| 1. We have audited the accompanying financial statements of Khaitan
(India) Limited ("the Company"), which comprise the Balance Sheet as at
March 31, 2015, the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements:
2. The company's Board of Directors is responsible for the matters
stated in section 134(5) of the Companies Act 2013 ("the act") with
respect to the preparation of these financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the accounting principle
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 judgements
and estimates that are reasonable and prudent and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for insuring the accuracy and
completeness of the accounting records relevant to the preparation and
presentation of the financial statements , that give a true and fair
view and are free from material misstatement, whether due to fraud or
error.
Auditors' Responsibility:
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the rules made there under.
We conducted our audit in accordance with the Standards on Auditing
specified under section 143 (10) of the Act . Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
4. 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 judgement, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal 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 operating 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 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.
5. Basis of Qualified Opinion:
a. Attention is provided to Note no. 14 regarding deferred tax asset
which have not been written off amounting to Rs.32643751/- being
recognized in the Balance Sheet. If the Deferred tax asset had been
written off during the year, there would be a loss of Rs.8,85,15,565/-
as against the loss of Rs.5,58,71,814/- shown in these financial
statements. Deferred tax asset balance in the Balance sheet would
amount to 'NIL'as against Rs.3,26,43,751/- as disclosed in these
financial statements.
b. Closing balances of Debtors, Creditors, loans, deposits, advances,
old liabilities relating to gratuity, land rent & panchayat tax and
some bank balances are unconfirmed and fixed deposit receipts and
National Saving certificates are not available with the company, in
respect of which we are unable to express our opinion.
Qualified Opinion:
6. In our opinion and to the best of our information and according to
the explanations given to us, except for the matter referred to in
paragraph 5above, 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 affairs of the
Company as at March 31, 2015;
b) in the case of the Statement of Profit and Loss, of the Loss , for
the year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter:
7. Without qualifying our opinion, we draw attention to the following
matters:
Attention is drawn to Note No. 2(f) regarding valuation of planted
trees on estimated realizable value being technical in nature, we are
unable to express our opinion.
Report on Other Legal and Regulatory Requirements:
8. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of sub-
section (11) of section 143 of the Companies Act , 2013 we give in the
Annexure a statement on the matters specified in paragraphs 3 and 4 of
the Order to the extent applicable .
9. As required by section 143(3) of the Act, we report that:
a) except for the matter referred to in paragraph 5 above, we have
sought and obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b) in our opinion, except for the matter referred to in paragraph 5
above, 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) except for the matter referred to in paragraph 5 above, 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 referred to in paragraph 5
above, 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) on the basis of written representations received from the directors
as on March 31, 2015, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2015, from being
appointed as a director in terms of section 164 (2) of the Act .
f) With respect to the other matters to be included in the Auditors'
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 :
The company has disclosed the impact of pending litigations on its
financial position in its financial statements 31 refer note 2 (M) to
the financial statements .
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT REFERRED TO IN PARAGRAPH 8
WITH THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS"
SECTION OF OUR REPORT OF EVEN DATE
1. i. The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
ii. The Fixed Assets have been physically verified in a phased manner
by the management and reconciliation of the quantities with the Fixed
Assets Register has been made. The differences, if any, have been
adjusted and no serious discrepancies between the Fixed Assets Register
and physical inventory have been noticed.
2. i. The management has conducted physical verification of inventory
at reasonable intervals during the year.
ii. In our opinion the procedure 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.
iii. On the basis of our examination of the records of Inventory, we
are of the opinion that company is maintaining proper records of
inventory. The discrepancies noticed on physical verification and the
books stock wherever ascertained were not significant and have been
properly dealt with in the books of accounts.
3. The Company has not granted loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 189 of the Act. Accordingly the requirements of clauses
(iii) (a) to (b) of the paragraph 3 of the order are not applicable.
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit no major weakness has been
noticed in the internal control system.
5. The Company has not accepted deposits from the public during the
year. The directives issued by the Reserve Bank of India and the
provisions of Section 73 to 76 of the Act and the rules framed there
under are not applicable
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 section 148 (1) of the Companies
Act, 2013and are of the opinion primafacie, the prescribed accounts and
records have been made and maintained. We have not, however, made
detailed examination of the records with a view to determine whether
they are accurate or complete.
7. i. According to the information and explanations given to us and on
the basis of our examination of the books and account, the company has
generally been regular but with delays in depositing the Undisputed
statutory dues including Provident Fund, Employees State Insurance,
Income Tax, Sales Tax, Service Tax, Excise Duty, Cess, Value Added Tax,
T.D.S. and other statutory dues ,if any, with the appropriate
authorities. No undisputed statutory dues were outstanding, as at 31st
March 2015 for a period of more than six months from the date they
became payable except Panchayat tax amounting to Rs.15,448/-and Service
tax amounting to Rs.44,61,000/- .
ii. According to the information and explanations given to us and the
records of the company examined by us, the dues of Income Tax, Sales
Tax, Service Tax, Excise Duty, Value added Tax and Cess as at 31st
March 2015 which have not been deposited on account of dispute and the
forum where the disputes are pending are as follows :
Name of the Nature of Amount Period to which
Statute Class is relating
Maharastra Tax & Penalty 94,87,225
Sales Tax Act on higher turnover
on reassessment
Income Tax
Income Tax - Do - 39,80,580 2008 - 09
Act, 1961
- Do - 0 2007 - 08
- Do - 7372674 2006 - 07
- Do - 53,21,692 2005 - 06
- Do - 1362312 2004 - 05
48,83,986 2003 - 04
Name of the Forum where dispute
Statute is pending
Maharastra Joint Commissioner & Sales Tax
Sales Tax Act (Appellate) Mumbai.
Income Tax Appeal filed by Company against
Act, 1961 Assessment order before CIT(A)
Department filed appeal
before ITAT
Department filed appeal
before ITAT
Company filed appeal
before ITaT
Department filed appeal
before ITAT
Appeal filled before CIT(A)
8. The Company does not have accumulated losses more than fifty
percent of its net worth at the end of the financial year but it has
incurred cash losses during the financial year covered by our audit. It
had incurred cash losses in the immediately preceding financial year
also.
9. According to the information and explanations given to us by the
management the company has not defaulted in repayment of dues to
financial institutions/Banks .Refer note no 5 in Notes on Financial
Statements .
10. According to the informations and explanations given to us, the
company has given guarantee for loan taken by others, from bank or
financial institutions. Since such guarantees or counter guarantees
given are very old and records to this effect has not been provided to
us we are unable to comment upon whether the terms and conditions are
prejudicial to the interest of the company.
11. Based on information and explanations given to us and the records
of the company examined by us, in our opinion the term loan has been
applied for the purpose for which it was obtained .
12. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the company
has been noticed or reported during the course of our audit.
For O P Sharma and Associates
Chartered Accountants
9 Old China Bazar St Registration Mø 500128 M
5th fl., Room No 80 Om Prakash Sharma
Kolkata-700001 Proprietor
The 29th May, 2015 Membership No070762 |