| We have audited the accompanying financial statements of THE DHAR
TEXTILE MILLS LTD. which comprise the Balance Sheet as at March 31,
2014 and the Statement of Profit and Loss 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 and
financial performance of the Company in accordance with the Accounting
Standards notified under the Companies Act, 1956 ("the Act") read with
the General Circular 15/2013 dated 13th September 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, 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.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, 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 Profit and Loss Account, of the profit/ loss for
the year ended on that date; and
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
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 Cash Flow Statement comply with the Accounting Standards notified
under the Companies Act, 1956 read with the General Circular 15/2013
dated 13th September 2013 of the Ministry of Corporate Affairs in
respect of section 133 of the Companies Act, 2013.
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.
f) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
g) a) Note No.1 of schedule "O" Part B regarding non redemption of
redeemable preference shares amounting to Rs. 350 lacs which fell due
up to 1st February 2006 and arrears of preference dividend of Rs.
5.555 crores. (Previous year Rs.5.555 crores).
b) Note No.2 a of schedule "O" Part B regarding non payment of debts
from Banks, IDBI, and Hire Purchase company amounting to Rs.185.61
Cores, due to failure of reschedulement of repayment of loans under
Corporate Debt Restructuring (CDR) mechanism of RBI .
3. Subject to the foregoing, In our opinion and to the best of our
information and according to the explanations given to us, the said
accounts read together with Significant Accounting Policies and Notes
on Accounts in Schedule 'O' and those appearing elsewhere in the
accounts give the information required by the Companies Act, in the
manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
1. In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2014; and
2. In the case of Statement of Profit and Loss, of the Loss for the
year ended on that date.
3. In the case of Cash Flow Statement, of the Cash Flow for the year
ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITOR'S REPORT ON THE
ACCOUNTS OF THE DHAR TEXTILE MILLS LTD.FOR THE YEAR ENDING 31st
MARCH, 2014
As required by the Companies (Auditor's report) Order, 2003 issued by
the central Government of India in terms of section 227(4-A) of the
Companies Act, 1956, we report that:
1 In respect of Fixed Assets:
(A) The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets on the
basis of available information.
(B) As explained to us, all the fixed assets have been physically
verified by the management during the year at reasonable intervals,
which in our opinion, is reasonable having regard to the size of the
company and the nature of assets. No material discrepancies were
noticed on such physical verification.
(C) In our opinion the Company has not disposed off any
substantial/major part of fixed assets during the year and the going
concern status of the company is not affected.
2 In respect of its Inventories:
(A) As explained to us, the inventory has been physically verified by
the management at regular intervals during the year.
(B) In our opinion and according to the information and explanations
given to us, the procedures followed by the management for physical
verification of inventory are reasonable and adequate in relation to
size of the company and nature of its business.
(C) In our opinion and according to the information and explanations
given to us and on the basis of our examination of the records of
inventory, the Company has maintained proper records of inventory. And
there were no material discrepancies noticed on physical verification
of inventory as compared to the book records.
3 In respect of Loans, Secured or Unsecured, granted or taken by the
company to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act 1956:
(A) As informed, during the year under audit the company has not
granted any loan, secured or unsecured, to companies, firms or other
parties covered in the register maintained under section 301 of the Act
hence sub-clause (b), (c) and (d) are not applicable.
4 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 nature of its business
with regard to purchase of inventory and fixed assets and with regard
for the sale of goods and services. During the course of audit, no
major weakness has been noticed in the internal control.
5 In respect of contracts or arrangements entered in the register
maintained in pursuance of Section 301 of the Companies Act, 1956.
(A) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of contracts or
arrangements that needed to be entered in the register maintained under
section 301 of the Companies Act 1956 have been so entered. Although
register maintained under section 301 are not produced before us.
(B) In our opinion and explanation given to us, the transactions
exceeding the value of 5 lakh in respect of any party during the year
have been made at prices which are prima-facie reasonable having regard
to prevailing market prices at the relevant time where such prices are
available.
6 In our opinion and according to the information and explanations
given to us, the Company has not accepted deposits from the public and
therefore, the provisions of Section 58A and 58AA of the Companies Act,
1956 and Rules made there under are not applicable to the Company.
7 In our opinion, the company doesn't have an internal audit system
commensurate with its size and nature of its business.
8 To the best of our knowledge the Central Government has prescribed
the maintenance of cost records U/s 209(1) (d) of the Company's Act,
1956 for the products of the company.
9 In respect of statutory dues:
According to the records of the company examined by us, in our opinion,
the company is irregular in depositing undisputed statutory dues
including Provident Fund Employees State Insurance, Income-Tax,
Sales-Tax, and Excise Duty, except Service Tax Custom Duty, cess and
any other statutory dues with the appropriate authorities. According to
the records of the company examined by us, no undisputed amount payable
in respect of Income Tax, Wealth Tax, Custom Duty and Excise Duty were
in arrears as at 31st March 2014 for a period of more than 6 months
from the date they become payable other than Employee State Insurance
of Rs.55,648/-, Provident fund of Rs.2,07,543/-, Electricity duty of
Rs.10,74,756/-.
The disputed statutory dues aggregating to Rs.38,46,025/- have not been
deposited on account of matters pending before appropriate authorities
as under, we are enclosing the annexure for the same:
S. Name of the Statue Nature of Dues Forum where dispute Amount
No is pending
1 Labour Commissioner Labour Due M.P. Government 8,61,300/-
(For the Labour Department
Year 2011)
2 Labour Commissioner Labour Due M.P. Government 7,97,162/-
(Feb - July Labour Department
2010)
3 Labour Commissioner Labour Due M.P. Government 21,87,563/-
(Aug10 - Labour Department
Jan 2011)
10 The company is a sick company within the meaning of Sick Industrial
Companies (special Provision) Act, 1985, as its accumulated losses
exceeded fifty percent of its Net Worth at the end of the financial
year. The Company has incurred cash losses during the current year as
also during the immediately preceding financial year. Reference file
under section 15(1) of sick Industrial Companies (special Provision)
Act, 1985 was registered as case no. 353/2004 vide letter No. 3
(T-22)/BC/2004 dated 30/11/2004 issued by Registrar, Board of
Industrial and Financial Reconstruction, New Delhi. The bench has
declared that the Company is a sick Industrial Company in terms of 3
(1) (O) of the Act w.e.f. 2.05.2006
11 Based on our audit procedures and on the basis of information and
explanations given by the management, the Company has defaulted in the
repayment of following dues to banks or financial institutions as at
balance sheet date:
S. Name of the Bank/Financial Amount of Default Default Continued
No. Institute (Rs. in Crores) since
1 State Bank of India* 113.26 30th April 04
2 Industrial Development
Bank of India 62.51 30th June 04
3 State Bank of India* 53.88 30th April 04
4 Canara Bank 23.75 30th April 04
5 State Bank of Saurashtra* 18.83 30th April 04
6 Ceat Financial Services Ltd. 0.26
Total 272.49
*Standard Chartered Bank has takeover account of State Bank of India
and State Bank of Saurashtra whereas Kotak Mahindra Bank Ltd. has taken
over account of Industrial Development Bank of India in financial year
2006-07 & 2007-08.
During the year, Asset Reconstruction Company India Ltd. (ARCIL) and
ASREC India Ltd. have takeover account of Standard Chartered Bank and
Kotak Mahindra Bank Ltd., Canara Bank respectively.
12 In our opinion and according to information and explanation given to
us, no loans and advances have been granted by the company on the basis
of security by way of pledge of shares, debentures and other security.
13 In our opinion the company is not a Chit Fund, Nidhi or Mutual
Benefit Fund/Society. Therefore, the provisions of clause 4(XIII) of
the CARO, 2003 are not applicable to the company.
14 The company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of
clause 4(xiv) of the order are not applicable.
15 In our opinion, the company has not given guarantees for loans taken
by others from banks and financial institutions during the year.
16 In our opinion and according to information and explanation given to
us, the Company has not availed of any term loans during the year.
17 According to the information and explanations given to us and on
examination of balance sheet, funds raised on short term basis have,
prima facie, not been used during the year for long term investment and
vice versa.
18 The company has not made any preferential allotment to parties and
companies covered under register maintained under Section 301 of the
Companies Act, 1956, during the year. The price at which the shares
have been issued is not prejudicial to the interest of the Company.
19 The Clause 13 of the order is not applicable, as the company has not
issued any debentures during the year.
20 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.
21 In our opinion and according to the information and explanations
given to us no fraud on or by the Company has been noticed or reported
during the year that causes the financial statements to be materially
misstated.
For B.BANSAL & CO.
Chartered Accountants
FRN: 000450C
RAJENDRA BANSAL
Place: Indore ( PARTNER )
Date: 30/05/2014 Membership No. 073533 | 