| We have audited the accompanying financial statements of Runeecha
Textiles Limited ("the Company"), which comprise the Balance Sheet as
at March 31, 2015, the Statement of Profit and Loss, the 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
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to 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 principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls
and ensuring their operating effectiveness and the accuracy and
completeness of the accounting records, 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 have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. 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 auditors' 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 financial control relevant to the Company's
preparation of the financial statements that give a true and fair view
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
whether the Company has in place an adequate internal financial
controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by the Company's Directors, 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 on the financial
statements.
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, of the state of affairs of the Company as
at 31st March, 2015, its loss and its cash flows for the year ended on
that date.
(a) We draw attention to Note 36 to the financial statements wherein,
in the opinion of the management, despite accumulated losses of the
Company having exceeded the net worth (excluding revaluation reserves),
minimal operations and defaults in payment of loans and interest
thereon, the financial statements have been prepared on a going concern
bas is in view of matters more fully explained in the said note.
(b) We draw attention to Note no. 39 of the financial statements,
wherein the management has explained reasons for disclosing optionally
convertible cumulative preference shares, which were overdue for
redemption and have been granted extension, as preference shares under
shareholders' funds.
Our report is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditors' Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Act, we give in the Annexure, a
statement on the matters specified in paragraphs 3 and 4 of the Order,
to the extent applicable.
(2) As required by Section 143(3) of the Act, we report that:
a. We have sought and 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 it 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 aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act read with
Rule 7 of the Companies (Accounts) Rules, 2014;
e. On the basis of written representations received from the directors
as on March 31, 2015, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2015 from being
appointed as a director in terms of Section 164 (2) of the Act;
f. With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 25 of the
financial statements in respect of contingent liabilities;
(ii) The Company did not have any long-term contracts including
derivative contracts hence, the question of any material foreseeable
losses does not arise;
(iii) There were no amounts which were required to be transferred to
the Investor Education and Protection Fund by the Company.
ANNEXURE TO INDEPENDENT AUDITORS' REPORT
[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory
Requirements' in the Independent Auditor's Report of even date to the
members of Runeecha Textiles Limited on the financial statements for
the year ended March 31, 2015]
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) During the year, the fixed assets of the Company have been
physically verified by the management and as informed, 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 the nature of its assets.
(ii) (a) The inventory has been physically verified by the management
during the year. In our opinion, the frequency of verification is
reasonable.
(b) The 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
informed, discrepancies noticed in physical verification during the
year have been properly dealt with in the books of account.
(iii) As informed, the Company has not granted any loans, secured or
unsecured to companies, firms or other parties covered in the register
maintained under Section 189 of the Act. Accordingly, the provisions
stated in paragraph 3 (iii)(a) and 3 (iii)(b) of the Order are not
applicable.
(iv) According to the information and explanations given to us, there
exists an adequate internal control system commensurate with the size
of the Company and nature of its business with regard to purchase of
fixed assets. In our opinion, the existing internal control system
needs to be further strengthened to be commensurate with the size of
the Company and the nature of its business with regard to purchase of
inventory and sale of goods. During the course of our audit, we have
observed continuing failure to correct major weakness in the internal
control system.
There are no transactions with respect to sale of services.
(v) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the provisions of Sections 73 to 76 of the Act and the rules
framed there under.
(vi) The Central Government of India has not prescribed the maintenance
of cost records for any of the business activities of the Company under
sub-section (1) of Section 148 of the Act and the rules framed there
under.
(vii) (a) The Company is not regular in depositing with appropriate
authorities, undisputed statutory dues including provident fund,
employees' state insurance, income tax, sales tax, wealth tax, service
tax, value added tax, customs duty, excise duty, cess and any other
material statutory dues applicable to it, and there have been serious
delays in a large number of cases.
According to the information and explanations given to us, undisputed
dues in respect of provident fund, employees' state insurance, income
tax, sales tax, wealth tax, service tax, value added tax, customs duty,
excise duty, cess and any other material statutory dues applicable to
it, which were outstanding, at the year-end for a period of more than
six months from the date they became payable are as follows:
Name of the Nature of Amount in Rs. Period to
statute the dues which the
amount relates
Income Tax Act, Income Tax 1,562,434 2010-11
1961
The Employees' Employee State 41,953 2014-15
State Insurance
Insurance Act,
1948
Employees Provident Fund 90,324 2014-15
Provident Funds
& Miscellaneous
Provisions Act,
1952
Name of the Due Date Date of
statute Payment
Income Tax Act, September Not paid
1961 30, 2011 till date
The Employees' Various dates Not paid
State till date
Insurance Act,
1948
Employees Various dates Not paid
Provident Funds till date
& Miscellaneous
Provisions Act,
1952
(b) According to the information and explanation given to us, there are
no dues with respect to income tax, sales tax, wealth tax, service tax,
value added tax, customs duty, excise duty, cess and any other material
statutory dues applicable to it, which have not been deposited on
account of any dispute.
(c) According to the information and explanations given to us, there
were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
(viii) In our opinion, the Company's accumulated losses at the end of
the financial year are more than fifty percent of its net worth.
Further, the Company has incurred cash losses during the current and
immediately preceding financial year.
(ix) According to the information and explanations given to us, the
Company has defaulted in repayment of its dues to banks. The
particulars of delays in repayment of dues (including interest) are as
follows:
Particulars Amount in Rs. Period
Term Loan/WCTL/FITL 126,355,982 Starting Dec 2013
(x) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions. Accordingly, the provisions stated in
paragraph 3(x) of the Order are not applicable to the Company.
(xi) According to the information and explanations given to us, the
term loans have been applied for the purpose for which the loans were
obtained.
(xii) During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of any such instance by the management.
For Haribhakti & Co. LLP
Chartered Accountants
ICAI Firm Registration No.103523W
Sd/-
Raj Kumar Agarwal Partner
Membership No. 074715
Date: 30.06.2015
Place: New Delhi
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