| 1. We have audited the accompanying financial statements of ZENITH
BIRLA (INDIA) LIMITED ("the Company"), which comprise the Balance Sheet
as at 31st March, 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 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 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; 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.
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
thereunder.
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 control 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 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 on the
financial statements.
6. Emphasis of Matter:
We draw attention to the following matter in Notes to the financial
statements:
Note no. 49 in the financial statements which indicates that the
company has accumulated losses and its net worth has been fully eroded.
The company has incurred a net loss/net cash loss during the current
and previous years and the Company's current liabilities exceeded its
current assets as at the Balance Sheet date. These conditions, along
with other matters, indicate the existence of a material uncertainty
that may cast significant doubt about the Company's ability to continue
as a going concern. However, the financial statements of the company
have been prepared on a going concern basis for the reasons stated in
the said Note.
Our opinion is not modified in respect of this matter.
7. Basis for Qualified Opinion
1. With reference to Note no. 44 regarding the non provision by the
company of the interest amounting to Rs. 32.70 crores on its working
capital facilities from banks during the year. Had this amount been
provided for, the loss would have been higher by Rs. 32.70 crores and
Secured loans would have been higher by an amount of Rs. 32.70 crores.
2. The Company has not complied with the provisions of sections 74 or
any other relevant provisions of the Act and the Companies (Acceptance
of Deposits) Rules 2014 with regard to non-repayment of deposits and
interest on due date, maintenance of liquid assets to the extent
required as well as not fully complying with the orders passed by The
Company Law Board.
3. With reference to Note no. 42 regarding the company not having the
balance confirmations for its party balances and hence our inability to
state whether these balances are recoverable / payable to the extent
stated.
8. Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, subject to the effects of the matters
described in the 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 affairs of the
company as at 31st March 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.
9. 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, we give in the Annexure a
statement on the matters specified in paragraphs 3 and 4 of the Order.
10. 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
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 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
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 31st March, 2015, and 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
f. 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, in our opinion and to the best of our information and
according to the explanations given to us:
i) As per the best estimates made by the management on the basis of
opinion taken, the Company is of the view that the ongoing litigations
as at the reporting date would not have a material impact on its
financial position;
ii) Based upon the assessment made by the company, there are no
material foreseeable losses on its long term contracts that may require
any provisioning.
iii) In view of there being no amount(s) required to be transferred to
the Investor Education and Protection Fund for the year under audit the
reporting under this clause is not applicable.
ANNEXURE TO INDEPENDENT AUDITOR'S REPORT
Referred to in paragraph 7 under the heading of "report on other legal
and regulatory requirement" of our report of even date.
i. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of Fixed
Assets as at 31st March 2014. These details are however yet to be
updated for the year. The Company has started the process of updating
these.
(b) The fixed assets are physically verified by the Management
according to a phased programme designed to cover all the items over a
period of three years, which in our opinion, is reasonable having
regard to the size of the company and nature of its assets. However
during the year the Company has not adhered to the programme of
physical verification in its Khopoli and Murbad Units.
ii. (a) The Inventory has been physically verified by the management
during the year. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of inventory records, in our
opinion the Company is maintaining proper records of inventory. As
informed to us no material discrepancies were noticed on physical
verification.
(a) The Company has granted unsecured loans to three companies covered
in the register maintained under section 189 of the Act. The maximum
amount involved during the year was Rs. 10664.69 lacs and year-ended
balance was Rs. 10556.42 lacs
(b) As explained to us no amounts of principal and interest has become
due during the year.
(c) In view of our comments in (b) above, para iii(b) of the Order is
not applicable to the Company.
(iv) 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, fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanation given to us, we have neither come across nor have been
informed of any continuing failure to correct major weaknesses in the
aforesaid internal control system.
(v) In our opinion, and according to the information and explanations
given to us, in respect of compliance by the company with the
directives issued by the Reserve Bank of India, the provisions of
Section 74 or any other relevant provisions of the Act and the rules
framed there under, with regard to the deposits accepted from the
public, we have to state that these have not been complied with in
respect to non repayment of deposits and interest on due date and
maintenance of liquid assets to the extent required as per Rule 13 of
the Companies (Acceptance of Deposit) Rules,2014. The Company has also
not fully complied with the orders passed by Company Law Board.
(vi) We have broadly reviewed the books of accounts maintained by the
Company in respect of products where, pursuant to the Rules made by the
Central Government of India the maintenance of cost records has been
prescribed under subsection (1) of section 148 of the Companies
Act,2013, and are of the opinion that prima facie the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records with a view to determine
whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion except
for dues in respect of Dividend Distribution Tax, Tax Deducted at
source, Professional Tax, Tax Collected at Source, Service Tax, and
Provident Fund, the Company is generally regular in depositing the
undisputed statutory dues including Wealth Tax, Excise Duty Custom
Duty,Cess and other material statutory dues, as applicable, with the
appropriate authorities. The following balances remain in arrears as at
the last day of financial year for a period exceeding six months from
the date they become payable.
Nature of Dues Amount Outstanding
(in Rs.)
Tax Deducted at Source 1846145
Profession Tax 20550
Tax collected at Source 40763
Service Tax 158043
Provident Fund 579895
Dividend Distribution Tax 35908091
Interest on Dividend Distribution Tax 16158641
(b) According to the information and explanation given to us and the
records of the company examined by us, there were no disputed dues in
respect of Income Tax, Wealth Tax, Service Tax, and Cess. The
particulars of dues of Custom Duty , Excise Duty and Sales Tax as at
March 31,2015, which have not been deposited on account of disputes,
are as follows:
Name of Statute Amount Period to which
(Rs. in Lacs) relates amount Forum
where dispute is
pending
Customs Act, 1962 82.00 1998-1999 Tribunal
3.45 1985-1986 High Court
Central Excise Act, 1959 129.78 1995-1996 Commissioner
appeal
Central Sales Tax Act and 78.88 1995-1996 Tribunal
Local Sales Tax
(c) There was a delay of 21 days in transferring the amount required to
be transferred to Investor Education and Protection Fund in accordance
with the relevant provisions of the Act.
(viii) The Company's accumulated loss as at March 31 2015, exceeded its
net worth. The Company has incurred cash losses in the current
financial year as well as in the immediately preceding financial year.
(ix) According to the records of the Company examined by us and the
information and explanations given to us, there has been default in
payments to the banks since August, 2012 and the Company's outstanding
as at 31st March 2015, as per the notice received from the banks, is
Rs. 21583.43 lacs plus interest of Rs. 5821.25 lacs for the period upto
March 2015.
(x) In our opinion and 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 institutions.
(xi) The Company has not raised new term loan during the year. The term
loans outstanding at the beginning of the year have been applied for
the purpose for which they were raised.
(xii) During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanation given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the Management.
For Thakur, Vaidyanath Aiyar & Co.
Chartered Accountants
Firm Reg. No. 000038N
Place: Mumbai C V Parameswar
Date: 30.05.2015 Partner
Mem. No. 11541
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