| We have audited the accompanying financial statements of Assam
Petro-Chemicals Limited ("the Company"), which comprise the Balance
Sheet as at March 31, 2014, and 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
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") which shall continue to
apply in respect of section 133 of the Companies Act, 2013 in terms of
General Circular 15/2013 dated September 13, 2013 issued by the
Ministry of Corporate Affairs. This responsibility includes the
design, implementation and maintenance of internal control 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
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 but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control. 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.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion.
Basis for Qualified Opinion
(i) Amortization of ROC fees Expenses:
Expenses related to ROC fees for enhancement of authorised share
capital total amounting to Rs. 1,66,50,510 had been amortized as per
decision of the management in the Financial Year 2012-13 and
accordingly Rs. 33,30,102 (Refer Note 9.C) has been charged under
Depreciation and Amortization expenses in the current year and balance
amount Rs. 99,90,306 shown as Unamortized Expenses under Other
Non-Current Assets (Refer Note 11). On the basis of Accounting Standard
(AS)-26 Para 56 under The Companies Accounting Standards Rules, 2006,
the whole expenses related to ROC fees for enhancement of authorised
share capital of Rs. 1,66,50,510 should have been charged to Statement
of Profit and Loss as reported last year in our Audit Report. ROC fees
expenses neither created any tangible asset nor any intangible asset.
Thus, on the basis of above Accounting Standard (AS)-26 Para 56 whole
of the balance amount Rs. 1,33,20,408 should have been charged to
Statement of Profit and Loss under 'Prior Period Items'. This has
resulted in overstatement of Profit and Other Current Assets by Rs.
99,90,306
(ii) Provision for Pay revision of Arrear salaries of employees for the
Year 2009-10 & 2010-11 :
As mentioned in CAG comments on the accounts for the year 2012-13, Rs.
6,27,54,977 being the arrear payable against pay revision of salaries
of employees for the years 2009-10 & 2010-11 should have been provided
for and shown under 'Current Liabilities' instead of disclosing it
under 'Contingent Liabilities' as the same was approved by the Board of
Directors of the Company and Government of Assam.
But no provision has been made by the company charging to Statement of
Profit and Loss Rs. 6,27,54,977 as 'Prior period Items and shown under
'Short-term provisions'. This has resulted in overstatement of Profit
by Rs. 6,27,54,977 and understatement of Short-term provisions by Rs.
6,27,54,977.
(iii) Unused Old catalyst not written off:
As per Note no. 25.9 "The Company is carrying unused catalyst valued
Rs. 65,97,535 which is more than 20 years old. A committee has been
constituted for disposal of the same. The loss/gain on sale will be
accounted for at the time of disposal." The company has not identified
& charged to Statement of Profit and Loss, the loss on impairment of
above asset.
Moreover, As mentioned in CAG comments for the year 2011-12, formal
order by the Managing Director of the company had been issued for
treating old catalyst worth Rs. 20,12,234 as obsolete on 26/11/2004 as
reported last year in our Audit Report.
On the basis of above, in our opinion, the company should have charged
to Statement of Profit and Loss Rs. 45,85,301as 'Other Expenses' and
Rs. 20,12,234 as 'Priorperiod Items'. This has resulted in
overstatement of Profit and Inventory by Rs. 65,97,535.
(iv) The total effect of the qualification in Para (i), (ii) & (iii)
above is that the Profit has been overstated by Rs. 7,93,42,818 and
overstatement of 'Other Current Assets' by Rs. 99,90,306 and
'Inventory' by Rs. 65,97,535 and understatement of 'Short-term
provisions' by Rs. 6,27,54,977.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
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 March 31, 2014;
(b) in the case of the Statement of Profit and Loss, of the profit 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
(i) We draw attention to Note 3(v) and Note 24.1 to the financial
statements related to Equity capital money received from Government of
Assam amounting Rs. 1702 lakhs shown under Share Application money
pending allotment for which legal formalities relating to issue of
share capital will be taken by the Board in due course as mentioned in
above notes. Our opinion is not qualified in respect of this matter.
(ii) We draw attention to Note No. 25.11 to the financial statements.
The documents in respect of Subsidiary Company (Pragjyotish Fertilizers
and Chemicals Ltd. (PFCL) required to be attached with the Balance
Sheet of this Company as per section 212(1) of the Companies Act, 1956,
have not been attached. Our opinion is not qualified in respect of this
matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's 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 section 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 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. except for the matter described in the basis for qualified opinion
Paragraph, in our opinion, the Balance Sheet, Statement of Profit and
Loss, and Cash Flow Statement comply with the Accounting Standards
referred to in subsection (3C) of section 211 of the Companies Act,
1956;
e. The provisions of Section 274(1)(g) of the Companies Act, 1956
regarding "Disqualifications of Directors" do not apply to this
company, being a Government Company, as per notification No. G.S.R. 829
(E) dated 21.10.2003 issued by the Ministry of Company Affairs,
Government of India;
f. Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
[Annexure referred to in paragraph under 'Report on other legal and
Regulatory requirements' section of our report of even date on the
accompanying financial statements of ASSAM PETRO-CHEMICALS LIMITED for
the year ended on 31st March, 2014]
(I) (a) The Company has not maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.The records maintained for a part period do not tally with the
financial statements.
(b) According to the information given to us, Physical verification of
fixed assets has not been done by the management during the year and as
such material discrepancies with financial records, if any, could not
be noticed and have not been dealt with in the books of account.
(c) The Company has not disposed off substantial part of fixed assets
during the year and thus the going concern concept of the Company has
not been affected.
(ii) (a) As explained to us the inventories of Stores and Spares have
been physically verified by the management. In our opinion, the
frequency of verification is reasonable.
(b) In accordance with the information and explanations given to us,
the procedures of physical verification of inventory followed by the
management appear to be 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 the inventory records, in our
opinion, the Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
with book records were not material considering the size of the company
and the nature of its business.
(iii) (a) The Company has granted loan to its subsidiary M/s
Pragjyotish Fertilizers & Chemicals Limited which is Rs. 41,84,185 and
advance for Share Application Money to the Subsidiary Company is Rs.
4,80,000 as on 31st March, 2014. The Company has made provision for the
full amount i.e. Rs. 41,84,185 & Rs. 4,80,000 respectively considering
them doubtful.
(b) The Company had also granted loans to Assam Tea Corporation Limited
as per details given in Note No. 25.10. As per above details, the
repayment of principal of loan II was received on 22.10.2009 against
the due date of 10.04.2009 and the interest due Rs. 4,25,686 has not
been received so far. In case of loan I, out of principal Rs. 35,00,000
, Rs. 10,00,000 only was received on 17.03.2011 against the due date of
07.08.2007.The Balance amount of principal of Rs. 25,00,000 is still
overdue. Interest accrued and due Rs. 26,76,856 has not been received
so far. Though the Company is pursuing through Govt. of Assam for the
recovery of the balance amount of principal and the amount of interest
overdue, however the steps are not reasonable in view of long overdues.
(c) According to information and explanations given to us, the Company
has not taken any loans, secured or unsecured, from companies, firms or
other parties covered in the register maintained under Section 301 of
the Companies Act,1956 and as such, clauses (iii)(e), (f) & (g) of para
4 of the Order are not applicable.
(iv) In our opinion and according to information and explanations given
to us, except non-maintenance of Fixed Asset register, no physical
verification of Fixed Assets, there is an adequate internal control
system commensurate with size of the company and the nature of its
business for the purchase of inventory, fixed assets and for the sale
of goods. We are not giving our opinion on the effectiveness of the
entity's internal control. As informed to us, steps have been taken to
correct weaknesses in Internal Control System but still the weaknesses
persist.
(v) According to the information and explanations given by the
management, there are no transactions that need to be entered in the
register maintained under section 301 of the Companies Act' 1956.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from the public during the year
and hence directives issued by the Reserve Bank of India and provisions
of sections 58A, 58AA or any other relevant provisions of Companies
Act,1956 and the rules framed there under are not applicable.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
(viii) We have broadly reviewed the Cost records maintained by the
company pursuant to the Companies ( Cost Accounting Records) Rules 2011
prescribed by the Central Government under section 209 (1) (d) of the
Companies Act, 1956, for maintenance of Cost records and we are of the
opinion that prima facie the prescribed accounts and records have been
made and maintained.
(ix) (a) According to the information and explanations given to us and
as per the records of the company, the company has been generally
regular in depositing undisputed statutory dues including Provident
Fund, Income tax, Sales tax, VAT, Custom duty, Excise duty and other
statutory dues with the appropriate authorities during the year.
(b) According to the information and explanation given to us there is
no material amount of the disputed tax etc. which are not deposited
with appropriate authority as at 31st March'2014. However, the Company
has received certain demands and show cause notices for payment of duty
and penalty as detailed in Note No. 24.02.
(x) As per the records of the company, the company has accumulated
Losses of Rs. 60.60 lakhs (Previous year Rs. 842.11 lakhs) as at 31st
March'2014 and the Company has not incurred any cash losses in the
financial year ended on that date or in the immediate preceding
financial year.
(xi) According to the information and explanations given to us the
Company has not defaulted in repayment of dues to the bank, and the
Company has not taken any loans from any financial institutions.
(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) The Company is not a chit fund/nidhi/mutual benefit/ society.
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) According to the information and explanations given to us, the
Company has not obtained any term loan during the year.
(xvii) According to the information and explanations given to us, we
report that the funds raised on short-term basis have not been used for
long-term investment.
(xviii) According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and Companies covered in the register maintained under section 301 of
the Companies Act, 1956.
(xix) The Company has not issued any debentures during the year.
(xx) The Company has not raised any money by public issues 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 year.
For L. K. Kejriwal & Co. (CA. Samta Agarwal)
Place: Guwahati Chartered Accountants Partner
Date: 04/08/2014 Firm Registration No. 001368C Membership No. 068296 | 