Mar 31, 2015
We have audited the accompanying financial statements of Gitanjali Gems
Limited ("the Company") which comprises of the Balance Sheet as at
31st March 2015, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended and a summary of significant
accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
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 the 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 the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these 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 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 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 the 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 audit opinion on the financial
statements.
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, of the state of affairs of the Company as
at 31st March, 2015, and its profit and its cash flows for the year
ended on that date.
Emphasis of matter We draw attention to
a. Note No. 27a relating to 12% Non-Convertible Debenture issued to LIC
where company has not paid overdue principal of Rs. 243.73 lacs. Further,
the Company has not created cash deposit as required by Circular 4/2013
dated 11th February 2013 of GOI, MCA in respect of debentures
installments maturing during the following year.
b. Note No. 27d relating to overdrawn position of Rs. 7,029 Lacs in
working capital borrowing from consortium of bankers.
c. Note No. 33 relating to non- payment of Self Assessment Tax of Rs.
2,163.32 Lacs for Assessment year 2013-14.
(As fully described in respective notes)
Our opinion is not qualified in respect of above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015
("the Order"), as issued by Central Government of India in terms of
sub section (11) of section 143 of Companies Act, 2013 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 obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purpose of our audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, 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. 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 133 of the Act read with Rule 7 of the Companies
(Accounts) Rules, 2014 ;
e. On the basis of 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 sub section (2) of section 164 of
the Companies Act, 2013, and
f. 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 29 to the
financial statements;
ii. As represented by the company, there are no foreseeable material
losses in respect of long-term contracts including derivative contracts
- Refer Note 49 to the financial statements;
iii. There has been no delay in transferring amounts required to be
transferred to Investor Education and Protection Fund by the holding
Company.
Annexure to the Auditors' Report
[Referred to in paragraph pertaining to "Report on Other Legal and
Regulatory Requirement" of our Report of even date to the members of
Gitanjali Gems limited on the financial statements for the year ended
31st March, 2015]
1. a) The Company is maintaining proper records showing full
particulars including quantitative details and situation of fixed
assets.
b) During the year Fixed Assets have been physically verified by the
management. The discrepancies between the book records and the physical
inventory are not material and have been adjusted in the books. In our
opinion, the frequency of verification is reasonable.
2. a) As explained to us the inventories have been physically verified
by the management during the year and also at the end of the year. In
our opinion, the frequency of verification is reasonable.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
c) On the basis of our examination of the inventory records, in our
opinion and according to the information and explanations given to us,
the company has maintained proper records of inventories. The
discrepancies noticed on physical verification of inventories as
compared to book records have been properly dealt with by the company
3. The Company has granted unsecured loans, to companies, firms or
other parties covered in the register maintained under Section 189 of
the Companies Act, 2013. Said loans are interest free and there is no
stipulation as to repayment.
4. In our opinion and according to the information and explanations
given to us, having regard to the explanations that certain items
purchased are of special nature for which suitable alternative sources
are not readily available for obtaining comparative quotations, there
is adequate internal control system commensurate with the size of the
Company and the nature of its business, for the purchase of inventories
and fixed asset and for sale of goods and services. Further, on the
basis of our examination of the books and records of the company, and
according to the information and explanations given to us, we have
neither come across nor have been informed of any continuing failure to
correct major weakness in the aforesaid internal control system.
5. The Company has accepted deposits from the public, within the
meaning of Sections 73 to 76 of Companies Act 2013 and the rules framed
there under. In our opinion and according to the information and
explanations given to us the company has complied with the provision of
Section 73 to 76 of the Companies Act 2013 and the Companies
(Acceptance of Deposits) Rules 2014.
6. The Central Government has not prescribed maintenance of cost
records under Section 148 of the Companies Act 2013.
7. a) According to the information and explanations given to us and
records of the Company examined by us, in our opinion, the Company is
generally regular in depositing undisputed statutory dues including
provident fund, investor education and protection fund, employees state
insurance, income tax, sales tax, wealth tax, service tax, custom duty,
excise duty, cess and any other material statutory dues as applicable
with the appropriate authorities however it is noticed that there has
been delays in payment of some of the statutory dues. There are no
undisputed statutory dues payable for a period of more than six months
from the date they became payable as at 31st March, 2015 except Self
Assessment tax of Rs. 2,163.32 lacs for year ended 31st March, 2013 which
is outstanding for a period of more than six months from the date it
became payable which we are informed is due to continuing liquidity
constraints face by the Group since May 2013 as described in Notes to
Consolidated Financial statements
b) According to the information and explanations given to us by the
Management and as per the records of the Company examined by us, there
is no disputed dues in respect of Wealth tax, Excise duty and Cess not
deposited as at 31st March 2015 except dispute in respect of income tax
& service tax as under :
Sr. Assessment Amount in Remark
No. Year Rs. in Lacs
Income Tax Act,1961
1 2006-2007 878.66 Section 143(3) r.w.s 153 A
2 2007-2008 610.79 Section 143(3) r.w.s 147
3 2008-2009 6,065.15 Section 143(3) r.w.s 153 A
4 2009-2010 1,567.22 Section 143(3) r.w.s 153 A
5 2010-2011 5,023.14 Section 143(3) r.w.s 153 A
6 2011-2012 8,995.49 Section 143(3) r.w.s 153 A
7 Various year 211.10 TDS demand as per TRACES
Service tax
8 Service tax 540.81 Appeal filed with excise
authorities
The above Income Tax demands are as consequence to assessment under
Section 153 A and reassessment for AY 2006-07 to AY 2011-12 and are
mainly on account of additions due to disallowance of business
expenses, disallowance of exemption and transfer pricing adjustment.
In respect of Assessment year 2007-08 in addition to above, there is a
demand by tax authority under assessment under Section 143(3) r.w.s.
153 A with demand of Rs. 473.90 Lacs.The company has filed appeal against
the said order. This orders and appeal is not likely to have effect in
view of the assessment under section 143(3) r.w.s 147 and therefore it
is not included under above figure of disputed Income Tax.
The Company has filed appeal against service tax assessments in respect
of assessed service tax payable of Rs. 540.81 lacs on service component
relating to FCCB, GDR, etc. Based on the internal assessment of the
company, the demand is not likely to be crystallized.
c) The amount required to be transferred to investor education and
protection fund in accordance with the relevant provisions of Companies
Act, 1956 (1 of 1956) and rules there under are transferred to such
fund within time.
8. The Company is registered over 5 years. The Company has not incurred
any cash loss in the current financial year however has incurred cash
loss in the immediately preceding financial year. The company does not
have accumulated losses at the end of the financial year.
9. Based on our audit procedures and as per the information and
explanation given to us by the management, during the year the company
has delayed in timely repayment of its dues to banks for ECB & for
working capital facilities and to Financial institution for debentures.
Further following amount due during the year are outstanding as at 31st
March 2015:
a. In respect of 12% Non convertible Debenture issued to LIC of India
principal of Rs. 243.73 lacs
b. Overdrawn bank facilities aggregating to Rs. 7029 lacs mainly on
account of non servicing of interest which we are informed is due to
continuing liquidity constraints face by the Group since May 2013 as
described in Notes to Consolidated Financial statements.
10. According to records of the company examined by us and the
information and explanation given to us by the management, the terms
and conditions of the guarantee given by the company for loans taken by
subsidiaries from banks or financial institutions are prima facie not
prejudicial to the interest of the company.
11. The Company has not obtained any term loans except for External
commercial borrowing obtain from foreign branch of Indian banks. The
same has been applied for the purpose it was obtained.
12. Based upon the audit procedures performed and information and
explanations given by the management, we report that we have not come
across any instances of fraud on or by the Company, noticed or reported
during the year, nor have we been informed of such case by management.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
ICAI Firm Registration No.102860W
A.D. Shenoy
Partner
Membership No.11549
Place: Mumbai
Date: 29th May, 2015
Mar 31, 2014
We have audited the accompanying financial statements of Gitanjali Gems
Limited ("the Company") which comprise the Balance Sheet as at 31st
March 2014, the Statement of profit and Loss and the Cash Flow Statement
for the year then ended and a summary of significant accounting policies
and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act") read with the General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013. This
responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the entities internal control an audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is suffcient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2014;
ii. in the case of the Statement of profit and Loss, of the loss for the
year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
"Emphasis of matter"
We draw attention to
a. Note No. 28a relating to 12% Non-Convertible Debenture issued to
LIC where company has not paid 4 installments aggregating to Rs. .
6,250.00 lacs and interest Rs..1,093.75 lacs which was overdue as at
31.03.2014. Further, the Company has not created cash deposit as
required by Circular 4/2013 dated 11th February 2013 of GOI, MCA in
respect of debentures installments maturing during the following year.
b. Note No. 28c relating to delays in servicing of principal and
interest of ECBs and overdue installment of USD 1 million and interest
of USD 1.32 million as at 31.03.14
c. Note No. 28d relating to overdrawn position in working capital
borrowing from consortium of bankers.
d. Note 29d,e & f relating to disputed income tax of Rs..1,352.56 lacs,
non-payment/ short deduction of TDS of Rs.. 300.59 lacs and disputed
service tax of Rs.. 550.77 lacs.
e. Note No. 33 relating to non- payment of Self Assessment Tax for FY
2012-13.
f. Note no. 34 relating to compliance with schedule XIII in respect of
payment of managerial remuneration.
(As fully discribed in respective notes)
Our opinion is not qualified in respect of above matters.
Report on Other Legal and Regulatory Requirements
1 As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order"), as amended, issued by the Central Government of India in terms
of sub- section (4A) of section 227 of the Act, we give in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
i. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
ii. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
iii. the Balance Sheet, Statement of profit and Loss 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 comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956 read with the
General Circular 15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013;
and
v. on the basis of written representations received from the directors
as on 31 March 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March 2014, from being
appointed as a director in terms of clause (g) of sub- section (1) of
section 274 of the Companies Act, 1956.
Annexure to the Auditors'' Report
[Referred to in paragraph pertaining to "Report on Other Legal and
Regulatory Requirement" of our Report of even date to the members of
Gitanjali Gems Limited on the financial statements for the year ended
31st March, 2014]
1.(a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
assets.
(b) The fixed assets of the Company have been physically verifed by the
management at specified intervals during the year which, in our opinion
is reasonable having regard to the size of the Company and the nature
of its assets and no material discrepancies were noticed on such
verifcation.
(c) During the year, the Company has not disposed off any substantial
part of fixed assets so as to affect the going concern.
2. a) The inventory has been physically verifed by the management
during the year and also at the year end.
(b) The procedures of physical verifcation of inventory followed by the
management is reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. No material
discrepancies were noticed on physical verifcation.
3. (a) The Company has granted unsecured loans / advances to companies,
firms or other parties covered in the register maintained under section
301 of the Act. The numbers of parties are nineteen and amount
outstanding as at 31st March 2014 is Rs..40,997.06 Lacs (Previous Year
Rs.64,470.86 Lacs and Number of Parties: Nineteen)
(b) The above loans are interest free except in respect of one of the
wholly owned subsidiary companies. In respect of the said wholly owned
subsidiary company, the principal amount has been repaid during the
year and only interest of Rs.. 383.32 Lacs is outstanding. The interest
charged to the subsidiary company is not prejudicial to the interest of
the Company.
(Refer note no. 46)
(c) In respect of other companies, as no stipulation as to repayment of
principal amounts have been mentioned, the question of repayment being
regular does not arise. However in respect of one subsidiary company,
loan of Rs.. 11,574.15 Lacs was to be received on or before 31/03/2014
but the same is outstanding.
(Refer note no. 46)
(d) The Company in earlier years had taken unsecured loans from
Companies, firms and other parties covered under section 301 of the Act
,the same has been repaid during the year Amount outstanding as at 31st
March 2014 is NIL (PY Rs..481.24 Lacs and No. of party: One). The said
loan was interest free and there were no stipulations as to repayment
hence, clauses 4 (iii) (f) & (g) do not apply.
4. (a) In our opinion and according to the
information and explanations given to us, there are adequate internal
control procedures commensurate with the size of the Company and the
nature of its business, for the purchase of inventory and fixed assets
and for the sale of goods and services.
(b) During the course of our audit, no major weakness has been noticed
in the internal control system in respect of these areas.
5. (a) On the basis of our examination of the books of
accounts and according to the information and explanations provided by
the management, we are of the opinion that the particulars of contracts
or arrangements referred to in Section 301 of the Act that need to be
entered into the register maintained under Section 301 have been so
entered.
(b) In our opinion and according to the information and explanations
given to us, all the transactions made in pursuance of such contracts
or arrangements entered into the register maintained under section 301
of the Companies Act, 1956, and exceeding the value of Rupees Five
Lakhs in respect of each party during the year have been made at prices
which are reasonable having regard to the prevailing market price at
the relevant time, except that in respect of purchases and sales of
some of the products, no comparison of prices could be made because of
the unique and specialized nature of items involved and the absence of
any comparable prices. We are unable to comment whether these
transactions were made at prevailing market prices at the relevant
time.
6. During the year, the Company has accepted deposits from the public
within the meaning of provisions of Section 58A and 58AA of the
Companies Act, 1956. In our opinion and according to the information
and explanations given to us, the Company has complied with the
provision of Section 58A of the Companies Act, 1956 and the Companies
[Acceptance of Deposits] Rules, 1975.
7. The Company has engaged an independent Chartered Accountant firm to
carry out the internal audit of the Company. In our opinion, the
internal audit system is commensurate with its size and nature of its
business.
8. We have broadly reviewed the cost accounting 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 from this year. We are of the opinion that
prima facie the prescribed cost records have been maintained. We have
however not made a detailed examination of the cost records with a view
to determine whether they are accurate or complete.
9. (a) Undisputed statutory dues including provident
fund, employees'' state insurance, income tax, sales tax, service tax,
custom duty, cess and other statutory dues have been deposited with the
appropriate authorities with some delays. According to the information
and explanations given to us, no undisputed amounts payable in respect
of provident fund, investor education and protection fund, employees''
state insurance, income tax, sales tax, service tax, custom duty, cess
and other statutory dues were outstanding at the year end for a period
of more than six months from the date they became payable.
(b) According to the information and explanations given to us by the
Management and as per records of the Company examined by us there were
no disputed dues in respect of Wealth- tax, Excise Duty and Cess not
deposited as at 31st March 2014 except in respect of following:
1. service tax dues of Rs..550.77 lacs pertaining to the period 2005 to
2008 in respect of Show cause cum notice demand fled with Service Tax
Authorities .
2. Income tax dues of Rs.. 1352.56 lacs on completion of income tax
assessments U/s. 153A of the Income Tax Act, 1961 up to Ay. 2007-08.
3. Custom duty of Rs.. 26.15 lacs
4. Non- payment/ short deduction of Tax Deducted at Source amounting
to Rs.. 300.59 lacs
10. The Company is registered for over 5 years and has no accumulated
losses as at the end of the financial year. The Company has incurred
cash losses of Rs..1,918.45 lacs in the current year. However, there were
no cash losses in the immediate preceding years.
11. Based on our audit procedures and as per the information and
explanations given to us by the management, during the year the Company
has defaulted in timely repayment of its dues to financial institutions,
banks and debenture holders. Further the following amount due during
the year are outstanding as at 31st March 2014;
(a) In respect of 12% No-convertible Debentures issued to LIC of India,
4 installments aggregating to Rs.. 6,250 Lacs and interest thereon of
Rs..1,093.75 lacs.
(b) In respect of ICICI Dubai ECB, One installment amounting to USD 1
million of principal and interest of USD 1.32 million.
(c) Overdrawn bank facilities in 19 banks amounting to Rs.. 12,739.78
lacs mainly on account of non-servicing of interest.
12. As per the information and explanations given to us by the
management, we are of the opinion that the Company has not granted
loans and advances on the basis of security of pledge of shares,
debentures and other securities.
13. The provisions of Clause 4 (xiii) of the Order (as
amended) are not applicable as the Company is not a chit fund company
or nidhi / mutual benefit fund/ society.
14. The Company has not dealt or traded in shares, securities,
debentures or other investments during the year. Hence provisions of
Clause 4 (xiv) of the Order) are not applicable.
15. According to the information given to us and managements''
representation, the Company has given guarantees of Rs..345,573.15 lacs
for the loans taken by its subsidiary companies from banks/ financial
institutions.
16. The Company has not raised any new term loans during the year. The
term loans outstanding at the beginning of the year have been applied
for the purposes for which they were obtained.
17. According to the information and explanations given to us and
overall examination of the Balance Sheet and Cash Flow Statement of the
Company we report that no funds raised on short term basis have been
used for long term investments.
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under section 301 of the Act.
19. The Company has outstanding non-convertible secured debentures
issued to LIC, for which, as per the information and explanations given
to us, the Company has already created security. During the earlier
year, the Company has issued unsecured zero % fully convertible
debenture of Rs..3,900 lacs on preferential basis to D.B. Corp Limited.
As the debenture issued in earlier year is unsecured, no security needs
to be created in respect of this debenture.
20. The Company has not raised any money by public issues during the
year.
21. Based upon the audit procedure performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm Registration No.102860W
A.D. Shenoy
Partner
Membership No.11549
Place: Mumbai
Date: 30th May, 2014
Mar 31, 2013
Report on the Financial Statements for the year ended 31st March, 2013
We have audited the accompanying financial statements of Gitanjali Gems
Limited ("the Company") which com- prise the Balance Sheet as at
31st March 2013, the State- ment of Profit and Loss and the Cash Flow
Statement for the year then ended and a summary of significant account-
ing policies and other explanatory information.
Management''s Responsibility for the Financial State- ments
Management is responsible for the preparation of these financial
statements that give a true and fair view of the fi- nancial position,
financial performance and cash flows of the Company in accordance with
the Accounting Stand- ards referred to in sub-section (3C) of section
211 of the Companies Act, 1956 ("the Act"). This responsibility in-
cludes the design, implementation and maintenance of in- ternal 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 fi- nancial
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 require- ments 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 au- dit 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 as-
sessments, 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 financial statements give the information
required by the Act in the manner so required and give a true and fair
view in con- formity with the accounting principles generally accepted
in India:
i. in the case of the Balance Sheet, of the state of af- fairs of the
Company as at 31st March 2013;
ii. in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Or- der, 2003
("the Order"), as amended, issued by the Cen- tral Government of
India in terms of sub-section (4A) of section 227 of the Act, we give
in the Annexure a state- ment 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:
i. we have obtained all the information and explana- tions which to
the best of our knowledge and belief were necessary for the purpose of
our audit;
ii. in our opinion proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
iii. the Balance Sheet, Statement of Profit and Loss 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 comply with the Accounting Standards referred
to in sub- section (3C) of section 211 of the Companies Act, 1956; and
v. on the basis of written representations received from the directors
as on 31st March 2013, and taken on record by the Board of Directors,
none of the di- rectors is disqualified as on 31st March 2013, from
being appointed as a director in terms of clause (g) of sub-section (1)
of section 274 of the Companies Act, 1956.
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
assets.
(b) The fixed assets of the Company have been physically verified by
the management at specified intervals during the year which, in our
opinion is reasonable having regard to the size of the Company and the
nature of its assets and no material discrepancies were noticed on such
verification.
(c) During the year, the Company has not disposed off any substantial
part of fixed assets so as to affect the going concern.
2. (a) The inventory has been physically verified by the management
during the year and also at the year end.
(b) The procedures of physical verification of inventory followed by
the management is reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. No material
discrepancies were noticed on physical verification.
3. (a) The Company has granted unsecured loans / advances to
companies, firms or other parties covered in the register maintained
under section 301 of the Act. The numbers of parties are nineteen and
amount outstanding as at 31st March 2013 is Rs.6,447.08 Million (P.Y.
Rs. 10,325.40 Million and Number of Parties: Twenty)
(b) The above loans are interest free except in respect of one of the
wholly owned subsidiary companies. In respect of the said wholly owned
subsidiary company, the loan amount carries interest and the repayment
is regular.
(c) In respect of other companies, as no stipulation as to repayment of
principal amounts have been mentioned, the question of repayment being
regular does not arise.
(d) The Company has taken unsecured loans from Companies, firms and
other parties covered under section 301 of the Act. The number of party
is one and the amount outstanding as at 31st March 2013 is Rs.48.12
Million (P.Y. Rs. 64.49 Million and Number of party: One). The said
loan is interest free and there are no stipulations as to repayment
hence, clauses 4 (iii) (f) & (g) do not apply.
4. (a) In our opinion and according to the information and
explanations given to us, there are adequate internal control
procedures commensurate with the size of the Company and the nature of
its business, for the purchase of inventory and fixed assets and for
the sale of goods and services.
(b) During the course of our audit, no major weakness has been noticed
in the internal control system in respect of these areas.
5. (a) On the basis of our examination of the books of accounts and
according to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in Section 301 of the Act that need to be
entered into the register maintained under Section 301 have been so
entered.
(b) In our opinion and according to the information and explanations
given to us, all the transactions made in pursuance of such contracts
or arrangements entered into the register maintained under section 301
of the Companies Act, 1956, and exceeding the value of Rupees Five
Lakhs in respect of each party during the year have been made at prices
which are reasonable having regard to the prevailing market price at
the relevant time, except that in respect of purchases and sales of
some of the products, no comparison of prices could be made because of
the unique and specialized nature of items involved and the absence of
any comparable prices. We are unable to comment whether these
transactions were made at prevailing market prices at the relevant
time.
6. The Company has not accepted any deposits from the public within
the meaning of provisions of Section 58A and 58AA of the Companies Act,
1956.
7. The Company has engaged an independent Chartered Accountant firm to
carry out the internal audit of the Company. In our opinion, the
internal audit system is commensurate with its size and nature of its
business.
8. We have broadly reviewed the cost accounting 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 from this year. We are of the opinion that
prima facie the prescribed cost records have been maintained. We have
however not made a detailed examination of the cost records with a view
to determine whether they are accurate or complete.
9. (a) Undisputed statutory dues including provident fund, investor
education and protection fund, employees'' state insurance, income
tax, sales tax, service tax, custom duty, cess and other statutory dues
have generally been regularly deposited with the appropriate
authorities. According to the information and explanations given to
us, no undisputed amounts payable in respect of provident fund,
investor education and protection fund, employees'' state insurance,
income tax, sales tax, service tax, custom duty, cess and other
statutory dues were outstanding at the year end for a period of more
than six months from the date they became payable.
(b) According to the information and explanations given to us by the
Management and as per records of the Company examined by us there were
no disputed dues in respect of Income Tax, Custom Duty, Wealth-tax,
Excise Duty and Cess not deposited as at 31st March 2013 except in
respect of service tax dues of Rs.61.99 Million pertaining to the
period 2005 to 2008 in respect of Showcause cum notice demand filed
with Service Tax Authorities .
10. The Company is registered for over 5 years and has no accumulated
losses as at the end of the financial year and it has not incurred any
cash losses in the current year and immediately preceding financial
year.
11. Based on our audit procedures and as per the information and
explanations given to us by the management, we are of the opinion that
the Company has not defaulted in repayment of its dues to any financial
institutions, bank or debenture holders during the year.
12. As per the information and explanations given to us by the
management, we are of the opinion that the Company has not granted
loans and advances on the basis of security of pledge of shares,
debentures and other securities.
13. The provisions of Clause 4 (xiii) of the Order (as amended) are
not applicable as the Company is not a chit fund company or nidhi /
mutual benefit fund/ society.
14. The Company has not dealt or traded in shares, securities,
debentures or other investments during the year. Hence provisions of
Clause 4 (xiv) of the Order) are not applicable.
15. According to the information given to us and managements''
representation, the Company has given guarantees of Rs.31,538.00
Million for the loans taken by its subsidiary companies from banks/
financial institutions.
16. The Company has not raised any new term loans during the year. The
term loans outstanding at the beginning of the year have been applied
for the purposes for which they were obtained.
17. According to the information and explanations given to us and
overall examination of the Balance Sheet and Cash Flow Statement of the
Company we report that no funds raised on short term basis have been
used for long term investments.
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under section 301 of the Act.
19. The Company has outstanding non-convertible secured debentures
issued to LIC, for which, as per the information and explanations given
to us, the Company has already created security. During the year, the
Company has issued unsecured zero % fully convertible debentures of
Rs.390.00 Million on preferential basis to D.B. Corporation Limited. As
the debentures issued during the year are unsecured, no security needs
to be created in respect of those debentures.
20. The Company has not raised any money by public issues during the
year. However the company has issued 9,43,396 equity shares of Rs. 10/-
each at a premium of Rs. 414/- each on conversion of share warrants to
equity shares on preferential basis. The price at which the said shares
are converted is not prejudicial to the interests of the Company.
21. Based upon the audit procedure performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm Registration No.102860W
A.D. Shenoy
Partner
Membership No.11549
Place: Mumbai
Date: 28th May, 2013
Mar 31, 2012
1. We have audited the attached Balance Sheet of Gitanjali Gems
Limited having their registered office at 801/802, Prasad Chambers,
Opera House, Mumbai à 400 004 as at 31st March 2012 and the Statement
of Profit and Loss and the Cash Flow Statement of the Company 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 the 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 from material misstatements. 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 ) issued by the Central Government in terms of Section 227(4A)
of the Companies Act, 1956 (the Act), and on the basis of such checks
as we considered appropriate and according to the information and
explanations given to us during the course of the audit, 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 3 referred to above, we
report that:
a. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. In our opinion, proper books of accounts as required by Law have
been kept by the Company so far as appears from our examination of
those books of the Company.
c. The Balance Sheet, Statement of Profit and Loss and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account of the Company.
d. In our opinion, the Balance Sheet, Statement of Profit and Loss and
the Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956.
e. On the basis of the written representations received from the
directors of the Company as on 31st March 2012, and taken on record by
the Board of Directors of the Company, we report that none of the
directors is disqualified as on 31st March, 2012 from being appointed
as a director in terms of clause (g) of sub- section (1) of Section 274
of the Companies Act, 1956.
5. In our opinion and to the best of our information and according to
the explanations given to us, the said Balance Sheet and the Statement
of Profit and Loss read together with notes thereon give the
information required by the Companies Act, 1956 in the manner so
required, and give a true and fair view in conformity with the
accounting principles generally accepted in India :
(i) in the case of the Balance Sheet, of the state of the affairs of
the Company as at 31st March, 2012;
(ii) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to the Auditors' Report (Referred to in paragraph 3 of our
report of even date) Re: GITANJALI GEMS LIMITED
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
assets.
(b) The fixed assets of the Company have been physically verified by
the management at specified intervals during the year which, in our
opinion is reasonable having regard to the size of the Company and the
nature of its assets and no material discrepancies were noticed on such
verification.
(c) During the year, the Company has not disposed off any substantial
part of fixed assets so as to affect the going concern.
2. (a) The inventory has been physically verified by the management
during the year and also at the year end.
(b) The procedures of physical verification of inventory followed by
the management is reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. No material
discrepancies were noticed on physical verification.
3. (a) The Company has granted unsecured loans / advances to
companies, firms or other parties covered in the register maintained
under section 301 of the Act. The number of parties are Twenty and
amount outstanding as at March 31, 2012 is Rs. 10,325.40 Million
(Previous year Rs. 6,129.21 Million and Number of Parties: Twenty Four)
(b) The above loans are interest free except in respect of one of the
wholly owned subsidiary companies. In respect of the said wholly owned
subsidiary company, the loan amount carries interest and the repayment
is regular.
(c) In respect of other companies, as no stipulation as to repayment of
principal amounts have been mentioned, the question of repayment being
regular does not arise.
(d) The Company has taken unsecured loans from Companies, firms and
other parties covered under section 301 of the Act. The number of party
is one and the amounts outstanding as at March 31, 2012 is Rs.64.49
Million (Previous Year Rs. 15.90 Million and Numbers of party: One).
The said loan is interest free and there are no stipulations as to
repayment hence, clauses 4 (iii) (f) & (g) do not apply.
4. (a) In our opinion and according to the information and
explanations given to us, there are adequate internal control
procedures commensurate with the size of the Company and the nature of
its business, for the purchase of inventory and fixed assets and for
the sale of goods and services.
(b) During the course of our audit, no major weakness has been noticed
in the internal control system in respect of these areas.
5. (a) On the basis of our examination of the books of accounts and
according to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in Section 301 of the Act that need to be
entered into the register maintained under Section 301 have been so
entered.
(b) In our opinion and according to the information and explanations
given to us, all the transactions made in pursuance of such contracts
or arrangements entered into the register maintained under section 301
of the Companies Act, 1956, and exceeding the value of Rupees Five
Lakhs in respect of each party during the year have been made at prices
which are reasonable having regard to the prevailing market price at
the relevant time, except that in respect of purchases and sales of
some of the products, no comparison of prices could be made because of
the unique and specialized nature of items involved and the absence of
any comparable prices. We are unable to comment whether these
transactions were made at prevailing market prices at the relevant
time.
6. The Company has not accepted any deposits from the public.
7. The Company has engaged an independent Chartered Accountants firm
to carry out the internal audit of the Company. In our opinion, the
internal audit system is commensurate with its size and nature of its
business.
8. We have broadly reviewed the cost accounting 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 from this year. We are of the opinion that
prima facie the prescribed cost records have been maintained. We have
however not made a detailed examination of the cost records with a view
to determine whether they are accurate or complete.
9. (a) Undisputed statutory dues including provident fund, investor
education and protection fund, employees' state insurance, income tax,
sales tax, service tax, custom duty, cess and other statutory dues have
generally been regularly deposited with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees' state insurance, income tax,
sales tax, service tax, custom duty, cess and other statutory dues were
outstanding at the year end for a period of more than six months from
the date they became payable.
(b) According to the information and explanations given to us by the
Management and as per records of the Company examined by us there were
no disputed dues in respect of Custom Duty, Wealth-tax, Excise Duty and
Cess not deposited as at 31st March 2012 except in respect of income
tax and service tax dues as under :
1. Disputed Income tax dues of Rs.47.44 million for A.Y. 2006-2007 and
Rs. 125.61 million for A.Y. 2007-08. Appeal filed with CIT(A).
2. Disputed Service tax dues of Rs.43.63 million for period 2005 to
2008, reply to the Showcause cum notice Demand is filed with Service
Tax Authorities.
10. The Company is registered for over 5 years and has no accumulated
losses as at the end of the financial year and it has not incurred any
cash losses in the current year and immediately preceding financial
year.
11. Based on our audit procedures and as per the information and
explanations given to us by the management, we are of the opinion that
the Company has not defaulted in repayment of its dues to any financial
institutions, bank or debenture holders during the year.
12. As per the information and explanations given to us by the
management, we are of the opinion that the Company has not granted
loans and advances on the basis of security of pledge of shares,
debentures and other securities.
13. The provisions of Clause 4 (xiii) of the Order (as amended) are
not applicable as the Company is not a chit fund company or
nidhi/mutual benefit fund/society.
14. The Company has not dealt or traded in shares, securities,
debentures or other investments during the year. Hence provisions of
Clause 4 (xiv) of the Order are not applicable.
15. According to the information given to us and managements'
representation, the Company has given guarantees of Rs.24,873.40
million for the loans taken by its wholly owned subsidiary companies
from banks/ financial institutions.
16. The Company has raised new term loans during the year. The term
loan outstanding at the beginning of the year and those raised during
the year have been applied for the purposes for which they were
obtained.
17. According to the information and explanations given to us and
overall examination of the Balance Sheet and Cash Flow Statement of the
Company we report that no funds raised on short term basis have been
used for long term investments.
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under section 301 of the Act.
19. As per information and explanations given to us, the Company has
created security in respect of Debentures issued.
20. The Company has not raised any money by public issues during the
year. However the company had issued 6,250,497 equity shares of Rs.
10/- each for the premium of Rs. 210/- each on conversion of FCCBs.
21. Based upon the audit procedure performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm Registration No.102860W
A.D.Shenoy
Date : May 21, 2012 Partner
Place: Mumbai Membership No. 11549
Mar 31, 2011
We have audited the attached Balance Sheet of Gitanjali Gems Limited
having their registered office at 801/802, Prasad Chambers, Opera
House, Mumbai à 400 004 as at 31st March, 2011 and the Profit and Loss
Account and the Cash Flow Statement of the Company for the year ended
on that date annexed thereto. Tese 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.
We conducted our audit in accordance with the auditing standards
generally accepted in India. Tose standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatements. 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.
I. As required by the Companies (Auditor's report) Order, 2003 (as
amended ) issued by the Central Government in terms of Section 227(4A)
of the Companies Act, 1956 (the Act), and on the basis of such checks
as we considered appropriate and according to the information and
explanations given to us during the course of the audit, we annex
hereto a statement on the matters specified in paragraphs 4 and 5 of
the said Order:
II. Further to our comments in the Annexure referred to above, we
report that:
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b) In our opinion, proper books of accounts as required by Law have
been kept by the Company so far as appears from our examination of
those books of the Company.
c) The Balance Sheet, Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account of the Company.
d) In our opinion, the Balance Sheet, Profit and Loss Account and the
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956.
e) On the basis of the written representations received from the
directors of the Company as on 31st March, 2011, and taken on record by
the Board of Directors of the Company, we report that none of the
directors is disqualified as on 31st March, 2011 from being appointed
as a director in terms of clause (g) of sub-section (1) of Section 274
of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to
the explanations given to us, the said Balance Sheet and the Profit and
Loss Account read together with notes thereon appearing in schedule 17
give the information required by the Companies Act, 1956 in the manner
so required, and give a true and fair view in conformity with the
accounting principles generally accepted in India :
(i) in the case of the Balance Sheet, of the state of the affairs of
the Company as at 31st March, 2011,
(ii) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Annexure to the Auditors' Report
(Referred to in paragraph I of our report of even date)
1 (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
assets.
(b) The fixed assets of the Company have been physically verified by the
management at reasonable intervals during the year which, in our
opinion is reasonable having regard to the size of the Company and the
nature of its assets and no material discrepancies were noticed on such
verification.
(c) During the year, the Company has not disposed off any substantial
part of fixed assets.
2 (a) The inventory has been physically verified by the management
during the year and also at the year end.
(b) The procedures of physical verification of inventory followed by the
management is reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. No material
discrepancies were noticed on physical verification.
3 (a) The Company has granted unsecured loans / advances to its
companies, firms or other parties covered in the register maintained
under section 301 of the Act. The number of parties are Twenty Four and
amount outstanding as at 31st March, 2011 is Rs. 6,129.21 millions
(Previous year Rs. 4,112.64 millions and Number of Parties : Twenty
Six)
(b) The above loan is interest free except in respect of one of the
wholly owned subsidiary companies. In respect of the said wholly owned
subsidiary company, the loan amount carries interest and the repayment
is regular.
(c) In respect of other companies, as no installments of repayment of
principal amount have been stipulated the question of repayment being
regular does not arise.
(d) The Company has taken unsecured loans from Companies, firms and
other parties covered under section 301 of the Act. The number of party
is One and the amounts outstanding as at 31st March, 2011 is Rs. 15.90
millions (Previous Year Rs. 0.62 millions and Numbers of parties :
Two). The said loan is interest free and there are no stipulations as to
repayment.
4 (a) In our opinion and according to the information and explanations
given to us, there are adequathe internal control procedures
commensurate with the size of the Company and the nature of its
business, for the purchase of inventory, fixed assets and for the sale
of goods and services.
(b) During the course of our audit, no major weakness has been noticed
in the internal control system in respect of these areas.
5. According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in Section 301 of the Act that need to be
entered into the register maintained under Section 301 have been so
entered.
In our opinion and according to the information and explanations given
to us, all the transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees Five Lakhs have been entered
into during the financial year at prices which are reasonable having
regard to the prevailing market price at the relevant time, except that
in respect of purchases and sales of some of the products, no
comparison of prices could be made because of unique and specialised
nature of items involved and absence of any comparable prices. We are
unable to comment whether these transactions were made at prevailing
market prices at the relevant time.
6. The Company has not accepted any deposits from the public.
7. The Company has engaged an independent Chartered Accountant firm to
carry out the internal audit of the Company. In our opinion, the
internal audit system is commensurate with its size and nature of its
business.
8. The Central Government has not prescribed maintenance of cost
records under Section 209(1) (d) of the Companies Act, 1956 for any of
the products of the Company.
9 (a) Undisputed statutory dues including provident fund, investor
education and protection fund, employees' state insurance, income tax,
sales tax, service tax, custom duty, cess and other statutory dues have
generally been regularly deposited with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees' state insurance, income tax,
sales tax, service tax, custom duty, cess and other statutory dues were
outstanding at the year end for a period of more than six months from
the date they became payable.
(b) According to the information and explanations given to us by the
Management and as per records of the Company examined by us there were
no disputed dues in respect of Custom Duty, Wealth-tax, Excise Duty and
Cess not deposited as at 31st March, 2011 except in respect of income
tax and service tax dues as under :
1. Disputed Income tax dues of Rs.47.44 millions for A.Y. 2006-2007
and Rs. 125.61 millions for A.Y.2007-08. Appeal filed with CIT(A).
2. Disputed Service tax dues of Rs.43.63 millions for period 2005 to
2008 Showcause cum Demand notice reply filed with Service T a x
Authorities.
10. The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current and
immediately preceding financial year.
11. Based on our audit procedures and as per the information and
explanations given to us by the management, we are of the opinion that
the Company has not defaulted in repayment of its dues to any financial
institution or bank during the year.
12. The Company has not granted loans and advances on the basis of
security of pledge of shares, debentures and other securities.
13. The provisions of Clause 4 (xiii) of the Order (as amended) are not
applicable as the Company is not a chit fund company or nidhi/mutual
benefit fund/society.
14. The Company has not dealt or traded in shares, securities,
debentures or other investments during the year. Hence provisions of
Clause 4 (xiv) of the Order (as amended) are not applicable.
15. According to the information given to us and managements'
representation, the Company has given guarantees of Rs.18,478.70
millions for the loans taken by its wholly owned subsidiary companies
from banks/ financial institutions.
16. The Company did not avail any term loans during the year.
17. According to the information and explanations given to us and
overall examination of the Balance Sheet and Cash Flow Statement of the
Company we report that no funds raised on short term basis have been
used for long term investments.
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under section 301 of the Act.
19. The Company has not issued any debenture during the year.
20. The Company has not raised any money by public issues during the
year. However the Company had issued 6,01,598 Equity Shares of Rs.10
each for premium of Rs. 210 each on conversion of FCCBs.
21. Based upon the audit procedure performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm Registration No.102860W
A.D.Shenoy
Partner
Membership No.11549
Place : Mumbai
Dated : 27th May, 2011
Mar 31, 2010
We have audited the attached Balance Sheet of Gitanjali Gems Limited
having their registered offce at 801/802, Prasad Chambers, Opera House,
Mumbai à 400 004 as at March 31, 2010 and the Proft and Loss Account
and the Cash Flow Statement of the Company for the year ended on that
date annexed thereto. These fnancial Statements are the responsibility
of the CompanyÃs management. Our responsibility is to express an
opinion on these fnancial statements based on our audit.
We conducted our audit in accordance with the auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
fnancial statements are free from material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the fnancial statements. An audit also includes
assessing the accounting principles used and signifcant estimates made
by the Management, as well as evaluating the overall fnancial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
I. As required by the Companies (Auditorsà Report) Order, 2003 (as
amended ) issued by the Central Government in terms of Section 227(4A)
of the Companies Act, 1956 (the Act), and on the basis of such checks
as we considered appropriate and according to the information and
explanations given to us during the course of the audit, we annex
hereto a statement on the matters specifed in paragraphs 4 and 5 of the
said Order:
II. Further to our comments in the Annexure referred to above, we
report that:
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
b) In our opinion, proper books of accounts as required by Law have
been kept by the Company so far as appears from our examination of
those books of the Company.
c) The Balance Sheet, Proft and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account of the Company.
d) In our opinion, the Balance Sheet, Proft and Loss Account and the
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956.
e) On the basis of the written representations received from the
directors of the Company as on March 31, 2010, and taken on record by
the Board of Directors of the Company, we report that none of the
directors is disqualifed as on March 31, 2010 from being appointed as a
director in terms of clause (g) of sub-section (1) of Section 274 of
the Companies Act, 1956.
f) In our opinion and to the best of our information and according to
the explanations given to us, the said Balance Sheet and the Proft and
Loss Account read together with notes thereon appearing in schedule 17
give the information required by the Companies Act, 1956 in the manner
so required, and give a true and fair view in conformity with the
accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of the affairs of the
Company as at March 31, 2010.
ii) in the case of the Proft and Loss Account, of the proft of the
Company for the year ended on that date, and
iii) in the case of the Cash Flow Statement, of the cash fows of the
Company for the year ended on that date.
Annexure to the Auditorsà Report
(Referred to in paragraph I of our report of even date)
1 a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its
fxed assets.
b) The fxed assets of the Company have been physically verifed by the
management at reasonable intervals during the year which, in our
opinion is reasonable having regard to the size of the Company and the
nature of its assets and no material discrepancies were noticed on such
verifcation.
c) During the year, the Company has not disposed off any substantial
part of fxed assets.
2 a) The inventory has been physically verifed by the management during
the year and also at the year end.
b) The procedures of physical verifcation of inventory followed by the
management is reasonable and adequate in relation to the size of the
Company and the nature of its business.
c) The Company is maintaining proper records of inventory. No material
discrepancies were noticed on physical verifcation.
3 a) The Company has granted unsecured loans / advances to its
companies, frms or other parties covered in the register
maintained under section 301 of the Act. The number of parties are
Twenty Six and amount outstanding as at March 31, 2010 is Rs. 4,112.64
Millions (Previous year Rs. 3,220.11 Millions and Number of Parties :
Sixteen)
b) The Company has taken unsecured loans from Companies, frms and other
parties covered under section 301 of the Act. The number of parties are
two and the amounts outstanding as at March 31, 2010 is Rs. 0.62
Millions (Previous Year Rs. 10.07 Millions and Numbers of parties :
Two).
c) The above loan is interest free except in respect of one of the
wholly owned subsidiary companies and no conditions as to repayment of
principal amount have been stipulated.
d) In respect of the said wholly owned subsidiary company, the loan
amount carries interest and the repayment is regular.
e) In respect of other companies, as no installments of repayment of
principal amounts have been stipulated, the question of repayment being
regular does not arise.
4 a) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business, for the purchase of inventory, fxed assets and for the sale
of goods and services.
b) During the course of our audit, no major weakness has been noticed
in the internal control system in respect of these areas.
5 According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in Section 301 of the Act that need to be
entered into the register maintained under Section 301 have been so
entered.
In our opinion and according to the information and explanations given
to us, all the transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees Five Lacs have been entered into
during the fnancial year at prices which are reasonable having regard
to the prevailing market price at the relevant time, except that in
respect of purchases and sales of some of the products, no comparison
of prices could be made because of unique and specialised nature of
items involved and absence of any comparable prices. We are unable to
comment whether these transactions were made at prevailing market
prices at the relevant time.
6 The Company has not accepted any deposits from the public.
7 The Company has engaged an independent internal auditor to carry out
the internal audit of the company. In our opinion, the internal audit
system is commensurate with its size and nature of its business.
8 The Central Government has not prescribed maintenance of cost records
under Section 209(1)(d) of the Companies Act, 1956 for any of the
products of the Company.
9 a) Undisputed statutory dues including provident fund, investor
education and protection fund, employeesà state insurance, income tax,
sales tax, service tax, custom duty, cess and other statutory dues have
generally been regularly deposited with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employeesà state insurance, income tax,
sales tax, service tax, custom duty, cess and other statutory dues were
outstanding at the year end for a period of more than six months from
the date they became payable.
b) According to the information and explanations given to us by the
Management and as per records of the Company examined by us there were
no disputed dues in respect of Custom Duty, Wealth-tax, Excise Duty and
Cess not deposited as at March 31, 2010 except in respect of income tax
and service tax dues as under :
i) Disputed Income tax dues of Rs. 47.44 Millions for A.Y. 2006-2007
Appeal fled with CIT(A).
ii) Disputed Service tax dues of Rs. 436.32 Millions for period 2005 to
2008. Showcause cum Demand notice reply fled with Service Tax
Authorities.
10 The Company has no accumulated losses at the end of the fnancial
year and it has not incurred any cash losses in the current and
immediately preceding fnancial year.
11 Based on our audit procedures and as per the information and
explanations given to us by the management, we are of the opinion that
the Company has not defaulted in repayment of its dues to any fnancial
institution or bank during the year.
12 The Company has not granted loans and advances on the basis of
security of pledge of shares, debentures and other securities.
13 The provisions of Clause 4 (xiii) of the Order (as amended) are not
applicable as the Company is not a chit fund company or nidhi/ mutual
beneft fund/society.
14 The Company has not dealt or traded in shares, securities,
debentures or other investments during the year. Hence provisions of
Clause 4 (xiv) of the Order (as amended) are not applicable.
15 According to the information given to us and managementsÃ
representation, the Company has given guarantees of Rs. 13,744.60
Millions for the loans taken by its wholly owned subsidiary companies
from banks/ fnancial institutions.
16 The Company did not avail any term loans during the year.
17 According to the information and explanations given to us and
overall examination of the Balance Sheet and Cash Flow Statement of the
Company we report that no funds raised on short term basis have been
used for long term investments.
18 During the year, the Company has not made any preferential allotment
of shares to parties and companies covered in the Register maintained
under section 301 of the Act.
19 According to the information and explanations given to us during the
year covered by our audit report, the company has created security or
charge in respect of debentures issued.
20 The Company has not raised any money by public issues during the
year.
21 Based upon the audit procedure performed for the purpose of
reporting the true and fair view of the fnancial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For Ford, Rhodes, Parks & Co.
Chartered Accountants
Firm Reg. No.: 102860W
A.D.Shenoy
Partner
Membership No. 11549
Place : Mumbai
Date : 29th May, 2010
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