| We have audited the accompanying financial statements of Trend
Electronics Limited ("the Company"), which comprise the Balance
Sheet as at 31st December, 2014, the Statement of Profit and Loss and
the Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
2. 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 notified under the Companies Act, 1956 ("the
Act") (which are deemed to be applicable as per section 133 of the
Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules,
2014) 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 financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
3. Auditors' 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 the 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 Company'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 audit opinion.
4. Opinion
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid 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 31st December, 2014;
b) in the case of the Statement of Profit and Loss, of the loss for the
year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. Other Matters
The Ministry of Corporate Affairs (MCA) had on 1st April, 2014, vide
its General Circular No. 01/2014, Dissemination of Information with
regards to the provision of the Companies Act, 2013 as notified till
date vis a vis corresponding provisions of the Companies Act, 1956,
identifies such Sections of the Companies Act, 1956, that would cease /
continue to have effect from 1st April, 2014.
Accordingly, in terms of the aforesaid Circular, our reporting in
respect of section 227(3)(f) of the Companies Act, 1956, and clauses
(iii), (v)(a) and (b), (vi), (viii), (xiv), (xviii) of the Companies
(Auditor's Report) Order, 2003 (dealing with Sections 49, 58A, 58AA,
209(1)(d) and 301 of the Companies Act, 1956) is only for the period
beginning from 1st January, 2014 till 31st March, 2014 since as per the
aforementioned MCA circular these Sections have ceased to have effect
from 1st April, 2014.
6. Report on Other Legal and Regulatory Requirements
A. 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
to the extent the same are applicable to the Company.
B. 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, 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 Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement comply with the Accounting Standards
notified under the Act (which are deemed to be applicable as per
section 133 of the Companies Act, 2013 read with Rule 7 of the
Companies (Accounts) Rules, 2014);
e) on the basis of written representations received from the directors
as on 31st March, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March, 2014, from
being appointed as a director in terms of clause (g) of sub-section (1)
of section 274 of the Act. The provisions of section 274(1)(g) ceased
to have effect from 1st April, 2014 and hence, the reporting
requirement under section 227(3)(f) of the Act is not applicable as of
the balance sheet date.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
Statement referred to in paragraph 6A read with paragraph 5 of the
Independent Auditors' Report of even date to the Members of Trend
Electronics Limited ("the Company") on the financial statements for
the year ended 31st December, 2014.
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situations of fixed
assets.
(b) As per the information and explanations given to us, physical
verification of fixed assets has been carried out in terms of the
phased programme of verification adopted by the Company and no material
discrepancies were noticed on such verification. In our opinion, the
frequency of verification is reasonable, having regard to the size of
the Company and nature of its business.
(c) During the year the Company has not disposed off any substantial
part of fixed assets.
(ii) (a) As per the information and explanation given to us, the
inventories have been physically verified during the year by the
management. In our opinion, having regard to the nature and location
of stocks, the frequency of the physical verification is reasonable.
(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. As per
information and explanation given to us, the 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 books of account.
(iii) (a) As per the information and explanation given to us, the
Company has not granted or taken any loans, secured or unsecured, to/
from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956.
(b) As the Company has not granted or taken any loans, secured or
unsecured, to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956, Sub-
clauses (b), (c), (d), (f) and (g) of Clause (iii) of paragraph 4 of
the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems 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. During the course of our audit, no major weakness has been
noticed in the internal control systems.
(v) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are
of the opinion that the transactions that need to be entered in the
register maintained under section 301 of the Companies Act, 1956 have
been so entered.
(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 of
the Companies Act, 1956 and exceeding the value of Rupees Five Lacs, 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) The Company has not accepted any deposits from the public within
the meaning of the provisions of section 58A, 58AA or any other
relevant provisions of the Companies Act, 1956 and rules framed there
under.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size of the Company and the nature of its
business.
(viii) The Central Government has prescribed maintenance of the cost
records under section 209(1)(d) of the Companies Act, 1956 in respect
to the Company's products. We have broadly reviewed the books of
account and records maintained by the Company in this connection and
are of the opinion that, prima facie, the prescribed accounts and
records have been made and maintained. We have however, not made a
detailed examination of the records with a view to determining whether
they are accurate or complete.
(ix) (a) According to the information and explanations given to us and
the records examined by us, the Company is regular in depositing with
appropriate authorities undisputed statutory dues including Provident
Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth-tax,
Service tax, Custom duty, Excise-duty, Cess and other statutory dues
wherever applicable. According to the information and explanations
given to us, no undisputed arrears of statutory dues were outstanding
as at 31st December, 2014 for a period of more than six months from the
date they became payable.
(b) According to the records of the Company examined by us and
information and explanations given to us, the particulars of 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, are given below:
Name of the Nature of the Amount
Statute Dues (Rs Million)
1. Customs Act, Custom Duty 0.75
1962
2. Central Excise Excise Duty 4.03
Act, 1944 2.98
6.95
0.93
0.57
3. Sales Tax Act Sales Tax 0.02
of various 32.72
States 0.28
Name of the statue Forum where dispute is pending
1. Customs Act, Commissioner
1962
2. Central Excise CESTAT
Act, 1944 High Court
Commissioner
Dy. Commissioner
Asst. Commissioner
3. Sales Tax Act Appellate Tribunal
of various Joint Commissioner
States STO
(x) There are accumulated losses of Rs. 892.92 Million as on 31st
December, 2014, which are more than fifty percent of its net worth. The
Company has incurred cash losses during the financial year and also
during the immediately preceding financial year.
(xi) Based on our audit procedures and the information and explanations
given to us, it is observed that, the Company has defaulted in
repayment of loans and payment of interest to banks and financial
institutions which are summarized below:
Particulars Principal Interest Delay in Days
Amount Amount - Range
in Million in Million
Amount paid
before the 1.15 12.36 1 to 35 days
year end
Amount
outstanding as - - -
at 31st December
2014
(xii) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and/or
advances on the basis of security by way of pledge of shares,
debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund company or
nidhi/mutual benefit fund/society. Therefore, the Clause (xiii) of
paragraph 4 of the Order is not applicable to the Company.
(xiv) The Company has maintained proper records of transactions and
contracts in respect of dealing and trading in shares, securities,
debentures and other investment and that timely entries have generally
been made therein. All shares, debentures and other securities have
been held by the Company in its own name except to the extent exemption
granted under section 49 of the Companies Act, 1956.
(xv) According to the information and explanations given to us, the
terms and conditions of guarantees given by the Company for loans taken
by others from banks or financial institutions are, prima facie, not
prejudicial to the interest of the Company.
(xvi) According to the information and explanations given to us, the
term loans raised during the year were applied, on an overall basis,
for the purpose for which the loans were obtained.
(xvii) On the basis of overall examination of the Balance Sheet of the
Company, we observed that, the Company has not used funds raised on
short term basis for long term investments.
(xviii) According to the information and explanation given to us, the
Company has not made any preferential allotment of shares during the
year 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 way of 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 the
year.
For KHANDELWAL JAIN & CO. For KADAM & CO.
Chartered Accountants Chartered Accountants
Firm Registration No.: 105049W Firm Registration No.: 104524W
BHUPENDRA Y. KARKHANIS U. S. KADAM
Partner Partner
Membership No.:108336 Membership No.: 31055
Place : Mumbai
Date : 14th May, 2015
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