| We have audited the accompanying financial statements of NRC Limited
("the Company"), which comprise the Balance Sheet as at 31st March,
2015, the Statement of Profit and Loss, the Cash Flow Statement for
the year then ended, and a summary of the significant accounting
policies and other explanatory information for the year then ended.
Management's Responsibility for the Financial Statements
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 of these financial statements that give a true and
fair view of the financial position, financial performance and cash
fl ows of the Company in accordance with the accounting principles
generally accepted in India, including the Accounting Standards specifi
ed 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.
Auditor's Responsibility
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. An audit involves performing procedures to
obtain audit evidence about the amounts and the disclosures in the fi
nancial 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 fi
nancial 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 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.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion on the
financial statements.
Basis for Qualified Opinion
(a) The Company has incurred loss in the current year as well as in the
preceding year and the accumulated losses as at the year-end has
exceeded its entire net worth and on reference to the Board for
Industrial and Financial Reconstruction; it has been declared a sick
industrial Company. The financial statements have, however, been
prepared by the management on a going concern basis as explained in
note 19.4(a). This being a technical matter and in view of uncertainty,
we are unable to express an opinion as to whether the Company can
operate as a going concern and the extent of the effect of the
resultant adjustments to the accumulated losses, assets and liabilities
as at the year-end and losses for the year which is presently not
ascertainable.
(b) The Company has not carried out impairment test as required by
Accounting Standard (AS) 28 'Impairment of Assets', particularly in
respect of Buildings and Plant and Equipment as explained in note
19.4(b).We are unable to express an opinion as to when and to what
extent the carrying value of Buildings and Plant & Equipment would be
recovered because of lock-out and continuing theft of certain machinery
parts. The impact whereof on the loss for the year, accumulated losses,
assets and liabilities as at the year-end is presently not
ascertainable.(Also refer clause no.12 of Companies (Auditor's Report)
Order, 2015 statement annexed with the report)
(c) The accounts of certain Banks, Loans & Advances, Other non- current
assets, Trade payables, Other liabilities and lenders are also subject
to confirmations, reconciliations and adjustments, if any, having
consequential impact on the loss for the year, accumulated losses,
assets and liabilities as at the year-end, the amounts whereof are
presently not ascertainable (Refer note no. 19.6 (a) of the financial
statements)
(d) Liability as may arise towards interest/compound interest/penalty/
on delayed/non- payment to certain Trade Payables /statutory dues/
Promoter Contribution/ Lenders/ Mesne profit liability is presently
not ascertainable and therefore not provided for. (Refer note no.
20.6(b) of the financial statements).
(e) The remuneration payable to the Managing Director for the period
December, 2008 to January, 2011 amounting to Rs. 224.27 lacs was
subject to Central Government approval, out of which approval for only
Rs. 82.15 Lacs was granted. For the balance amount paid of Rs. 142.10
Lacs, the Company has applied to the Central Government for waiver of
its recovery and is hopeful of receiving the same in due course. (Refer
Note no. 19(5) of the financial statements)
(f) Non provisioning of Liability towards Mesne profit aggregating to
Rs. 529.36 lacs in respect of premises taken on lease and vacated in
terms of the Supreme Court order received during the financial year
2013-14.(Refer note no. 19(1) (III) of the financial statements)
(g) We further report that without considering the matter referred in
para (b) to (f) above, the effect of which could not be determined, had
the observation made by us in para (f) above been considered, the loss
before tax for the current year would have been Rs. 1,663.24 lacs. (as
against reported loss of Rs. 1,133.88 lacs), Reserves and Surplus
(accumulated losses) would have been Rs. 62,967.17 lacs (as against
reported losses of Rs.62,437.81 lacs) and trade payables would have
been Rs. 17,338.00 lacs. (as against reported figure of Rs. 16,808.64
lacs)
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 above, the aforesaid fi
nancial 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 and its loss and its cash
fl ows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
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 of the Order, to
the extent applicable.
As required by Section 143 (3) of the Act, we report that:
(a) Subject to what is stated in the Basis of Qualified Opinion para
(c) and (d) above, 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) Subject to what is stated in the Basis of Qualified Opinion para
(b) to (f) above and para 1 (a), 2 (b) and 6 of the Order, 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, 2014except for the effects of
the matter described in the Basis for Qualified Opinion paragraph (b),
(d) and (f) above;
(e) The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the Company.
(f) Considering the re-schedulement of redemption of Zero Percent
Secured Redeemable non-convertible Debentures approved in CDR package
in January, 2008 and on the basis of the written representations
received from the Directors as on 31st March, 2015 taken on record by
the Board of Directors. We report that 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.
(g) With respect to other matter to be included in the Auditor's Report
in accordance with the 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. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements- Refer Note 19(1) (I)
(a) to the financial statements.
II. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
III. There is no amount required to be transferred to the Investor
Education and Protection Fund by the Company.
ANNEXURE REFERRED TO IN PARAGRAPH "REPORT ON OTHER LEGAL AND REGUALTORY
REQUIREMENTS" OF OUR REPORT TO THE MEMBERS 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 state that:
1. a) The Company's fixed assets records need to be updated to show
full particulars, including quantitative details and situation of fixed
assets.
b) The Company has not carried out physical verification of its fixed
assets during the year. As explained, discrepancies as may be noticed
on physical verification will be dealt with in the books of account as
and when the assets will be physically verified.
2. a) No physical verification has been carried out during the year
or in the recent past. b) The inventory records are required to be
updated.
3. The Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 189 of the Act. Accordingly the provisions of clause
(iii) of the Order are not applicable to the Company.
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 nature of its business for the
purchase of fixed assets and for the sale of services. During the
course of our audit, no major weaknesses have been noticed in the
aforesaid internal control system.
5. No deposits within the meaning of directives issued by RBI (Reserve
Bank of India) and Sections 73 to 76 or any other relevant provisions
of the Act and rules framed there under have been accepted by the
Company.
6. As explained to us, due to lock out and stoppage of production in
the plant, the cost records have not been maintained
7. a) The Company is not regular in depositing the undisputed
statutory dues including Provident Fund, Employees' State Insurance,
Income-Tax, sales-tax, wealth tax, Service Tax, duty of customs, duty
of excise, Value Added Tax, Cess and other statutory dues applicable to
it with the appropriate authorities. According to the information and
explanations given to us, there are no undisputed statutory dues
outstanding as at 31st March, 2015 for a period of more than six months
from the date they became payable except the following :
Particulars \Rs. In lacs
Tax Deducted at Source (TDS) 110.92
Professional Tax 80.04
Employees State Insurance (ESI) 98.79
Provident Fund 25.40
Sales tax 7.03
Work Contract Tax 2.00
Service tax 33.12
Also refer point (d) of Basis of Qualified opinion
reported above.
b) According to the records of the Company and information and
explanations given to us by the management, the details of disputed
duty of excise, duty of customs, Service Tax, Income Tax, Wealth Tax
and Cess which have not been deposited are as under:
Name of the Statute Nature of Forum where dispute Dues
is pending
The Central Excise Excise duty Supreme Court
Act, 1944
High Court, Mumbai
Customs, Excise,
Service Tax Appellate
Tribunal, Mumbai
Commissioner (Appeals)
Asst. Commissioner
The Central Excise Service Tax Customs, Excise,
Act, 1944 Service Tax Appellate
Tribunal, Mumbai
The Maharashtra Water Cess Assessing authority,
Irrigation Act,1976 -MPCB, Mumbai
The Income tax Act, Income Tax Income Tax
1961 Commissioner
(Appeals)-Thane
Name of the Statute Rs. In lacs Period to
which it
relates
Tae Central Excise
Act,1944 1,539.43 1986 to 2009
11.47
1121.64
68.66
274.92
The Central Excise
Act,1944 105.02 2005 to 2009
17,073 2005 to 2013
2145.60 Assessment Year
2008-09 to 2011-12
c) There is no amount required to be transferred to investor education
and protection fund in accordance with relevant provisions of the
Companies Act and rules made there under.
8. The Company's accumulated losses as at 31st March, 2015 exceeds fi
fty percent of its net worth and has incurred cash losses during the fi
nancial year ended on that date and also in the immediately preceding
financial year.
9. After considering what was approved in the Corporate Debt
Restructuring package in the year January, 2008 and considering that
loans from a bank have already been assigned to a body corporate, the
Company has defaulted in repayment of dues to banks and the details are
as under :
Nature of Dues Period of Default Rs. In Lacs
Principal amount 12-68 months 19,229.69
Interest thereon 12-68 months 10,120.46
10. During the year, the Company has not given any guarantee for loans
taken by others from the bank or financial institution.
11. According to the information and explanations given to us, in our
opinion, term loans availed by the Company were, prima facie, applied
by the Company for the purpose for which they were obtained.
12. 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
explanations given to us, no material fraud on or by the Company has
been noticed or reported during the course of our audit. 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 except continuing theft of certain parts of Plant &
Machinery in the factory, the amount whereof has not been ascertained,
for which the Company has lodged FIRs with relevant authorities and
also filed the claims with insurance company.
For LODHA & CO.
Chartered Accountants
Firm Registration No: 301051E
A.M. Hariharan
Place: Mumbai Partner
Date : May 27, 2015 Membership No. 38323 | 