Auditor Report of Winsome Yarns Ltd.
Mar 31, 2015
We have audited the accompanying Standalone Financial Statements of
WINSOME YARNS LIMITED ("the Company"), which comprise the Balance Sheet
as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow
Statement for the period (6 Months) then ended, and a summary of the
significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these Standalone Financial Statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified 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 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 standalone
Financial Statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.
We 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 the disclosures in the Standalone Financial Statements.
The procedures selected depend on the auditor's 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, 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 Standalone 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
Attention is drawn to:
i. Note no. 2.25 and 2.26 [this is to be read with note. No. 2.8(b) &
2.8(c)] regarding non-provisioning of Interest Expenses of Rs. 3273.37
Lacs (Previous Year NIL), penal interest, penalty etc. (amount
unascertainable) AND Adjustment/set off of payment of
receivables/payables pending necessary approval respectively as stated
in the said notes.
ii. Note no. 2.22(A)(iv) (b) and 2.22(A) (v) regarding Non compliance
of conditions [read with note no. 2.2 (A) (iii)] with respect to
physical verification of fixed assets, as advised not to maintain bank
accounts outside consortium parties (Bankers etc.) as directed by the
CDR-MC and the impact on the state of affairs on exiting from CDR by
Banks, as stated in the said notes.
iii. Note No. 2.14 regarding pending confirmation / reconciliation of
balances of certain receivables (including overseas overdue receivables
as stated in note no.2.8), bank balances, payables (including of an
Associate Company), secured loans, other liabilities, loans and
advances etc.; and contingent liability being considered as certified
by the management in the absence of full detail, in this respect impact
is unascertainable and cannot be commented upon by us. In our view read
with said note internal control needs to be further strengthened.
iv. Note No. 2.8 (a)&(b) and Note no. 2.11 regarding non-provision
against receivables [including of oversea overdue debtors of amounting
to Rs. 6908.79 lacs (Previous Year Rs. 6846.77 Lacs)] [including
accounting of exchange fluctuation of Rs. 897.41 lacs (Previous Year
Rs. 823.31 Lacs) till 31st March 2015] and loans and advances of Rs.
10377.68 lacs (Previous Year Rs. 6844.14 Lacs) and Rs. 2599.32 lacs
(Previous Year Rs. 2935.38 Lacs) respectively. The accounting of
exchange fluctuation is not in line with generally accepted accounting
principles and Accounting Standards 11 (AS-11)-"The Effect of Changes
in Foreign Exchange Rates".
v. Note No. 2.22(A)(iv)(a) to (d) regarding accounting of consumption
of Raw Material and Stores & Spares as balancing figure and the
valuation of inventories is as taken, valued and as certified by the
management [also attention is drawn on provision against non/slow
moving which has been made as assessed by the management] as stated in
said note; the impact whereof on the statement of state of affairs and
loss for the period not being ascertainable for the reason stated in
the said note and cannot be commented upon by us.
vi. As stated in note no. 2.5 and as per the AS-28 (Impairment of
Assets), the company have carried out assessment of value in use of
assets of knitwear unit, by an independent professional firm, based on
this estimated impairment loss is of amounting to Rs. 2365.58 lacs
(Previous Year 2996.00 Lacs -Gross Amount) (net). However, no provision
against the same has been made by the company for the reason as
explained in the said note. The Non provision against impairment in
value of above stated assets is not in line with AS 28.
vii. Note no. 2.3 regarding pending receipt of part money of amounting
to USD 50,72,110 (Rs. 2679.34 lacs) out of the GDR issue made by the
company and as explained lying outside India [i.e. balance amount
against GDR issue of 19,94,125 nos. made in financial year 2010-11,
entitling 19,94,12,500 fully paid up equity shares of Re. 1/ each at
Rs. 2.97 per share including premium (now 1,99,41,250 fully paid up
equity shares of Rs. 10/ each at Rs. 29.70 including premium)]. In
respect of realisability/receipt we are unable to comment. As
explained, above stated amount is invested in money market fund outside
India, pending for utilization.
viii. Note No. 2.23 (read with note no. 2.14) regarding non-provisions
of Interest, Penalty etc. on delay of certain statutory dues on time
w.r.t. Employee State Insurance, Provident Fund, Punjab Welfare Fund,
Tax Deducted at source, Tax Collected at source and Service Tax etc.
(amount unascertainable) and our inability to comment the impact on the
loss for the period.
ix. Note no. 2.12(b) regarding the net worth of the Company become
negative and preparation of financial statements by the management on
"going concern basis", considering the future business plans and
expected cash flows as stated in the said note. In the event of the
same not being held to be a "going concern" and various assets and
liabilities being consequently required to be adjusted with respect to
their realizable value, the impact whereof has not been ascertainable.
x. Note no. 2.21 regarding payment of managerial remuneration of Rs.
44.46 Lacs (w.e.f. 1st July, 2014) (Previous Year Rs. 14.82 Lacs) is
subject to necessary approval of the Central Government.
xi. Note no. 2.28 regarding pending appointment of requisite number of
independent directors as stated in the said note.
xii. In view of our comment under para (i) to (x) above and on our
comments in terms of the internal control system needs to be further
strengthened to be made the same commensurate with the size of the
Company and the nature of its business for the purchases and
consumption of inventory, booking of the expenses, set off of balances
and for the sale of goods and services.
We report that, without considering items mentioned in paragraph
(ii),(iii), (v), (vii) and (viii) above the impact of which could not
be determined, had the impact of notes referred in paragraph (i), (iv)
& (vi) above been given to in these financial statements, the loss for
the period would have been Rs. 23,290.66 lacs (as against the reported
figures of Rs. 4,674.71 lacs), accumulated loss at the period end
would have been Rs. 43,277.78 Lacs (as against the reported figure of
Rs. 24,661.82 lacs), Loans and advances at the period end would have
been Rs. 1,167.34 lacs (as against the reported figure of Rs. 3,766.66
lacs), carrying value of fixed assets would have been Rs. 25,342.70
lacs (as against the reported figure of Rs. 27,708.28 Lacs), trade
receivables would have been Rs. 1,466.83 lacs (as against the reported
figure of Rs. 11,844.51 lacs), other current liability at the period
end would have been Rs. 20,311.82 lacs (as against the reported figure
of Rs. 17,038.45 lacs).
Our opinion was also qualified on the financial statements for the year
ended 30th Sept 2014 in respect of matter reported in (i) to (vii)
above.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the matters described in the Basis
for Qualified Opinion paragraph, 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, 2015, and its loss and its
cash flows for the period ended on that date.
Emphasis of Matters
Attention is drawn to Note no. 2.29 regarding Financial Statements of a
Subsidiary Company namely Winsome Yarns FZE for the year ended
31.3.2015 are unaudited and as certified by the management.
Our opinion is not qualified in respect of above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Act, and on the basis of such
checks of the books and records of the Company as we considered
appropriate and according to the information and explanations given to
us during the course of audit, we give in the Annexure a statement on
the matters specified in the 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
purposes of our audit, except as stated in para (iii) under the head
"Basis of Qualified Opinion".
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
those books.
(c) The Balance Sheet, 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, Except for the matter described in para (iv) [AS-11
"The Effect of Changes in Foreign Exchange Rates" and read with note
no. 2.8(a)) and para (vi) (AS-28 "Impairment of Assets" and read with
note no.2.5] under the Basis for Qualified Opinion paragraph, 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.
(e) The matters described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the Company.
(f) On the basis of the written representations received from the
directors as on 31st March, 2015 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.
(g) The qualification relating to the maintenance of accounts and other
matters connected therewith are as stated in the Basis for Qualified
Opinion paragraph above.
(h) 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 Standalone Financial Statements - Refer Note
No. 2.1 [read with Note No. 2.2(A)(iv)(a), 2.2(A)(v) and 2.2(B)] to the
Standalone Financial Statements.
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; except to the
extent and as explained in Note No.2.2 of the Standalone Financial
Statements.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure referred to in paragraph 1 under the heading "Report on Other
Legal and Regulatory Requirements" of our report of even date for the
period (6 Months) ended 31st March 2015 Standalone Financial Statements
of Winsome Yarns Limited
1. (a) The company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets except in respect of certain fixed assets (including assets of
knitwear unit) where, the records as explained, are in process of
compilation/ updation [Read with note no. 2.22(A)(iv)(b)].
(b) As per information and explanations given to us, certain fixed
assets have been physically verified by the Management according to the
programme of physical verification once in every three years in phased
manner, which in our opinion need to be further strengthen having
regard to the size of the company and the nature of its fixed assets.
The discrepancies noticed on such physical verification were not
material.
2. (a) As explained, only some of the inventories of the Company
(including stock lying with the third parties and in transit) have been
physically verified by the management during the period [Read with our
comments para (b) and (c) below].
(b) In our opinion and according to information & explanations given to
us, the procedures of physical verification of inventories followed by
the management need to be strengthen in relation to the size of the
Company and nature of its business [Read with note no. 2.22(A)(iv)(a)
to (c)].
(c) In the absence of detailed item wise quantitative records (Read
with our comments in para (b) above], we are not in position to comment
whether discrepancies accounted for is correct and complete. However,
as per the information made available the discrepancies noticed between
the physical stock, to the extant physical verification carried out
read with note no. 2.22(A) (iv) (a) to (c) and the book records were
not material.
3. As informed to us, the Company has not granted any loan secured or
unsecured to any companies, firms or other parties covered in the
register maintained under Section 189 of the Companies Act, 2013.
Accordingly, the provisions of Clause 3(iii) (a) & (b) of the Order are
not applicable.
4. In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
purchased/ sold/ services rendered are of special nature and suitable
alternative sources do not exist for obtaining comparable quotation or
where user department has shown specific preference, where, as
explained, rates were determined considering the quality, volume,
nature of the items and market conditions prevailing at that time,
there are internal control system which need to be further strengthened
to be made the same commensurate with size of the company and nature of
its business with regard to the purchase of inventory, fixed assets,
services and for the sale of goods/fixed assets and services. [read
with note no. 2.8, 2.14, 2.16, 2.22(A) (iv) & 2.26 and our comments
under "Basis of Qualified Opinion" paragraph]. Based on the audit
procedure performed and information & explanation provided by the
management, during the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system nor been identified by the management except to the extent as
stated above under clauses (i) and (ii) above.
5. In our opinion and according to the information and explanations
given to us, the Company has complied with the directive issued by the
Reserve Bank of India and the provisions of Section 73 to 76 of the Act
or any other relevant provisions of the Act and the rules framed there
under (to the extent applicable) with regard to deposit accepted from
the public. We have been informed that no order has been passed by the
Company Law Board or National Company Law Tribunal or Reserve Bank of
India or any Court or other tribunal in this regard.
6. We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under sub section (1) of section 148 of the
Act in respect of the Company's products to which the said rules are
made applicable and are of the opinion that prima facie, the prescribed
records have been made and maintained. We have however not made a
detailed examination of the said records with a view to determine
whether they are accurate or complete.
7. (a) According to the records of the Company, the Company is generally
regular in depositing with appropriate authorities undisputed statutory
dues including Investor Education and Protection Fund, Income Tax, Sales
Tax, Wealth Tax, Custom Duty, Cess and other material statutory dues to
the extent applicable to it except in respect of Provident Fund,
Employee State Insurance dues, Punjab Welfare Fund, TDS, TCS & Service
Tax were same found paid with certain delay (and as stated in note no.
2.23) and non deposition of PF, ESI & PWF amounting to Rs. 94.54 Lacs,
Rs. 0.77 Lacs & Rs. 2.02 Lacs respectively and According to the
information and explanations given to us, there are no undisputed
statutory dues payable for a period more than six months from the date
they became payable as at 31st March 2015.
(b) Based on the records and information and explanations given to us,
there are no dues in respect of Income Tax, Custom Duty, Wealth Tax,
Service Tax and Cess that have not been deposited on account of any
dispute. In our opinion based on the records and according to the
information and explanations given to us, the dues in respect of Income
Tax, Sales Tax and Excise duty that have not been deposited with the
appropriate authorities on account of dispute and the forum where these
disputes pending are given below:
Name of the Statute Nature of dues Amount Period to which
(Rs. in Lacs) amount relates
Central / State Sales Tax/VAT 4.35 1999-2000
Sales Tax
2.25 1993-1994
13.36 2003-2004
29.08 2008-2009
Central Excise Act# Excise Duty 67.45 2000-01 to 2004-05
Excise Duty 35.54 2005-06 to 2008-09
Excise Duty 513.39 2006-07 to 2009-10
Excise Duty 15.97 2010-11
Excise Duty 13.42 2011-12
Name of the Statute Forum where
dispute is pending
Central / State Joint Director Excise and
Sales Tax Taxation, Chandigarh
Sales Tax Tribunal Punjab
Deputy Excise and
Taxation Commissioner
(Appeal)
Commissioner (Appeal)
Central Excise Act* CESTAT, New Delhi
CESTAT, New Delhi
CESTAT, New Delhi
CESTAT, New Delhi
CESTAT, New Delhi
* (Excluding show cause notices)
This para is to be read with note no. 2.1(A) and 2.1(B) and note no.
2.14 AND para (iii) of "Basis for Qualified Opinion".
(c) There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
8. The Company's accumulated losses at the end of the financial year
is in excess of fifty percent of the net worth and it has incurred cash
loss during the current financial period as well as in the immediate
preceding financial year.
9. In our opinion, on the basis of audit procedures and according to
the information and explanations given to us, the company has defaulted
in repayment of dues on account of interest and principal (maximum) of
amounting to Rs. 4024.25 lacs and amounting to Rs. 8083.59 lacs
respectively for delay of maximum period of 727 days and 788 days
respectively) to banks (this is to be read with note no.2.2). During
the period, Company has not taken loan from financial institution or
debenture holders (This to be read with Note No. 5.6 for the continuing
default).
10. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institution.
11. According to the information and explanations given to us, the
term loans were applied for the purposes for which the loans were
obtained.
12. To the best of our knowledge and belief, based on the audit
procedure performed and on the basis of information and explanations
provided by the management, no material fraud [read with note no.2.3,
2.22(A)(iv) and our comments under the "Basis for Qualified Opinion"]
on or by the Company has been noticed or reported during the course of
the audit.
For LODHA & CO.,
Chartered Accountants
Firm's Registration No. 301051E
(N. K. LODHA)
Partner
Membership No. 85155
Place : New Delhi
Date : 28th May, 2015
Sep 30, 2014
We have audited the accompanying financial statements of Winsome Yarns
Limited, which comprise the balance sheet as at 30th September 2014,
and the statement of the 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''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 Acf) 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 Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for audit opinion.
Basis for Qualified Opinion:- Attention is drawn to:
i. Note no. 2.26 and note no. 2.14 regarding non-provision for penal
interest, penalty etc. AND adjustment/set off of payment of
receivables/payables pending necessary approval as stated in the said
notes.
ii. Note no. 2.23 (A) (iv) (b) and 2.23(A) (v) regarding Non-compliance
of conditions [read with note no. 2 .2 (A) (iii) and 2.2 (B)] with
respect to physical verification of fixed assets and also advised not
to maintain bank accounts outside consortium parties (Bankers etc.) as
directed by the CDR-MC, as stated in the said notes.
iii. Note No.2.15 regarding pending confirmation/ reconciliation of
balances of certain receivables (including oversea overdue receivables
as stated in note no.2.8) bank balances, payables (including of an
Associate Company of amounting to Rs. 572.40 lacs), secured loans,
contingent and other liabilities, loans and advances etc., in this
respect impact is unascertainable and cannot be commented by us. In our
view read with said note internal control needs to be further
strengthened.
iv. Note No. 2.8 and Note no. 2.11 regarding non-provision against
receivables (including of oversea overdue debtors of amounting to Rs.
6846.77 lacs and including accounting of exchange fluctuation of Rs.
823.31 lacs till 30th September 2014) AND loans and advances of Rs.
6844.14 lacs and Rs. 2935.38 lacs respectively. The accounting of
exchange fluctuation is not in line with generally accepted accounting
principles and Accounting Standards 11 (AS-11)-"The Effect of Changes
in Foreign Exchange Rates''"
v. Note No. 2.23(A) (iv) (a) to (d) regarding accounting of consumption
of Raw Material and Stores & Spares as balancing figure and the
valuation of inventories is as taken, valued and certified by the
management [also regarding provision against non/slow moving as
assessed by the management] in view of reasons stated in said note, the
impact whereof on the statement of profit and loss and state of affairs
not being ascertained and cannot be commented by us.
vi. As stated in note no. 2.5 and as per the AS-28 (Impairment of
Assets), the company have carried out assessment of value in use of
assets of knitwear unit, by an independent professional firm, based on
this estimated impairment loss is of amounting to Rs. 2,996.00 lacs.
However, no provision against the same has been made by the company for
the reason as explained in the said note. The Non-provision against
diminution in value of above stated assets is not in line with AS-28.
The overall impact of above cannot be assessed (except of AS-28) or
otherwise on loss for the year and balance in Statement of Profit &
Loss.
vii. Note no. 2.3 regarding pending receipt of part money of amounting
to USD 50,72,110 (Rs. 2679.34 lacs) of the GDR issue made by the
company lying outside India [i.e. balance amount against GDR issue of
19,94,125 nos. made in financial year 2010-11, Entitling 19,94,12,500
fully paid up equity shares of Re.1/- each at Rs.2.97 per share
including premium (now 1,99,41,250 fully paid up equity shares of
Rs.10/- each at Rs.29.70 including premium)]. As explained, above
stated amount is invested in money market fund outside India, and the
same is pending for utilization.
We report that, without considering items mentioned in paragraph (i),
(ii), (iii), (v)and (vii) above the impact of which could not be
determined, had the impact of notes referred in paragraph (iv) and (vi)
above been given to in these financial statements, the loss for the
period would have been Rs. 23,938.82 lacs(as against the reported
figures of Rs. 11,163.30 lacs), accumulated loss at the period end
would have been Rs.32,678.61 Lacs (as against the reported figure of
Rs. 19,903.09 lacs), Loans and advances at the period end would have
been Rs. 1,468.26 lacs (as against the reported figure of Rs. 4403.64
lacs), carrying value of fixed assets would have been Rs.25709.59 lacs
(as against the reported figure of Rs. 28,705.59 Lacs), trade
receivables would have been Rs. 5152.16 lacs (as against the reported
figure of Rs.11,996.30 lacs).
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 under the head "Basis for Qualified Opinion"paragraph, the
financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) In the case of the balance sheet, of the state of the affairs of
the company as at 30th September 2014,
(b) In case of the statement of the profit and loss, of the loss for
the year ended on that date, and
(c) In case of the cash flow statement, of the cash flows for the year
ended on that date.
Emphasis of Matter
Attention is drawn to:
(i) Note no 2.12(b) regarding the net worth of the Company become
negative and preparation of financial statements by the management on
"going concern basis" considering the future business plans and
expected cash flows. In the event of the same not being held to be a
"going concern" and various assets and liabilities being consequently
required to be adjusted with respect to their realizable value, the
impact whereof has not been ascertained and herefore cannot be
commented upon by us.
(ii) Note no. 2.22 regarding payment of remuneration of Rs. 14.82 Lacs
(w.e.f. 1st July 2014) is subject to approval of shareholders in
General Meeting and also necessary approval of the Central Government.
Our report is not qualified in respect of above matter.
Report on other legal and the regulatory requirements:
(1) As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give the Annexure a
statement on the, matters specified in the paragraphs 4 and 5 of the
order.
(2) As required by section 227(3) of the Act, we report that:
(a) Except as stated in para (iii) under the head "Basis of Qualified
Opinion"'' We have obtained all the information and explanations which,
to the best of our knowledge and belief, were necessary for the
purposes of our audit;
(b) In our opinion, proper books of account, as required by law, have
been kept by the Company so far as appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement referred to in this report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement referred to in this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
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 to the extent applicable except
to the extent stated in para (iv) [AS-11 "The Effect of Changes in
Foreign Exchange Rates"and read with note no.2.8(a)) and para (vii)
(AS-28"Impairment of Assets"and read with note no2.5]under the head
"Basis of Qualified Opinion"
(e) On the basis of the written representations received from the
Directors and taken on records by the Board of Directors, we report
that none of the directors of the Company is disqualified as on 30th
September 2014 from being appointed as a Director of the Company 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 1 of our Report of even date on Winsome Yarns
Limited for the period ended 30th September, 2014).
i. (a) The company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets except in respect of certain fixed assets (including assets of
knitwear unit) where, the records as explained, are in process of
compilation/ updation [Read with note no. 2.23(A) (iv) (b)].
(b) As per information & explanations given to us, physical
verification of the fixed assets have not been carried out according to
the regular programme of physical verification, once in every three
years (in phased manner) which in our opinion need to be further
strengthen having regard to the size of the company and the nature of
its fixed assets. As explained in note no no. 2.23 (A) (iv) (b), in
view of the necessary security arrangements there will not be any
material discrepancies on completion of such physical verification.
(c) As per the records and information and explanation given to us,
fixed assets disposed off during the year were not substantial.
ii. (a) As explained, only some of the inventories of the Company
(including stock lying with the third parties and in transit) have
been physically verified by the management during the period. [Read
with our comments para (a) and (b) below].
(b) In our opinion and according to information & explanations given to
us, the procedures of physical verification of inventories followed by
the management need to be strengthen in relation to the size of the
Company and nature of its business[Read with note no. 2.23(A) (iv) (a)
to (c)].
(c) In the absence of detailed item wise quantitative records and
physical verification reports (Read with our comments in para (b)
above], we are not in position to comment whether discrepancies
accounted for is correct and complete. However, as per the information
made available the discrepancies noticed between the physical stock, to
the extant physical verification carried out read with note no. 2.23(A)
(iv) (a) to (c) and the book records were not material.
iii. (a) As explained, The Company has not granted any loans, secured/
unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly,
the provisions of clause 4 (iii) (b) to (d) of the Order are not
applicable to the Company.
(b) The Company has taken unsecured loans from a party covered in the
register maintained under section 301 of the Act. The maximum amount
involved during the year and the year end balance of such loans is Rs.
549.17 lacs and Rs. NIL respectively.
(c) In our opinion and according to information and explanations given
to us, the rate of interest and other terms and conditions of such
loans taken by the Company are not prima facie prejudicial to the
interest of the Company.
(d) In respect of aforesaid loans taken, the Company is regular in
repayment of principal mounts as stipulated and payment of interest is
regular.
iv. An our opinion and according to the information, and explanations
given to us, paving regard to the explanation that some of the items
purchased/ sold/ Services rendered are of special nature and suitable
alternative sources do not exist for obtaining comparable quotation or
where user department has shown specific preference, where, as
explained, rates were determined considering the quality, volume,
nature of the items and market conditions prevailing at that time,
there are internal control system which need to be further strengthened
to be made the same commensurate with size of the company and nature of
its business with regard to the purchase of inventory, fixed assets,
services and for the sale of goods/fixed assets and services.(read with
note no. 2.8, 2.10, 2.14, 2.15, 2.17 & 2.23 (A)(iv) and our comments
under "Basis of Qualified Opinion"paragraph]. Based on the audit
procedure performed and information & explanation provided by the
management, during the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system nor been identified by the management except to the extent as
stated above under Para (i) and (ii) above.
v. (a) According to the information and explanations provided by the
management and based on the audit procedure performed, we are of the
opinion that the particulars of the contracts or arrangements referred
to in Section 301 of the Act have been entered in the register required
to be maintained under that section; and (b) In our opinion and
according to the information and explanation given to us and having
regard to para iv above, the transactions made in pursuance of such
contracts or arrangements (exceeding the value of Rs.5Lacs in respect
of each party during the financial year) have been made at prices which
are generally reasonable having regard to the prevailing market prices
at the relevant time.
vi. According to the information and explanations given to us, the
Company has not accepted any deposits from the public within the
meaning of Section 58A and 58 AA Act and the rules framed there under
and directives issued by the Reserve bank of India and other relevant
provisions of the Act We have been informed that no order has been
passed by the company Law Board or National Company Law Tribunal or
Reserve Bank of India or any Court or any other Tribunal in this
regard.
vii. In our opinion, the Company has an internal audit system which
needs to be further strengthened to be made the same commensurate with
the size of the Company and nature of its business.
viii. We have broadly reviewed the books of account to the extent made
[Read with note no. 2.23(A) (iv)(a) to (c)] and maintained by the
company as prescribed by the Central Government for the maintenance of
cost records under section 209 (1) (d) of the Companies Act, 1956 and
are of the opinion that, prima facie the prescribed full details and
records which needs to be updated. We have, however, not made a
detailed examination of the said records with view to determine whether
they are accurate to the extent the same are maintained.
ix. (a) According to the records of the Company, the Company is
generally regular in depositing with appropriate authorities undisputed statutory dues including Investor Education and Protection Fund, Income
Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Cess and other
material statutory dues to the extent applicable to it except in
respect of Provident Fund and Employee State Insurance dues and Service
Tax were same found paid with certain delay (and as stated in note 2.24) According to the information and explanations given to us, there are no undisputed statutory dues payable for a period more than six months
from the date they became payable as at 30th September 2014.
(b) Based on the records and information and explanations given to us,
there are no dues in respect of Income Tax, Custom Duty, Wealth Tax,
Service Tax and Cess that have not been deposited on account of any
dispute. In our opinion based on the records and according to the
information and explanations given to us, the dues in respect of Income
Tax, Sales Tax and Excise duty that have not been deposited with the
appropriate authorities on account of dispute and the forum where these
disputes pending are given below:
Name of the Nature of Amount Period to which
Statute Dues (Rs. In Lacs) amount relates
Central/ State Sales Tax 4.35 1999-2000
Sales Tax
2.25 1993-1994
13.36 2003-2004
29.08 2008-2009
Name of the Statute Forum where dispute is pending
Centrla /State Joint Director Excise and Taxation
Sales Tax
Sales Tax Tribunal Punjab
Dy. Excise and Taxation Commis- sioner (Appeal)
Commissioner (Appeal)
Name of the Nature of Amount Period to which
Statute Dues (Rupees) amount relates
Central Ex- Excise Duty 6744540 2000-01 to 2004-05
cise Act
Excise Duty 3553824 2005-06 to 2008-09
Excise Duty 51339129 2006-07 to 2009-10
Excise Duty 1597494 2010-11
Excise Duty 1342181 2011-12
Name of the Statute Forum where dispute is pending
Central Ex-cixe Act CESTAT, New Delhi
CESTAT, New Delhi
CESTAT, New Delhi
CESTAT, New Delhi
CESTAT, New Delhi
This para is to be read with note no. 2.1 (A) and 2.1(B) and note no.
2.15 AND para (iii) of "Basis for Qualified Opinion"''
x. The Company''s accumulated losses at the end of the financial year is
in excess of fifty percent of the net worth and it has incurred cash
loss during the current financial period as well as in the immediate
preceding financial year.
xi. In our opinion, on the basis of audit procedures and according to
the information an explanations given to us, the company has defaulted
in repayment of dues on account of interest and principal (maximum) of
amounting to Rs. 2,579.56 lacs and amounting to Rs. 5,776.53 lacs
respectively for delay of maximum period of 488 days and 549 days
respectively) to banks (this is to be read with note no. 2.2).
During the period Company has not taken loan from financial institution
or debenture holders (This to be read with Note No. 5.5 for the
continuing default).
xii. Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and/or
advances on the basis of security by way of pledge of shares,
debentures and other securities.
xiii. The Company is not a Chit Fund Company or nidhi /mutual benefit
fund/society accordingly clause (xiii) of the order is not applicable.
xiv. In our opinion, the company is not dealing in or trading in
shares, securities, debentures and other investment.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institution.
xvi. According to the information and explanations given to us, the
term loans were applied for the purposes for which the loans were
obtained.
xvii. On the basis of information and explanations given to us and on
overall examination of the Company, we are of the opinion that prima
facie no funds raised on short-term basis have been used for long term
investment.
xviii. According to the information and explanations given to us, the
Company has not made preferential allotment of shares during the year
to any parties or companies covered in the register maintained under
Section 301 of the Act.
xix. No debenture has been issued /outstanding during the year hence
the provision of clause 4 (xix) of the said order are not applicable.
xx. According to the information and explanations given to us, during
the earlier year (2010-11) the Company has raised money through a GDR
issue (this to be read with note no. 2.3) However, as explained, no
money has been raised through issue during the year.
xxi. To the best of our knowledge and belief, based on the audit
procedure performed and on the basis of information and explanations
provided by the management, no material fraud [read with note no. 2.3,
2.23(A)(iv) and our comments under the "Basis for Qualified Opinion"]
on or by the Company has been noticed or reported during the course of
the audit
For LODHA & CO.
Firm Registration Number: 301051E
Chartered Accountants
N.K. Lodha
(Partner)
Membership No: 85155
Date : 29.11.2014
sPlace : New Delhi
Mar 31, 2012
We have audited the attached Balance Sheet of Winsome Yarns Limited as
at 31st March 2012, the Statement of Profit and Loss and also the Cash
Flow Statement of the Company for the year ended on that date annexed
thereto. These financial statements are the responsibility of 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 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 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.
1. As required by the Companies (Auditor's Report) Order, 2003 ('The
Order') as amended by the Companies (Auditor's Report) Order, 2004
issued by the Central Government of India in terms of Section 227 (4A)
of the Companies Act, 1956 ('The Act'), we enclose in the Annexure a
statement on the matters specified in the paragraphs 4 & 5 of the said
Order.
2. Further to our comments in the Annexure referred to in paragraph 1
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 purposes of our
audit.
b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books.
c) The Balance Sheet, the statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
d) In our opinion, the Balance Sheet, the 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 Companies Act, 1956 to the extent applicable except as stated in
para g (i) in respect of gain recognised on restatement of foreign
currency overdue debtors of Rs.32 6.05 lacs (including Rs. 108.15 lacs
for the year), which is not in line with Accounting standard-11 (The
Effects of Changes in Foreign Exchange Rates) of the companies
accounting standard rules, 2006).
e) On the basis of written representation received from the directors
of the Company and taken on the Record by the Board of Directors, we
report that none of the directors of the Company is disqualified as on
31.03.2012 from being appointed as director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
f) Without qualifying attention is invited to Note No 6 regarding
Deferred Tax Assets (Net) of Rs 1233.24 Lacs carried out as assessed by
the management on unabsorbed depreciation and business losses as stated
in the said note.
g) Further attention is invited to:
i. Note no. 2.16 regarding non provision for shortfall in recovery
(amount unascertained) against overdue debt aggregating to Rs 1641.09
lacs and its cumulative gain recognised on reinstatement of said
debtors of Rs. 326.05 lacs as stated in the said note for which
persuasive action for recovery has been initiated, in the opinion of
the management these debts are good and recoverable.
ii. Note no 2.10 regarding non provision for diminution in the value
of investment in a subsidiary company (impact unascertainable) for the
reason as stated in the said note
We further report that the loss for the year, the balance in reserve
and surplus, debtors and investments are without considering items
mentioned in para (g) above, the impact of which could not be
determined.
Subject to the para (g) above, In our opinion and to the best of our
information and according to the explanations given to us, the said
account subject to and read with note no 2.12, 2.17, 2.19 and read
together with other notes give the information as 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 Balance Sheet, of the State of Affairs of the
Company as at 31st March, 2012;
(ii) in the case of the statement of Profit and Loss, of the loss of
the Company for the year ended on that date; and
(iii) in the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
(Referred to in paragraph 1 of our Report of even date on Winsome Yarns
Limited for the year ended 31st March, 2012)
i. (a) The company has maintained proper records showing particulars,
including quantitative details and situation of fixed assets except of
certain fixed assets in respect of which the records are in process of
compilation Updation.
(b) As per information & explanations given to us, physical
verification of the fixed assets are in process of completion according
to the regular programme of physical verification once in every three
years, in phased manner, which in our opinion is reasonable having
regard to the size of the company and the nature of its fixed assets As
explained, in view of the necessary security arrangements there will
not be any material discrepancies on completion of such physical
verification.
(c) As per the records and information and explanation given to us,
fixed assets disposed off during the year were not substantial.
ii. (a) As explained to us, the inventories of the Company (except
stock lying with the third parties and in transit) have been physically
verified by the management during the year.
(b) In our opinion and according to information & explanations given to
us, the procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and nature of its business.
(c) According to the information and explanations given to us, we are
of the opinion that the company is maintaining proper records of
inventories (In case of process stock, records are updated on monthly
physical verification of stock) As per records and information made
available the discrepancies noticed on verification between the
physical stock and the book records were not material in relation to
the operation of the company.
iii. As per information & explanations given to us the Company has
neither granted nor taken during the year any loans, secured or
unsecured to companies, firms or other parties as covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) to (g)
of the Order are not applicable.
iv. In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
purchased/ sold/ services rendered are of special nature and suitable
alternative sources do not exist for obtaining comparable quotation or
where user department has shown specific preference, where, as
explained, rates were determined considering the quality, volume,
nature of the items and market conditions prevailing at that time,
there are internal control system commensurate with size of the company
and nature of its business with regard to the purchase of inventory,
fixed assets, services and for the sale of goods/ fixed assets and
services where steps have been initiated to strengthen system further.
(read with note no. 2.12, 2.17 & 2.19 of notes) Based on the audit
procedure performed and information & explanation provided by the
management, during the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system nor been identified by the management.
v. a) According to the information and explanations provided by the
management and based on the audit procedure performed, we are of the
opinion that the particulars of the contracts or arrangements referred
to in Section 301 of the Act have been entered in the register required
to be maintained under that section, and
b) In our opinion and according to the information and explanation
given to us and having regard to para iv above, the transactions made
in pursuance of such contracts or arrangements (exceeding the value of
Rs 5 Lacs in respect of each party during the financial year) have been
made at prices which are generally reasonable having regard to the
prevailing market prices at the relevant time.
vi. According to the information and explanations given to us, the
Company has not accepted any deposits from the public within the
meaning of Section 58A and 58 AA Act and the rules framed there under
and directives issued by the Reserve bank of India and other relevant
provisions of the Act We have been informed that no order has been
passed by the company Law Board or National Company Law Tribunal or
Reserve Bank of India or any Court or any other Tribunal in this
regard.
vii. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business
which needs to be further strengthened.
viii. We have broadly reviewed the books of account maintained by the
company as prescribed by the Central Government for the maintenance of
cost records under section 209 (1) (d) of the Companies Act, 1956 and
are of the opinion that prima facie the prescribed records have been
made and maintained We have, however, not made a detailed examination
of the said records with view to determine whether they are accurate
and complete.
ix. (a) According to the records of the Company, the Company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees' State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other
material statutory dues applicable to it. According to the information
and explanations given to us, there are no undisputed statutory dues
payable for a period more than six months from the date they became
payable as at 31.03.2012.
(b) Based on the records and information and explanations given to us,
there are no dues in respect of Income Tax, Custom Duty, Wealth Tax,
Service Tax and Cess that have not been deposited on account of any
dispute. In our opinion based on the records and according to the
information and explanations given to us, the dues in respect of Income
Tax, Sales Tax and Excise duty that have not been deposited with the
appropriate authorities on account of dispute and the forum where these
disputes pending are given below:
Nature of the
Statute Nature of
dues Amount
(Rs. In
lacs) Period to which Forum where
dispute is
pending
amount relates
Central/
State Sales
Tax Sales Tax 4.35 1999-2000 Joint Director
Excise and
Taxation
2.25 1993-1994 Sales Tax
Tribunal Punjab
13.36 2003-2004 Deputy Excise
and Taxation
Commissioner
(Appeal)
Central Excise
Act# Excise Duty 11.72 2006-2007 &
2007-2008 Hon'ble Punjab
& Haryana
High Court
Excise Duty 28.60 2000-2001 to
2004-2005 CESTAT
Excise Duty 463.46 2006-2007 to
2009-2010 CESTAT
Excise Duty 3.82 2007-2008 &
2008-2009 Commissioner
Appeals
Excise Duty 5.93 2011-2012 Commissioner
Appeals
Excise Duty 6.68 2009-2010 Assistant
Commissioner
Finance Act
1994 Service Tax 0.62 2005 Commissioner
Appeals
# (Excluding excise show cause notices)
This para is to be read with note no. 2.1 (A) and 2.1(B).
x The Company has accumulated losses at the end of the financial year
and it has incurred cash loss during the current financial year.
However company did not incurred cash loss in the immediately preceding
financial year.
xi. In our opinion, on the basis of audit procedures and according to
the information and explanations given to us, the company has not
defaulted in repayment of dues (except for maximum of interest
amounting to Rs 352.40 lacs and principal amounting to Rs 940.71 lacs
and delay for maximum period of 89 days and 89 days respectively) to
banks (this is to be read with note n. 2.2)During the year Company has
not taken loan from financial institution or debenture holders.
xii Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and/or
advances on the basis of security by way of pledge of shares,
debentures and other securities.
xiii The Company is not a Chit Fund Company or nidhi /mutual benefit
fund/ society accordingly clause (xiii) of the order is not applicable.
xiv. In our opinion, the company is not dealing in or trading in
shares, securities, debentures and other investment.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institution.
xvi According to the information and explanations given to us, the term
loans were applied for the purposes for which the loans were obtained.
xvii. On the basis of information and explanations given to us and on
overall examination of the Company, we are of the opinion that prima
facie no funds raised on short-term basis have been used for long term
investment.
xviii. According to the information and explanations given to us, the
Company has not made preferential allotment of shares to any parties or
companies covered in the register maintained under Section 301 of the
Act (read with note no 2.3A).
xix. No debenture has been issued /outstanding during the year hence
the provision of clause 4 (xix) of the said order are not applicable.
xx. According to the information and explanations given to us, during
the previous year the Company has raised money through a GDR issue
Certain amount has been utilised for the purposes as mentioned in note
no. 2.3B, and pending compliances, the balance money is parked in a
separate bank Escrow account outside Indiaxxi.To the best of our
knowledge and belief, based on the audit procedure performed and on the
basis of information and explanations provided by the management, no
material fraud on or by the Company has been noticed or reported during
the course of the audit.
For Lodha & Co
Chartered Accountants
FRN No 301051E
N.K. Lodha
Partner
Membership No 85155
30.05.2012
New Delhi
Mar 31, 2011
We have audited the attached Balance Sheet of Winsome Yarns Limited as
at 31st March 2011, the Profit and Loss Account and also the Cash Flow
Statement of the Company for the year ended on that date annexed
thereto. These financial statements are the responsibility of Companys
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. 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.
1. As required by the Companies (Auditors Report) Order, 2003 (ÃThe
OrderÃ) as amended by the Companies (Auditors Report) Order, 2004
issued by the Central Government of India in terms of Section 227 (4A)
of the Companies Act, 1956 (ÃThe ActÃ), we enclose in the Annexure a
statement on the matters specified in the paragraphs 4 and 5 of the
said Order.
2. Further to our comments in the Annexure referred to in paragraph 1
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 purposes of our
audit.
b) In our opinion proper books of account as required by law have been
kept by the company so far as appears from our examination of those
books.
c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
d) 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
Companies Act, 1956 to the extent applicable except as stated in para f
(i) in respect of cumulative gain recognised on restatement of foreign
currency overdue debtors of Rs. 217.90 lacs, which is not in line with
Accounting Standard - 11 (The Effects of Changes in Foreign Exchange
Rates) of the Companies Accounting Standard Rules, 2006).
e) On the basis of written representations received from the directors
of the Company and taken on the record by the Board of Directors, we
report that none of the directors of the company is disqualified as on
31.3.2011 from being appointed as director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
f) Attention is invited to:
i. Note No. 16 of schedule 15 B regarding non provision for shortfall
in recovery (amount unascertained) against overdue debtor aggregating
to Rs. 1900.18 lacs and cumulative gain recognised on restatement of
said debtors of Rs. 217.90 lacs as stated in the said note for which
persuasive action for recovery has been initiated, in the opinion of
the management these debts are good and recoverable and our inability
to comment thereon.
ii. Note No. 10B of Schedule 15 B regarding non provision for
diminution in the value of investment in a subsidiary company (impact
unascertainable) for the reason as stated in the said note and our
inability to comment thereon.
We further report that the profit for the year, the balance in reserve
and surplus, debtors and investments are without considering items
mentioned in para (f) above, the impact of which could not be
determined.
Subject to the para (f) above, in our opinion and to the best of our
information and according to the explanations given to us, the said
account subject to and read with Note No 17 & 3B of Schedule 15B and
read together with other notes on accounts give the information as
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 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 Cash Flow Statement, of the Cash Flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in Paragraph 1 of our report of even date on Winsome Yarns
Limited for the year ended 31st March 2011)
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets excepts at certain location, fixed assets are in process of
updation.
(b) As per information & explanations given to us, physical
verification of the certain fixed assets have been taken up which is in
process of completion according to the regular programme of physical
verification once in every three years, in phased manner, which in our
opinion is reasonable having regard to the size of the company and the
nature of its fixed assets. As explained, in view of the necessary
security arrangements there will not be any material discrepancies on
completion of such physical verification.
(c) As per the records and information and explanations given to us,
fixed assets disposed off during the year were not substantial.
ii. (a) As explained to us, the inventories of the Company (except
stock lying with the third parties and in transit) have been physically
verified by the management during the year.
(b) In our opinion and according to the information and explanation
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) According to the information and explanations given to us, we are
of the opinion that the company is maintaining proper records of
inventories (In case of process stock, records are updated on monthly
physical verification of stocks). As per records and information made
available the discrepancies noticed on verification between the
physical stock and the book records were not material in relation to
the operation of the company.
iii. As per information and explanations given to us the Company has
neither granted nor taken during the year any loans, secured or
unsecured to companies, firms or other parties as covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4(iii)(b) to (d) and (f) to (g)
of the Order are not applicable.
iv. In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
purchased are of special nature and suitable alternative sources do not
exist for obtaining comparable quotation or where user department has
shown specific preference, where, as explained, rates were determined
considering the quality, volume, nature of the items and market
conditions prevailing at that time, there are internal control system
commensurate with size of the company and nature of its business with
regard to the purchase of inventory, fixed assets, services and for the
sale of goods and services which needs to be further strengthened (read
with note no. 17 and 19 of schedule 15B). Based on the audit procedure
performed and information and explanation provided by the management,
during the course of our audit, we have not observed any continuing
failure to correct major weaknesses in internal control system nor been
identified by the management.
v. (a) According to the information and explanations provided by the
management and based on the audit procedure performed, we are of the
opinion that the particulars of contracts or arrangements referred to
in Section 301 of the Act have been entered in the register required to
be maintained under that section; and
(b) In our opinion and according to the information and explanation
given to us and having regard to para iv above, the transactions made
in pursuance of such contracts or arrangements (exceeding the value of
Rs. 5 lacs in respect of each party during the financial year) have
been made at prices which are generally reasonable having regard to
prevailing market prices at the relevant time.
vi. According to the information and explanations given to us, the
company has not accepted any deposits from public within the meaning of
Sections 58A, 58AA Act and the rules framed thereunder and the
directives issued by Reserve Bank of India and other relevant
provisions of the Act. We have been informed that no order has been
passed by the Company Law Board or National Company Law Tribunal or
Reserve Bank of India or any Court or any other Tribunal in this
regard.
vii. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business
which needs to be further strengthened.
viii. We have broadly reviewed the books of account maintained by the
company as prescribed by the Central Government for the maintenance of
cost records under section 209 (1) (d) of the Companies Act, 1956 and
are of the opinion that prima facie the prescribed records have been
made and maintained. We have, however, not made a detailed examination
of the said records with view to determine whether they are accurate
and complete.
ix. (a) According to the records of the company, the company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other
material statutory dues applicable to it. According to the information
and explanations given to us, there are no undisputed statutory dues
payable for a period more than six months from the date they became
payable as at 31.03.2011.
(b) Based on the records and information and explanations given to us,
there are no dues in respect of Income Tax, Custom Duty, Wealth Tax,
Service Tax and Cess that have not been deposited on account of any
dispute. In our opinion based on the records and according to the
information and explanations given to us, the dues in respect of Income
Tax, Sales Tax and Excise duty that have not been deposited with the
appropriate authorities on account of dispute and the forum where these
disputes pending are given below:
Name of the
Statute Nature of Dues Amount (Rs. in Lacs)
Central/ State
Sales tax Sales tax 4.35
2.25
13.36
Central Excise Act # Excise Duty 456.24
Excise Duty 35.74
Excise Duty 18.15
Excise Duty 3.82
Financial Act, 1994 Service Tax 0.62
Income Tax Act, 1961 Income Tax 125.53
Period to which Forum where dispute is
pending
the amount relates
Central /State
Sales tax 1999-2000 Joint Director Excise and
Taxation
1993-1994 Sales Tax Tribunal Punjab
2003-2004 Deputy Excise and Taxation
Commissioner (Appeal)
2002-2003 CESTAT
2005 to 2007 CESTAT
2006 to 2008 Commissioner Appeals 2008-2009
Assistant Commissioner
2005 Commissioner Appeals
2006-2007 Additional Commissioner of
#(excluding excise show cause notices)
This para is to be read with note no. 1 of schedule 15B x.
X The Company does not have accumulated losses at the end of the
financial year and has not incurred any cash loss during the current
and immediately preceding previous year.
xi. In our opinion, on the basis of audit procedures and according to
the information and explanations given to us, the company has not
defaulted in repayment of dues (except for maximum of interest
amounting to Rs. 62.38 lacs and principal amounting to Rs. 66.10 lacs
and delay for maximum period of 87 days and 84 days respectively) to
banks (this is to be read with note no. 2 of schedule 15B). During
the year Company has not taken loan from financial institution or
debenture holders.
xii. Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and /or
advances on the basis of security by way of pledge of shares, debenture
and other securities.
xiii. The Company is not a Chit Fund Company or nidhi / mutual benefit
fund / society accordingly clause (xiii) of the order is not
applicable. xiv. In our opinion, the company is not dealing in or
trading in shares, securities, debenture and other investment.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institution.
xvi. According to the information and explanations given to us, the
term loans were applied for the purpose for which the loans were
obtained. xvii. On the basis of information and explanations given to
us and on overall examination of the Company, we are of the opinion
that prima facie no fund raised on short-term basis which have been
used for long term investment. xviii. According to the information
and explanations given to us, the Company has not made any preferential
allotment of shares to any parties or companies covered in the register
maintained under Section 301 of the Act (read with note no. 3 A of
schedule 15B).
xix. No debenture has been issued/ outstanding during the year hence
the provision of clause 4(xix) of the said order are not applicable.
xx. According to the information and explanations given to us, during
the year the company has raised money through a GDR issue, pending
compliance the money is parked in a separate bank Escrow account.
(refer note no. 3B of schedule 15 B). xxi. To the best of our
knowledge and belief, based on the audit procedures performed and on
the basis of information and explanations provided by the management,
no material fraud on or by the Company has been noticed or reported
during the course of our audit.
For Lodha & Co.
Chartered Accountants
(N.K. Lodha)
Partner
Membership No.: 85155
Place : New Delhi
Date : 12th May 2011
Mar 31, 2010
We have audited the attached Balance Sheet of Winsome Yarns Limited as
at 31 st March 2010, the Profit and loss Account and also the Cash Flow
Statement of the Company for the year ended on that date annexed
thereto. These financial statements are the responsibility of Companys
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. 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.
1. As required by the Companies (Auditors Report) Order, 2003 ("The
Order") as amended by the Companies (Auditors Report) Order, 2004
issued by the Central Government of India in terms of Section 227 (4A)
of the Companies Act, 1956 ("The Act"), we enclose in the Annexure a
statement on the matters specified in the paragraphs 4 and 5 of the
said Order.
2. Further to our comments in the Annexure referred to in paragraph 1
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 purposes of our
audit;
b) In our opinion proper books of account as required by law have been
kept by the company so far as appears from our examination of those
books;
c) The Balance Sheet and Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
d) In our opinion, the Balance Sheet and 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 Companies Act, 1956 to the extent applicable;
e) On the basis of written representations received from the directors
of the Company and taken on the record by the Board of Directors, we
report that none of the directors of the company is disqualified as on
31.3.10 from being appointed as director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
f) Attention is drawn on note no. 11 of schedule 15-B regarding
depreciation on certain Plant and Machinery is provided as per the
rates applicable to the continuous process plant for the reason as
stated in the said note.
g) Further attention is invited to:
Note No. 16 of schedule 15B regarding non provision for shortfall
in recovery (amount unascertained) against overdue debt aggregating Rs.
1903.39 lacs as stated in the said note for which persuasive action for
recovery has been initiated, in the opinion of the management these
debts are good and recoverable and our inability to comment thereon.
ii. Note No. 10B of Schedule 15B regarding non provision for
diminution in the value of investment in a subsidiary company (impact
unascertainable) for the reason as stated in the said note and our
inability to comment thereon. Hi. Note No. 8 of schedule 15B regarding
appointment and remuneration paid to the managing director amounting to
Rs. 17.79 lacs is subject to the approval of the Central Government.
We further report that the loss for the year, the balance in reserve
and surplus, debtors and investments are without considering items
mentioned in para (g) above, the impact of which could not be
determined. Subject to the para (g) above, in our opinion and to the
best of our information and according to the explanations given to us,
the said accounts read with Note No 17 of Schedule 15B and read
together with other notes on accounts give the information as 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 Affairs of the
company as at 31 st March, 2010; (ii) in the case of the Profit and
Loss Account, of the loss of the company for the year ended on that
date; and (iii) in the case of Cash Flow Statement, of the Cash Flows
for the year ended on that date.
(Referred to in Paragraph 1 of our report of even date on Winsome Yarns
Limited for the year ended 31 st March 2010)
i. (a) The Company has maintained records in respect of fixed assets
showing full particulars including quantitative details and situation
of fixed assets.
(b) As per information & explanations given to us, physical
verification of the fixed assets are in process of completion according
to the regular programme of physical verification once in every three
years, in phased manner, which in our opinion is reasonable having
regard to the size of the company and the nature of its fixed assets.
As explained, in view of the necessary security arrangements there will
not be any material discrepancies on completion of such physical
verification.
(c) As per the records and information and explanations given to us,
fixed assets disposed off during the year were not substantial.
ii. (a) As explained to us, the inventories of the Company (except
stock lying with the third parties and in transit) have been physically
verified by the mnagement during the year.
(b) In our opinion and according to the information and explanation
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) According to the information and explanations given to us, we are
of the opinion that the company is maintaining proper records of
inventories (In case of process stock, records are updated on monthly
physical verification of stocks). As per records and information made
available the discrepancies noticed on verification between the
physical stock and the book records were not material in relation to
the operation of the company.
iii. As per information and explanations given to us the Company has
neither granted nor taken during the year any loans, secured or
unsecured to companies, firms or other parties as covered in the
register maintained under section 301 of the Companies Act, 1956.
Accordingly, the provisions of clause 4(iii)(b) to (d) and (f) to (g)
of the Order are not applicable.
iv. In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
purchased are of special nature and suitable alternative sources do not
exist for obtaining comparable quotation or where user department has
shown specific preference, where, as explained, rates were determined
considering the quality, volume, nature of the items and market
conditions prevailing at that time, there are internal control system
commensurate with size of the company and nature of its business with
regard to the purchase of inventory, fixed assets, services and for the
sale of goods and services which needs to be further strengthened (read
with note no. 17 and 20 of schedule 15B). Based on the audit procedure
performed and information and explanation provided by the management,
during the course of our audit, we have not observed any continuing
failure to correct major weaknesses in internal control system nor been
identified by the management.
v. (a) According to the information and explanations provided by the
management and based on the audit procedure performed, we are of the
opinion that the particulars of contracts or arrangements referred to
in Section 301 of the Act have been entered in the register required to
be maintained underthat section;and
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of such contracts or
arrangements (exceeding the value of Rs. 5 lacs in respect of each
party during the financial year) have been made at prices which are
generally reasonable having regard to prevailing market prices at the
relevant time.
vi. According to the information and explanations given to us, the
company has not accepted any deposits from public within the meaning of
Sections 58A, 58AA Act and the rules framed thereunder and the
directives issued by Reserve Bank of India and other relevant
provisions of the Act. We have been informed that no order has been
passed by the Company Law Board or National Company Law Tribunal or
Reserve Bank of India or any Court or any other Tribunal in this
regard.
vii. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business
which needs to be further strengthened.
viii. We have broadly reviewed the books of account maintained by the
company as prescribed by the Central Government for the maintenance of
cost records under section 209 (1) (d) of the Companies Act, 1956 and
are of the opinion that prima facie the prescribed records have been
made and maintained. We have, however, not made a detailed examination
of the said records with view to determine whether they are accurate
and complete.
ix. (a) According to the records of the company, the company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other
material statutory dues applicable to it. According to the information
and explanations given to us, there are no undisputed statutory dues
payable for a period more than six months from the date they became
payable as at 31.03.2010.
(b) Based on the records and information and explanations given to us,
there are no dues in respect of Income Tax, Custom Duty, Wealth Tax,
Service Tax and Cess that have not been deposited on account of any
dispute. In our opinion based on the records and according to the
information and explanations given to us, the dues in respect of Income
Tax, Sales Tax and Excise duty that have not been deposited with the
appropriate authorities on account of dispute and the forum where these
disputes pending are given below:
Name of the
Statute Nature of Dues Period to
which Amount
(Rs. in
Lacs) Forum where
dispute
is pending
the amount
relates
Central/
State Sales
tax Sales tax 1999-2000 4.35 Joint Director
Excise
and Taxation
1993-1994 Sales Tax
Tribunal
Punjab
Central
Excise Act# Excise Duty 2002-2003 456.24 CESTAT
Excise Duty 2005 to 2007 35.74 CESTAT
ExciseDuty 2006-2007, 18.15 Commissioner
Appeals
2007-2008
ExciseDuty 2008-2009 3.82 Assistant
Commissioner
Financial
Act, 1994 Service Tax 2005 0.62 Commissioner
Appeals
Income Tax Income Tax 2004-2005 33.94 ITAT
Income Tax 2005-2006 103.77 CIT(A)
Income Tax 2006-2007 125.53 Additional
Commissioner
of
Income Tax
#(excluding excise show cause notices)
This para is to be read with note no. 1 of schedule 15B
x. The Company has no accumulated losses at the end of the financial
year and it has not incurred cash loss during the financial year.
However company did incurred cash loss in the immediately preceding
financial year.
xi. In our opinion, on the basis of audit procedures
and according to the information and explanations given to us, the
company has not defaulted in repayment of dues (except for maximum of
interest amounting to Rs. 62.96 lacs and principal amounting to Rs.
83.34 lacs and delay for maximum period of 88 days and 86 days
respectively) to banks (this is to be read with note no. 2 of schedule
15B). During the year Company has not taken loan from financial
institution or debenture holders.
xii. Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and /or
advances on the basis of security by way of pledge of shares, debenture
and other securities.
xiii. The Company is not a Chit Fund Company or nidhi / mutual benefit
fund / society accordingly clause
(xiii) of the order is not applicable.
xiv. In our opinion, the company is not dealing in or trading in
shares, securities, debenture and other investment. xv. According to
the information and explanations given to us, the Company has not given
any guarantee for loans taken by others from banks and financial
institution.
xvi. According to the information and explanations given to us, the
term loans were applied for the purpose for
which the loans were obtained.
xvii. On the basis of information and explanations given to us and on
overall examination of the Company, we are of the opinion that prima
facie no fund raised on short-term basis which have been used for long
term investment.
xviii. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to any
parties or companies covered in the register maintained under Section
301 of the Act (read with note no. 3 of schedule 15B).
xix. No debenture has been issued/ outstanding during the year hence
the provision of clause 4(xix) of the said order are not applicable.
xx. The company has not raised any money through a public issues
during the year.
xxi. To the best of our knowledge and belief, based on the audit
procedures performed and on the basis of information and explanations
provided by the management, no material fraud on or by the Company has
been noticed or reported during the course of our audit.
ForLodha&Co.
Chartered Accountants
Firm Registration No. 301051E
Place : New Delhi N.K. Lodha
Date : 27.05.2010 Partner
Membership No.: 85155
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Winsome Yarns Ltd.
-
Winsome Yarns Ltd. Tools
- Bulk Deals
- Block Deals
-
Winsome Yarns Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
- NSE Price History
-
Winsome Yarns Ltd. Key Financial Ratios
- Ratios
-
Winsome Yarns Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Winsome Yarns Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Winsome Yarns Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Winsome Yarns Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
