintained under section 301, of the Companies Act, 1956
have been so entered.
(b) The price at which such contract or arrangement is entered is
reasonable compared to prevailing market price.
vi) The Company has not accepted any deposit from the public during the
year.
vii.) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii.) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under section 209(1 )(d) of the
Companies Act, 1956 and are of the opinion that prima facie, the
prescribed cost records have been maintained We have, however, not made
a detailed examination of the cost records with a view to determine
whether these are accurate or complete.
ix.) (a) According to the records of the Company, the Company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Income-tax, Sales-tax,
Wealth-tax, Service tax, Custom duty, Excise duty, Cess and other
statutory dues applicable to it. No statutory dues are outstanding for
period of more than six months as on 31st March, 2012.
(b) According to information and explanation given to us, the following
dues of Service tax have not been deposited by the Company on account
of disputes:
Name of the
Statute Nature of
Dues Financial Amount
in Rs. Forum where
dispute is
Year Crores pending
The Finance
Act, 1994 Service
Tax 2004-05 to 2.58 Appellate Tribunal
2008-09
(c) The Company does not have accumulated losses at the end of the
financial year. The Company has not incurred any cash loss during the
financial year covered by our audit and in the immediately preceding
financial year.
(d) The company is generally regular in repayment of principal and
interest.
x.) Based on our examination of documents and records, the Company has
not granted any loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
xi.) The Company is not a chit fund/ nidhi/ mutual benefit fund/
society, to which the provisions of special statute relating to
chit fund are applicable. Accordingly, paragraph 4 (xiii) of the Order
is not applicable to the Company.
xii.) The Company is not engaged in dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
xiii.) According to the information and explanations given to us, the
Company has given guarantees of Rs.2000.92 crores for credit facilities
taken by body corporates from banks and financial institutions, the
terms and conditions whereof in our opinion are not prima facie
prejudicial to the interest of the Company.
xiv.) In our opinion and according to the information and explanations
given to us, on the overall basis, term loans have been applied
for the purposes for which they were obtained.
xv.) According to the information and explanations given to us and
based on our examination of the books of account of the Company, short
term funds to the extent of approximately Rs. 131.52 crores have been
used for long term purposes.
xvi.) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Companies Act, 1956. Accordingly, the provisions of paragraph 4(xviii)
of the Order are not applicable to the Company.
xvii.)According to the information and explanations given to us and on
the basis of records made available, we report that security has been
created in respect of debentures issued.
xviii.)The Company has not raised any money by public issues during the
year. Accordingly, paragraph 4(xx) of the Order is not applicable.
xix.) Based upon the information and explanations given by the
management and audit procedures performed, we report that no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For Nisar & Kumar
Chartered Accountants
F.R.No. 107117W
M.N.Ahmed
Place: Mumbai (Partner)
Date : 29th May, 2012 M. No. 18380
Mar 31, 2011
1. We have audited the attached Balance Sheet of ABG SHIPYARD LIMITED,
as at 31st March, 2011, 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 Company's
management. Our responsibility is to express an opinion on these
financial statements based onouraudit.
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 Companies (Auditor's Report) Order, 2003(as
amended) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956 of India, we
enclose in the annexure a statement on the matters specified in
paragraphs 4 and 5 of the said order.
4. Attention is drawn to Note no. 24 of Schedule 19 whereby the
Company has applied the principles of Accounting Standard 30 issued by
The Institute of Chartered Accountants of India.
5. Further to our comments in the Annexure referred to above, we
report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of
ouraudit;
(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 and Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) In our opinion, the Balance Sheet and Profit and Loss Account
dealt with by this report comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the Companies Act, 1956.
Attention is drawn to point no. 4 above whereby the Company has not
adopted AS 30 fully but applied the principles of hedging as per AS 30
where there are firm commitments payable and receivable;
(v) On the basis of written representations 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.
6. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the notes
thereon and attached thereto, give in the prescribed manner the
information required by the Companies Act, 1956 and give a true and
fairview 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 31st March, 2011;
ii) In the case of the Profit and Loss Account, of the Profit of the
Company for the year ended on that date; and
iii) In the case of the Cash flow Statement, of the Cash flows of the
Company for the year ended on that date.
Annexure to Auditor's Report
(Referred in paragraph 3 of our report of even date to the members of
ABG Shipyard Limited on the financial statements for the year
ended31s,March,2011.)
As required by the Companies (Auditor's Report) Order, 2003 (as
amended) ("The Order") issued by the Central Government of India in
terms of Section 227 (4A) of the Companies Act, 1956, on the matters
specified in paragraphs^ and 5 of the said Order, we further report
that:
i.) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets;
(b) The fixed assets have been physically verified in a phased manner
by the management during the year as per the program of verification
which, in our opinion, is reasonable having regard to the size of the
Company and nature of its assets. As informed to us no material
discrepancies were noticed between book records and physical
verification;
(c) During the year, the Company has not disposed off any substantial
part of fixed assets, which would affect the going concern of the
Company.
ii.) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable;
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business;
(c) On the basis of the records of inventory, we are of the opinion
that the Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii.) (a) The Company had granted unsecured loan to its wholly owned
subsidiary which is also a party covered in the Register maintained
under Section 301, of the Companies Act, 1956. The maximum amount
involved during the year was 368 crores and the year end balance was
Rs. 0.002 crores.
(b) According to the information and explanations given to us, there is
no stipulation of period of payment or rate of interest. In our opinion
the terms of loan given are not, prima facie, prejudicial to the
interest of the company
(c) As loan outstanding at the year end is negligible amount, and there
is no contemplation of repayment period of principal amount or
interest, clause 4 (iii) (c) and (d) of the Order is not commented on.
(d) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the Register maintained
under Section 301, of the Companies Act, 1956. Accordingly,
clauses 4(iii) (f) and (g) of the Order are not applicable to the
Company.
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, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weakness in internal control.
v.) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the contracts or arrangements that need to be entered
into the register maintained under section 301, of the Companies Act,
1956 have been so entered.
(b) The price at which such contract or arrangement is entered is
reasonable compared to prevailing market price.
vi.) The Company has not accepted any deposit from the public during
the year.
vii.) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii.) As informed to us, the maintenance of cost records have not been
prescribed by the Central Government under clause (d) of sub section
(1) of Section 209 of the Companies Act, 1956.
ix.) (a) According to the records of the Company, the Company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Income-tax, Sales-tax,
Wealth-tax, Service tax, Custom duty, Excise duty, Cess and other
statutory dues applicable to it. No statutory dues are outstanding for
period of more than six months as on 31st March, 2011 except for Rs.
6,775 of Profession Tax. However, the same has been, subsequently paid.
(b) According to information and explanation given to us, the following
dues of Service tax have not been deposited by the company on account
of disputes:
Name of the Nature of Dues Financial Amount Rs. Forum where dispute is
Statute Year in crores pending.
Service Tax Matter under 2004-05 to 2.58 Appellate Tribunal
dispute 2008-09
x.) The Company does not have accumulated losses at the end of the
financial year. The Company has not incurred any cash loss during the
financial year covered by our audit and in the immediately preceding
financial year.
xi.) According to the information and explanations given to us, the
Company has not defaulted in repayment of dues to any financial
institutions, banks ordebenture holders.
xii.) Based on our examination of documents and records, the Company
has not granted any loans and advances on the basis of security by way
of pledge of shares, debentures and othersecurities
xiii) The Company is not a chitfund/ nidhi/ mutual benefit fund/
society, to which the provisions of special statute relating to
chitfund are applicable. Accordingly, paragraph 4 (xiii) of the Order
is not applicable to the Company.
xiv.) The Company is not engaged in dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
xv.) According to the information and explanations given to us, the
Company has given guarantee of Rs. 1,800.23 crores for credit
facilities taken by body corporates from banks and financial
institutions, the terms and conditions whereof in our opinion are not
prima facie prejudicial to the interest of the Company.
xvi.) In our opinion and according to the information and explanations
given to us, on the overall basis, term loans have been applied
for the purposes for which they were obtained.
xvii.)According to the information and explanations given to us and
based on our examination of the books of account of the Company, short
term funds to the extent of approximately 7156.74 crores have been used
for long term purposes.
xviii.)According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Companies Act, 1956. Accordingly, the provisions of paragraph 4(xviii)
of the Order are not applicable to the Company.
xix.) According to the information and explanations given to us and on
the basis of records made available, we report that adequate security
has been created in respect of debentures issued during the year.
xx.) The Company has not raised any money by public issues during the
year. Accordingly, paragraph 4(xx) of the Order is not applicable.
xxi.) Based upon the information and explanations given by the
management and audit procedures performed, we report that no fraud on
or by the Company has been noticed or reported during the course of
our audit.
For Nisar& Kumar
Chartered Accountants
F.R.NO.107117W
M.N.Ahmed
Place: Mumbai (partner)
Date :30th May, 2011 M No 18380
Mar 31, 2010
1. We have audited the attached Balance Sheet of ABG SHIPYARD LIMITED,
as at 31st March 2010, the Profitand 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 over all financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003(as
amended) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956 we enclose
in the annexure a statement on the matters specified in paragraphs 4
and 5 of the said order.
4. Attention is drawn to Note no. 25 of Schedule 20 whereby the
Company has applied the principles of Accounting Standard 30 issued by
The Institute of Chartered Accountants of India.
5. Further to our comments in the Annexure referred to above, we
report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) In our opinion, the Balance Sheet, Profitand Loss Account and Cash
Flow Statement dealt with by this report comply with the Accounting
Standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956. Attention is drawn to point No. 4 above whereby
the Company has not adopted AS 30 fully but applied the principles of
hedging as per AS 30 where there are firm commitments payable and
receivable.
(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
31st March 2010 from being appointed as a director in terms of clause
(g) of sub- section (1) of section 274 of the Companies Act, 1956.
6. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the notes
thereon and attached thereto, give in the prescribed manner the
information required by the Act and give a true and fair view in
conformity with the accounting principles generally accepted in lndia
i) In the case of the Balance Sheet ,of the state of affairs of the
Company as at 31st March 2010;
ii) In the case of the Profitand Loss Account, of the Profit of the
Company for the year ended on that date; and
iii) In the case of the Cash flow Statement, of the Cash flows forthe
year ended on that date.
Annexure to Auditors Report
(Referred in paragraph 3 of our report of even date to the members of
ABG Shipyard Limited on the financial statements for the year ended
31st March 2010.)
As required by the Companies (Auditors Report) Order, 2003(as amended)
("The Order) issued by the Central Government of India in terms of
Section 227 (4A) of the Companies Act, 1956, on the matters specified
in paragraphs 4 and 5 of the said Order, we further report that:
i.) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets;
(b) The fixed assets have been physically verified in a phased manner
by the management during the year as per the program of verification
which, in our opinion, is reasonable having regard to the size of the
Company and nature of its assets. As informed to us no material
discrepancies were noticed between book records and physical inventory;
(c) During the year, the Company has not disposed off any substantial
part of fixed assets, which would affect the going concern of the
Company.
ii.) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable;
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business;
(c) On the basis of the records of inventory, we are of the opinion
that the Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification.
iii.) (a) During the year under audit the Company has granted unsecured
loan to its wholly owned subsidiary which is also a party covered in
the Register maintained under Section 301 of the Companies Act, 1956
The maximum amount involved during the year and the year end balance
aggregates to Rs. 369 crores.
(b) According to the information and explanations given to us, there is
no stipulation of period of payment or rate of interest. In our opinion
the terms of loan given are not, prima facie, prejudicial to the
interest of the company
(c) As there is no contemplation of repayment period of principal
amount or interest, clause 4 (iii) (c) and (d) of the Order is not
commented on.
(d) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act, 1956. Accordingly,
clauses4(iii) (f)and (g) of the Order are not applicable to the
Company.
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, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weakness in internal control.
v.) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the contracts or arrangements that need to be entered
into the register maintained under section 301 of the Companies Act,
1956 have been so entered.
(b) The price at which such contract or arrangement is entered is
reasonable compared to prevailing market price.
vi.) The Company has not accepted any deposit from the public during
the year.
vii.) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii.) As informed to us, the maintenance of cost records have not been
prescribed by the Central Government under clause (d) of sub section
(1) of Section 209 of the Companies Act, 1956.
ix.) (a) According to the records of the Company, the Company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees State Insurance, Income-tax, Sales-tax,
Wealth-tax, Service tax, Custom duty, Excise duty, Cess and other
statutory dues applicable to it.
(b) According to the records of the Company, there are no dues in
respect of disputed liability in respect of Provident Fund,
Income-tax, Sales-tax, Wealth-tax, Service tax, Custom duty, Cess and
other statutory dues which have not been deposited on account of
dispute.
x.) The Company does not have accumulated losses at the end of the
financial year. The Company has not incurred any cash loss during the
financial year covered by our audit and in the immediately preceding
financial year
xi.) According to the information and explanations given to us, the
Company has not defaulted in repayment of dues to any financial
institutions, banks or debenture holders
xii.) Based on our examination of documents and records, the Company
has not granted any loans and advances on the basis of security by way
of pledge of shares, debentures and other securities
xiii.) The Company is not a chitfund/ nidhi/ mutual benefit fund/
society, to which the provisions of special statute relating to
chitfund are applicable. Accordingly, paragraph4(xiii)ofthe Order is
not applicable to the Company.
xiv.) The Company is not engaged in dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause4(xiv) of the Order are not applicable to the
Company.
xv.) According to the information and explanations given to us, the
Company has given guarantee of Rs. 1005.44 crores for credit facilities
taken by body corporates from banks and financial institutions, the
terms and conditions whereof in our opinion are not prima facie
prejudicial to the interest of the Company.
xvi.) In our opinion and according to the information and explanations
given to us, on the overall basis, term loans have been applied for the
purposes for which they were obtained.
xvii.) According to the information and explanations given to us and
based on our examination of the books of account of the Company, short
term funds to the extent of approximately Rs. 190 crores have been used
for long term purposes.
xviii.) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Companies Act, 1956. Accordingly, the provisions of paragraph 4(xviii)
of the Order are not applicable to the Company.
xix.) According to the information and explanations given to us and on
the basis of records made available, we report that adequate security
has been created in respect of debentures issued in the immediately
preceding year. No debentures have been issued in the reporting period.
xx.) The Company has not raised any money by public issue during the
year. Accordingly, paragraph 4(xx) of the Order is not applicable.
xxi.) Based upon the information and explanations given by the
management and audit procedures performed, we report that no fraud on
or by the Company has been noticed or reported during the course of our
audit.
For Nisar& Kumar
Chartered Accountants
F. R No. 107117W
M.N.Ahmed
Place: Mumbai (Partner)
Date: 29th May, 2010 M. No. 18380
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