| 1 We have audited the accompanying financial statements of Lakhotia
Polyesters 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 management and Board of Directors of the Company are 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 principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with
rule 7 of Companies (Accounts) Rules, 2014. This responsibility
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; design,
implementation and maintenance of adequate internal financial controls,
that are operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error
Auditor's Responsibility
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 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 accounting policies used and the reasonableness of
the accounting estimates made by the Company's management and Board of
Directors, as well as evaluating the overall presentation of the
financial statements
5 We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion
6 Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid financial statements give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India of the state of affairs of the Company as
at 31st March 2015, its profit and its cash flows for the year ended
on that date
Report on Other Legal and Regulatory Requirements
7 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, we give in the Annexure a
statement on the matters Specified in paragraphs 3 and 4 of the Order.
8 As required by section 143(3) of the Act, we further report that:
a. we have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purpose of our audit;
b. in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c. the Balance Sheet, 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 aforesaid financial statements comply with the
applicable 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. In our opinion and to the best of our information and according to
the explanations given to us, we report as under with respect to other
matters to be included in the Auditor's Report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules, 2014:
(i) The Company has following pending litigations which would impact
its financial position.
The company, promoters, directors and certain group promoted entities
are a party to litigation with the customs departments for import of
certain materials based upon alleged "misleading information". The
matter is pending in Appeal before the Central Excise and Customs
Appellate Tribunal, Mumbai and before the High Court, Mumbai. The total
demand in the matter raised by the adjudicating authorities is to the
tune of Rs 220.91 Lakhs against company and Rs 42.00 Lakhs against Shri
M.S. Lakhotia, the Managing Director of the company. The amounts as
stated are ex interest thereon.
(ii) The Company did not have any long-term contracts including
derivative contracts; as such the question of commenting on any
material foreseeable losses thereon does not arise.
(iii) There has not been an occasion in case of the Company during the
year under report to transfer any sums to the Investor Education and
Protection Fund. The question of delay in transferring such sums does
not arise
ANNEXURE TO AUDITOR'S REPORT
Annexure referred to in paragraph 7 Our Report of even date to the
members of Lakhotia Polyesters
India Limited on the accounts of the company for the year ended 31st
March, 2015.
On the basis of such checks as we considered appropriate and according
to the information and explanations given to us during the course of
our audit, we report that
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of
fixed assets ;
(b) As explained to us, fixed assets have been physically verified by
the management at regular intervals; as informed to us no material
discrepancies were noticed on such verification;
(ii) (a) The inventories at all business places have been physically
verified by the management from time to time. In our opinion, the
frequency of verification is reasonable.
(b) In our opinion and according to the explanations given to us, the
procedure of physical verification of the inventories followed by the
management is reasonable and adequate in relation to the size of
company and nature of business.
(c) The company is maintaining proper records of inventory. As
explained to us, there were no material discrepancies noticed on
physical verification of inventories as compared to the book records.
(iii) The company has granted loans, secured or unsecured to the
companies, firms or other parties covered in the register maintained
under section 189 of the Companies Act, 2013. The year end balances in
respect of such 3 parties advances are to the tune of ' 123.23 Lakhs
Based upon the management representations as made to us, we report that
these advances are towards business transactions and in the normal
course of business activity of the company.
(iv) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of fixed assets and for the sale of goods & services. Further,
no continuing failure to correct major weaknesses in internal control
system of the company is observed.
(v) The Company has accepted deposits from its members and has complied
with the provisions of the Companies Act, 2013.
(vi) As informed to us, the Central Government has not prescribed
maintenance of cost records under sub-section (1) of Section 148 of the
Act.
(vii) (a) According to the information and explanations given to us and
based on the records of the company examined by us, the company is
regular in depositing the undisputed statutory dues, including Provident
Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty and other material statutory dues,
as applicable, with the appropriate authorities in India;
(b) According to the information and explanations given to us and based
on the records of the company examined by us, there are no dues of
Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty and Excise
Duty which have not been deposited on account of any disputes except
customs duty to the tune of ' 220.91 Lakhs against company and Rs 42.00
Lakhs against Shri M.S. Lakhotia, the Managing Director of the company.
The amounts as stated are ex interest thereon.
(c) There has not been an occasion in case of the Company during the
year under report to transfer any sums to the Investor Education and
Protection Fund. The question of reporting delay in transferring such
sums does not arise.
(viii) The company does not have any accumulated losses as at
31.03.2015 The company has not incurred any cash loss during the
financial year covered under audit and immediately preceding financial
year.
(ix) According to the records of the company examined by us and as per
the information and explanations given to us, the company has not
defaulted in repayment of dues to financial institutions or banks.
Similarly no debentures have been issued by the company and hence
compliance with the said clause is not applicable.
(x) In our opinion, and according to the information and explanations
given to us, the Company has not given any guarantee for loan taken by
others from a bank or financial institution during the year.
(xi) In our opinion, and according to the information and explanations
given to us, the company has not raised any term loans during the year.
(xii) During the course of our examination of the books and records of
the company, carried in accordance with the auditing standards
generally accepted in India, we have neither come across any instance
of fraud on or by the Company noticed or reported during the course of
our audit nor have we been informed of any such instance by the
Management.
or SABADRA & SABADRA
CHARTERED ACCOUNTANTS
Firm Registration No 108921W
Sd/-
JAGATPAL S BAJAJ, FCA
Membership No. 122234
Partner
Nashik
30.05.2015
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