| 1. We have audited the accompanying financial statements of Gwalior
Polypipes Limited (the "Company"), which comprise the Balance Sheet as
at March 31,2014, Statement of Profit and Loss and Cash Flow Statement
for the year ended on that date, and a summary of significant
accounting policies and other explanatory information, which we have
signed under reference to this report.
Management's Responsibility for the Financial Statements
2. The Company's Management is responsible for the preparation of
these financial statements that give a true and fair view of the
financial position and financial performance and cash flows of the
Company in accordance with the Accounting Standards notified under 'the
Companies Act,1956' of India (the "Act") read with the General Circular
15/2013 dated 13th September, 2013 of Ministry of Corporate Affairs in
respect of Section 13 3 of the Companies Act* 2013. This
responsibility includes the design, implementatibn and maintenance of
internal control relevant to the preparation and presentation of the
financial statements that give a true and fan- view and are free from
material misstatement, whether due to fraud or error.
Auditors'Responsibility
3. 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.
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 auditors' 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 auditors consider internal control relevant to the
entity'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.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion, and to the best of our information and according to
the explanations given to us, the accompanying financial statements
give the informationrequired by the Act in die 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
theCompany as at March 31,2014;
b) in the case of die Statement of Profit and Loss, of the loss for the
year ended on that date; and
c) in the case of die Cash Flow statement, of me cash flows for die
year ended on that date. Report on Other Legal and Regulatory
Requirements
7. As required by me Companies (Auditor's Report) Order, 2003 (as
amended) issued by me Central Government of India in terms of
sub-section (4A) of Section 227 of The Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of die said order, on the basis of such checks of me books and
records of me company as we considered appropriate and me information
and explanation given to us during the course of our audit.
8. As required by section 227(3) of die Act, we report that:
(a) we have obtained all me information and explanations which, to the
best of our knowledge and belief, were necessary for die purpose of our
audit;
(b) in our opinion, proper books of account as required by law have
been kept by die Company so far as appears from our examination of
those books;
(c) die Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt witii by tiiis Report are in agreement wim die books of
account;
(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt widi by tiiis report comply wiui die
Accounting Standards notified under Companies Act, 1956 read witii die
General Circular 15/2013 dated 13di September, 2013 of Ministry of
Corporate Affairs in respect of Section 133 ofmeCompaniesAct,2013;
(e) on the basis of written representations received from the directors
as on March 31,2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act.
(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 Auditors' Report
The Annexure referred to in our report to the members of Gwalior
Polypipes Limited ('the Company') for the year ended March 31, 2014. We
report that:
(i) (a) The Company has not maintained fixed asset register showing
full particulars including quantitative details and situation of fixed
assets.
(b) We are informed that the fixed assets have been physically verified
by the management during the year and no material discrepancies were
noticed on such verification.
(c) There was no substantial disposal of fixed assets during the year.
(ii) (a) As per the information furnished, the inventories have been
physically verified during the year by the management.
(b) In Our opinion and according to the information and explanations
given to us 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) The Company is maintaining proper records of inventory. In our
opinion, discrepancies noticed on physical verification of stocks were
not material in relation to the operations of the Company and the same
have been properly dealt with in the booksof account.
(hi) (a) As per the information furnished, the Company has not granted
any loans, secured or unsecured, to companies, firms or other parties
covered in the register maintained u/s 301 of the Companies Act, 1956.
The balances in current account due from Companies, firms or other
parties covered in the register maintained u/s 301 of the Companies
Act, 1956 are not in the nature of loans and are without any
stipulation or condition attached thereto
(b) As the Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
u/s 301 of the Companies Act, 1956, the Clause (iii) (b) to (d) of the
Order is not applicable.
(c) As per the information furnished, the Company has not taken any
loans secured or unsecured from companies, firms or other parties
covered in the register maintained u/s 301 of the Companies Act, 1956,
hence the Clause (iii) (f) and (g) of the Order is not applicable.
(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 with regard
to purchase of inventory and fixed assets and for the sale of goods and
services. (v) (a) In our opinion and according to the information and
explanation given to us, we are of opinion that the particulars of the
contracts and arrangements have been entered into a register in
pursuance of section 301 of the Act. (b) In our opinion and according
to the information and explanations given to us, the transactions made
in pursuance of contracts or arrangements entered in the register
maintained under section 301 and exceeding the value of five lacs rupee
in respect of any party during the year have been made at prices which
are reasonable having regard to prevailing market prices at the
relevant time. (vi) In our opinion, the Company has not accepted any
deposits during the year in contravention of section 58-Aand 58AA of
the Companies Act, 1956, and the rules framed there under.
(vii) The Company does not have a formal internal audit system.
However, according to the information and explanation given to us,
operating control systems are commensurate with the size of the company
and nature of its business. (viii) The Central Government has
prescribed maintenance of cost records under section 209(1 )(d) .
of the Companies Act 1956 in respect of company's product. (ix) (a)
According to the information and explanations given to us and records
of the company examined by us, in our opinion the company has not yet
deposited undisputed statutory dues on account of Sales-tax, Central
Sales Tax, Entry Tax, VAT with the appropriate authorities. In case of
others the amount has been paid timely except some delays in few cases.
According to the information and explanations given to us, the details
of undisputed statutory dues in arrears as at 31.03.2014 for a period
of more than 6 months from the date they became payable, are as
follows.
Name of the statute Nature of the dues Amount (Rs.)
1. MP Sales Tax Act Entry Tax Rs. 4,28,908/-
2. Central Sales Tax Act(MP) Central Sales Tax Rs. 4,41,610/-
3. Central Sales Tax Act(Raj.) Central Sales Tax Rs. 13,61,098/-
4. MP Sales Tax Act Sales Tax Rs. 8,18,544/-
b) According to the information and explanations given to us, the
details of disputed statutory dues in arrears, as at 31.03.2014aire as
follows:
Name of the statute Nature of the dues Amount (Rs.) Forum where
dispute is
pending
1.MP Sales Tax Act Sales Tax Rs. 29,00,394/-Under Appeal
before High
Court, Gwalior
2.MP Sales Tax Act Deferred Sales Tax Rs. 61,54,725/-Under Appeal
before High
Court, Gwalior
(x) Accumulated losses of the Company as on 31.03.2014 are Rs.
89,371,250/-. The Company has incurred cash losses during the current
financial year amounting to 2,193,777/- as against cash profit of Rs.
599,003/- during the last year. The company was declared as a sick
industrial company in terms of Section 3(l)(o) of Sick Industrial
Companies (Special Provisions) Act, 1985 vide BIFR order dated 9th
September, 2009 and IFCI was appointed as the operating agency for
formulating the scheme of rehabilitation. Subsequently, BIFR abated the
reference against which the company filed an appeal before the AAIFR,
which was dismissed on the ground that BIFR had already abated the
matter. Since the abatement by BIFR was without considering the matter
on merit, the company has filed a writ petition before the Hon'ble M. R
High Court.
(xi) The Company had enjoyed cash credit facility from State Bank of
India, which was recalled and the bank filed a suit before the Debt
Recovery Tribunal in 2003. Subsequently, the said loan was assigned to
Kotak Mahindra Bank Limited (KMBL), pursuant to the execution of a deed
of assignment on January 16,2006. KMBL had issued a notice dated July
6,2007 to the company u/s 13(2) of SARFAESIAct, 2002. The Company has
also filed an application before the Debt Recovery Tribunal against the
symbolic possession of assets taken by KMBL u/s 13(4) of SARFESAI ACT,
2002 on 28th /29th November, 2011.
(xii) The company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities
(xiii) The provisions of any special statute applicable to chit
fund/nidhi/mutual benefit fund/Societies are not applicable to the
company
(xiv) In our opinion, the company is not a dealer or trader in shares,
securities, debentures and other investments.
(xv) In our opinion and according to the information and explanations
given to us, there is no guarantee given by the company, for the loans
taken by others from banks.
(xvi) No term loans were taken by the company during the year under
audit. The question of applications of these funds does not arise.
(xvii) On the basis of an overall examination of the Balance Sheet of
the company, in our opinion and according to the information and
explanations given to us the company has not raised funds on short term
basis that have been used for long term investment.
(xviii) The company has not made any preferential allotment of shares
to parties and companies covered in the Register maintained under
section 301 of the Act during the year.
(xix) The company has not raised any money from the issue of
debentures.
(xx) The company has not raised any money by Public issue during the
year.
(xxi) 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 any such case by the management.
For SNMG & CO.
Chartered Accountants
FRN0.04921N
Place: New Delhi (Rakesh Kumar)
Dated: 18 July 2014 Partner
M. No. 083911 | 