| 1. Report on the Financial Statements
We have audited the accompanying financial statements of Duncans
Industries Limited ("the Company"), which comprise the Balance Sheet as
at September 30, 2014, the Statement of Profit and Loss, the Cash Flow
Statement, significant accounting policies and other notes thereon for
the year ended on that date.
2. 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') 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.
3. 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 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 qualified audit opinion.
4. Basis for Qualified Opinion
(I) Attention is invited to the following notes to the financial
statements:
a) Note 10 (a) (i) and 10(b)(i) regarding shortfall in value of loans
and advances given to certain companies;
b) Note 19(i) regarding non ascertainment of impact of wage revision
pending negotiations thereof;
c) Note 26 regarding non-provision of Rs. 811.67 lacs demanded by the
appropriate authorities as 'Salami' on renewal of lease in certain
circumstances;
d) Note 27 regarding payment of managerial remuneration amounting to
Rs.719.30 lacs (including Rs.196.68 lacs for the year) which is subject
to approval of the Central Government;
e) Note 28 regarding certain debit and credit balances including
advances, trade receivables, trade payables and other liabilities which
are subject to confirmation and reconciliation thereof;
(II) Impacts with respect to Para a) to e) above are presently not
ascertainable and as such cannot be commented upon by us.
5. Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the
matters described 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 30th September, 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.
6. Emphasis of Matter
Without qualifying our opinion on this matter, we draw attention to
Note 24 (a) to the financial statements which indicate that inspite of
the Company's networth becoming negative, the accounts have been
prepared on going concern basis. The Company's ability to continue as a
going concern is dependent upon the outcome of the measures as per BIFR
scheme under implementation and other ameliorative steps and prospects
thereof and as such, we are unable to comment on the same.
7. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditors' Report) Order, 2003 as amended
by the Companies (Auditors' Report) (Amendment) Order, 2004 ('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.
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 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 possible effects of the matters described in Para
4(I)(b) above under Basis for Qualified Opinion paragraph (Note 19(i)
of the financial statements), in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement comply with the
Accounting Standards referred to in Section 211 (3C) of 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; and
e. As per the legal opinion received and on the basis of written
representations received from the directors as on September 30, 2014,
and taken on record by the Board of Directors, none of the directors is
disqualified as on September 30, 2014, from being appointed as a
director in terms of clause (g) of sub-section (1) of section 274 of
the Act.
ANNEXURE TO THE AUDITORS' REPORT REFERRED TO IN PARAGRAPH 6 THEREOF
i) a) The Company has maintained proper records to show full
particulars including quantitative details and situation of its fixed
assets.
b) All the fixed assets have not been verified by the management during
the year but according to the information and explanations given to us,
there is a regular programme of verification which, in our opinion, is
reasonable having regard to the size and the nature of its assets. In
respect of assets verified during the year, no material discrepancies
have been noticed.
c) In our opinion, during the year, the company has not disposed off
substantial part of its fixed assets.
ii) a) The inventory, as explained to us, has been physically verified
during the year by the management in a phased manner. Necessary
confirmations with respect to year end stock lying with third parties
was not available. In respect of certain materials stored in heaps such
verification has been done on the basis of visual estimation / survey
and/ or volumetric measurement technique.
b) In our opinion, read together with Para (ii) (a) above, the
procedure of physical verification of inventory followed by the
management are reasonable and adequate in relation to the size of the
Company and nature of its business.
c) In our opinion, the company has maintained proper records of its
inventory and as explained to us, the discrepancies observed on such
verification between the physical stock and the book records were not
material.
iii) a) During the year, the Company has not granted any loan secured
or unsecured to any company, firm or other party covered in the
Register maintained under Section 301 of the Act. In respect of
unsecured loan given in earlier years (Note 10(b) (i) to the financial
statements), recoverable from a company covered in the register
maintained under Section 301 of the Act, the aggregate maximum amount
involved and the year end balance was Rs.1685 lacs.
b) The aforesaid loan as stated in Note 10(b) (i) to the financial
statements is repayable to the Company by March, 2015 and is interest
free and having regard to the explanations given by the management of
the same being strategic in nature, the terms and conditions of the
said loan is prima facie not prejudicial to the interest of the
Company.
c) As stated above, the aforesaid loan is repayable to the Company by
March, 2015. During the year, the Company has not received any amount
in this respect.
d) Having regard to Para (c) above, there is no overdue amount of loan
and accordingly clause 4 (iii) (d) is not applicable to the company.
e) The Company, during the year has not taken any loan secured or
unsecured from companies, firms or other parties covered in the
register maintained under section 301 of the Act. Accordingly, clause 4
(iii) (e) to (g) of the order are not applicable to the company.
iv) In our opinion, and having regard to the nature and exigencies of
business and the practices followed and the explanation that certain
items purchased are of a special nature and therefore in certain cases
alternative quotations are not available, there is an adequate internal
control procedure commensurate with the size of the Company and nature
of its business with regard to purchase of inventory, fixed assets and
with regard to sale of goods. During the course of our audit, we have
not observed any continuing failure to correct the major weaknesses in
internal controls.
v) According to information and explanation given to us and as per the
records of the company, there is no transaction that needs to be
entered, in the Register maintained under Section 301 of the Act.
Accordingly, the provisions of the clause 4 (v) (b) of the said order
is not applicable to the Company.
vi) The Company has not accepted any deposits from public during the
year within the meaning of the provisions of the section 58A, 58AA or
any other relevant provision of the Act and rules made thereunder.
Deposits accepted in the earlier years have been repaid in terms of the
scheme sanctioned by Board for Industrial and Financial Reconstruction
(BIFR) and to the extent lying unclaimed has been kept deposited in a
separate bank account.
vii) The Company's internal audit has been conducted by independent
consultants as per the phased programme of verification. Internal audit
reports with respect to areas covered till 31st March, 2014 were
received and the same was in progress for the remaining period. In our
opinion the internal audit system in respect of the areas covered is
commensurate with the size and nature of the business of the Company.
viii) On the basis of records produced, we are of the opinion that
prima facie the cost records and accounts prescribed by the Central
Government under Section 209(1) (d) of the Act have been maintained.
However, we have not carried out any detailed examination of such
records with a view to determine whether they are accurate or complete.
ix) a) According to the information and explanations given to us,
undisputed dues with respect to provident/pension fund (including
interest thereon), tax deducted at source (including interest thereon),
service tax, works contract tax, professional tax, cess and other
statutory payables, as applicable, were not deposited regularly with
appropriate authorities. The details of material statutory dues
outstanding for a period exceeding six months as provided for in the
accounts are given below:
Statute Nature of Dues Amount (Rs.
in Lacs)
The Income Tax Act, Tax Deducted at Source 565.58
1961 (including interest) Tax
collected at source 5.35
West Bengal Rural Cess on Green Leaf 219.04
Employment &
Production Act, 1976
The Employee's Contribution to Provident 2041.89
Provident Funds and and Pension Fund
Miscellaneous Provisions
Act, 1952 Interest on Provident and 705.19
Pension Fund
Employees' Contribution to 88.73
Provident Fund
West Bengal State Professional Tax 0.39
Tax On Professions,
Trades, Callings And
Employments Act, 1979
West Bengal Value Works Contract Tax 3.76
Added Tax Act,
2003
West Bengal Value Purchase Tax 3.25
Added Tax Act, 2003
Service Tax Service tax 3.43
Statute Period to which the amount
relates to
The Income Tax Act, 2011-14
1961
2013-14
West Bengal Rural 2001-06 and 2011-12
Employment &
Production Act, 1976
The Employee's 2010-13 (including Rs. 1908.62
Provident Funds lacs in respect of which instalment
Miscellaneous Provisions facility has been granted (Refer
Act, 1952 Note 25)
2004-14
2013-14
West Bengal State 2013-14
Tax On Professions,
Trades, Callings And
Employments Act, 1979
West Bengal Value 2010-14
Added Tax Act,
2003
West Bengal Value 2004-14
Added Tax Act, 2003
Service Tax 2013-14
b) According to the information and explanations given to us, there are
no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty,
Service Tax and Cess which have not been deposited on account of any
dispute except as given below:
Statute Nature of Tax Forum where Amount
Dispute is Pending (Rs. in
Lacs)
The Income Tax Income Tax High Court CIT 47.32
Act, 1961
(Appeals) 41.51
The Central Sales Central
Sales Tax ACCT 2.41
Tax Act, 1956
The West Bengal Sales Tax ACCT 12.16
Sales Tax Act,
1994
The West Bengal VAT WBTT 15.77
Value Added Tax, WBCT 8.84
2003 Additional 21.86
Commissioner
Statute Period to which
amount relates
The Income Tax 1976-78 &2005-07
Act, 1961
The Central Sales
2004-05
Tax Act, 1956
The West Bengal 1996-98, 2001-02,
Sales Tax Act, 2003-05
1994
The West Bengal 2007-08
Value Added Tax, 2008-09
2003 2010-12
x) The accumulated losses of the Company as at the end of the financial
year are more than 50 percent of its net worth. The Company has
incurred cash losses during the financial year and in the immediately
preceding financial year covered by our audit.
xi) In our opinion and on the basis of information and explanations
provided by the management, except as given in Note 4(a) and (b) (iv)
of the financial statements, the Company has not defaulted in repayment
of dues, if any, to financial institutions, banks and debenture
holders.
xii) The Company has not granted any loan and advances on the basis of
security by way of pledge of shares, debentures and other security.
xiii) In our opinion, the Company is not a chit fund or nidhi / mutual
benefit fund / society. Therefore, the provisions of the clause 4
(xiii) of the said order 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
provision of clause 4 (xiv) of the Order is not applicable to the
Company.
xv) The Company has not given any guarantee during the year for loan
taken by others. The guarantee of Rs. 830 lacs given in earlier years
to group/associate companies in respect of loans taken by them from
bank, considering the long term involvement with those companies when
issued, was not prima facie prejudicial to the interest of the Company.
xvi) As per the information and explanations given to us, no fresh term
loan has been taken during the year.
xvii) According to the information and explanation given to us, on an
overall examination of the Balance Sheet of the Company, we report that
funds amounting to Rs.15,572.98 lacs raised on short-term basis have
been used for long term investment, i.e. for fixed assets, funding the
losses etc of the Company.
xviii) The Company has made preferential allotment of shares at par to
companies covered in the Register maintained under Section 301 of the
Act during the year. Considering the terms of rehabilitation sanctioned
by BIFR, the price at which the shares have been issued is not
prejudicial to the interest of the Company.
xix) The Company has not issued any secured debentures during the year.
Accordingly, clause 4 (xix) of the order is not applicable to the
company.
xx) The Company has not raised any money through a public issue during
the year.
xxi) During the course of our examination of books and records of the
Company carried out in accordance with generally accepted auditing
practices in India, we have neither come across any instances of fraud
on or by the Company, noticed and/or reported during the year, nor have
we been informed of any such case by the management.
For Lodha & Co.
Chartered Accountants
Firm ICAI Registration No: 301051E
R.P.Singh
Place: Kolkata Partner
Date: 18th November, 2014 Membership No. 52438 |