Mar 31, 2016
To the Members of Bharati Defense and Infrastructure Limited
(Formerly Known as Bharati Shipyard Limited)
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Bharati Defence and Infrastructure Limited (Formerly known as Bharati Shipyard Limited) (âthe Company"), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, 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
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe 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 under 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 of 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 and ensuring their operating effectiveness and the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone 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 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 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 standalone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the standalone 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 of the standalone 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 on the standalone financial statements.
Basis for Qualified Opinion
a) The Company has as on 31st March 2016, recognized deferred tax asset (net) of Rs. 1,01,135.63 Lakhs on its carried forward Accumulated Losses (including unabsorbed depreciation), interest expenses (including Funded Interest Term Loan (FITL)), Disallowance of Expenses and Retirement Benefits. The principles of Accounting Standard- 22 notified in this regard clearly states that deferred tax assets should be recognized and carried forward only to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In our opinion, considering the huge accumulated losses and the present scenario of the Company''s business, there is no certainty that the company would have sufficient future taxable income to justify the creation of Deferred Tax Asset. Had the Deferred tax asset not been created, the net the loss for the year ended 31st March 2016 would have been higher by Rs. 1,01,135.63 Lakhs and the accumulated losses as at that date would have been higher by the same amount. (Refer Note No. 31 forming part of the standalone financial statements).
b) The Company had recognized for subsidy under Ship Building Subsidy Scheme in earlier years, out of which subsidy of Rs. 42,238.11 Lakhs is still receivable as on 31st March, 2016 (after write off of Rs 22,554.66 Lakhs during the year due to change in Government Policy). The receipt of aforesaid Subsidy is dependent upon completion of vessels and compliance with other terms and conditions of the Shipbuilding Subsidy Scheme of the Government of India. In our opinion, the recognition of above claim, being contingent asset in nature, is not in conformity with AS-29, Provisions, Contingent liabilities and Contingent assets. In view of the uncertainty involved with respect to generation of future cash flow as required for completion of vessels, we are unable to comment on the recoverability or otherwise of the aforementioned subsidy receivable amounting to Rs. 42,238.11 Lakhs. Therefore, the possible impact of the same on the standalone financial statement cannot be ascertained. (Refer Note No. 32 forming part of the standalone financial statements).
c) We draw attention to Note no. 33 forming part of the standalone financial statements, which indicates that the Company has continuously been incurring substantial losses since past few years and Company has also incurred net loss of Rs. 1,89,799.01 Lakhs for the year ended 31st March, 2016. As of reporting date, the Company''s total liabilities exceed its total assets by Rs. 2,96,677.35 Lakhs and its net worth has been fully eroded.
The appropriateness of the going concern basis is interalia dependent upon company''s successful financial restructuring including raising requisite finance for its revival and consequent generation of future cash flow to meets its obligations. In our opinion, these conditions along with other matters indicate the existence of material uncertainty that may cast doubt about the Company''s ability to continue as going concern.
d) The Company had given loans and advances of Rs. 91,048.18 Lakhs to its subsidiaries, for investment in GOL Offshore Ltd (GOL). Further an amount of Rs. 3,523.41 Lakhs is due from GOL on account of trade and other receivables. GOL has been incurring losses and its cash flows are under stress and there are continuing defaults in repayment of loans including invocation of some of the corporate guarantees and in some cases recovery proceedings have been initiated. No provision for non- recoverability of loans and advances given to its subsidiaries and trade and other receivables due from GOL is made by the company as explained in note no. 34 (a) forming part of the standalone financial statements. We are unable to comment on the same and ascertain its possible impact, if any, on the standalone financial statements in respect of above matters.
e) The Company had given loans and advances of Rs. 8,497.86 Lakhs to its subsidiary for investment in Tebma Shipyard Limited (TSL). Further an amount of Rs. 86.22 Lakhs was due from TSL on account of trade and other receivables. TSL has been incurring cash losses, its net worth is fully eroded, its cash flows are under stress and being referred to CDR. The Company has made provision of Rs. 3,498.23 Lakhs in respect of loans and advances receivable from its subsidiary and trade and other receivable from TSL of Rs. 86.22 Lakhs on the basis of business valuation report of TSL by an Independent valuer. In the opinion of management, the investment in TSL is strategic and long term and the loans and advances, trade and other receivables (after considering provisions) are collectible and no further provisioning is required against the same as explained in note no 34 (b) forming part of the standalone financial statements. We are unable to comment on the same and ascertain its possible impact, if any, on the standalone financial statements in respect of above matters.
f) Company has not provided for interest on secured loans and other debt facility if any (funded as well as non- funded) assigned to Edelweiss Asset Reconstruction Company Limited (EARC) by lenders over a period of time. In absence of terms of assignment and other relevant details and information with respect to terms of repayment, rate of interest and other relevant terms for computation of un-provided interest liability, we are unable to quantify its possible impact on the standalone financial statement in respect of above matters. (Refer Note No. 35 forming part of the standalone financial statements).
g) Company has not provided for interest and other dues on NPA accounts including bank guarantee and other debt facility if any (funded as well as non funded) for which,
i. It has not received any statement from lenders or in respect of which interest has not been charged in the statement provided by the lenders:
ii. It has received any recall notice, in respect of which interest has not been charged in the statement provided by the lenders.
In absence of relevant details and information with respect to computation of un-provided interest liability and other dues, we are unable to quantify its possible effect, if any, on the standalone financial statements in respect of above matters. (Refer Note No. 35 forming part of the standalone financial statements).
h) Confirmation / bank statements of secured loans outstanding with ICICI Bank as on 31st March, 2016 were not made available for verification. Due to pending confirmation and consequent reconciliation with the books of accounts, we are unable to comment on the same and ascertain its impact, if any, on the standalone financial statements. (Refer Note No. 35 forming part of the standalone financial statements).
i) Margin money of Rs.4,472.25 Lakhs with State Bank of Travancore is subject to confirmation and reconciliation. Due to pending confirmation and consequent reconciliation with the books of accounts, we are unable to comment on the same and ascertain its impact, if any, on the standalone financial statements. (Refer Note No. 36 forming part of the standalone financial statements).
j) We refer to note no. 37 forming part of the standalone financial statements regarding Company''s policies, procedures and lack of controls in respect of timely and properly recording of the expenses and proper evidences regarding accounting for direct and indirect taxes including other statutory compliances. We are unable to ascertain its impact, if any, on the standalone financial statements in respect of above matters.
k) Due to pending reconciliation and confirmation of Trade Receivables, Loan and Advances, Trade Payables and Other Liabilities, we are unable to ascertain its impact, if any, on the standalone financial statements in respect of above matters. (Refer Note No. 38 forming part of the standalone financial statements).
l) The Company is in the process of obtaining legal opinion with respect to disclosure and accounting treatment of un appropriated amount lying in share application money post expiry of last appointed date for exercise of option for conversion of share warrants and upon revocation of CDR scheme as explained in Note No. 29 forming part of the standalone financial statements. Pending legal opinion, we are unable to ascertain its impact, if any, on the standalone financial statements in respect of above matters.
m) The Company is in process of technical evaluation of componentization of fixed assets and useful life thereof and identifying significant part of assets qualifying for component accounting as required by para 4(a), Part C, schedule II of the Companies Act, 2013 amended by MCA notification dated 29th August, 2015. Pending technical evaluation of componentization of fixed assets and useful life thereof, we are unable to ascertain its impact, if any, on the standalone financial statements in respect of above matters. (Refer Note No. 39 forming part of the standalone financial statements)
n) The Company has not appointed the Internal Auditor as required by Section 138 of the Companies Act 2013.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the effects/possible effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone 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 the following matter in the notes to the Standalone Financial Statements:
a) Based on the valuation report of an Independent Chartered Engineer, Company has written off excess value of work in progress ("WIP") as on 31st March 2016 amounting to Rs. 64,174.54 Lakhs and charged excess value of WIP to statement of profit and loss as "Exceptional items". (Refer Note No. 44 forming part of the standalone financial statements).
b) Based on the valuation report of an Independent Valuer, Company has written off Capital work in progress ("CWIP") as on 31st March 2016 amounting to Rs. 6,397.39 Lakhs by recognizing impairment in CWIP and charged said CWIP impairment to statement of profit and loss as "Exceptional items". (Refer Note No. 44 forming part of the standalone financial statements).
c) The Company has given effect of invoked bank guarantees to customer accounts and resultant Interest and Exchange variation amounting to Rs. 40,457.62 Lakhs and Rs.
32,977.47 Lakhs respectively has been charged to statement of profit and loss as "Exceptional items". (Refer Note No. 41 forming part of the standalone financial statements).
d) The Company has made provision for diminution in the value of investment in Bengal Shipyard Limited and made provision for loans and advances receivable amounting to Rs. 22.50 Lakhs and Rs. 3,162.36 Lakhs respectively. This has been charged to statement of profit and loss as "Exceptional items". (Refer Note No. 34 (c) forming part of the standalone financial statements).
e) The Company has reconciled balance of secured loans transferred by 18 lenders to Edelweiss Assets Reconstruction Company (EARC) with the balance appearing in books of accounts and the differential interest / other charges amounting to Rs. 29,170.46 Lakhs on such reconciliation has been charged to statement of profit and loss as "Exceptional items". (Refer Note No. 44 (c) forming part of the standalone financial statements).
Our opinion is not qualified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditors'' Report) Order, 2016 ("the Order") issued by the Central Government of India (Ministry of Corporate Affairs) in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.
(2) As required by Section 143(3) of the Act, we report that:
a. We have sought and except for the matter described in the Basis for Qualified Opinion and Emphasis of matters paragraph above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
b. Except for the effects/possible effects of the matters 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 it appears from our examination of those books;
c. The Company has no branch offices whose accounts are audited by branch auditors;
d. 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;
e. Except for the effects/possible 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;
f. 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;
g. Based on the legal opinion obtained by the management on disqualification of directors and written representations received from the directors as on 31st March 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2016 from being appointed as a director in terms of Section 164 (2) of the Act;
h. The qualifications relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.
i. 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";
j. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements - (Refer Note No. 28 forming part of the standalone financial statements on Contingent Liabilities);
(ii) 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.
Referred to in paragraph 1 under the heading, "Report on Other legal and Regulatory Requirements" of our report on even date:
a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets
b. According to information and explanation given to us, physical verification of a major portion of fixed assets including capital work in progress was conducted by an independent valuation agency as at the year end. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and the nature of its assets and the discrepancies noticed on such physical verification have been properly dealt with in the books of account.
c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company except for immovable properties, as referred in Annexure I, for which original title deeds or Lender confirmation for holding original title deeds on behalf of the Company are not available for verification and upon which we are unable to comment upon. Further the Company is in the process of reconciling cost of the above referred immovable properties as per title deeds vis a vis consolidated cost appearing in books of accounts.
ii As informed to us, physical verification of inventories except vessels under construction have been conducted at reasonable intervals by the management. Physical verification of the vessels under construction is conducted by an independent Chartered Engineers as at the year end.
In our opinion and according to the information and explanation given to us, the discrepancies noticed on such physical verification between physical stock and the book records have been properly dealt with in the books of account.
iii
a. According to the information and explanation given to us, the Company has granted interest free unsecured loans to parties covered in the register maintained Under Section 189 of the Companies Act, 2013 and the terms and conditions of the loans are not prejudicial to the interest of the Company.
b. As there is no stipulation as to the schedule of repayment of principal and interest, question of repayment of receipts being regular does not arise.
c. As there is no stipulation as to the schedule of repayment of principal and interest, question of amount being overdue does not arise.
iv In our opinion and according to the information and explanation given to us, provisions of section 185 and 186 of the Companies Act 2013 in respect of loans and advances to entities in which directors are interested have been complied with by the Company. The Company has not given any guarantees and securities on behalf of entities in which directors are interested.
v According to the information and explanations given to us, the Company has not accepted any deposit from public as governed by provisions of section 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed there under, where applicable, hence provision of clause 3 (v) of the order is not applicable to the Company.
vi According to the information and explanations given to us, maintenance of cost records has not been prescribed by the Central Government under Section 148(1) of the Companies Act for any of the products or services rendered by the Company and hence provision of clause 3 (vi) of the order is not applicable to the Company.
vii
a. According to the records of the company, the Company is not regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales tax, service tax, customs duty, excise duty, Value added tax, cess and any other statutory dues with the appropriate authorities. According to the information and explanation given to us, there are no undisputed statutory dues as referred to above as at 31st March, 2016 for a period more than six months from the date they become payable except as detailed in Annexure I to this report.
b. According to the records of the company and information and explanation given to us, the dues in respect of Income tax, Service tax, Duty of Excise and Duty of Custom that have not been deposited on account of pending disputes with appropriate authorities are as detailed in Annexure II to this report.
viii According to the information and explanation given to us, company has defaulted in repayment of loan or borrowings to a financial institution, bank, government or dues to debenture holders as detailed in Annexure III to this report.
ix According to the information and explanation given to us, the Company has not raised moneys by way of Initial public issue / Further public offer (including debt instruments). However term loan raised during the year have been applied for the purposes for which they are raised.
x Based upon the audit procedures performed by us and according to the information and explanations given by the management, we report that no fraud on or by the Company by its officers/ employees has been noticed or reported during the year.
xi According to the information and explanation given to us and based on our examination of the records of the company, the company has not paid / provided managerial remuneration during the year and hence provision of clause 3 (xi) of the order is not applicable to the Company.
xii In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable to the Company .
xiii According to the information and explanation given to us and based on our examination of the records of the company, transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details of such transaction have been disclosed in the standalone financial statements, as required by the applicable accounting standards.
xiv According to the information and explanation given to us and based on our examination of the records of the company, Preferential allotment of Share warrants were made during the year by the Company, the requirement of section 42 of the Companies Act, 2013 have been complied with and the amount raised have been used for the purposes for which the funds were raised.
xv According to the information and explanation given to us and based on our examination of the records of the company, the company has not entered into any non-cash transactions with directors or or persons connected with him as referred to in section 192 of Companies Act, 2013. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.
xvi The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
Details of immovable properties for which title deeds are not available for verification.
Total no. of cases |
Leasehold / Freehold |
Cost of Land as appearing in books of accounts |
Remarks |
7 |
Freehold |
77,81,699/- |
Original title deed submitted with Exim Bank. Confirmation from Exim bank confirming holding of original title deed is not available for verification. |
2 |
Freehold |
33,95,251 |
Original title deed not available with company. However Photocopy is available for verification and verified. |
Details of Undisputed Statutory Dues outstanding for a period more than six months from the date they become due for payment.
Name of the Statute |
Nature of the Dues |
Financial Year to which matters Pertains |
Amount (Rs. in Lakhs) |
The Income Tax Act, 1961 |
Income Tax |
2008-2009 |
928.07 |
The Income Tax Act, 1961 |
TDS |
2011-2012 |
2.69 |
The Income Tax Act, 1961 |
TDS |
2012-2013 |
5.56 |
The Income Tax Act, 1961 |
TDS |
2013-2014 |
300.49 |
The Income Tax Act, 1961 |
TDS |
2014-2015 |
209.43 |
The Income Tax Act, 1961 |
TDS |
2015-2016 |
52.95 |
The Income Tax Act, 1961 |
TCS |
2014-2015 |
4.15 |
The Income Tax Act, 1961 |
TCS |
2015-2016 |
4.66 |
The EPF and MP Act, 1952 |
Provident Fund |
2013-2014 |
149.83 |
The EPF and MP Act, 1952 |
Provident Fund |
2014-2015 |
231.94 |
The EPF and MP Act, 1952 |
Provident Fund |
2015-2016 |
146.09 |
Professional Tax Act, 1975 |
Professional Tax |
2013-2014 |
0.30 |
Professional Tax Act, 1975 |
Professional Tax |
2014-2015 |
9.07 |
Professional Tax Act, 1975 |
Professional Tax |
2015-2016 |
8.78 |
Employee''s State Insurance Act, 1948 |
ESIC |
2015-2016 |
3.58 |
The Customs Act, 1962 |
Custom Duty |
2009-2010 |
115.01 |
The Customs Act, 1962 |
Custom Duty |
2010-2011 |
71.96 |
The Finance Act, 2004 and Service Tax Rules |
Service Tax |
2015-2016 |
19.06 |
The Goa Value Added Tax Act, 2005 |
VAT |
2014-2015 |
86.54 |
The Goa Value Added Tax Act, 2005 |
VAT |
2015-2016 |
2.53 |
The West Bengal Value Added Tax Act, 2003 |
VAT |
* Before 20142015 |
2.84 |
The West Bengal Value Added Tax Act, 2003 |
VAT |
2014-2015 |
3.13 |
- Year wise breakup not available for VAT Liabilities till Financial year 2014 - 2015
Details of statutory dues that have not been deposited on account of pending disputes with appropriate authorities.
Name of the Statue |
Nature of the dues |
Financial Year to which the matter Pertains |
Amount (Rs in Lakhs) |
Forum where dispute is pending |
The Income Tax Act, 1961 |
Income Tax |
2003-2004 |
0.15 |
Appeal pending before CIT(A) |
The Income Tax Act, 1961 |
Income Tax |
2005-2006 |
0.04 |
Appeal pending before CIT(A) |
The Income Tax Act, 1961 |
Income Tax |
2007-2008 |
668.19 |
Appeal pending before CIT(A) |
The Income Tax Act, 1961 |
Income Tax |
2008-2009 |
496.47 |
Appeal pending before CIT(A) |
The Income Tax Act, 1961 |
Income Tax |
2009-2010 |
451.12 |
Appeal pending before CIT(A) |
The Income Tax Act, 1961 |
Income Tax |
2010-2011 |
373.98 |
Appeal pending before CIT(A) |
The Income Tax Act, 1961 |
Income Tax |
2011-2012 |
2.27 |
Appeal pending before CIT(A) |
The Finance Act, 2004 and Service Tax Rules |
Service Tax |
2008-2009 to 20122013 |
2,479.28 |
Dy. Commissioner |
The Customs Act, 1962 |
Custom Duty |
2008-2009 |
81.84 |
Director General of Central Excise Intelligence |
The Customs Act, 1962 |
Custom Duty |
2011-2012 |
4,978.56 |
Commissioner of Customs |
The Central Excise Act, 1944 |
Excise Duty |
2011-2012 |
1,354.04 |
Commissioner of Central Excise (LTU) |
Details of default in repayment of dues to financial institution, banks and debenture holders:
(1) The company has made continuous default in repayment of its banks loans, Compulsory Convertible Debentures and interest due thereon from date of revocation of CDR scheme i.e. 21st August, 2014 till the balance sheet date. Upon revocation of CDR scheme, in absence of requisite information from EARC and other banks covered under CDR scheme with respect to terms of repayment, the information in respect of amount and period of delays for default in repayment of Loan and interest cannot be ascertained and hence said information were not furnished in this report.
(2) Details of default in repayment of Loans including interest and other dues, other than those referred above as follows: (Rs. In Lakhs)
Particulars |
No of Months |
Amount |
DBS Bank |
24 - 36 Months |
14,814.84 |
SICOM Limited |
24 - 36 Months |
6,477.80 |
LIC of India |
15 - 30 Months |
10,742.66 |
GIC of India |
9 - 33 Months |
2,227.29 |
ANNEXURE B TO THE INDEPENDENT AUDITOR''S REPORT
(Referred to in paragraph 2(f) under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Bharati Defence and Infrastructure Limited(Formerly known as Bharati Shipyard Limited) (âthe Company") as of 31st March,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 Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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.
Qualified Opinion:
According to the information and explanation given to us and based on our audit, the following material weaknesses have been identified in operative effectiveness of the Company''s internal financial control over financial reporting as at 31st March, 2016.
Based on selective verification of process manual and related financial controls made available to us towards the very end of the financial year under audit and thereafter , the Company has an internal financial controls system over financial reporting design, which needs to be enhanced to make it more comprehensive.
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, considering the internal control over financial reporting criteria established by the company as per the essential components of internal control stated in the Guidance Note, the operating effectiveness of such process controls and appropriate documentation thereof needs to be strengthened to make the same commensurate with the size of the Company and nature of its business.
We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the 31st March, 2016 standalone financial statements of the Company, and these material weaknesses does not affect our opinion on the standalone financial statements of the Company.
For Damania and Varaiya.
Firm''s Registration Number: 102079W
Chartered Accountants
CA. Bharat Jain Partner
Membership No.100583
Place: Mumbai
Date: 30th May 2016
Mar 31, 2015
We have audited the accompanying Financial Statements of Bharati
Shipyards Limited ("the Company"), which comprise the Balance Sheet as
at March 31, 2015, the Statement of Profit and Loss, 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
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 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 under 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 of 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
and ensuring their operating effectiveness and 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 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 thereunder.
We 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 auditors' 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 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 the 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 on the
Financial Statements.
Basis for Qualified Opinion
a) The Company has as on 31st March 2015, recognized deferred tax asset
(net) of Rs. 29,998 Lakhs in the financial Statement on its carried
forward Accumulated Losses (including unabsorbed depreciation),
interest expenses (including Funded Interest Term Loan (FITL)),
Disallowance of Expenses, Gratuity and Leave Encashment. The principles
of Accounting Standard- 22 notified in this regard clearly states that
deferred tax assets should be recognized and carried forward only to
the extent that there is a virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. In our opinion, considering the huge accumulated
losses and the present scenario of the Company's business, there is no
certainty that the company would have sufficient future taxable income
to justify the creation of Deferred Tax Asset. Had the Deferred tax
asset not been created, the net the loss for the year ended 31st March
2015 would have been higher by Rs. 29,998 Lakhs and the accumulated
losses as at that date would have been higher by the same amount. Refer
Note No. 31 forming part of the Financial Statements.
b) The company has issued refund bank guarantees to customers against
various advance stage payments received by the Company. Several of
these customers had invoked the Bank Guarantees and the Banks have made
payment aggregating to Rs. 96,632.71 Lakhs on account of refund bank
guarantee invoked by the customers, along with Interest of Rs.
30,245.42 Lakhs and foreign exchange variation of Rs. 32,843.42 Lakhs
upto 31st March 2015 and has charged further interest of Rs. 9,027
lakhs on such invoked refund bank guarantee payments upto 31st March
2015. The Company is of the opinion that payments under the refund bank
guarantee are made by banks without following due process of law. The
Company has also filed a suit before the Hon'ble City civil court,
Mumbai against the lending banks for payment of such invoked refund
bank guarantees and the same is pending for disposal. Hence the Company
has not made any provision in its Financial Statements for the year
ended 31st March 2015 in respect of any of the above payments made by
the banks. In view of the pending litigation and the uncertainty of
outcome of such pending litigation, we are unable to quantify its
possible effect that may arise upon settlement of such litigation on
the Financial Statement for the year ended 31st March 2015. Refer Note
No. 32 forming part of the Financial Statements.
c) The Company had recognized for subsidy under Ship Building Subsidy
Scheme in earlier years, of which subsidy of Rs.64,792.77 Lakhs is
outstanding as on 31st March 2015. The receipt of aforesaid Subsidy is
dependent upon completion of vessels and compliance with other terms
and conditions of the Shipbuilding Subsidy Scheme of the Government of
India. In our opinion the recognition of above claim, being contingent
asset in nature, is not in conformity with AS-29, Provisions,
Contingent liabilities and Contingent assets. In view of the
uncertainty involved with respect to generation of future cash flow as
required for completion of vassals, we are unable to comment on the
recoverability or otherwise of the aforementioned Subsidy receivable
amounting to Rs. 64,792.77 Lakhs. Therefore, the possible impact of the
same on the Financial Statement for the year ended 31st March 2015
cannot be ascertained. Refer Note No. 33 forming part of the Financial
Statements.
d) The Company had been referred to CDR Cell on 16th December, 2011,
and the financing arrangements under the scheme have been partly
implemented. The said CDR scheme has been subsequently revoked by CDR
EG being monitoring institutions vide its letter dated 21st August
2014. Some of the lenders including Lead Bankers have transferred there
right, title, securities and interest in financial assistances to
Edelweiss Asset Reconstruction Company Limited (EARC). EARC is also
proposing to come up with various stage wise restructuring plans for
debts including reference made to BIFR on 10th April, 2015 to curtail
the financial burden of the business cash flows in addition to business
operation and management. We draw attention to Note no. 30 of the
Financial Statement which indicates that the Company has continuously
been incurring substantial losses since past few years and Company has
also incurred a net loss of Rs 86,458.24 Lakhs for the year ended 31st
March 2015. As of this date, the Company's total liabilities exceed its
total assets by Rs 106,878.36 Lakhs and its net worth has been fully
eroded.
The appropriateness of the going concern basis is interalia dependent
upon company's successful financial restructuring including raising
requisite finance for its revival and consequent generation of future
cash flow to meets its obligations. In our opinion, these conditions
along with other matters indicate the existence of material uncertainty
that may cast doubt about the Company's ability to continue as going
concern.
e) The Company had given loans and advances of Rs. 91,048.18 Lakhs to
its subsidiaries, which in turn holds investment in GOL Offshore Ltd
(GOL). As per the Audited Financial Result of GOL as on 31st March 2015,
there are continuing defaults in repayment of loans including invocation
of some of the corporate guarantees and in some cases recovery
proceedings have been initiated. In the opinion of the management,
Investment in GOL being strategic and long term in nature and the
diminution in the value of investment is temporary and the loans and
advances given are recoverable and no provisioning is required against
the same. We are unable to comment on the recoverability of the Loans
and Advances and ascertain its possible impact, if any, on the Financial
Statements for the year ended 31st March 2015. Refer Note No. 34 (a)
forming part of the Financial Statements.
f) The Company had given loans and advances of Rs. 8,497.86 Lakhs to
its subsidiary for investment in Tebma Shipyard Limited (TSL). TSL has
been incurring cash losses and its net worth has substantially eroded
and its cash flows are under stress. In the opinion of the management,
the investment is strategic and long term in nature and the diminution
in value of Investment is temporary and the loans and advances given
are recoverable and no provisioning is required against the same. We
are unable to comment on the recoverability of the Loans and Advances
and ascertain its possible impact, if any, on the Financial Statements
for the year ended 31st March 2015. Refer Note No.34 (b) forming part
of the Financial Statements.
g) The Company had made investment and given loans and advances
amounting to Rs. 3,184.86 Lakhs in/to Bengal Shipyard Limited
(Bengal). Bengal is yet to start its business operations due to pending
approvals and problems associated with acquisition of land from Govt of
West Bengal. In the opinion of the management, the investment is
strategic and long term in nature and the diminution in value of
Investment is temporary and the loans and advances given are
recoverable and no provisioning is required against the same. We are
unable to comment on the recoverability of the Loans and Advances and
diminution in the value of the investments and ascertain its possible
impact, if any, on the Financial Statement for the year ended 31st
March 2015. Refer Note No. 34 (c) forming part of the Financial
Statements.
h) Confirmation / bank statements from some banks and Edelweiss Asset
Reconstruction Company Limited (EARC) with respect to secured loans
outstanding as on 31st March 2015 were not made available for
verification. Hence the possible effect due to pending reconciliation
with the books of accounts, if any, on Financial Statements for the
year ended 31st March 2015 remains unascertained. Refer Note No. 35
forming part of the Financial Statements.
i) Company has not provided for interest on secured loans including
bank guarantee and other debt facility if any (funded as well as non
funded) assigned to Edelweiss Asset Reconstruction Company Limited
(EARC) and loans for which company has received any recall notice, from
the date of assignment and / or receipt of recall notice from banks and
NPA loan accounts for which it has not received call notice or any
statement from lenders. In absence of relevant details and information
with respect to computation of un-provided interest liability, we are
unable to quantify its possible effect on the Financial Statement for
the year ended 31st March 2015. Refer Note No. 35 forming part of the
Financial Statements.
j) In absence of relevant documents / confirmations from banks, we are
unable to comment on current status of Margin deposit with banks and
Bank Guarantee as disclosed in contingent liability. Refer Note No. 36
forming part of the Financial Statements.
k) Due to pending reconciliation and confirmation of Trade Receivables,
Loan and Advances, Trade Payables and Other Liabilities, we are unable
to comment upon its possible effect on the Financial Statement for the
year ended 31st March 2015. Refer Note No. 38 forming part of the
Financial Statements.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects/possible 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;
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2015;
b) In the case of the Statement of Profit and Loss, of the loss for the
year ended on that date; and
c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
We draw attention to the following matter in the notes to the Financial
Statements:
i Based on the valuation report of an Independent Chartered Engineer
company has written off excess value of Work in Progress ("WIP") as on
31st March 2015 amounting to Rs. 54,177.02 Lakhs and charged excess
value of WIP to statement of profit and loss as "Exception items".
Refer Note No. 39 (a) forming part of the Financial Statements.
ii The Company is in the process of obtaining legal opinion with
respect to disclosure and accounting treatment of unappropriated amount
lying in share application money post expiry of last appointed date for
exercise of option for conversion of share warrants and upon revocation
of CDR scheme. Refer Note No. 29.1 forming part of the Financial
Statements.
iii Internal control system in relation to timely and proper recording
of the revenue and expenses transaction needs to be strengthened. Refer
Note No. 37 forming part of the Financial Statements.
Our opinion is not qualified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditors' Report) Order, 2015 ("the
Order") issued by the Central Government of India (Ministry of Corporate
Affairs) in terms of sub-section (11) of Section 143 of the Act, we give
in the Annexure, a statement on the matters specified in paragraphs 3
and 4 of the Order.
(2) As required by Section 143(3) of the Act, we report that:
a. We have sought and except for the matter described in the Basis for
Qualified Opinion and Emphasis of matters paragraph above, obtained all
the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit;
b. Except for the effects/possible effects of the matters 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 it appears from our examination of those books.
c. The Company has no branch offices whose accounts are audited by
branch auditors, hence requirement of clause c of section 143(3) of the
act is not applicable.
d. 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;
e. Except for the effects/possible effects of the matter described in
the Basis for Qualified Opinion paragraph above, in our opinion, the
aforesaid Financial Statements comply with the Accounting Standards
specified under Section 133 of the Act read with Rule 7 of the
Companies (Accounts) Rules, 2014;
f. 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;
g. Based on the legal opinion obtained by the management on
disqualification of directors and written representations received from
the directors as on 31st March 2015, and taken on record by the Board
of Directors, none of the directors is disqualified as on 31st March
2015 from being appointed as a director in terms of Section 164 (2) of
the Act;
h. The qualifications relating to the maintenance of accounts and
other matters connected therewith are as stated in the Basis for
Qualified Opinion paragraph above.
i. With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its
financial position in its Financial Statements - Refer Note No. 28
forming part of the Financial Statements on Contingent Liabilities;
(ii) 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 is a delay of 19 days in transferring amount of Rs. 0.61
Lakhs as required to be transferred, to the Investor Education and
Protection Fund by the Company.
Annexure to the Auditors' Report
Annexure referred to in paragraph 1 under the heading "Report on other
legal and regulatory requirements" of our report of even date
i
a. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets
b. According to information and explanation given to us, physical
verification of a major portion of fixed assets including capital work
in progress was conducted by an independent valuation agency as at the
year end. In our opinion, the frequency of such verification is
reasonable having regard to the size of the Company and the nature of
its assets. As informed to us, no material discrepancies were noticed
on such physical verification.
ii
a. As explained to us, physical verification of inventories has been
conducted at reasonable intervals by the management and the physical
verification of the vessels under construction was conducted by an
independent valuation agency as at the year end.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory and
vessels under construction, followed by the management are reasonable
and adequate in relation to the size of the Company and the nature of
its business.
c. In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventories
and vessels under construction and the discrepancies noticed on such
physical verification between physical stock and the book records have
been properly dealt with in the books of account.
iii
a. As per the records of the company, it has granted interest free
unsecured loans to parties covered in the register maintained Under
Section 189 of the Companies Act, 2013.
b. According to the information and explanation given to us, there is
no stipulation as to the repayment of the above loans and the same are
repayable on demand.
c. As there is no stipulation as to the repayment of the loans given,
question of any overdue amount exceeding Rs. One lakh does not arise.
iv In our opinion and according to the information and explanations
given to us, an internal control system is required to be strengthened
to make it commensurate with the size of the Company and the nature of
its business, for the purchase of inventory and fixed assets and for
the sale of goods and services. During the course of our audit, we have
not observed any continuing failure to correct major weakness in such
internal control system.
v According to the information and explanations given to us, the
Company has not accepted any deposit from public as governed by
provisions of section 73 to 76 or any other relevant provisions of the
Companies Act 2013 and the rules framed there under, where applicable,
hence provision of clause (v) of the order is not applicable.
vi On the basis of records produced before us, we are of the opinion
that prima facie, the cost records prescribed by the Central Government
of India under section 148(1) of the Companies Act 2013 have been made
and maintained. We have however not made a detailed examination of the
cost records with a view to determine whether they are accurate or
complete
vii
a. According to the records of the company, the Company is not regular
in depositing undisputed statutory dues including Provident Fund,
Employees State Insurance, Income-tax, Sales-tax, Wealth-tax, Service
tax, Duty of customs, Duty of Excise, Value added tax, Cess and any
other statutory dues with the appropriate authorities. According to the
information and explanation given to us, there are no undisputed
statutory dues as referred to above as at 31st March, 2015 for a period
more than six months from the date they become payable except as
detailed in Annexure I to this report.
b. According to the records of the company and information and
explanation given to us, the dues in respect of Income tax, Service
tax, Duty of Excise and Duty of Custom that have not been deposited on
account of pending disputes with appropriate authorities are as
detailed in Annexure II to this report.
c. According to the information and explanation given to us, the
amounts 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 have been so transferred.
However there is a delay of 19 days in transferring amount of Rs. 0.61
Lakhs.
viii The accumulated losses of the Company at the end of the financial
year exceed fifty percent of its net worth. The Company has incurred
cash losses during the financial year and in the immediately preceding
financial year.
ix According to the information and explanation given to us, the
Company has defaulted in repayment of dues to a financial institution,
banks and debenture holders as detailed in Annexure III to this report.
x According to the information and explanation given to us, the Company
has not given guarantees for loans taken by others from Banks or
Financial Institutions; hence provision of clause (x) of the order is
not applicable.
xi According to the information and explanation given to us, the
company has not obtained any term loans; hence provision of clause (xi)
of the order is not applicable.
xii Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the year.
For Damania and Varaiya.
Firm's Registration Number: 102079W
Chartered Accountants
CA. Bharat Jain
Partner
Membership No.100583
Place: Mumbai
Date: 30th May 2015.
Mar 31, 2014
We have audited the accompanying financial statements of BHARATI
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 the significant
accounting policies and other explanatory information.
MANAGEMENT RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Company''s Management is responsible for the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance and the cash flows of the Company in
accordance with the Accounting Standards notified under the Companies
Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th
September, 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act, 2013 and in accordance with the
accounting principles generally accepted in India. This responsibility
includes the design, implementation and maintenance of internal control
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
AUDITORS'' RESPONSIBILITY
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Company''s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company''s internal control. An audit also includes
evaluating the appropriateness of the 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 qualified audit opinion.
BASIS FOR QUALIFIED OPINION
Attention is invited to detailed Note no. 31 of the financial
statements, regarding Work in Progress carried in the financial
statements of the Company at Rs. 3,63,049 lakhs. As per the practice
regularly followed by the Company, valuation of Work in Progress was
carried out as on March 31, 2014 by an Independent Chartered Engineer.
As determined by the Independent Chartered Engineer in the Valuation
Report obtained by the Company, the WIP as on Balance Sheet date was
valued at Rs. 3,26,442 lakhs which is lower by Rs. 36,607 lakhs
compared to the book value of WIP of Rs. 3,63,049 lakhs due to
reworking and replacement costs, obsolescence of material, delay in
procurements leading to delay in construction and consequential
increase in costs, liquidation damages due to delay in construction and
other such expenditure. The Management has not written off the said
excess Work in Progress of Rs. 36,607 lakhs in the accounts for the
year ending March 31, 2014. In our opinion, considering the report of
the Independent Chartered Engineer, the Company ought to have written
off vessels under constructions to the extent of Rs. 36,607 lakhs in
its Statement of Profit and Loss for the year ended March 31, 2014. Had
the same been accounted for, the net loss for the year ended March 31,
2014 would have been higher by Rs. 36,607 lakhs and the accumulated
losses as at that date would have been higher by the same amount. Our
audit opinion on the financial statements for the year ended March 31,
2014 is qualified in respect of the above matter.
Attention is invited to detailed note 32 of the financial statements ,
regarding Deferred Tax Asset created by the Company. The Company has
created deferred tax asset of Rs. 33,097 lakhs on its Accumulated
Losses (including unabsorbed depreciation) and on the unpaid interest
(including Funded Interest Term Loans). The principles of Accounting
Standard- 22 notified in this regard clearly states that deferred tax
assets should be recognised and carried forward only to the extent that
there is a virtual certainty that sufficient future taxable income will
be available against which such deferred tax assets can be realised.
In our opinion, considering the huge accumulated losses and the present
scenario of the Company''s business, there is no certainty that the
company would have sufficient future taxable income to justify the
creation of Deferred Tax Asset. Had the Deferred tax asset not been
created, the net loss for the year ended March 31, 2014 would have been
higher by Rs. 33,097 lakhs and the accumulated losses as at that date
would have been higher by the same amount. Our audit opinion on the
financial statements for the year ended March 31, 2014 is qualified in
respect of the above matter.
Attention is invited to detailed note 33 of the financial statements,
regarding refund bank guarantees invoked by Customers of Rs. 73,041
lakhs and paid by the bank, interest of Rs. 22,846 lakhs paid by the
bank to the Customers on such invoked refund bank guarantees, foreign
exchange variation of Rs. 28,737 lakhs on such refund bank guarantee
payments and further interest of Rs. 7,467 lakhs charged by bank on
such refund bank guarantee payments. The Company has not made any
provision in its financial statements in respect of any of the above.
The Company has filed a suit before the Hon''ble City Civil Court,
Mumbai against the lending banks for payment of such invoked refund
bank guarantees. In view of the pending litigation and the uncertainty
of outcome of such pending litigation, we are unable to quantify and
comment upon the liability that may devolve on the Company on account
of such invoked bank guarantees. Our audit opinion on the financial
statements for the year ended March 31, 2014 is qualified in respect of
the above matter.
Attention is invited to detailed note 34 of the financial statements,
regarding company''s receivables include Subsidy receivable from the
Government of India amounting to Rs. 66,060 lakhs. The receipt of the
aforesaid Subsidy is dependent upon completion of vessels and
compliance with other terms and conditions of the Shipbuilding Subsidy
Scheme of the Government of India. In view of the uncertainty involved
as mentioned above, we are unable to comment on the recoverability or
otherwise of the aforementioned Subsidy receivable amounting to Rs.
66,060 lakhs. Therefore, the impact of the same on the Losses for the
year ending March 31, 2014 cannot be ascertained. Our audit opinion on
the financial statements for the year ended March 31, 2014 is qualified
in respect of the above 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 :
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
(b) In the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
EMPHASIS OF MATTER
We draw attention to Note 30 of the financial statements which
indicates that the Company is undergoing the process of Financial
Restructuring We also refer to our qualifications in Basis for
Qualified Opinion paragraph herein above. The appropriateness of
assumption of going concern of the Company is dependent upon the
successful financial restructuring including raising of requisite
finance for its revival and consequent utilisation of the
infrastructure to generate cash flows in future to meet its
obligations. Our opinion is not qualified in respect of this matter.
REPORT ON 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 Section
227(4A) of the Act, we give in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, we report that:
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
b) 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 it
appears from our examination of those books.
c) 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.
d) Except for the effects of the matter described in the Basis for
Qualified Opinion paragraph above, in our opinion, the Balance Sheet,
the Statement of Profit and Loss, and the Cash Flow Statement comply
with the Accounting Standards notified under the Companies Act, 1956
read with the General Circular 15/2013 dated 13th September, 2013 of
the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013;
e) On the basis of the written representations received from the
directors as on March 31, 2014, taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2014,
from being appointed as a director in terms of Section 274(1)(g) of the
Act.
(Referred to in Paragraph 1 under "Report on Other Legal and Regulatory
Requirements" section of our report of even date) (i) In respect of its
Fixed Assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) According to information furnished to us, physical verification of
a major portion of fixed assets as at March 31, 2014 was conducted by
the management during the year. In our opinion, the frequency of
verification is reasonable having regard to the size of the Company and
the nature of its assets. No material discrepancies were noticed on
such physical verification.
(c) No substantial part of fixed assets has been disposed off during
the year which will affect the going concern principle. (ii) In
respect of its Inventories:
(a) Physical verification of inventories has been conducted at
reasonable intervals by the management.
(b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventory and
during the course of our audit no material discrepancies were noticed
on physical verification of inventories.
(iii) In respect of loans, secured or unsecured, granted by the Company
to companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act 1956, according to the
information and explanations given to us:
(a) The Company has not granted loans during the year. At the year-end,
the outstanding balances of such loans granted aggregated Rs.
103,283.77 Lakhs (number of parties 14) and the maximum amount involved
during the year was Rs. 103,283.77 Lakhs (number of parties 14).
(b) In our opinion and according to the information and explanation
given to us, the above loans are Interest free and conditions on which
loans have been given to the company are not, prima facie, prejudicial
to the interest of the Company.
(c) There is no stipulation for repayment of principal and interest on
the above loans and hence, the question of repayment being irregular
does not arise.
(d) There is no stipulation for repayment of principal and interest on
the above loans and hence, the question of overdue principal and
interest amount does not arise.
In respect of loans, secured or unsecured, taken by the Company from
companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act, 1956, according to the
information and explanations given to us:
(e) The Company has taken loans aggregating Rs. 7,029.77 Lakhs from 1
party during the year. At the year-end, the outstanding balances of
such loans taken aggregated Rs. 40.15 Lakhs (number of parties 3) and
the maximum amount involved during the year was Rs. 7069.92 Lakhs
(number of parties 4).
(f) In our opinion and according to the information and explanation
given to us, above loans are interest free and terms and conditions on
which loans have been given to the company are not, prima facie,
prejudicial to the interest of the Company.
(g) There is no stipulation for repayment of principal and interest on
the above loans and hence, the question of repayment being irregular
does not arise.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system, commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weakness in such internal controls.
(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 particulars of the contracts or arrangements that
need to be entered into the register maintained under section 301 of
the Act, have been so entered.
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the contracts maintained under Section 301 of
the Act exceeding the value of rupees five lakhs in respect of any
party during the year have been made at prices which are reasonable
having regard to prevailing market prices at that time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from public as
defined under section 58A and 58AA of the Act and the rules framed
there under.
(vii) In our opinion, the company has an in-house internal audit system
commensurate with its 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 made and maintained. We have,
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
(ix) (a) According to the information and explanation given to us and
according to the books and records produced and examined by us, the
Company has been irregular in depositing with the appropriate
authorities undisputed statutory dues including Provident Fund,
Employee''s State Insurance, Sales Tax, Service Tax, Income Tax, Wealth
Tax, Custom Duty, Excise Duty. However, according to the information
and explanations given to us, the dues in respect of income tax, Wealth
Tax, Professional Tax, ESIC, Service Tax that have not been deposited
with the appropriate authorities within a period of 6 months from the
date they became payable are given below:
Nature of the Financial Year to which
Nature of the Statute . dues the matter Pertains
The Income Tax Act, 1961 Income Tax 2008-2009
The Income Tax Act, 1961 Income Tax 2010-2011
The Wealth Tax Act, 1957 Wealth Tax 2003-2004
The Income Tax Act, 1961 TCS 2013-2014
The Income Tax Act, 1961 TDS 2011-2012
The Income Tax Act, 1961 TDS 2012-2013
The Income Tax Act, 1961 TDS 2013-2014
Professional Tax Act, 1975 Professional Tax 2013-2014
ESIC Act, 1948 ESIC 2013-2014
The Finance Act, 2004
and Service Tax Rules Service Tax 2008-2009 to 2011
-2012
The Finance Act, 2004 and
Service Tax Rules Service Tax 2012-2013
The Finance Act, 2004 and
Service Tax Rules Service Tax 2013-2014
The Customs Act, 1962 Custom Duty 2010-2011
The Customs Act, 1962 Custom Duty 2009-2010
Nature of the Statute Amount Rs.
(in Lakhs)
The Income Tax Act, 1961 928.07
The Income Tax Act, 1961 1319.07
The Wealth Tax Act, 1957 0.15
The Income Tax Act, 1961 0.48
The Income Tax Act, 1961 2.69
The Income Tax Act, 1961 5.56
The Income Tax Act, 1961 126.81
Professional Tax Act, 1975 5.93
ESIC Act, 1948 2.34
The Finance Act, 2004 and Service Tax Rules 292.11
The Finance Act, 2004 and Service Tax Rules 106.07
The Finance Act, 2004 and Service Tax Rules 21.90
The Customs Act, 1962 104.30
The Customs Act, 1962 115.01
(b) According to the information and explanation given to us, the dues
in respect of income tax, service tax, excise duty, custom duty that
have not been deposited with the appropriate authorities on account of
dispute and the forum where the disputes are pending are given below.
Nature of Financial Year
to which Amount Rs.
Nature of the Statute the dues the matter Pertains (in Lakhs)
The Income Tax Act, 1961 Income Tax 2003-2004 0.15
The Income Tax Act, 1961 Income Tax 2005-2006 0.04
The Income Tax Act, 1961 Income Tax 2007-2008 668.19
The Income Tax Act, 1961 Income Tax 2008-2009 496.47
The Income Tax Act, 1961 Income Tax 2009-2010 451.12
The Finance Act, 2004
and Service Tax 2008-2009 to 2012-13 2871.00
Service Tax Rules
The Customs Act, 1962 Custom Duty 2008-2009 39.36
The Customs Act, 1962 Custom Duty 2011-2012 4978.56
The Central Excise Act, Excise Duty 2011-2012 1354.04
1944
Nature of the Statute Forum where dispute is pending
The Income Tax Act, 1961 Appeal pending before CIT(A)
The Income Tax Act, 1961 Appeal pending before CIT(A)
The Income Tax Act, 1961 Appeal pending before CIT(A)
The Income Tax Act, 1961 Appeal pending before CIT(A)
The Income Tax Act, 1961 Appeal pending before CIT(A)
The Finance Act, 2004 and Dy Commissioner
Service Tax Rules
The Customs Act, 1962 Director General of Central
Excise Intelligence
The Customs Act, 1962 Commissioner of Customs
The Central Excise Act, 1944 Commissioner of Central
Excise (LTU)
(x) The accumulated losses of the Company at the end of the financial
year are not less than fifty percent of its net worth and the Company
has incurred cash losses during the financial year covered by our audit
and in the immediately preceding financial year.
(xi) According to the records produced, the company had overdrawn cash
credit, overdue principal and overdue interest. In the absence of the
status of the Corporate Debt Restructuring and declaration of bank
accounts as Non Performing Assets by various banks, we are unable to
comment on the defaults in repayment of dues to financial institutions,
banks and debenture holders.
(xii) According to the information and explanation given to us, 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) In our opinion, considering the nature of the business carried
on during the year, the Company is not a chit fund or nidhi /mutual
benefit fund /society. In view of the above, the said clause (xiii) of
the order is not applicable to the Company.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in securities. It
has only invested in shares of subsidiaries, joint venture, for which
proper records have been maintained and timely entries have been made
therein. The said investments are held in company''s name.
(xv) In our opinion and according to the information and explanation
given to us, the Company has not given any corporate guarantee for loan
taken by others from financial institution during the year.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purpose for which
they were raised, except for loan amounting to Rs 2,350/- lakhs which
was applied for other purpose.
(xvii) According to the information and explanation given to us and on
the overall examination of the balance sheet of the company, we report
that no funds raised on short term basis have been used for long term
investments.
(xviii) During the year the Company has made preferential allotment of
1,18,46,602 Equity shares of Rs. 10/- each at premium of Rs. 69.12/- to
the promoter group of the Company in accordance with the terms of
Corporate Debt Restructuring agreed with its Lenders. The valuation of
these shares was done as per SEBI (Issue of Capital and Disclosure
Requirements) (Amendment) Regulations which in our opinion is not
prejudicial to the interest of the company.
(xix) According to information and explanations given to us, the
company has not issued any debentures during the year.
(xx) As informed to us, the Company has not raised any money by public
issues during the year.
(xxi) In our opinion and according to information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the year.
For DPH & Co.
Chartered Accountants
Firm Registration No. 128862W
CA. Apeksha Gada
Partner
Membership No. 139282
Place: Mumbai
Date: September 08, 2014
Mar 31, 2013
REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying financial statements of BHARATI
SHIPYARD LIMITED ("the Company"), which comprise the Balance Sheet as
at March 31, 2013, the Statement of Profit and Loss and Cash Flow
Statement for the year then ended and a summary of significant
accounting policies and other explanatory information.
MANAGEMENT RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting principles generally accepted in India including
Accounting Standards referred to in Section 211(3C) 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.
AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material 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
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers
internal control relevant to the Company''s preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India :
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(b) In the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Point nos. 1(a)
Basis of Preparation and Point no. 28 Corporate Debt Restructuring of
the Significant Accounting Policies and Notes to Accounts forming in
the financial statements which indicates that the Company is undergoing
the process of Financial Restructuring which till the time of
finalization of these accounts appears to be pending for complete
implementation in substance and not just form. These conditions, along
with other matters as set forth in Point nos. 1(h), 1(k), 1(m) and 30
of Notes to Accounts indicate the existence of a material uncertainty
which may have significant impact on the Company''s financial position
in future.
REPORT ON 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 Section
227(4A) 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:
- We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
- 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.
- 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.
- In our opinion, the Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
referred to in section 211(3C) of the Act;
- On the basis of the written representations received from the
directors as on March 31, 2013, taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2013,
from being appointed as a director in terms of Section 274(1)(g) of the
Act.
Referred to in paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As explained to us, physical verification of a major portion of
fixed assets as at March 31, 2013 was conducted by the management
during the year. In our opinion, the frequency of verification is
reasonable having regard to the size of the Company and the nature of
its assets. No material discrepancies were noticed on such physical
verification.
(c) No substantial part of fixed assets has been disposed off during
the year which will affect the going concern principle.
(ii) (a) Physical verification of inventories has been conducted at
reasonable intervals by the management.
(b) In our opinion the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion, the Company is maintaining proper records of
inventory and during the course of our audit no material discrepancies
were noticed on physical verification of inventories.
(iii) (a) The Company has granted advances to 1 (One) Company covered
in the register maintained under Section 301 of the Act. The maximum
balance outstanding during the year is 3,456.64 Lakhs; and the year-end
balance of loan granted to such party is Rs. 3,456.64 Lakhs.
(b) In our opinion and according to the information and explanation
given to us, the above loans are Interest free and conditions on which
loans have been given to the company are not, prima facie, prejudicial
to the interest of the Company.
(c) There is no stipulation for repayment of principal and interest on
the above loans and hence, the question of repayment being irregular
does not arise.
(d) There is no stipulation for repayment of principal amount of the
above loans and hence, the question of overdue principal amount does
not arise.
(e) The company has received unsecured loan from 2 (Two) Companies
covered in the register maintained under section 301 of the Act. The
maximum balance outstanding during the year is Rs. 40.09 Lakhs; and the
year-end balance of loan received from such parties is Rs. 40.09 Lakhs.
(f) In our opinion and according to the information and explanation
given to us, above loans are interest free and terms and conditions on
which loans have been given to the company are not, prima facie,
prejudicial to the interest of the Company.
(g) There is no stipulation for repayment of principal on the above
loans and hence, the question of repayment being irregular does not
arise.
(iv) In our opinion, there is an internal control system, commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, we have not observed any major weakness
in the internal controls.
(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 particulars of the contracts or arrangements that
need to be entered into the register maintained under section 301 of
the Act, have been so entered.
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the contracts maintained under Section 301 of
the Act exceeding the value of rupees five lakhs in respect of any
party during the year have been made at prices which are reasonable
having regard to prevailing market prices at that time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from public as
defined under section 58A and 58AA of the Act and the rules framed
there under, during the year under review.
(vii) In our opinion, the company has an in-house internal audit system
commensurate with its size and nature of its business.
(viii) The maintenance of cost records under section 209 (1) (d) of the
Act has been prescribed by the Central Government from current year in
respect of the activities carried on by the Windmill Segment of the
Company. The cost record of the company have been broadly reviewed by
the cost auditor (Mr. K. N. Satyanarayan) and as per the report he is
of the opinion that prima facie the prescribed cost records has been
maintained. We have, however, not made a detailed record with a view to
determine whether they are accurate or complete.
(ix) (a) According to the information and explanation given to us and
according to the books and records produced and examined by us, the
Company has been irregular in depositing with the appropriate
authorities undisputed statutory dues including Provident Fund,
Employee''s State Insurance, Sales Tax, Service Tax, Income Tax,Wealth
Tax, Custom Duty, Excise Duty. However, according to the information
and explanations given to us, the dues in respect of income tax &
Wealth Tax that have not been deposited with the appropriate
authorities within a period of 6 months from the date they became
payable are given below:
Nature of the Statute Nature of the
dues Financial
Year to
which the Amount
Rs. (in Lakhs)
matter
Pertains
The Income Tax Act, 1956 Income Tax 2008-2009 216.47
The Income Tax Act, 1956 Income Tax 2009-2010 3.54
The Income Tax Act, 1956 Income Tax 2010-2011 2,273.71
The Wealth Tax Act Wealth Tax 2003-2004 0.15
(b) According to the information and explanation given to us, the dues
in respect of custom duty that have not been deposited with the
appropriate authorities on account of dispute and the forum where the
disputes are pending are given below.
Nature of the Statute Nature of the dues Financial Year to which
the matter Pertains
The Customs Act, 1962 Custom Duty 2012-13
The Customs Act, 1962 Custom Duty 2010-11
Nature of the Statute Amount Forum where dispute
Rs. (in Lakhs) is pending
The Customs Act, 1962 14,255.24 Custom Department
The Customs Act, 1962 62.61 High Court
(x) The accumulated losses of the Company at the end of the financial
year do not exceed 50% of its networth and it has incurred cash losses
during the current year.
(xi) According to the records produced, the company had certain
overdrawn cash credit and overdue interest. Under the revised scheme as
finalized in February, 2013, as discussed in point no. 28 on "Corporate
Debt Restructuring" of the Notes to Accounts forming part of the
financials, such overdue interest has been funded and converted into
term loan repayable Q2 of FY 2013-14 onwards. Also the Overdrawn cash
Credit facility has been regularized by conversion of the unutilized
Non Fund Based Working Capital Facilities into Fund Based Facilities.
(xii) According to the information and explanation given to us, 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) In our opinion, considering the nature of the business carried
on during the year, the Company is not a chit fund or nidhi /mutual
benefit fund /society. In view of the above, the said clause (xiii) of
the order is not applicable to the Company.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in securities. It
has only invested in shares of subsidiaries, other body corporate and
units of mutual funds for which proper records have been maintained and
timely entries have been made therein. The said investments are held in
company''s name.
(xv) In our opinion and according to the information and explanation
given to us, the Company has not given any corporate guarantee for loan
taken by others from financial institution during the year.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purpose for which
they were raised.
(xvii) According to the information and explanation given to us and on
the overall examination of the balance sheet of the company, we report
that no funds raised on short term basis have been used for long term
investments. No long term funds have been used to finance short term
assets.
(xviii) During the year the Company has made preferential allotment of
67,64,576 Equity shares of Rs. 10/- each at premium of Rs. 69.12/- to
the promoter group of the Company in accordance with the terms of
Corporate Debt Restructuring agreed with its Lenders. The valuation of
these shares was done as per SEBI (Issue of Capital and Disclosure
Requirements) (Amendment) Regulations which in our opinion is not
prejudicial to the interest of the company.
(xix) According to the information and explanation given to us, the
Company has issued Compulsorily Convertible Debentures to its lenders
amounting to Rs. 21,303 lakhs in accordance with the terms and
conditions of the Corporate Debt Restructuring scheme agreed with them.
The valuation of these debentures was done as per SEBI (Issue of
Capital and Disclosure Requirements) (Amendment) Regulations which in
our opinion is not prejudicial to the interest of the company.
(xx) As informed to us, the Company has not raised any money by public
issues during the year.
(xxi) In our opinion and according to information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the year.
For DPH & Co.
Chartered Accountants
Firm Registration No. 128862W
CA. Apeksha Gada
Partner Place: Mumbai
Membership No. 139282 Date: 30th May, 2013
Mar 31, 2012
1. We have audited the attached Balance Sheet of BHARATI SHIPYARD
LIMITED ("the Company") as at March 31, 2012, Statement of Profit and
Loss and 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 the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, as
amended by the Companies (Auditor's Report) Amendment Order, 2004
(hereinafter referred to as "the order"), issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of the
Companies Act, 1956, hereinafter referred to as "the Act", and on the
basis of such checks as we considered appropriate, we annex hereto 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 in paragraph 3
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, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
iv. in our opinion, the Balance Sheet, Statement of Profit and Loss
and Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of Section 211 of
the Act;
v. on the basis of written representations received from the Directors
of the Company as on 31st March, 2012 and taken on record by the Board
of Directors, we report that, none of the directors are prima facie,
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 Act;
and
vi. in our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Act, in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India :
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2011;
(b) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Referred to in paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As explained to us, physical verification of a major portion of
fixed assets as at March 31, 2012 was conducted by the management
during the year. In our opinion, the frequency of verification is
reasonable having regard to the size of the Company and the nature of
its assets. No material discrepancies were noticed on such physical
verification.
(c) No substantial part of fixed assets has been disposed off during
the year which will affect the going concern principle.
(ii) (a) Physical verification of inventories has been conducted at
reasonable intervals by the management.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) In our opinion, the Company is maintaining proper records of
inventory and during the course of our audit no material discrepancies
were noticed on physical verification of inventories.
(iii) (a) The Company has granted advances to 9 (Nine) parties,
consisting of 1 (one) subsidiary and 8 (Eight) private limited
companies under Section 301 of the Act. The maximum amount involved
during the year is 2,252 Lakhs; and the year-end balance of loan
granted to such parties is Rs. 428 Lakhs.
(b) In our opinion and according to the information and explanation
given to us, the rate of interest and other terms and conditions on
which loans have been given to the company are not, prima facie,
prejudicial to the interest of the Company.
(c) There is no stipulation for repayment of principal and interest on
the above loans and hence, the question of repayment being irregular
does not arise.
(d) There is no stipulation for repayment of principal amount of the
above loans and hence, the question of overdue principal amount does
not arise.
(e) The company has received unsecured loan from 1 (one) party listed
in the register maintained under section 301 of the Act. The maximum
amount involved during the year is 5,573 Lakhs; and the year-end
balance of loan received from such parties is Rs. 5,573 Lakhs.
(f) In our opinion and according to the information and explanation
given to us, above loans are interest free and terms and conditions on
which loans have been given to the company are not, prima facie,
prejudicial to the interest of the Company.
(g) There is no stipulation for repayment of principal on the above
loans and hence, the question of repayment being irregular does not
arise.
(iv) In our opinion, there is an internal control system, commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, we have not observed any major weakness
in the internal controls.
(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 particulars of the contracts or arrangements that
need to be entered into the register maintained under section 301 of
the Act, have been so entered.
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the contracts maintained under Section 301 of
the Act exceeding the value of rupees five lakhs in respect of any
party during the year have been made at prices which are reasonable
having regard to prevailing market prices at that time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from public as
defined under section 58A and 58AA of the Act and the rules framed
there under, during the year under review.
(vii) In our opinion, the company has an in-house internal audit system
commensurate with its size and nature of its business.
(viii) The maintenance of cost records under section 209 (1) (d) of the
Act has been prescribed by the Central Government from current year in
respect of the activities carried on by the Windmill Segment of the
Company. The cost record of the company have been broadly reviewed by
the cost auditor (Mr. K. N. Satyanarayan) and as per the report he is
of the opinion that prima facie the prescribed cost records has been
maintained. We have, however, not made a detailed record with a view to
determine whether they are accurate or complete.
(ix) (a) According to the information and explanation given to us and
according to books and records produced and examined by us, the Company
is generally regular in depositing with the appropriate authorities
undisputed statutory dues including
Provident Fund, Employee's State Insurance, Sales Tax, Wealth Tax,
Custom Duty, Excise Duty, Cess and any other material statutory dues,
wherever applicable. However, according to the information and
explanations given to us, the dues in respect of sales tax, income tax,
custom duty, excise duty, cess that have not been deposited with the
appropriate authorities within a period of 6 months from the date they
became payable are given below.
Nature of the Nature of Financial Year to Amount
Statute the dues which the matter
Pertains Rs. (in Lakhs)
The Income
Tax Act, 1956 Income Tax 2010-2011 1,993.34
(b) According to the information and explanation given to us, the dues
in respect of sales tax, income tax, custom duty, excise duty, cess
that have not been deposited with the appropriate authorities on
account of dispute and the forum where the disputes are pending are
given below.
Nature of the Nature of Financial Year to Amount Forum where
Statute the dues which the matter
Pertains Rs.
(in Lakhs) dispute is
pending
The Customs
Act, 1962 Custom
Duty 2010-11 62.61 CESTAT
The Customs
Act, 1962 Custom
Duty 2010-11 418.18 CESTAT
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current or in the
immediately preceding financial year.
(xi) According to the records produced, the company has defaulted in
repayment of term Loan of Rs. 67,805 lakhs and the overdrawn cash
credit amounting to Rs. 29,954 lakhs. Further default in payment of
interest is Rs. 14,662 lakhs.
The period of default in respect of Cash Credit Facility and term loans
starts from October, 2011. The default continues to exist as on the
reporting date.
(xii) According to the information and explanation given to us, 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) In our opinion, considering the nature of the business carried
on during the year, the Company is not a chit fund or nidhi /mutual
benefit fund /society. In view of the above, the said clause (xiii) of
the order is not applicable to the Company.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in securities. It
has only invested in shares of subsidiaries, other body corporate and
units of mutual funds for which proper records have been maintained and
timely entries have been made therein. The said investments are held in
company's name.
(xv) In our opinion and according to the information and explanation
given to us, the terms and conditions on which the Company has given
corporate guarantee for loan taken by others from financial institution
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, the term loans have been applied for the purpose for which
they were raised.
(xvii) According to the information and explanation given to us and on
the overall examination of the balance sheet of the company, we report
that no funds raised on short term basis have been used for long term
investments. No long term funds have been used to finance short term
assets.
(xviii) During the year the Company has made preferential allotment of
1,378,484 Equity shares of Rs. 10/- each at premium of Rs. 190/- to the
promoters of the Company, which in our opinion is not prejudicial to
the interest of the company.
(xix) According to the information and explanation given to us, the
Company has not issued debentures during the year.
(xx) As informed to us, the Company has not raised any money by public
issues during the year.
(xxi) In our opinion and according to information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the year.
For M/s. DPH & Co. For M/s. Bhuta Shah & Co.
Chartered Accountants Chartered Accountants
Firm Registration No. 128862W Firm Registration No. 101474W
CA. Ashwin Patel CA. Mitesh Kothari
Partner Partner
Membership No.127052 Membership No. 110822
Date: 28th May, 2012
Place: Mumbai
Mar 31, 2011
1. We have audited the attached Balance Sheet of BHARATI SHIPYARD
LIMITED ("the Company") as at March 31, 2011, Profit and Loss Account
and 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 the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, as
amended by the Companies (Auditor's Report) Amendment Order, 2004
(hereinafter referred to as "the order"), issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of the
Companies Act, 1956, hereinafter referred to as "the Act", and on the
basis of such checks as we considered appropriate, we annex hereto 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 in paragraph 3
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, Profit and 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 Act;
v. on the basis of written representations received from the Directors
of the Company as on 31st March, 2011 and taken on record by the Board
of Directors, we report that, none of the directors are prima facie,
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 Act;
and
vi. in our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Act, in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India :
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2011;
(b) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
b) As explained to us, physical verification of a major portion of
fixed assets as at March 31, 2011 was conducted by the management
during the year. In our opinion, the frequency of verification is
reasonable having regard to the size of the Company and the nature of
its assets. No material discrepancies were noticed on such physical
verification.
(c) No substantial part of fixed assets has been disposed off during
the year which will affect the going concern principle.
(ii) (a) Physical verification of inventories has been conducted at
reasonable intervals by the management.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) In our opinion, the Company is maintaining proper records of
inventory and during the course of our audit no material discrepancies
were noticed on physical verification of inventories.
(iii) (a) The Company has granted advances to 11 (eleven) parties,
consisting of 1 (one) subsidiary, 9 (nine) private limited companies
and 1 (one) public company listed in the register maintained under
Section 301 of the Act. The maximum amount involved during the year is
Rs. 8,434.53 lakhs; and the year-end balance of loan granted to such
parties is Rs. 9,750.61 lakhs.
(b) In our opinion and according to the information and explanation
given to us, the rate of interest and other terms and conditions on
which loans have been given to the company are not, prima facie,
prejudicial to the interest of the Company.
(c) There is no stipulation for repayment of principal and interest on
the above loans and hence, the question of repayment being irregular
does not arise.
(d) There is no stipulation for repayment of principal amount of the
above loans and hence, the question of overdue principal amount does
not arise.
(e) The company has received unsecured loan from two Directors listed
in the register maintained under section 301 of the Act. The maximum
amount involved during the year is Rs. 240.15 lakhs; and the year-end
balance of loan granted to such parties is Rs. 240.15 lakhs.
(f) In our opinion and according to the information and explanation
given to us, above loans are interest free and terms and conditions on
which loans have been given to the company are not, prima facie,
prejudicial to the interest of the Company.
(g) There is no stipulation for repayment of principal on the above
loans and hence, the question of repayment being irregular does not
arise.
(iv) In our opinion, there is an internal control system, commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, we have not observed any major weakness
in the internal controls.
(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 particulars of the contracts or arrangements that
need to be entered into the register maintained under section 301 of
the Act, have been so entered.
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the contracts maintained under Section 301 of
the Act exceeding the value of rupees five lakhs in respect of any
party during the year have been made at prices which are reasonable
having regard to prevailing market prices at that time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from public as
defined under section 58A and 58AA of the Act and the rules framed
there under, during the year under review.
(vii) In our opinion, the company has an in-house internal audit system
commensurate with its size and nature of its business.
(viii) As informed to us, the maintenance of cost records under section
209 (1) (d) of the Act has not been prescribed by the Central
Government in respect of the activities carried on by the Company.
(ix) (a) According to the information and explanation given to us and
according to books and records produced and examined by us, the Company
is generally regular in depositing with the appropriate authorities
undisputed statutory dues including Provident Fund, Employee's State
Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty,
Cess and any other material statutory dues, wherever applicable.
According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at 31-03-2011 for a period of more than six months from
the date they become payable.
(b) According to the information and explanation given to us, the dues
in respect of sales tax, income tax, custom duty, excise duty, cess
that have not been deposited with the appropriate authorities on
account of dispute and the forum where the disputes are pending are
given below.
Name of the Nature of Financial Year to Amount Forum where
dispute is
Statute the dues which matter
pertains Rs. (in
Lakhs) pending
The Central Central 1996 Ã 97 140.00 The Appellate
Sales Tax
Act, Sales Tax Tribunal Sales
Tax
1956
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current or in the
immediately preceding financial year.
(xi) According to the information and explanation given to us, the
Company has not defaulted in repayment of dues to the banks.
(xii) According to the information and explanation given to us, 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) In our opinion, considering the nature of the business carried
on during the year, the Company is not a chit fund or nidhi /mutual
benefit fund /society. In view of the above, the said clause (xiii) of
the order is not applicable to the Company.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in securities. It
has only invested in shares of subsidiaries, other body corporate and
units of mutual funds for which proper records have been maintained and
timely entries have been made therein. The said investments are held in
company's name.
(xv) In our opinion and according to the information and explanation
given to us, the terms and conditions on which the Company has given
corporate guarantee for loan taken by others from financial institution
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, the term loans have been applied for the purpose for which
they were raised.
(xvii) According to the information and explanation given to us and on
the overall examination of the balance sheet of the company, we report
that no funds raised on short term basis have been used for long term
investments. No long term funds have been used to finance short term
assets.
(xviii) During the year the Company has made preferential allotment of
1,370,000 Equity shares of Rs 10/- each at premium of Rs. 70/- to the
promoters of the Company, which in our opinion is not prejudicial to
the interest of the company.
(xix) According to the information and explanation given to us, the
Company has not issued debentures during the year.
(xx) As informed to us, the Company has not raised any money by public
issues during the year.
(xxi) In our opinion and according to information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the year.
For M/s. DPH & Co. For M/s. Bhuta Shah & Co.
Chartered Accountants Chartered Accountants
CA. Ashwin Patel CA. Mitesh Kothari
Partner Partner
Membership No.127052 Membership No. 110822
Firm Reg. No. 128862W Firm Reg. No. 101474W
Date: 20th July, 2011
Place: Mumbai
Mar 31, 2010
1. We have audited the attached Balance Sheet of BHARATI SHIPYARD
LIMITED ("the Company") as at March 31, 2010, Profit and Loss Account
and Cash Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Companys Management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003, as
amended by the Companies (Auditors Report) Amendment Order, 2004
(hereinafter referred to as Ãthe orderÃ), issued by the Central
Government of India in terms of sub-section (4A) of Section 227 of the
Companies Act, 1956, hereinafter referred to as Ãthe ActÃ, and on the
basis of such checks as we considered appropriate, we annex hereto 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 in paragraph 3
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, Profit and 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 Act;
v. on the basis of written representations received from the directors
of the Company as on 31st March, 2010 and taken on record by the Board
of Directors, we report that, none of the directors are prima facie,
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 Act;
and
vi. in our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Act, in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India :
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2010;
(b) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to the Auditors Report
Referred to in paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As explained to us, physical verification of a major portion of
fixed assets as at March 31, 2010 was conducted by the management
during the year. In our opinion, the frequency of verification is
reasonable having regard to the size of the Company and the nature of
its assets.No material discrepancies were noticed on such physical
verification.
(c) No substantial part of fixed assets has been disposed off during
the year which will affect the going concern principle. (ii) (a)
Physical verification of inventories has been conducted at reasonable
intervals by the management.
(b) In our opinion the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion, the Company is maintaining proper records of
inventory and during the course of our audit no material discrepancies
were noticed on physical verification of inventories.
(iii) (a) The Company has granted unsecured loans to 14 (fourteen)
parties, consisting of 5 (five) subsidiaries, 8 (eight) private limited
companies and 1 (one) public company listed in the register maintained
under Section 301 of the Act. The maximum amount involved during the
year is 99,345.31 Lakhs; and the year-end balance of loan granted to
such parties is Rs. 91,114.75 Lakhs.
(b) In our opinion and according to the information and explanation
given to us, the rate of interest and other terms and conditions on
which loans have been given to the company are not, prima facie,
prejudicial to the interest of the Company.
(c) There is no stipulation for repayment of principal and interest on
the above loans and hence, the question of repayment being irregular
does not arise.
(d) There is no stipulation for repayment of principal amount of the
above loans and hence, the question of overdue principal amount does
not arise.
(e) The company has not taken any loan, secured or unsecured, from
companies, firms or other parties listed in the register maintained
under section 301 of the Act. Accordingly, paragraph 4(iii) clause no.
(f) and (g) of the Order are not applicable.
(iv) In our opinion, there is an internal control system, commensurate
with the size of the Company and the nature of its business,
for the purchase of inventory and fixed assets and for the sale of
goods. During the course of our audit, we have not observed any major
weakness in the internal controls.
(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 particulars of the contracts or arrangements that
need to be entered into the register maintained under section 301 of
the Act, have been so entered.
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements entered in the contracts maintained under Section 301 of
the Act exceeding the value of rupees five lakhs in respect of any
party during the year have been made at prices which are reasonable
having regard to prevailing market prices at that time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from
public as defined under section 58A and 58AA of the Act and the rules
framed there under, during the year under review.
(vii) In our opinion, the company has an in-house internal audit system
commensurate with its size and nature of its business, which needs to
be strengthened.
(viii) Maintenance of cost records under section 209 (1) (d) of the Act
has not been prescribed by the Central Government in respect of the
Companys business.
(ix) (a) According to the information and explanation given to us and
according to books and records produced and examined by us, the Company
is generally regular in depositing with the appropriate authorities
undisputed statutory dues including Provident Fund, Employees State
Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty,
Cess and any other material statutory dues, wherever applicable.
According to the information and explanations given to us, no
undisputed amounts payable in respect of the aforesaid dues were
outstanding as at 31-03-2010 for a period of more than six months from
the date they become payable.
(b) According to the information and explanation given to us, the dues
in respect of sales tax, income tax, custom duty, excise duty, cess
that have not been deposited with the appropriate authorities on
account of dispute and the forum where the disputes are pending are
given below.
Name of the Nature of Financial Year to
Statute the dues which matter pertains
The Income Tax Act, 1961 Income Tax 1997-98
The Central Sales Tax Act Central Sales Tax 1996-97
1956
Name of Amount Forum where dispute is
Statue Rs. (in Lakhs) pending
The Income Tax Act, 1961 15.00 The High Court of Bombay
The Central Sales Tax Act 140.00 The Appellate Tribunal
1956 Sales Tax
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current or
in the immediately preceding financial year.
(xi) According to the information and explanation given to us, the
Company has not defaulted in repayment of dues to the banks.
(xii) According to the information and explanation given to us, 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) In our opinion, considering the nature of the business carried
on during the year, the Company is not a chit fund or nidhi /mutual
benefit fund /society. In view of the above, the said clause (xiii) is
not applicable to the Company.
(xiv) According to the information and explanation given to us, the
Company is not dealing or trading in shares, securities and other
investments. Accordingly, the provisions of clause 4 (xiv) of the
Companies (Auditors Report) Order 2003, as amended, is not applicable
to the company.
(xv) According to the information and explanation given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purpose for which
they were raised.
(xvii) According to the information and explanation given to us and on
the overall examination of the balance sheet of the company, we report
that no funds raised on short term basis have been used for long term
investments. No long term funds have been used to finance short term
assets.
(xviii) During the year the Company has made preferential allotment of
1,370,000 Equity shares of Rs 10/- each at premium of Rs. 70/- to the
promoters of the Company, which in our opinion is not prejudicial to
the interest of the company.
(xix) According to the information and explanation given to us, the
Company had issued 11.00% secured redeemable non- convertible
debentures amounting to Rs. 2,000 Lakhs during the year. The Company
has created the security / charge in respect of the same.
(xx) As informed to us, during the year covered by our audit report the
Company has not raised any money by public issues.
(xxi) In our opinion and according to information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the year.
For M/s. DPH & Co. For M/s. Bhuta Shah & Co.
Chartered Accountants Chartered Accountants
CA. Ashwin Patel CA. Mitesh Kothari
Partner Partner
Membership No.127052 Membership No. 110822
Firm Reg. No. 128862W Firm Reg. No. 101474W
Date: 29th June, 2010
Place: Mumbai
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