| We have audited the accompanying financial statements of SHREE GANESH
FORGINGS LIMITED ("the Company"), which comprise the Balance Sheet as
at March 31, 2014 and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended , and a summary of significant
accounting policies and other explanatory information.
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 in accordance with the Accounting Standards
referred to in sub-section (3C) of section 211 of the Companies Act,
1956 ("the Act") read with the general circular 15/2013 dated September
13, 2013 of the Ministry of Corporate Affairs in respect of section 133
of the Companies Act 2013. 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.
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. 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.
Basis for Qualified Opinion
The company has defaulted in payment of statutory dues, such as Sales
tax, Property Tax, NMMC Cess, and for P.T. the company has not filled
any return during the year. The Company has also defaulted in repayment
of loans and interest on loans borrowed from banks.
Despite accumulated losses and consequent total erosion of equity and
inadequate liquidity, accounts have been complied as on going concern
basis.
Qualified opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the matter
described in the Basis for Qualified Opinion paragraph, the impact
whereof is unascertainable, 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.
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
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 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 and Statement of Profit and Loss and cash flow
dealt with by this report are in agreement with the books of account.
(d) in our opinion, the Balance Sheet and Statement of Profit and Loss
comply with the Accounting Standards referred to in subsection (3C) of
section 211 of the Companies Act, 1956;
(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 Companies Act, 1956.
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in Paragraph 1 (Report on Other Legal and Regulatory
Requirements) of our report of even date)
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The fixed assets were physically verified at the close of the year
and no discrepancies were noticed.
(ii) According to the information and explanations given to us,
(a) Inventories have been physically verified by management at regular
intervals. However the verification exercises have not been observed by
us.
(b) The procedure of physical verification of inventories followed by
the management is reasonable and adequate in relation to the size of
the company and nature of business.
(c) In our opinion, the company has maintained adequate records of its
inventories and.
(d) No material discrepancies were noticed on physical verification.
(iii) (a) According to the information and explanations given to us,
the company has granted interest free loans to related parties of Rs.
3,70,98,457 which is a non - compliance of Section 295 of the Companies
Act, 1956 as the necessary prior approval from Central Government has
not been obtained. The maximum Outstanding during the year and year-end
balance of such loan are as follows:
Maximum amount Year-end
Name of the Party outstanding balance
during the year
Namha metal Ltd. 1,41,88,311 3,51,36,543
Akshatt 2,00,02,501 1,50,189
Warehousing
Corporation
Anita Sekhri 2,49,048 7,04,118
Deepak Sekhri 46,05,220 10,99,607
Namha Sekhri 8,000 8,000
(b) Since there are no stipulated terms of repayment of interest and
principle, hence we are not able to comment on the regularity of
receipt of the same.
(c) According to the information and explanations given to us, in case
where overdue amount is more than rupees one lakh, reasonable steps
have been taken by the company for the recovery of principal.
(d) The Company has taken interest free loans of Rs. 1,21,199/-
secured or unsecured, from related parties. The maximum outstanding
during the year and the year-end balance of such loans are as
follows:q1
Name of the Party Maximum Year-end
amount balance
outstanding
during the year
Akshatt Sekhri 34,456 16,776
Deepak Sekhri HU 1,04,423 1,04,423
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business with regard to purchase of fixed assets etc. There is no sale
of services during the year. During the course of our audit, we have
not observed any major weaknesses in internal controls. However, in
our opinion the company should strengthen its controls with regard to
storage and maintenance of inventory records.
(v) Based on the audit procedure 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 into the register
maintained u/s 301 have been so entered. In our opinion and according
to the information and explanations given to us, the transactions made
in the registers maintained under section 301 and exceeding the value
of five lakhs rupees 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 and according to the information and explanations
given to us, the company has not accepted any deposits from the public
therefore the provisions of clause 4 (vi) of the Order are not
applicable to the company.
(vii) In our opinion, the company has internal audit system
commensurate with the size and nature of its business.
(viii) The Central Government has not prescribed the maintenance of
cost records under section 209 (1) (d) of the Companies Act, 1956
having regard to the nature of the business of the company. As
explained to us, the specified records have been maintained to the
extent applicable, We have, however not made detailed examination of
the records, with a view to determine whether they are accurate.
(ix) In respect of Statutory Dues:
(a) According to the information given to us, there were certain dues
in respect of Income Tax & Cess are outstanding as at March 31st,2014
for a period of more than six months from the date they become payable
due to financial constraints faced by the company. Details are as
follows:
NMMC Cess 1,050,184
Sales Tax 45,15,673
Property Tax 91,45,565
P.T 57,996
CST 1,56,580
The disputed statutory dues relating to sales Tax and misc. aggregating
to Rs. 270.68 lakhs that have not been deposited are as under: for
which the company has made an appeal to the higher authority.
Assessment Year Amount (Rs.)
2000-01 9,450.00
2001-02 350,003.00
2002-03 3,043,843.00
2003-04 2,216,678.00
2004-05 1,331,956.00
2005-06 1,331,956.00
2006-07 21,115,850.00
(x) As on 31.03.2010 the company had accumulated losses of Rs.
357,639,510/- which completely eroded company's net worth. The company
was registered as sick company Under the provisions of Sick Industrial
and Companies (special provisions) Act, 1985 with the board for
Industrial and Financial Reconstruction (BIFR) on 3rd August, 2010. As
on 31st March, 2014 the Company's net worth remains eroded by its
accumulated losses of Rs. 767,70,5343/-. During the financial year
2013-14 the company had incurred cash losses of Rs. 23,099,193/- and
Rs.176,506,322/- for the immediately preceding previous year i.e. F.Y.
2012-13.
(xi) According to the information and explanations given to us, the
company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities, as such
the provisions of clause 4(xi) of the Order are not applicable.
(xii) The company is not a chit fund or a nidhi / mutual benefit
fund/society. Therefore, the provisions of clause 4 (xii) of the order
are not applicable.
(xiii) According to the information and explanations given to us, the
Company is not dealing in or trading in shares, securities, debentures
and other investments, as such the provisions of clause 4 (xiii) of the
order are not applicable.
(xiv) As per the information and explanations given to us, the company
has not given any guarantee for loans taken by others from banks or
financial institutions, as such the provisions of clause 4 (xiv) of the
order are not applicable.
(xv) According to the information and explanations given to us, no term
loan was taken during the year. Accordingly provisions of clause 4 (xv)
of the order are not applicable.
(xvi) Based on 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. .
(xvii) According to the information and explanations given to us,
during the year the company has not made any preferential allotment of
shares to parties covered in the register maintained under section 301
of the Companies Act, 1956. Accordingly, provisions of clause 4(xvii)
of the Order are not applicable.
(xviii) According to the information and explanations given to us, the
company has not issued debentures during the year. Therefore, the
provisions of clause 4(xviii) of the Order are not applicable.
(xix) According to the information and explanations given to us, the
company has not raised money by way of public issue during the year.
Therefore, the provisions of clause 4(xix) of the Order are not
applicable.
For BATLIBOI & PUROHIT
Chartered Accountants
Firm Reg.No. 101048W
Place : Mumbai (R.D. Hangekar)
Date : Partner
Membership No: 30615 | 