| 1. Report on the Financial Statements
We have audited the accompanying financial statements of TECPRO SYSTEMS
LIMITED ("the Company"), which comprise the Balance Sheet as at March
31,2014, and 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 referred to in Section 211 (3C) of the
Companies Act,1956 (the "Act") (which continue to be applicable in
respect of Section 133 of the Companies Act, 2013 in terms of General
Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate
Affairs) 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. Auditor's 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 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 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.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
4. Basis for Qualified Opinion
1. We refer to Note No. 32- regarding possible diminution in value of
certain investments aggregating to Rs. 999.18 lakhs which has not been
recognished in the statement of Profit and Loss for the year. The
Statutory Auditors of one of the subsidiaries-Tecpro Systems
(Singapore) Pte Limited (carrying value of Investment Rs.853.97 lakhs)
has qualified the financial statements for the year ended March 31,2014
with regard to the going concern assumption adopted by the said
subsidiary. The diminution in value of the said investment has not
been provided for. Further, possible dimunition on other non-current
investments of the company has also not , been reckoned in the
statement of Profit and Loss for the year, based on assessments of the
Company which is dependent on the achievement of certain projections by
the said entities.
The attached financial statements do not include any adjustments that
might result had the above uncertainties been known.
5. Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matters
described in the Basis for Qualified Opinion paragraph, the 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 March 31,2014;
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 for the
year ended on that date.
6. Emphasis of Matter We draw attention to
a) Note No.30(i) regarding assumption of going concern based on
Company's proposal for restructuring of debt which has been admitted by
the CDR empowered group for Corporate Debt Restructuring.
b) Note No.30 (iii) regarding a sum of Rs.3,942.68.lakhs recognized as
interest income arising from delayed payments made by certain customers
pending confirmation from the said customers.
c) Note 30 (ii) and (iii) regarding certain debts considered realizable
based on management's representation regarding continuous steps /
engagement with the customers for realisation of dues and
adjustments,if any, arising out of circularization of balances of
Debtors/ Vendors as detailed in Note 30 (iv) and providing for
liquidated damages as detailed in Note 30 (v)
d) Note 38 regarding payment of remuneration to a managerial person
being in excess of the limits specified by the relevant provisions of
Companies Act 1956 by Rs.51.94 lakhs in respect of which the Company
will seek approval of the shareholders and the Central Government.
Our opinion is not qualified in respect of the above matters.
7. 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 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.
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) 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) except for the effect of the matters described in the Basis for
Qualified Opinion paragraph, in our opinion, the Balance Sheet, the
Statement of Profit and Loss, and the Cash Flow Statement comply with
the Accounting Standards referred to in Section 211 (3C) of the Act
(which continue to be applicable in respect of Section 133 of the
Companies Act, 2013 in terms of General Circular 15/2013 dated 13
September 2013 of the Ministry of Corporate Affairs).
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.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT Re: TECPRO SYSTEMS LIMITED
Referred to in paragraph 7 under'Report on Other Legal and Regulatory
Requirements'section of our report of even date
In our opinion and on the basis of such checks as we considered
appropriate, and according to the information and explanations given to
us, the nature of the Company's business/ activities/ results during
the year are such that clauses (iii)(e),(iii)(f),(iii) (g), (vi),
(xii),(xiii), (xiv), (xviii),(xix) and (xx) of paragraph 4 of the Order
are not applicable to the Company. Further, in respect of other
clauses, on the basis of such checks as we considered appropriate, we
report that:
1. In respect of its fixed assets:
(i) the Company is maintaining proper records showing full particulars
including quantitative details and situation of fixed assets.
(ii) the fixed assets were not physically verified by the Management
during the year and hence we are unable to comment on the
discrepancies, if any, noticed.
(iii) substantial part of the fixed assets were not disposed off during
the year, in our opinion, and hence the going concern status of the
Company is not affected.
2. In respect of its inventories:
(i) the inventories have been physically verified during the year by
the Management at the year end.
(ii) we were not able to observe the physical verification of such
inventory but based on information and explanations given by
Management, the procedures of physical verification of the inventory
followed appear reasonable and adequate in relation to the size of the
Company and the nature of its business.
(iii) in our opinion and according to the information and explanations
given to us, the Company is generally maintaining proper records of its
inventories and no material discrepancies were noticed on physical
verification.
3. (a) On the basis of our examination of the books of account and as
per information and explanations given to us, the Company has during
the year given interest-free unsecured Trade Advance (not being a loan)
to a party covered in the register maintained under section 301 of the
Companies Act, 1956. The maximum amount outstanding during the year was
Rs.800.35 lakhs and the balance due from such party as at the end of
the year was Rs.713.24 lakhs. The said Trade Advance is being repaid
regularly.There are no other amounts granted as loans or advance to any
other party covered in the register maintained under section 301 of the
Companies Act, 1956.
(b) In our opinion the other terms and conditions of such loans are not
prima-facie prejudicial to the interests of the Company.
4. In our opinion and according to the information and explanations
given to us, there is generally an adequate internal control system
commensurate with the size of the Company and the nature of its
business, for the purchase of inventories at factory and fixed assets,
for payment of expenses and for sale of goods and services. With regard
to internal control system for purchase of inventories for delivery at
site, the same needs to be strengthened. Further, on the basis of our
examination of the books and records of the Company, we have neither
come across nor have been informed of any continuing failure to correct
major weaknesses in the aforesaid internal control system.
5. In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
a) the particulars of contracts or arrangements referred to in Section
301 of the Act that needed to be entered into the register, maintained
under the said section 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 and
arrangements referred to in (a) above and exceeding the value of Rs. 5
lakh with any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the
relevant time except for (i) sale of certain goods which are for the
specialised requirements of the buyer and for which suitable
alternative sources are not available to obtain comparable quotations
and
(ii) purchases of certain goods and services which are for the
specialised requirements of the Company and for which suitable
alternative sources are not available to obtain comparable quotations.
However, on the basis of information and explanations provided, the
same appear reasonable.
6. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
7. We have broadly reviewed the cost records maintained by the Company
pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government of India under Section 209(1 )(d)
of the Act and are of the opinion that, prima fade, the prescribed
accounts and cost records have been made and maintained. We have,
however, not made a detailed examination of the cost records with a
view to determine whether they are accurate or complete.
8. According to the Information and explanations given to us and the
books of account examined by us, In respect of statutory dues:
(I) the Company Is not regular In depositing undisputed statutory dues
Including provident fund, investor education and protection fund,
employees' state insurance, Income tax, sales tax, wealth tax, service
tax, customs duty, excise duty, cess and other material statutory dues,
as applicable, with the appropriate authorities during the year.
(ii) the undisputed amounts payable in respect of such statutory dues
outstanding as at March 31, 2014 for a period of more than six months
from the date they became payable are as under:
(Rs. in Lakhs)
S. Nature of Dues Amount
No.
1. Central Sales Tax 24,10
2. Provident Fund 54,88
3. Works Contract Tax 377.19
4 Tax Deducted at Source/Tax 742.63
Collected at Source
5. Customs Duty 3.54
6. Value Added Tax 557,96
7. Service Tax 1134.04
8. Entry Tax 3.05
9. Wealth Tax 1.55
(III) there are no dues of wealth-tax and customs duty which have not
been deposited on account of any dispute. Details of dues towards
income tax, sales tax, service tax, excise duty and cess that have not
been deposited as at March 31,2014 on account of disputes are as stated
below.
Name of the Statute Nature of Amount (Rs.
dues In Lakhs)
Central Sales tax Sales tax 124.06
Act, 1956 49.51
Central Sales tax Sales tax 5.81
Act, 1956 20.25
West Bengal Sales Sales tax 14.04
Tax Act, 1994
Central Sales Tax Sales tax 37.08
Act, 1956 185,04
West Bengal Sales Sales tax 13.37
Tax Act, 1994
Central Sales Tax Sales tax 1.70
Act, 1956
Central Sales Tax Sales tax 27.21
Act, 1956
Chapter V of the Service 65.36
Finance Act, 1994 Tax
Central Sales tax Sales tax 13.41
Act, 1956
Central Sales tax Sales tax 4.54
Act, 1956
Central Sales tax Sales tax 5.48
Act, 1956
Central Sales tax Sales tax 1.14
Act, 1956
Central Sales Tax Sales tax 189.92
Act, 1956
Rajasthan Tax on Entry Tax 204.08
Entry of Goods
into Local Areas
Act, 1999
West Bengal Sales tax 48.92
Value Added Tax
Act, 2003
Rajasthan Tax on Entry Tax 116.59
Entry of Goods
into Local Areas
Act, 1999
Rajasthan Tax on Entry Tax 164.89
Entry of Goods
into Local Areas
Act, 1999
Income Tax Act,1961 Income tax 2,642,77
Income Tax Act,1961 Income tax 2,372.05
Name of the Statute Period to which Forum where dispute is pending
amount relates
Central Sales tax 1 April 2001 to Joint Commissioner of Sales
Act, 1956 31 March 2002 tax (Appeals), Pune
1 April 2002 to Joint Commissioner of Sales
31 March 2003 tax (Appeals), Pune
Central Sales tax 1 April 2001 to Commercial tax Officer,
Act, 1956 31 March 2002 Lucknow
1 April 2000 to Commercial tax Officer,
31 March 2001 Lucknow
West Bengal Sales 1 April 2005 to West Bengal Commercial Taxes
Tax Act, 1994 31 March 2006 Appellate and Revlsional
board, Kolkata
Central Sales Tax 1 April 2005 to West Bengal Commercial Taxes
Act, 1956 31 March 2006 Appellate and Revisional
board, Kolkata
1 April 2006 to West Bengal Commercial Taxes
31 March 2007 Appellate and Revlsional
board, Kolkata
West Bengal Sales 1 April 2003 to Sales tax Officer Commercial
Tax Act, 1994 31 March 2004 Taxes, West Bengal
Central Sales Tax 1 April 2003 to Sales tax Officer Commercial
Act, 1956 31 March 2004 Taxes, West Bengal
Central Sales Tax 1 April 2003 to Joint Commissioner, Sales tax
Act, 1956 31 March 2004 (Appeals) II, Mumbai
Chapter V of the 1 July 2003 to Additional Commissioner of
Finance Act, 1994 31 May 2007 Excise
Central Sales tax 1 April 2004 to Joint Commissioner of Sales
Act, 1956 31 March 2005 Tax, Pune
Central Sales tax 1 April 2008 to Joint Commissioner Trade Tax,
Act, 1956 31 March 2009 Bikaner
Central Sales tax 1 April 2008 to West Bengal Commercial Taxes
Act, 1956 31 March 2009 Appellate and Revlsional Board
Central Sales tax 1 April 2007 to Dy. Commissioner Commercial
Act, 1956 31 March 2008 Tax, Bhawanipore Charge,
Kolkata
Central Sales Tax 1 April 2009 to Rajasthan Tax Board, Ajmer
Act, 1956 31 March 2010
Rajasthan Tax on 1 April 2006 to Rajasthan High Court
Entry of Goods 31 March 2009
into Local Areas
Act, 1999
West Bengal 1 April 2009 to West Bengal Commercial Taxes
Value Added Tax 31 March 2010 Appellate and Revisional Board
Act, 2003
Rajasthan Tax on 1 April 2009 to Rajasthan High Court
Entry of Goods 31 March 2010
into Local Areas
Act, 1999
Rajasthan Tax on 1 April 2010 to Rajasthan High Court
Entry of Goods 31 March 2011
into Local Areas
Act, 1999
Income Tax Act,1961 Asst. Commissioner of Income tax
Year 2011-12 (Appeals)
Income Tax Act,1961 Asst. Commissioner of Income tax
Year 2012-13 (Appeals)
9. The Company does not have any accumulated losses as at March 31,
2014. It has incurred cash losses in the financial year ended on that
date but not in the Immediately preceding financial year.
10. In our opinion, the Company has defaulted in repayment of dues to
financial Institutions and banks as under:
Rs. In Lakhs
S. Dues to Amount Nature of
No. Involved Dues
1. DBS Bank(DBS) Bill discounting 277.00 Principal
DBS-ECB Loan 480.80 Principal
77.20 Interest
DBS Short Term Loan 27,414.90 Principal
1,193.82 Interest
DBS - Long Term Loan 615.00 Principal
250.87 Interest
Corporate Guarantee 6009.98 Principal
113.19 Interest
2. Axis Bank (LC Devolved) 99.89 Principal
0.66 Interest
3. ICICI Bank (LC) 3546.80 Principal
16.22 Interest
4. Standard Chartered Bank 14725.00 Principal
Packing Credit
Standard Chartered Bank-Bill 675.00 Principal
Discount
Standard chartered bank-PCFC 2180.00 Principal
1917,00 Principal
5. RIICO LTD -Term Loan 386.55 Interest
6. Kotak Mahindra Prime Ltd 58.30 Principal
3.28 Interest
Rs. In Lakhs
S. Dues to Period of default upto
No. March 31,2014
1. DBS Bank(DBS) Bill discounting From 34-64 days
DBS-ECB Loan 104 days
104 days
DBS Short Term Loan From 30- 160 days
From 30 - 160 days
DBS - Long Term Loan 180 Days-365 days
180 Days-365 days
Corporate Guarantee Less than 30 days
Less Than 30 days
2. Axis Bank (LC Devolved) From 90 days to 180 days
3. ICICI Bank (LC) Less than 90 days
Less than 90 days
4. Standard Chartered Bank More than 180 days
Packing Credit
Standard Chartered Bank-Bill More than 180 days
Discount
Standard chartered bank-PCFC Less than 90 days
From 90 to 180 days
5. RIICO LTD -Term Loan From 30 to 270 days
6. Kotak Mahindra Prime Ltd From 30 to 60 days
There are no debenture holders in the Company,
11. In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company, for loans taken by others from banks or financial
institutions, are not, prima fade, prejudicial to the interest of the
Company.
12. In our opinion and according to the Information and explanations
given to us, out of the term loan of Rs.3,000 lakhs availed by the
Company during the year, only Rs. 1,288.83 lakhs were applied for the
purpose for which they were obtained.
13. According to the information and explanations given to us and on
an overall examination of the financial statements of the Company, we
report that the company has, prima fade, utilised short term funds
raised during the year for purchase of fixed assets to the extent of Rs
2,422.65 lakhs.
14. To the best of our knowledge and belief, and according to the
Information and explanations given to us, and considering the size and
nature of the Company's operations, no fraud of material significance
on or by the Company has been noticed or reported during the year.
For M.S. Krishnaswaml & Rajan
Chartered Accountants
Firm Registration. No. 01554S
Sd/-
M.S. Murali
Place: Chennai Partner
Date : June 9,2014 Membership No.: 026453 | 