| Report on the Financial Statements
We have audited the accompanying fnancial statements of ASIAN
ELECTRONICS LIMITED ("the Company"), which comprise the Balance Sheet
as at 31st March, 2013, the Statement of Proft and Loss and the Cash
Flow Statement for the year then ended, and a summary of the signifcant
accounting policies and other explanatory information, in which are
incorporated the unaudited Returns for the year ended on that date of
PAL Technology Division, LMD Division and SMR Division.
Management's Responsibility for the Financial Statements
The Management is responsible for the preparation of these fnancial
statements that give a true and fair view of the fnancial position,
fnancial performance and cash fows of the Company in accordance with
the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956 ("the Act") and in accordance with the accounting
principles generally accepted in India. This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the fnancial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these fnancial
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 fnancial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the fnancial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the fnancial
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 fnancial 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 Company's internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the Management, as
well as evaluating the overall presentation of the fnancial statements.
We believe that the audit evidence we have obtained is suffcient and
appropriate to provide a basis for our qualifed audit opinion.
Basis for Qualifed Opinion
Attention is invited to the following:
i. Note No. 30 regarding transfer of related loans and debentures of
ESCO and Project Division aggregating to Rs. 14,279.61 Lacs to two
wholly owned subsidiaries. The Lenders have refused to give their
approval and have informed the company not to proceed with hiving off
of the Assets and not to transfer the Loans / Debentures to the two
subsidiaries. Although the Loans / Debentures aggregating to Rs.
14,279.61 Lacs granted by Banks/Financial Institutions to the Company
are not refected in the Books of Account, the Company continues to be
liable to the lenders for the Loans / Debentures transferred to the
subsidiary companies. Also, the Company has not provided interest on
the above Loans / Debentures for the year under review. On the basis of
information available to us, we are unable to form an opinion in this
matter and unable to opine on the fall in the value of Investments in
the subsidiary companies amounting to Rs 6303.49 Lacs shown under
Investment Supense in Note No. 10.
ii. Note Nos. 31 to 33 regarding Stock Options granted to Directors and
Employees. Since the Company has not ascertained the fair value of the
Options granted, impact of the same on the Proforma Loss, Proforma
basic earnings per share and Proforma diluted earnings per share is not
ascertainable. Also the Company has not complied with the Securities
and Exchange Board Of India (Employee Stock Option Scheme And Employee
Stock Purchase Scheme) Guidelines, 1999.
iii. Note No. 35, wherein as explained, LIC NOMURA Mutual Fund and SBI
Factors Limited had fled petitions in The Bombay High Court for winding
up of the company for nonpayment of their dues. In case of the dues to
SBI Factors Limited, the dues were supposed to be paid in the fnancial
year 2012-13, where there is a delay and the company is likely to pay
in the coming months. The other lenders are being addressed under One
Time Settlement. Upon settlement of the matters amicably with the
lenders including LIC Nomura Mutual Fund, the consent terms will be
fled. Also Bank of India has served upon the Company a Notice under
Section 13(2) of the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Act, 2002 for repayment of dues. The
said notice has been set aside by DRT and is now being challenged in
appeal by the Bank. Other Banks have also asked the Company for
repayment of their dues and also issued SARFAESI notices.
iv. Note No. 37, wherein consequent to review made by the management
the following are the observations:
a. Diminution in the value of Investments in certain companies of Rs.
4,507.47 Lacs not refected in theFinancial Statements which is not in
accordance with Accounting Standard - 13 Accounting for Investments"
referred to in Section 211(3C) of the Act .
b. Loans aggregating to Rs 22,399.68 Lacs have been recalled by the
banks, due to default in repayment of the principal and interest
amounts. Interest aggregating to Rs. 2,835.95 Lacs approx, has not
been provided on these loans for the year ended 31.03.2013 and
consequently loss for the year has been understated to the same extent.
Also no interest has been provided on account of delays in payment of
various statutory dues like Tax Deducted at Source, Service Tax, ESIC,
Customs Duty, Sales Tax, Provident Fund etc. amount whereof is not
ascertainable. Of the above, balances aggregating to Rs. 7,657.83 Lacs
have not been confrmed / reconciled. The Company has approached the
Banks for One Time Settlement of the Dues. Consequently the aggregate
liability due to these Banks is not ascertainable.
c. Trade Receivables considered good includes Rs. 9,979.50 Lacs of old
Outstanding's which may be doubful of recovery.
d. Old Debit Balances of Rs. 5,901.13 Lacs included in Loans and
Advances and old unreconciled debits in certain Bank Accounts which may
not be recoverable / realizable.
e. Interest amounting to Rs. 63.55 Lacs approx, has not been provided
on Public Deposits for the year including on Deposits which have
matured and are claimed but have not been paid as on 31 st March 2013
amounting to Rs. 258.62 Lacs and consequently loss for the year has
been understated to the same extent Consequently, although the above
related items of assets have been shown as Considered Good, no
provision has been made for the same.
v. Managerial remuneration of Rs 17.99 Lacs paid during the year to the
Executive Director is subject to the approval of the Central Government
vi. Note No. 40 wherein Management has stated that Impairment of the
Company's assets and impact thereof on the loss for the year has not
been ascertained. Also certain Fixed Assets are no longer under the
control of the Company for the reasons stated in Note No. 35. Hence we
are unable to ascertain as to whether there is any impairment in line
with Accounting Standard - 28 "Impairment of Assets" referred to in
Section 211(3C) of the Act
In view of the above, we are unable to express an opinion on the
recoverability / realizability of the above mentioned items, the impact
of the same on the Loss for the year as well as the future viability of
the Company as a `going concern'.
Qualifed 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 Qualifed Opinion paragraph, the aforesaid
fnancial 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, 2013;
(b) in the case of the Statement of Proft and Loss, of the loss of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fows of the
Company for the year ended on that date.
Emphasis of Matter:
We draw attention to Note Numbers 38 and 41 regarding Unsecured
Interest Free Loans received from certain parties aggregating to Rs.
131.50 Lacs and Balances of Trade Receivables, Loans and Advances and
Trade Payables which are subject to confrmations and reconciliations,
the effects of which are at present unascertainable.
Attention is also drawn to Note No. 39 regarding non availability of
Sales Invoices along with relevant corresponding documents for a part
of the year as the same are in the custody of the Government
Authorities.
Our opinion is not qualifed 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 in terms of Section 227(4A) of
the Act, we give in the Annexure a statement on the matters specifed 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 purposes of our
audit.
(b) Except for the effects of the matter described in the Basis for
Qualifed Opinion paragraph, 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 and proper returns adequate for the
purposes of our audit have been received from the branches not visited
by us, except for the fnancial statements of PAL Technology Division,
LMD Division and SMR Division which have not been audited by branch
auditors. Therefore, we are unable to express an opinion on the same.
(c) The Balance Sheet, the Statement of Proft and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account and with the returns received from the branches not
visited by us.
(d) Except for the effects of the matter described in the Basis for
Qualifed Opinion paragraph, in our opinion, the Balance Sheet, the
Statement of Proft and Loss and the Cash Flow Statement comply with the
Accounting Standards referred to in Section 211(3C) of the Act.
(e) As the Company has failed to repay its Public Deposits and interest
thereon on the due dates, and such failure has continued for a period
of over one year, all the directors are disqualifed as on March 31,
2013 from being appointed as directors in any other public company,
under clause (g) of sub-section (1) of Section 274 of the Companies
Act, 1956. Refer Note No. 37(ii)(a).
For SORAB S. ENGINEER & CO.
Chartered Accountants
Firm Registration No. 110417W
CA N.D. Anklesaria
(Partner)
(Membership No. 10250)
Place : Mumbai.
Date : 30th May, 2013
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