| 1. We have audited the attached Balance Sheet of Ashco Niulab
Industries Limited as at 31st March, 2012 and also the Statement of
Profit and Loss and the Cash Flow Statement of the Company for the six
months period ended on that date annexed thereto. These financial
statements are the responsibility of the management of the Company.
Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 as
amended by the Companies (Auditor's Report) (Amendment) Order, 2004
(the 'Order'), issued by the Central Government of India in terms
sub-section (4A) of Section 227 of the Companies Act, 1956, of India
(the 'Act') and on the basis of such checks of the books and records of
the Company as we considered appropriate and according to the
information and explanations given to us, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, 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 purposes 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 Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the mandatory Accounting Standards
referred to in sub- section 3C of Section 211 of the Companies Act,
1956, except for non-provision of gratuity liability and leave
encashment, which is not as per AS-15 "Employee Benefits"
e) On the basis of written representations received from the directors
and taken on record by the Board of Directors, we report that none of
the said directors is disqualified as on 31st March, 2012 from being
appointed as directors of the Company under clause (g) of sub-section
(1) of Sec 274 of the Companies Act, 1956;
f) In our opinion and to the best of our information and according to
the explanations given to us, the said Accounts read together with the
Notes thereon give the information required by the Companies Act, 1956
in the manner so required and subject to Note No.2.1 (ii) of the Notes
to the Accounts for non provision of gratuity liability and leave
encashment as the same is accounted for on cash basis give a true and
fair view in conformity with the accounting principles generally
accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
ii) in the case of the Statement of Profit and Loss , of the loss of
the Company for the six months period ended on that date
and
iii) in the case of Cash Flow Statement, of the cash flows for the six
months period ended on that date.
ANNEXURE TO THE AUDITOR'S REPORT OF ASHCO NIULAB INDUSTRIES LIMITED FOR
THE PERIOD ENDED ON 31ST MARCH, 2012
(Referred to in paragraph 3 of our Report of Even Date)
i. (a) The Company has maintained proper records showing major
particulars including quantitative details and situation of fixed
assets.
(b) All the assets have not been physically verified by the management
during the period but there is a regular programme of verification by
the management at reasonable intervals. In our opinion the frequency of
verification may be increased. No material discrepancies were noticed
on such verification by the management.
(c) In our opinion, the Company has not disposed off substantial part
of Fixed Assets during the period.
ii. (a) We are informed that the management has a regular programme of
physical verification of inventories. In our opinion the frequency of
verification may be increased.
(b) The procedures of physical verification of inventories followed by
the management needs to be strengthened significantly in relation to
the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. We are
informed that the discrepancies noticed on verification between the
physical stocks and the book records were not material.
iii. (a) The Company has granted an advance of Rs. 50,92,13,465/- to
wholly owned subsidiary company covered in the register maintained
under Section 301 of the Companies Act, 1956. The maximum amount
involved during the period was Rs.50,92,13,465/- and the year-end
balance of advance given to such party was Rs. 50,92,13,465/-.
(b) In our opinion and according to the information and explanations
given to us, the terms and conditions of interest free advance given by
the Company, are prima facie not prejudicial to the interest of the
Company.
(c) The Company had taken unsecured loans from two parties covered in
the register maintained under Section 301 of the Companies Act 1956.
The maximum amount involved during the period was Rs. 2,13,67,534/-
and the year-end balance of loan taken from such parties was Rs.
1,93,39,799/-.
(d) In our opinion and according to the information and explanations
given to us, the terms and conditions of interest free unsecured loans
taken by the Company, are prima facie not prejudicial to the interest
of the Company.
(e) The Company is regular in repaying the principal amount wherever
stipulated.
iv. In our opinion and according to the information and explanations
given to us, the internal control systems need to be significantly
strengthened to be commensurate with the size of the Company and the
nature of its business, for the purchase of inventory and fixed assets
and for the sale of goods and services. During the course of our
audit, no continuing failure to correct major weakness in the internal
control system has been noted.
v. (a) According to the information and explanations given to us, we
are of the opinion that the particulars of contracts or arrangements
referred to in section 301 of the Companies Act, 1956 have been entered
in the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations
given to us, there were no transactions made in pursuance of contracts
or arrangements entered in the Register maintained under section 301 of
the Companies Act, 1956, aggregating Rs. 5,00,000/- or more during the
period.
vi. In our opinion and according to the information and explanations
given to us, the Company has not accepted deposits from public, and
consequently the directives issued by the Reserve Bank of India and the
provisions of sections 58A, 58AA or any other relevant provisions of
the Companies Act, 1956 and the rules framed there under are not
applicable to the Company.
Vii The Company presently has no separate internal audit system. It has
an internal control system which needs to be significantly strengthened
to be commensurate with the size and nature of its business.
viii. According to the information and explanations given to us, the
maintenance of cost records has not been prescribed by the Central
Government under clause (d) of sub section 1 of Section 209 of the
Companies Act, 1956, and hence, the provisions of clause (viii) of
paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not
applicable to the Company.
ix. (a) The Company is irregular in depositing undisputed statutory
dues including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income-Tax, Wealth Tax, Customs Duty,
Excise Duty, Cess and any other statutory dues with the appropriate
authorities. Further, Service Tax, Profession Tax and Tax Deducted at
Source which are outstanding as at the last day of the financial period
concerned for a period of more than six months from the date they
became payable are furnished below:
Nature of Dues Amount in Rs.
Service Tax 2,64,26,652
Sales Tax 52,63,905
Tax Deducted at Source 22,52,702
Provident Fund 27,22,284
ESIC 7,61,197
Profession Tax 2,89,015
Labour Welfare Fund 2,208
Total 3,77,17,963
(b) According to the information and explanations given to us, there
are no dues of Income Tax/ Sales Tax/ Wealth Tax/ Service Tax/ Custom
Duty/ Excise Duty/ Cess which have not been deposited on account of any
dispute and hence the provisions of clause (ix) (b) of paragraph 4 of
the Companies (Auditor's Report) Order, 2003 are not applicable to the
Company.
x. The accumulated losses of the company are not more than fifty
percent of its net worth. The company has incurred cash losses during
the financial period and in the immediately preceding financial period.
xi. The company has defaulted in repayment of dues to Financial
Institutions and Banks. The company has not issued any debentures. The
period and amount of default are as under:
Name of Bank / Over dues Over dues Month
Institution Interest Principle Pending
SIDBI 2,07,330 40,50,000 Jan-12 to Mar-12
Punjab National 12,76,442 25,00,000 Jan-12 to
Bank - Term Loan Mar-12
Punjab National 10,63,984 25,00,000 Jan-12 to
Bank - Term Loan Mar-12
Citi Bank - 2,00,647 86,982 Mar-12
Home Loan
Total 27,48,403 91,36,982
xii. In our opinion and according to information and explanations given
to us, the Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities,
and hence, the provisions of clause (xii) of paragraph 4 of the
Companies (Auditor's Report) Order, 2003 are not applicable to the
Company.
xiii. In our opinion and according to information and explanations
given to us, the Company is not a chit fund or a nidhi/mutual benefit
fund/society and hence the provisions of clause (xiii) of paragraph 4
the Companies (Auditor's Report) Order, 2003 are not applicable to the
Company.
xiv. In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments. All the shares,
securities, debentures and other investments have been held by the
Company, in its own name.
xv. In our opinion and according to information and explanations given
to us, the Company has not given any guarantees for the loans taken by
others from banks or financial institutions, and hence the provisions
of clause (xv) of paragraph 4 the Companies (Auditor's Report) Order,
2003 are not applicable to the Company.
xvi. According to the information and explanations given to us, the
term loans availed in the recent past have been applied for the purpose
for which they were obtained.
xvii. According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment by the Company.
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 Companies Act, 1956.
xix The Company has not issued any debentures and hence the provisions
of clause (xix) of paragraph 4 the Companies (Auditor's Report) Order,
2003 are not applicable to the Company.
xx. The Company has raised an amount of Rs. 33,77,95,000/- by issue of
GDR in April, 2010. The management has invested the proceeds in the
wholly owned subsidiary Ashco Niulab FZE.
xxi. According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
year.
For GMJ & Co
Chartered Accountants
FRN No. 103429W
CA S.MAHESHWARI
Partner
M. No. 38755
Place : Mumbai
Date : 5th January, 2013
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