| Report on the Financial Statements
We have audited the accompanying financial statements of Rainbow Denim
Ltd which comprise the Balance Sheet as at 31st March 2015, the
Statement of Profit & 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 Management is responsible for the maters 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 the maintenance of adequate
accounting records in accordance with the provision of the Act for
safeguarding of the assets of the Company and for preventing and
detecting the 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 internal financial control, that were operating
effectively for ensuring 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 provision of the Act, the accounting and
auditing standards and matters which are required to be included in the
audit report under the provision 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 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 financial control relevant to the Company's
preparation of the financial statements that give true and fair view 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 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
statement.
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,
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2015;
(b) in the case of the Statement of Profit & 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 33 of the accompanying financial statements
in respect of Company's ability to continue as a going concern. Our
opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 issued
by the Central Government of India in terms of section 143 (11) of the
Companies Act, 2013, we give in the Annexure a statement on the matters
specified in the said order.
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
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, Statement of Profit & 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 standalone 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 31st March, 2015 taken on record by the Board of Directors, we
report that none of the directors is disqualified as on 31st March,
2015 from being appointed as a director in terms of Section 164 (2) of
the Act.
f. To our best of information and according to the explanations given
to us:
i) The Company did not have any long term contracts including
derivatives contract for which there were any material foreseeable
losses.
ii) The Company did not have any pending litigations which would have
impact its financial position in its financial statements.
iii) There were no amounts which were required to be transferred to
Investor Education & Protection Fund by the Company.
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT
The annexure referred to our Report of even date to the members of
Rainbow Denim Ltd on the financial statements for the year ended 31st
March 2015. We report that:
1. In respect of its Fixed assets:
a) The Company has maintained proper records showing full particulars
including quantitative details and situations of fixed assets on the
basis of available information;
b) Management has certified that they have carried out physical
verification of fixed assets and no material discrepancy was noticed on
such verification.
2. In respect of its inventories:
a) The inventories have been physically verified by the management
during the year. In our opinion, the frequency of verification is
reasonable.
b) In our opinion, the procedures of physical verification of stocks
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. No material
discrepancies have been noticed on physical verification of stocks as
compared to book records in so far as it appears from our examination
of the books.
3. According to the information and explanations given to us, the
company has not granted any loans, secured or unsecured to any
companies, firms or other parties covered in the register maintained
under section 189 of the Companies Act, 2013. Accordingly sub clause
(a) and (b) are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and nature of its business with regard to
purchase of inventory, fixed assets and for sale of goods and services.
During the course of our audit, no major weakness has been noticed in
the internal controls.
5. According to the information and explanation given to us, the
company has not accepted any deposits u/s 73 to 76 or any other
relevant provisions of the Companies Act, 2013 during the year.
6. We have broadly reviewed the books of accounts maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 148 (1) of the Companies Act,
2013 in respect of the Company's Products to which the said rules are
made applicable, and are of the opinion that prima facie, the
prescribed accounts have been made and maintained. We have, however not
made a detailed examination of the records with a view to determine
whether they are accurate.
7. a) According to the records of the Company, there were no
undisputed amounts payable in respect of Provident Fund, Investor
Education and Protection Fund, Employee's State Insurance, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, value
added tax, Cess and any other statutory dues with appropriate
authorities outstanding as on 31st March, 2015, for a period of more
than six months from the date they became payable.
b) According to the records of the Company and information and
explanations given to us there are no dues of sales tax, income tax,
wealth tax, service tax, custom duty, excise duty, value added tax,
cess on account of any disputes.
c) There was no amount required to be transferred to investor education
and protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules made thereunder.
8. In our opinion, the accumulated losses of the company are more than
fifty percent of its net worth. During the year company has incurred
cash loss of Rs. 84,016,930/- and in the immediately preceding
financial year it has incurred cash loss of Rs. 192,223,318/-.
9. On the basis of our examination of the books and according to the
information and explanation given to us, we are of the opinion that the
company has defaulted in repayment of dues including interest &LC
devolvement, amounting to Rs. 24,47,86,116/- (P.Y. Rs.22,39,29,953/-),
to financial institutions and banks as below:
Name of lender Principal Interest
Amount Due Since Amount Due Since
IDBI Bank Limited 7,59,62,178 October,
2012 7,83,22,234 January,
2013
Dena Bank 2,10,20,472 April,
2013 2,98,56,741 February,
2013
Dena Bank -
Devolved LCs 3,96,24,491 January,
2013
Total 13,66,07,141 10,81,78,975
10. According to the information and explanations given to us, and the
representations made by the management, the Company has not given any
guarantee for loans taken by others from any bank or financial
institution.
11. In our opinion and on the basis of information and explanations
given to us, term loans availed by the Company were, prima facie,
applied by the Company for the purpose for which the loans were
obtained.
12. According to the information and explanations given to us, and to
the best of our knowledge and belief no fraud on or by the Company has
been noticed or reported during the year.
For Dayal and Lohia
Chartered Accountants
(Firm Registration No.102200W)
(S.V. Thomas)
Place : Mumbai. Partner
Date : 29th May, 2015 Membership No.125944 | 