| We have audited the accompanying financial statements of THE WESTERN
INDIA COTTONS LIMITED, PAPPINISSERI ("the Company"), which comprise the
Balance Sheet as at 31st March, 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 and cash flows 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"). 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
1. The impairment loss, if any, in respect of assets has not been
assessed and adjusted in the accounts as required in the Accounting
Standard, 'AS 28-Impairment of Assets'.
2. Confirmation in respect of balances outstanding under trade
receivables, advances and liabilities has not been obtained.
Qualified Opinion
In our opinion, and to the best of our information and according to the
explanations given to us, except for the effects of the matters stated
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 31st March, 2014;
(b) in the case of the Statement of Profit and Loss, of the profit 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.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' 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 Companies Act, 1956, 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, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. Except for the effects of the matters stated in the Basis for
Qualified Opinion paragraph, in our opinion, the Balance Sheet,
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 Companies Act, 1956;
e. On the basis of written representations received from the directors
as on 31st March 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March 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 44IA 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.
Referred to in our report of 19 August, 2014
(i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets. But, the records have not been updated.
(b) The fixed assets have been physically verified by the management
during the year and no material discrepancies were noticed on such
verification.
(c) The company has not disposed of a substantial part of the fixed
assets during the year.
(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 laid down by the management for physical
verification of inventory 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. The
discrepancies noticed on physical verification of stocks as compared to
book records were not material and have been properly dealt with in the
books of account.
(iii) (a) 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 Companies Act, 1956.
(b) The company has taken unsecured loan from a director. The maximum
amount of the loan during the year was Rs.24 lakh and the year-end
balance was Rs. 19 lakh. The company has not taken any loans, secured
or unsecured, from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
(c) No interest is charged on the loan taken from the director. In our
opinion, the other terms and conditions on which the loan has been
taken from the director are not, prima facie, prejudicial to the
interest of the company.
(d) The principal amount of the loan taken from the director was partly
repaid by the company during the year.
(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 purchases of inventory, fixed assets and with
regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weaknesses in internal controls.
(v) (a) According to the information and explanations given to us,
there were no contracts or arrangements referred to in section 301 of
the Companies Act, 1956 to be entered in the register required to be
maintained under that section.
(b) The company did not have any transaction exceeding the value of
five lakh rupees with any party in pursuance of contracts or
arrangements to be entered in the register maintained under section 301
of the Companies Act, 1956.
(vi) The company has not accepted deposits from the public.
(vii) In our opinion, the company has an internal audit system
commensurate with the size and nature of its business.
(viii) The Companies (Cost Accounting Records) Rules, 2011 prescribed
by the Central Government under section 209(1)(d) of the Companies Act,
1956 are not applicable to the company. The company was not, therefore,
required to maintain cost records.
(ix) (a) The company was regular in depositing with the appropriate
authorities undisputed statutory dues including provident fund, income
tax, sales tax, service tax and other statutory dues during the year.
There was delay in remittance of employees' state insurance dues.
According to the information and explanations given to us, no
undisputed amounts payable in respect of statutory dues were in
arrears, as at 31 March, 2014 for a period of more than six months from
the date they became payable other than employees' state insurance
amounting to Rs.97,335/-.
(b) According to the information and explanation given to us, the
following disputed amount of incometax was not deposited with the
appropriate authority as at 31 March, 2014:
Nature of statute : Incometax
Nature of dues : Incometax and interest
Amount : Rs. 1,23,48,110/-
Period for which the amount relates : 2010-'11
(Assessment year 2011-'12)
Forum where dispute is pending : Commissioner of Incometax
(Appeals), Kozhikode
There are no dues of salestax, wealthtax, service tax, customs duty and
excise duty which have not been deposited on account of dispute.
(x) The accumulated losses of the company are more than fifty percent
of its net worth as at 31 March, 2014. The company has not incurred
cash losses in the financial year and in the immediately preceding
financial year.
(xi) The company has not defaulted in repayment of dues to any
financial institution or bank. The company has not issued debentures.
(xii) 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, the company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor's Report) Order, 2003 are not
applicable to the company.
(xiv) In our opinion, the company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor's Report) Order,
2003 are not applicable to the company.
(xv) According to the information and explanations given to us the
company has not given guarantees for loans taken by others from banks
or financial institutions.
(xvi) According to the information and explanations given to us, the
company has not raised any term loan during the year.
(xvii) According to 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.
(xviii) According to the information and explanations given to us, the
company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Act.
(xix) According to the information and explanations given to us, the
company has not issued any debentures during the period covered by our
audit report.
(xx) The company has not raised any money by public issues during the
period covered by our audit report.
(xxi) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For T.K. Menon & Co.,
Chartered Accountants.
Firm Regn. No: 002067S
P.Balagopal
Partner
Membership No.022290 | 