| We have audited the accompanying financial statements of Kanco
Enterprises Limited (the "Company"), which comprise the Balance Sheet
as at September 30, 2014, and the Statement of Profit and Loss and Cash
How Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information, which we have
signed under reference to this report.
Management's Responsibility for the Financial Statements
The Company's 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 notified under the Companies
Act, 1956 of India (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.
Auditors'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 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 auditors
consider 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.
Qualified Opinion
We report the following observations:
(a) As referred to in note no. 24(2) (a) (I) (b) of financial
statements, during the year ended September 30, 2012, the Company has
not accounted for Foreign Exchange loss oft 11,78,81,338/- arising out
of Cancellation of Forward Contract and disclosed the same as
contingent liability On account of this, accumulated loss as at
September 30, 2014 is lower by the said amount. The loss above does not
include interest, if any.
(b) Interest on Loan accounts with State Bank of India has been debited
in the accounts as per last agreed rate. We have been explained that
the Company has no information about any change in the rate of
interest, so impact, if any, of the same in statement of profit and
loss and Reserve and Surplus is not determinable.
Subject to Above,
In our opinion, and to the best of our information and according to the
explanations given to us, the accompanying 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 September 30, 2014;
b in the case of the Statement of Profit and Loss, of the loss 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.
Emphasis of Matter
We draw attention to Note 24 (2) (j) in the financial statements which
indicates that the Company incurred a net loss of Rs. 76,31,01,034/- as
on year ended September 30, 2014. These conditions, along with other
matters as set forth in
Note 24 (2) (), indicate the existence of a material uncertainty that
may cast significant doubt about the Company's ability to continue as a
going concern.
Report on Other Legal and Regulatory Requirements
As required by 'the Companies (Auditor's Report) Order, 2003', as
amended by 'the Companies (Auditor's Report) (Amendment) Order, 2004',
issued by the Central Government of India in terms of sub-section (4A)
of Section 227 of the Act (hereinafter referred to as the "Order"), and
on the basis of such checks of the books and records of the Company as
we considered appropriate and according to the information and
explanations given to us, we give in the Annexurea statement on the
matters specified in paragraphs 4 and 5 of the Order.
TO THE MEMBERS OF KANCO ENTERPRISES LIMITED
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
(b) lifssfontoner Vote Taccol as required by law have been kept by
the Company so far as appears
(c) The and Loss and Cash Flow Statement dealt with by this Report are
in
ANNEXURE TO AUDITORS'REPORT
Referred to in Annexure referred to in paragraph 1 under the heading
"Report on other legal and regulatory Eaterprises non -financial
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and
(c) In TurllptnK and explanations given to us, a substantial part of
fixed assets has not been disposed of by the Company during the year.
ii. (a) The inventory has been physically verified by the Management
during the year. In our opinion, the frequency
(b) In our'opfnion, 'fh^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.
iii. (a) Companias To granted any loans, secured or unsecured, to
companies, firms or other parties covered he Acl cosequen Clause ,Nil
b)'(iii) ,c) and T,d)
(c) She rate of interest and other terms and conditions of such
loans are not primafacie prejudicial
(d) In replace of\he afoSsaifflns, the Company is regular in repaying
the principal amounts as stipulated and is also regular in payment of
interest, wherever applicable. records of the Company, and according
to the information and explanations given to us, we have neither come
across nor have been informed of any continuing failure to correct
major weaknesses in the aforesaid internal
v. (a) In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in Section 301 of the Act have been entered in the register required to
be maintained under that section. (b) In our opinion and according to
the information and explanations given to us, the transactions made in
pursuance of contracts or arrangements and exceeding the value of Rs.
Five Lakhs in respect of any party during the year have been made at
prices which are reasonable having regard to prevailing market prices
at that time
vi. The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
there under.
vii. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
viii. We have broadly reviewed the Books of Account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the
Act, and are of the opinion that, prima-facie, the prescribed accounts
and records have been made and maintained. We have not, however, made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
ix. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing undisputed statutory dues including investor
education and protection fund, employees' state insurance, income-tax,
wealth tax, service tax, customs duty, excise duty and other material
statutory dues as applicable, with the appropriate authorities.
According to the information and explanations given to us, there are no
statutory dues outstanding as at September 30, 2014 for a period of
more than six months from the date they became payable. (b) According
to the information and explanations given to us and the records of the
Company examined by us, there are no dues of income-tax, sales tax,
wealth-tax, service tax, customs duty, excise duty and cess which have
not been deposited on account of any dispute.
x. The Company's accumulated losses at the end of the year are more
than fifty percent of its net worth. The Company has incurred cash
losses during the current year and in the immediately preceding
financial year.
xi. According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of dues to any financial institution or debenture holders
as at the balance sheet date. However, Company has defaulted in
repayment of dues to bank as detailed below:_
Particulars Outstanding Period of Default Amount of
as on September 30, Default
Since 2014 (In days) Loan (Rs.)
IDBI - Rupee Loan Oct-11 1,096 54,00,000
Jan-12 1,004 54,00,000
Apr-12 913 54,00,000
Jul-12 822 54,00,000
Oct-12 730 54,00,000
Jan-13 638 54,00,000
Apr-13 548 68,02,500
Jul-13 457 68,02,500
Oct-13 365 68,02,500
Jan-14 273 68,02,500
Apr-14 183 68,02,500
Jul-14 92 68,02,500
SBI - Rupee Loan Sep-11 1,097 26,50,000
Dec-11 1,005 37,50,000
Mar-12 914 37,50,000
Jun-12 823 42,50,000
Sep-12 731 42,50,000
Dec-12 639 42,50,000
Mar-13 549 42,50,000
Jun-13 458 45,00,000
Sep-13 366 45,00,000
Dec-13 274 45,00,000
Mar-14 184 45,00,000
Jun-14 93 50,00,000
Sep-14 1 50,00,000
S.B.I. Corporate Sep-11 1,097 30,00,000
Loan Dec-11 1,005 30,00,000
Mar-12 914 30,00,000
Jun-12 823 30,00,000
Sep-12 731 30,00,000
Dec-12 639 30.00.000
Mar-13 549 30,00,000
S.B.I.-Rupee Sep-12 731 15,00,000
Loan (FITL) Dec-12 639 20,00,000
Mar-13 549 20,00,000
Jun-13 458 20,00,000
Sep-13 366 20,00,000
Dec-13 274 20,00,000
Mar-14 184 20,00,000
Jun-14 93 22,50,000
Sep-14 1 22,50,000
I.D.B.I. Line Of Aug-11 1,157 50,00,000
Credit Sep-11 1,126 50,00,000
I.D.B.I. Rupee Term Loan Aug-11 1,157 16,70,000
Wctl Sep-11 1,126 16,10,000
xii. The Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
xiii. The provisions of any special statute applicable to chit fund /
nidhi / mutual benefit fund/ societies are not applicable to the
Company.
xiv. In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments. xv. In our opinion and
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 during the year.
xvi. The Company has not received any term loans during the year.
xvii. On the basis of an overall examination of the balance sheet of
the Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis which have been used for long-term investment.
xviii. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
xix. The Company has not issued debentures during the year.
xx. The Company has not raised any money by public issues during the
year.
xxi. 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 such case by the Management.
For B.R. SHAH & ASSOCIATES
Firm Registration No. 129053W
Chartered Accountants
DEVAL R. DESAI
Place : Ahmedabad Partner
Date : November 29, 2014 Membership No. 132426
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