Report on the Financial Statements
1. We have audited the accompanying financial statements of VKS
PROJECTS LIMITED (CIN - L74210MH1998PLC113596) ("The Company"), which
comprises 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 the 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 and presentation of these financial
statements to give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the accounting principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility
also includes maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding the assets of the
Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditors' Responsibility
3. Our responsibility is to express an opinion on these financial
statements based on our audit.
4. 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.
5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act and other applicable
authoritative pronouncements issued by the Institute if Chartered
Accountants of India. Those Standards and pronouncements 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.
6. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
7. 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.
Emphasis of Matter
8. We invite attention to Note no 24 (ii) to the financial statements
regarding non reconciliation and non availability of balance
confirmation from Various Lenders, Sundry Creditors, Trade Receivables
and parties to whom Loans and Advances and Deposits have been made.
9. As referred in Note 24 (iiii) to the financial statement, the
company have not complied with section 203 & section 134 (1) of
Companies Act, 2013.
Opinion
10. In our opinion and to the best of our information and according to
the explanations given to us, except for the possible effects of the
above matter and subject to our remarks as stated in notes hereunder
vide Annexure "A", aforesaid financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India, of the state of affairs of the Company as at March 31, 2015 and
its loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
11. 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 (hereinafter referred to as
the "Order"), and on the basis of such checks of the books and records
of the Company as we consider appropriate and according to the
information and explanation given to us, we give in the Annexure a
statement on the matters specified in the paragraph 3 and 4 of the
Order.
12. 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.
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, 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 the written representations received from the
directors as on March 31, 2015 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; and
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, if any, of pending litigations
as at March 31, 2015 on its financial position in its financial
statements - Refer Note No. 24
- 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 i.e Nil; and
the Investor Education and Protection Fund by the Company during the
year ended March 31, 2015 - NA.
(Referred to in our report of even date)
1) In respect of Fixed Assets:
a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
b) As explained to us, the assets have been physically verified by the
management in accordance with a phased program of verification of its
Fixed Assets including Capital Work in Progress adopted by the Company
which, in our opinion, is reasonable, considering the size and the
nature of its business. No material discrepancies have been noticed on
such physical verification, however no such report provided to us for
verification;
2) INVENTORIES
a) According to the information and explanations given to us, the
inventory has been physically verified by the management during and at
the close of the year.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventory
followed by the management as evidenced by the written procedures and
instructions are reasonable and adequate in relation to the size of the
company and nature of its business.
c) The company is maintaining proper records of inventory. As explained
to us, no discrepancies were noticed on physical verification between
physical stocks and book records. However, physical verification
reports are not produced before us for verification.
3) In respect of the loans, secured or unsecured, granted or taken by
the Company to/from companies, firms or other parties covered in the
Register maintained under Section 189 of the Companies Act, 2013: a)
According to the information and explanations given to us, the company
has granted unsecured loan. The amount and number of parties involved
are INR 7527000/- and
2 parties respectively with closing balance being INR 6829000/- of 2
parties respectively.
b) The company has granted aforementioned advances as non-interest
bearing advances.
c) Terms and conditions for the repayment of the loan granted at clause
(a) above is not specified, hence regularity of receipt of loan amount
could not be commented upon.
d) In view of clause 3(c) above, clause 3(d) are not applicable.
e) According to the information and explanations given to us, the
company has taken unsecured loan. The amount and number of parties
involved are INR 8569486/- and 1 parties respectively with closing
balance being INR 14407556/- of 2 parties respectively.
f) The company has taken aforementioned advances as non-interest
bearing advances.
g) Terms and conditions for the repayment of the loan granted at clause
(a) above is not specified, hence regularity of receipt of loan amount
could not be commented upon.
h) In view of clause 3(c) above, clause 3(d) 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 for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in such internal control
system.
However the internal controls over accounting of consumptions, wastage,
material reconciliation needs further strengthening.
5) In our opinion and according to the information and explanations
given to us, the company has not complied with the provision of section
76 or any other relevant provisions of the Companies Act, 2013 and the
Companies (Acceptance of Deposits) Rules, 2013 with regard to the
deposits accepted from the public and the directives issued by the
Reserve Bank of India in this matter. According to the information and
explanation given to us, no order has been passed by the Company Law
Board or the National Company Law Tribunal or the Reserve Bank of India
or any Court or any other Tribunal in this regard.
6) We have broadly reviewed the records maintained by the Company
pursuant to the rules prescribed by the Central Government for
maintenance of cost records under Sub- Section (1) of Section 148 of
the act and are of the opinion that prima facie the , prescribed cost
records have been maintained. However, we have not made a detailed
examination of the cost records with a view to determine whether they
are accurate or complete.
7) In respect of Statutory dues:
a) The Company is not regular (defaulted) in depositing with
appropriate authorities undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees' State
Insurance, custom duty, excise duty and other statutory dues,
applicable to it with a closing balance as on March 31, 2015 for
Service Tax, Sales Tax and Income Tax. Service Tax dues as at the end
of the year were Rs. 2,86,58,152/- Sales Tax were of Rs. 6,92,851, TDS
were of Rs. 1,37,88,531/- and Income tax were Rs.2,76,17,021/-.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Investor
Education and Protection Fund, Employees' State Insurance, custom duty,
sales tax, excise duty and other statutory dues were outstanding, as at
March 31, 2015 for a period of more than six months from the date were
they became payable except the followings.
Sr.
No. Particulars Amount Outstanding for more than
6 months as on March 31, 2015
1 Income Tax 2,76,17,021
2 Service Tax 2,86,58,152
3 Sales Tax 6,92,851
4 Tax Deducted at Source 1,37,88,531
Note: The sales tax department has initiated proceedings for various
financial years starting from 2006-07 to 2012-13 on the company, in the
absence of the detailed information and explanation in respect of Tax
Liability, Interest and Penalty thereon, we are unable to comment upon
the impact of the same on the statement of profit and loss account.
c) According to the information and explanations given to us and the
records of the Company examined by us, there are no dues of wealth tax,
service tax and cess which have not been deposited on account of any
dispute however the demand raised by the sales tax departments are
still pending for deposition however exact demand amount is not
provided to us by the management hence impact of the same is not
commented.
8) The Company does not have accumulated losses at the end of the
financial year and the company has incurred cash losses amounting to
INR 13.66 Lacs during financial year and INR 561 Lacs in the
immediately preceding financial year.
9) In our opinion and according to the information and explanations
given to us and based on the documents and records produced to us that
the company has defaulted in repayment of dues to financial institution
and banks during the financial year covered under audit.
10) According the information and explanation given to us and records
produced before us, the Company has not given any guarantee for loans
taken by others from banks or financial institution during the year.
Accordingly this clause is not applicable to the Company.
11) In our opinion and according to information and explanation given
to us, the Company has not raised any Terms Loans during the year under
audit hence this clause is not applicable to the Company.
12) According the information and explanation given to us, no instances
of material fraud on or by the Company has been noticed or reported
during the course of our audit.
Annexure "A"
1. Inability to comment on Inter Corporate Deposits and Other Loans
and Advances taken from various parties as at March 2015, in the
absence of third party confirmation, reconciliation, if any and other
sufficient appropriate audit evidence.
2. No Provision is made for Interest Payable on Inter Corporate
Deposits and Other Loans and Advances taken by the Company and no
provision made of Interest Receivable on Inter Corporate Deposits and
Other Loans and Advances provided by the Company, consequently the
profit / loss of the quarter are not ascertainable.
3. Inability to comment on Trade Payables and dues to Related Parties
as at March 2015, in the absence of the third party confirmation,
reconciliation, if any and other sufficient appropriate audit evidence.
4. No Provision made for Interest payable on Loans taken from Banks
and NBFC Companies which are already been declared as NPA, consequently
the loss of the quarter is not ascertainable.
5. Inability to comment on Balance Recoverability, if any of Trade
Receivables and Other Short Term Loans and Advances as at March 2015,
in the absence of sufficient appropriate audit evidence.
6. Inability to comment on Balance Recoverability, if any of Sundry
Deposits and Other Current Assets as at March 2015, in the absence of
sufficient appropriate audit evidence.
7. With reference to Fixed Deposits Accepted by the Company, the
Company has defaulted in repayment of dues as at March 2015. Further,
the Company has not made provisions for penal interest as per the
Companies (Acceptance of Deposits) Rule 2014. The Company has not
intimated to the tribunal on monthly basis about the default in
repayment as per section 73(4) of the Companies Act 2013 corresponding
to section 58AA of the Companies Act 1956.
8. Inability to comment on impairment provisions, if any as per the
Accounting Standard 28 "Impairment of Assets" on Plant and Machinery
along with other fixed assets amounting to INR 1281.46 Lacs situated at
various sites of the Company which have been generally operating at
lower capacity, in the absence of future cash flows projection and
information about the value of use.
9. A notice has been issued by the State Bank of India under section
13 (12) read with rule 3 of the Security Interest (Enforcement) Rules,
2002 for non repayment of installments and interest thereon after the
due date by the Company and therefore all the loan accounts became Non
Performing Assets with effective from respective dates mentioned in
such notice. We are informed that the Company has filed response
against such notices and requested to restructure the loan accounts.
These factors along with other matter as set forth in said notice,
raise substantial doubt about the company's ability to continue as
going concern in the foreseeable future however the company's financial
statements have been prepared on going concern basis on the basis of
management assurance.
10. Inability to comment on Impairment provisions, if any on loan of
INR 32,12,000/- given to VKS Edserve Private Limited ("the related
party"), in the absence of last audited financial statements, detailed
information of projected cash flows as at March 2015 or other
sufficient appropriate audit evidence. Further Inability to comment on
Impairment provisions, if any on loan of INR 36,17,000/- given to VKS
Healthcare Private Limited ("the other related party"), in the absence
of last audited financial statements, detailed information of projected
cash flows as at March 2015 or other sufficient appropriate audit
evidence.
11. Tangible Assets are stated at cost net of recoverable taxes, trade
discounts, and rebates, less accumulated depreciation.
12. Depreciation on Fixed Assets is provided to the extent of
depreciable amount on Written Down Value (W.D.V.) Method. Depreciation
is provided based on useful life of asset described in Schedule II to
the Companies Act, 2013.
13. The Sales Tax Department initiated proceedings for various
financial years starting from 2006-07 to 2012-13 on the Company, in the
absence of the detailed information and explanation in respect of Tax
Liability, Interest and Penalties thereon, we are unable to comment
upon the impact of the same on the statement of profit and loss
account.
14. It is informed to us that the Company has not complied with the
provisions of filing of Returns for TDS during the period under review
however the company has not provided the effect of the same in the
books of accounts.
15. As per explanation and information provided to us by the Company
Management about the Future Business of the Company, Realization of
Current Assets and Default in Repayment of loans to Banks and NBFC's,
the Going Concern assumption of the Company in near future is
considered inappropriate, as there is significant material impact on
the Company's Going Concern after the due action taken by the Banks and
NBFC's for default of repayment of dues however the company's financial
statements have been prepared on going concern basis on the basis of
management assurance.
16. The Company has not provided us the details of pending litigation
against the company and its directors for various matters including the
financial matters hence we are not able to comment upon the financial
impact of the same on the financial statements.
For Maheshwari & Co.
Chartered Accountants
Firm Registration Number: 105834W
Pawan Gattani
(Partner)
Membership Number: - 144734
Place: Mumbai
Date: May 29, 2015
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