| Report on the Financial Statements
We have audited the accompanying financial statements of IAG Company
Limited ("The Company"), which comprise the Balance Sheet as at March
31, 2013, and statement of Profit and Loss and Cash Flow Statement for
the year ended, and a summary of significant accounting policies and
other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("The Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the - preparation and fair presentation of the financial statements
that are free from material misstatement, whether due to fraud or
error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company's preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements subject to qualified
opinion given below and read together with the notes and significant
accounting policies thereon, and attached thereto give the information
required by the Companies Act 1956 in the manner so required and in
view of qualifications we are unable to confirm whether the accounts
give a true & fair view in conformity with the accounting principles
generally accepted in India.
(a) in the case of Balance Sheet, of the state of affairs of the
Company as at March 31 , 2013;
(b) in the case of the statement of Profit and Loss, of the 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' 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 in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by œ action 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the 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 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, Statement of Profit and Loss and
Cash Flow Statement comply with the accounting standards referred to in
sub-section (3C) of section 211 of the Act except non provision of
depreciation, bonus & leave encashment, non provision of impairment
loss on Fixed Assets, electricity & telephone expenses treated on cash
basis and as disclosed under Qualified Opinion. Financial impact of
same could not be ascertained at this stage.
e. On the basis of written representation received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31,2013, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act except two directors.
Qualified Opinion
(a) The Company has not followed the SEBI Guidelines of publishing the
unaudited quarterly financial results during the year or
unaudited/audited financial results of the years within the prescribed
limits.
(b) Both the furnaces of the Company has been lying closed during the
year and has not been restarted till the date of our signature of these
Accounts and the factory is inoperative for more than two years. These
Accounts have been prepared on a going concern basis. Net Worth of the
company has been fully eroded. However, in our opinion, the ability of
the Company to continue as a going concern depends on introduction of
sufficient injection of funds and its future profitability.
(c) Due to closure of factory, we have neither visited the factory nor
any records/data available with us. Technical assessment of fixed
assets viz. Furnace, Plant and Machinery and stock of Inventories etc.
are required to be made to determine their conditions/obsolation.
(d) As stipulated by the State Bank of India, Unsecured loans of
Rs.24.50 crores obtained by the Company from a party had to be
converted into Non Cumulative 0% dividend paying Preference Shares
within March, 2010. Out of the above, Rs.6.50 crores Preference Shares
have been issued so far and the balance remains outstanding.
(e) Gratuity premium of Rs.22.76 lakhs claimed by L.I.C. during the
year for 2008-09 have not been paid. Loan of Rs.72.40 lakhs taken by
the Company from the Gratuity Fund has not been repaid. Employees
Group Gratuity Policy with LIC of India has not been renewed and the
gratuity for the year has not been provided for.
(f) Un-arranged credit balance of Rs.0.40 lakhs from a bank has been
grouped under "short term borrowings".
(g) In absence of reconciliation and balance confirmation from
unsecured Loans received, debtors, creditors, advances and deposits, we
have relied on book balances and is subject to scrutiny. There are
several debit/credit balance of different debtors/creditors for which
no party wise details were available. Substantial amounts due from old
debtors, other debts and advances to suppliers appear to be doubtful of
recovery. We are unable to quantify the same at this stage.
(h) Fire and burglary insurances of the factory expired on 31.12.2010
and are yet to be renewed.
(i) No provision has been made for wages & salary for both H.O. and
factory during the year. Statutory dues pertaining to salary & wages
neither deducted nor provided. During the year company has deposited a
sum of Rs 4,75,968/- to P.F. Authorities against Employees Contribution
against old dues.
(j) Service Tax, Excise Duty & Cenvat recoverable balances needs
reconciliation and adjustment with the Excise Records.
(k) We have observed that in case of certain Cash Credit accounts and a
number of Secured Loan Accounts have exceeded the approved limits.
(I) We have been informed that various bank accounts of the Company
have been attached by the Income Tax and P.F. Authorities and the
company is having difficulty in this regard.
(m) The company is recommended to avoid cash transactions and the same
should be closely monitored by the management.
(n) During the year one car under hypothecation with Bank has been
seized but Loan has not been adjusted till the date.
(o) Capital Work-in-Progress amounting to Rs.986.85 Lakhs is
outstanding for a long time and needs to be looked into.
Annexure referred to in paragraph (1) underthe heading "Report on Legal
and Regulatory requirements" of Independent Auditors' report of even
date:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets but need to be updated.
(b) Due to closure of Factory no physical verification have been
conducted by the management during the year and as such we are unable
to comment whether there is material discrepancies with book records.
(c) During the year, the Company has not disposed off substantial
portion of its fixed assets.
(ii) (a) As certified by the management, during the year physical
verification of Inventory have been conducted and no material
discrepancies were noticed between physical stock and book stock.
(b) The procedures of physical verification of inventory followed by
the management needs improvement in relation to the size of the company
and nature of its business.
(c j No records of Inventories were available to us and hence we are
unable to comment
(iii) (a) The Company has taken interest free unsecured loans from
companies and the same have been entered in the Register maintained
under section 301 of the Companies Act, 1956.
(b) The Company has not granted any loans, secured or unsecured to
Companies, Firms or other parties listed in the register maintained
under Section 301 of The Companies Act, 1956.
(iv) Company's operation was closed during the year. In our opinion
comments on internal Control does not arise.
(v) (a) According to the information and explanations given to us, we
are of the opinion that during the year no contracts or arrangements
have been made and as such entry as per Section 301 of the Companies
Act, 1956 does not arise.
(b) No contracts or arrangements exceeding Rupees five lacs have been
made during the year and as such we have no comments.
(vi) According to the information given to us, the Company has not
accepted any deposits from the public.
(vii) Internal Audit has not been conducted during the year.
(viii) No cost records was made available to us and we reserve our
comments.
(ix) (a) In our opinion and according to the information and
explanations given to us, the Company is not regular in depositing with
appropriate authorities undisputed statutory dues in respect of
provident fund, investor education protection fund, employees state
Insurance, income tax, sales tax, wealth tax and other material
statutory dues applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts,payable in respect of income tax, wealth tax,
service tax, sales tax, excise duty etc., were in arrears as at
31.03.2013 except as certified by the management, following statutory
dues are outstanding for more than six months as at the end of the
financial year.
Particulars Amount (Rs. In Lakhs)
Provident Fund 226.36
Interest OrkEmployees
State Insurance 0.79
Tax Deducted At Source (Payable) 19.52
Sales Tax 16.48
Consumer Durable Loan 19.56
Recurring Deposit/ CTD With
Post Office 20.40
LIC (Factory) 32.61
Salary & Wages
(Head Office & Factory) 553.82
Employees' State Insurance 73.69
Gratuity Premium 68.25
Statutory Bonus (2008-2009)
(For 2009-10, 2010-11 & 2011-12
Amount Not Ascertained) 12.56
Interest due on Bank Loans
not paid* 1354.48
Monthly Instalment on Term
Loan not paid* 707.00
'Subject to Banks' Confirmation. (c) According to records of the
company, the undernoted dues of Sales Tax, Income Tax, Excise Duty and
Provident Fund are pending on account of disputes :
Name of the Nature of Dues Amount Period to which Forum where
Statute (Rs. In Lakhs) the amount dispute is
relates pending
1 The Central Excise Duty Leviable Unascertainable 1987 CEGAT-DELH1
Excise Act on special packing
& forwarding
2 Income Tax Exchange Fluctuation Unascertainable 1989 -1990 To IT
Deptt. Act, 1961 Losses on foreign 1992 - 1993
currency loan
3 The Employees Penal Damage 214.68 (Net of April 2001 to Employees
P.F. Provident Fund Deposit of September 2004 Appellate Tribunal, &
Misc. Act, 1952 Rs. 25 Lakhs) New Delhi
4 West Bengal Import of machinery 26.01 2003-04 West Bengal Sales Sales
Tax Act, for Repair treated as Tax Tribunal, 1949 turnover(ex-parte)
remanded back to
Department for examination
(x) The Company has accumulated losses of Rs. 2688.23 Lakhs as at the
beginning of the financial year. The Company has incurred cash losses
during the current financial year. However, the Company had also
incurred cash losses during the immediately preceding financial year.
Un-quantified audit qualifications could not be taken into
consideration in computing the above.
(xi) The Company is not regular in repayment of interest and
installments to banks and others.
(xii) According to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a Chit Fund or a Nidhi/Mutual
Benefit Fund/Society.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments.
(xv) According to the information and explanations given to us and to
the best of our knowledge, the Company has not given any guarantees of
loans taken by others from banks or financial institutions during the
year.
(xvi) The Company has not availed long term loan from Scheduled Bank
during the year and the question of application of loan does not arise.
(xvii) Based on the information and explanations given to us and on an
overall examination of the Balance Sheet of the Company, in our
opinion, there are no fund raised on short-term basis, which have been
used for long-term investments.
(xviii) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Act.
(xix) The Company has not issued any debenture during the year.
(xx) The Company has not raised any money by public issue during the
year.
(xxi) 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 the year.
For D. Basu & Co.
Chartered Accountants
Firm Registration No. 301111E
10, Old Post Office Street, (Malay Bhaduri)
Kolkata - 700 001 Partner
Date : 7th September, 2013 Membership No. 12724
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