| We have audited the accompanying financial statements of MCS 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 of the Company 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 8/2014
dated April, 4 2014 issued by the Ministry of Corporate Affairs and in
accordance with the ac- counting 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.
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 rea- sonableness 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 of Qualification
1. As discussed in Notes 13 ( i to iv) and 14 of notes to financial
statements, investments of Rs. 2589.44 lacs and advances of Rs. 233.81
lacs made in a foreign company, could not be verified in the absence of
ad- equate information and related documents made available to us.
Consequently, the requisite disclosure and provision for diminution in
the value of investments and advances have not been made. Pending
availability of information and related documents and confirmation, we
are unable to opine on the re- coverability/ adjustment of these
amounts and thus its consequent impact on the company's net worth and
discloser in term of AS 13 and AS 21. This had also caused us to
qualify our audit opinion on the financial statements relating to
preceding years.
2. Due to discrepancies in process of applications of some public
issues handled by the company in earlier years, rectification of the
errors and consequent investor's claims are continuing in process. In
the ab- sence of adequate information and pending completion of
investigations/claims, the liability on account of claims and its
effect on profitability is not ascertainable. However, the investors'
claims to the extent admitted by the Company are accounted for in the
year of settlement. During the year, the company has settled and
changed to profit and loss a/c the investor's claims amounting to Rs.
67.35 lacs (P.Y Rs. 100.04 lacs).
3. No provision of interest on unsecured loans has been made, as the
management claims no interest is payable thereon. In the absence of
adequate information, confirmation and related documents, interest
provision, if any, could not be assessed and provided for and
consequent impact on financial statements could not be determined. This
had also caused us to qualify our audit opinion on the financial
statements relating to preceding year.
4. Building & Electrical fittings and Equipment having carrying value
of Rs. 7.07 lacs on the land not belong- ing to the company is doubtful
of recovery in view of the Land in question, was mortgaged to banks,
and taken in possession by these banks in term of securitization and
Reconstruction of financial assets and Enforcement of security Interest
Act, 2002 for which no provision has been made. Had the provision being
made, the profits for the year & fixed assets would have been lower by
Rs. 7.07 lacs. This had also caused us to qualify our audit opinion on
the financial statements relating to preceding year.
5. In view of the point no. 1 to 4 hereinabove, we are of the opinion
that the company's net worth would have been be fully eroded if the
adjustment is made on account of the aforesaid qualifications and con-
sequently going concern status of the company is significantly doubtful
and is dependent on its ability
(a) to meet financial obligations under the corporate guarantee of Rs.
2565.50 lacs given in the favour of bank on behalf of Computech
International Ltd., a company in which promoters have substantial
inter- est, (b) of realization of investment of Rs. 2589.44 lacs made
in the foreign company (c) of realization of advance of Rs. 233.81 lacs
to a foreign company and (d) to repay unsecured loan of Rs. 901.99 lacs
and interest thereon if any.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, subject to the effect of the provision that
would have been required had the information and related documents
referred to in paragraph 1, 2 & 3 been made available and the provision
for loss of assets amounting to Rs. 7.07 lacs has been made, the
financial statements give the information required by the Act in the
manner so required give a true and fair view in conformity with the
accounting principles generally accepted in India:
a) In the case of Balance Sheet, of the state of affairs of the company
as at 31st March,2014
b) In the case of the Profit & Loss Account, of the profit for the year
ended on that date.
c) In the case of the Cash Flow Statement, of the cash flows for the
year ended as 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 Govern- ment 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. 2. As required by section 227(3) of the Act, we report that:
a) 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 except as referred to in point no.1 and 15 of the annexure to
this report;
b) 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) c) the Balance Sheet, and Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account
d) d) in our opinion, the Balance Sheet, and Statement of Profit and
Loss and Cash Flow Statement comply with the Accounting Standards
referred to in sub-section (3C) of section 211 of the Com- panies Act,
1956, read with the general circular 8/2014 dated April,4 2014 issued
by the Ministry of Corporate Affairs except to the extent referred to
in point no. 1 to 4 mentioned hereinabove in the 'basis of
qualifications' ;
e) 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 AUDITOR'S REPORT
The Annexure referred to in paragraph 1 of the Our Report of even date
to the members of MCS Limited on the accounts of the company for the
year ended 31st March, 2014.
On the basis of such checks as we considered appropriate and according
to the information and explanation given to us during the course of our
audit, we report that:
I. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets except for furniture & fixtures and electrical fitting and
intangible assets. In respect of furniture & fixtures and electrical
fitting and intangible assets quantitative details are not mentioned.
No identification mark is placed on fixed assets.
(b) The company has designed a programme for physical verification of
assets to cover all the items over a period of three years which in our
opinion is reasonable having regard to the size of the company and
nature of its assets. As informed no physical verification was carried
out during the year and therefore we are unable to comment if there is
any discrepancy in physi- cal verification and books recorded and on
adjustment thereof.
(c) There was no substantial disposal of fixed assets during the year.
II. The Company does not carry any stock of raw material, spare parts,
finished goods, stores mainte- nance and components. As per the
practice consistently followed by the company purchases of sta- tionary
and spare parts are charged to the revenue directly and no stock is
carrying by the company. In view of the above no comments are offered
on (i) procedure of physical verification (ii) discrepancies on
physical verification if any.
III (a) According to the information and explanations given to us, the
Company has during the year not granted any loan, secured or unsecured
to companies, firms or other parties listed in the Register maintained
under section 301 of the Companies Act 1956. Accordingly paragraphs
4(iii)(a), (b), (c) and (d) of the order, are not applicable.
(b) According to the information and explanations given to us, the
company has not taken any unsecured or secured advances from companies,
firms or other parties listed in the Register maintained under section
301 of the Companies Act 1956. Accordingly paragraphs 4(iii)(e), (f)
and (g) of the order, are not applicable.
IV. In our opinion and according to the information and explanations
given to us, there are adequate in- ternal control procedures
commensurate with the size of the Company and nature of its business
with regard to the sale of services. During the course of our audit, no
major weakness has been noticed in the internal controls. During the
course of our audit, we have not observed any continuing failure to
correct major weakness in internal control system of the company.
V (a) According to the information and explanations given to us, we are
of the opinion that the transactions that need to be entered into 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 Company has not made any transaction 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.
VI. The Company has not accepted any deposits from the public
VII. The Company has no internal audit system during the year.
VIII. In our opinion and according to the information & explanation
given to us maintenance of cost records has not been prescribed by the
Central Government under clause (d) of subsection (I) of section 209 of
the Act.
IX. (a) According to the records of the Company and information and
explanations given to us, the Company is regular in depositing
undisputed statutory dues as applicable to the Company in- cluding
Provident Fund, Investor Education and Protection Funds, Employee's
State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Custom duty, Excise
Duty, Cess, Service tax and other mate- rial statutory dues with the
appropriate authorities during the year.
(b) According to the information & explanation given to us, no
undisputed amounts payable in re- spect of Provident fund, Investor
Education and Protection Funds, Employee's State Insurance, Income-Tax,
Wealth-Tax, Sales-Tax, Customs Duty, and Cess, Service tax and other
undisputed statutory dues were in arrears, as at 31st March, 2014 for a
period of more than six months from the date they became payable.
(c) According to the records of the Company and information and
explanation given to us, there are no dues outstanding in respect of
Sales Tax, Custom Duty, Wealth Tax, Excise Duty Cess and Service tax
which have not been deposited on account of any dispute.
X. The Company has no accumulated losses at the end of the financial
year. It has not incurred cash losses in the current year. However the
accumulated losses at the end of the financial year will not be less
than 50% of its net worth, had the provision for diminution in the
value of investment to the tune of Rs. 25,89,44,435 and provision for
doubtful advance of Rs. 2,33,81,438/- been made in the financial
statements.
XI. Based on our audit procedures and on the basis of information and
explanations given by the manage- ment, the Company has not defaulted
in the repayment of dues to financial institutions & banks.
XII. In our opinion and according to the 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.
XIII. In our opinion and according to the information and explanations
given to us, the nature of activities of the Company does not attract
any special statute applicable to chit fund and nidhi/mutual benefit
fund/societies.
XIV. We have been informed that the company is not dealing or trading
in shares, securities, debentures and other investments. However, in
respect of securities acquired during the normal course of the business
the company has maintained proper record for transactions and contracts
and as per the information provided timely entries have been made
therein. The securities have been held by the company in its own name.
XV. In the absence of requisite information made available to us, the
terms & conditions of the guar- antee given by the company in earlier
years for the loans taken by the other company mentioned in the
register maintained under section 301 of the company Act, 1956 of Rs.
2565.00 lacs, detailed examination could not be made with regards to
its justification, therefore no comments are offered.
XVI. According to the information and explanations given to us and
bases on the audit procedure applied by us, the term loan taken by the
company during the year has been applied for the purpose for which the
loan was obtained.
XVII. According to the records examined by us and according to the
information and explanations given to us, on overall examination of the
balance sheet of the Company, we report that prima facie no funds
raised on short term basis have been used for long-term investment.
XVIII. The Company has not made any preferential allotment of shares
to parties and companies covered under register maintained under
Section 301 of the Companies Act, 1956.
XIX. According to the information and explanation given to us and the
records examined by us, the Com- pany has not issued debentures.
XX. The Company has not raised money by any public issues during the
year and hence the question of disclosure and verification of end use
of such money does not arise.
XXI. To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
was noticed or reported during the year.
For AMOD AGRAWAL &ASSOCIATES
CHARTERED ACCOUNTANTS
FRN NO. 005780N
Date: 30-05-2014
Place : New Delhi VIRENDER KUMAR
(Partner)
M No. 85350 | 