| Report on the Financial Statements
We were engaged to audit the accompanying financial statements of UT
LIMITED ("the Company"), which comprise the Balance Sheet as at 31
March , 2013, the Statement of Profit and Loss and the Cash Flow
Statement for the six months then ended, and a summary of the
significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The 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 Section 211(3C) of the
Companies Act, 1956 ("the Act") and in accordance with the accounting
principles generally accepted in India. 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 in accordance with the Standards on
Auditing issued by the Institute of Chartered Accountants of India.
However, because of the significance of the matters described in
Paragraphs 1 and in view of the matter described in Paragraph 2 of the
Basis for Disclaimer of Opinion below, we were not able to obtain
sufficient appropriate audit evidence to provide a basis for an audit
opinion.
Basis for Disclaimer of Opinion
1. (i) Attention is invited to Note 3 of the financial statements
regarding preparation of the financial statements of
the Company on a going concern basis notwithstanding the fact that the
Company has been incurring cash losses, its net worth has been fully
eroded as on the Balance Sheet date and its current liabilities far
exceed the current assets as on that date. Further, banks and financial
institution have declared the Company as a Non Performing Asset, taken
possession of certain immoveable properties, referred it to the Debt
Recovery Tribunal and filed multiple suits for recovery of dues.
Moreover, the Company was unable to honor the Settlement Scheme given
by the Sales Tax Authorities for payment of Sales Tax arrears.
(ii) As indicated in Note 4 of the financial statements, the Company's
Hosur unit is under suspension of work since 24 July 2012; as a result
the physical verification of fixed assets (period end book value of Rs
1,31,25 thousands) and inventories (period end book value of Rs.1,49,11
thousands) was not carried out by the management. Material
discrepancies, if any, between physical verification and book records
of fixed assets and inventories is thus, not ascertainable at this
stage.
(iii) Subsequent to 31 March 2013, the Company had to close down its
Budge Budge factory on a number of occasions due to various reasons
adversely affecting production and sales. Moreover, as indicated in
paragraph (ii) above, we were unable to witness physical verification
of inventories at the Hosur factory. As a result, we are unable to
comment on the existence or reliability of the value of inventories
as at 31 March, 2013 and, consequently, on the extent of write down
that may be required.
The situations described above indicate that there are multiple
material uncertainties for the Company to continue as a going concern
and, consequently, the ability of the Company to realise its assets and
discharge its liabilities in the normal course of its business. In the
absence of sufficient audit evidence to support the preparation of the
financial statements on a going concern basis we are unable to form an
opinion in the matter.
2. The Company has not provided interest on loan from a body corporate
for the six months period ended 31 March, 2013. Interest not provided
by the Company on such loan (based on the loan agreement) amounts to
Rs.20,58 thousands and interest charged in previous year amounting to
Rs.18,10 thousands has been written back and shown under 'Liabilities
no longer required written back' in Note 22 of the financial
statements. Had the Company provided the interest on loan as per the
agreement, Finance Cost would have been Rs.5,13,21 thousands as against
the reported figure of Rs.4,92,63 thousands, Other Income would have
been Rs.32,81 thousands as against the reported figure of Rs.50,91
thousands, Loss before tax would have been Rs.13,17,01 thousands as
against the reported figure of Rs.12,78,33 thousands, Loss after tax
would have been Rs. 13,04,18 thousands as against the reported figure
of Rs. 12,65,50 thousands and Reserve and surplus would have been
negative Rs.70,05,52 thousands as against the reported figure of
negative Rs.69,66,84 thousands. We have not been provided with any
documentary audit evidence to support the non-provision and write back
of the interest on the said loan.
3. We draw attention to Note 34.1 of the financial statements regarding
Central Government's approval, which is still awaited, for the
appointment and remuneration of the Whole Time Director. Remuneration
paid/ payable for the six months ended 31 March, 2013 amounts to
Rs.1,61 thousands.
Disclaimer of Opinion
Because of the significance of the matters described in Paragraph 1 and
in view of the matter described in Paragraph 2 of the Basis for
Disclaimer of Opinion above, we have not been able to obtain sufficient
appropriate audit evidence to provide a basis for an audit opinion.
Accordingly, we do not express an opinion on the aforesaid financial
statements.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2003 ("the
Order") issued by the Central Government in terms of Section 227(4A) 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 Act, we report that:
(a) As described in the Basis for Disclaimer of Opinion paragraphs
above, we were unable to obtain all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
(b) Due to the possible effects of the matters described in the Basis
for Disclaimer of Opinion paragraphs above, we are unable to state
whether 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) Due to the possible effects of the matters described in the Basis
for Disclaimer of Opinion paragraphs above, we are unable to state
whether the Balance Sheet, the Statement of Profit and Loss and the
Cash Flow Statement comply with the Accounting Standards referred to in
Section 211(3C) of the Act.
(e) On the basis of the written representations received from the
directors as on 31 March, 2013 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March, 2013
from being appointed as a director in terms of Section 274(1)(g) of the
Act.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory
Requirements' section of our report of even date)
(i) Having regard to the nature of the Company's
business/activities/result clauses (vi), (xii), (xiii), (xiv), (xv),
(xviii), (xix) and (xx) are not applicable to the Company.
(ii) In respect of its fixed assets (excluding the fixed assets having
period end book value of Rs 1,31,25 thousands at the Company's Hosur
Unit, which is under suspension of work since 24th July 2012 (as
indicated in Note 4 of the Financial Statements), and on which we are,
therefore, unable to comment):
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the period by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. Pursuant to such programme and
according to the information and explanations given to us, no material
discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the period, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company. However, attention is invited to our comments on
the matters described in paragraph 1 under 'Basis for Disclaimer of
Opinion' of the Independent Auditors' Report.
(iii) In respect of its inventories (excluding inventories having a
period end book value of Rs.1,49,11 thousands pertaining to the
Company's Hosur Unit which is under suspension for wok as stated in
(ii) above, and on which we are , therefore, unable to comment):
(a) As explained to us, the inventories, were physically verified
during the period by the Management at reasonable intervals.
(b) In our opinion and according to the information and explanation
given to us, the procedures of physical verification of inventories
followed by the Management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification.
(iv) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties listed in the Register maintained
under Section 301 of the Companies Act, 1956.
In respect of loans, secured or unsecured, taken by the Company from
companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act, 1956, according to the
information and explanations given to us:
(a) The Company has taken loans aggregating Rs. 23,50 thousands from
two parties during the year. At the period-end, the outstanding balance
of such loans taken aggregated Rs. 2,25,73 thousands and the maximum
amount involved during the year was Rs. 2,25,73 thousands (number of
parties - three).
(b) The rate of interest (where applicable) and other terms and
conditions of such loans are, in our opinion, prima facie, not
prejudicial to the interests of the Company.
(c) The payments of principal amounts and interest (where applicable)
in respect of such loans are regular/as per stipulations.
(v) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchases of inventory and fixed assets and the sale of goods and
services. During the course of our audit, we have not observed any
major weakness in such internal control system.
(vi) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs.5 lakhs in
respect of any party, the transactions have been made at prices which
are, prima facie, reasonable having regard to the prevailing market
prices at the relevant time.
(vii) In our opinion, the internal audit functions carried out during
the period by a firm of Chartered Accountants appointed by the
Management have been commensurate with the size of the Company and the
nature of its business.
(viii) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
(ix) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has not been regular in depositing undisputed statutory
dues, including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, Cess and other material statutory dues
applicable to it with the appropriate authorities, and there have been
serious delays (see (b) below) in several cases in respect of Provident
Fund, Employees' State Insurance, Sales Tax, Service Tax, Entry Tax,
and Municipal Taxes.
(b) The undisputed amounts payable in respect of Provident Fund,
Investor Education and Protection Fund, Employees' State Insurance,
Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise
Duty, Cess and other material statutory dues in arrears as at 31st
March, 2013 for a period of more than six months from the date they
became payable are as follows:
Name of statute Nature of Amount Period
dues (Rs. in '000)
Central Sales Tax Act, 1956 Sales Tax 28,57 2008-09
2,41 2011-12
55,03 2012-13
Mahestala Municipality Municipal 93 2003-04
Corporation Taxes
2,26 2004-05
2,04 2005-06
2,26 2006-07
2,26 2007-08
2,26 2008-09
2,26 2009-10
2,26 2010-11
2,26 2011-12
Finance Act, 1994 Service Tax 22,80 2011-12
13,23 2012-13
Employees Provident Provident Fund 8,08 2012-13
Fund Act, 1952
Employees' State Employees'
State 70 2012-13
Insurance Act, 1948 Insurance
West Bengal Tax on Entry Tax 675 2012-13
Entry of Goods into
Local Areas Act, 2012 *
Name of Status Due Date Date of
payment
Central Sales Tax Act, 1956 Various dates upto 31-03-09 Not paid
Various dates upto 31-03-12 Not paid
Various dates upto 31-03-13 Not paid
Mahestala Muncipality 31-01-05 Not paid
Corporation
31-01-06 Not paid
31-01-07 Not paid
31-01-08 Not paid
31-01-09 Not paid
31-01-10 Not paid
31-01-11 Not paid
31-01-12 Not paid
31-01-13 Not paid
Financial Act, 1994 Various dates upto 31-03-12 Not paid
Various dates upto 31-03-13 Not paid
Employees Provident Fund Act, Various dates upto 30-09-12 Not paid
1952
Employees State Insurance Various dates upto 30-09-12 Not paid
Act 1948
west bengal Tax on Entry of Various dates upto 30-09-12 Not paid
goods in to Local Areaa
Act, 2012
* The above has been held unconstitutional by the Calcutta High Court
on 24th June 2013 in the case of Tata Steel Limited and Others Vs The
State of West Bengal.
(c) Details of dues of Sales Tax/VAT and Excise Duty which have not
been deposited as on 31 March, 2013 on account of disputes are given
below:
Name of the Nature of Period Amount Forum where
Statute Dues (Rs. in
000) Dispute is pending
The West Bengal
Sales Sales Tax- 2007-08 1,56,91 Senior Joint
Commissioner of
Tax Act, 1994 VAT Sales Tax , WB
The West Bengal
Sales Sales Tax- 2008-09 1,19,64 Sr Joint
Commissioner, WB
Tax Act, 1994 VAT
The West Bengal
Sales Sales Tax- 2009-10 81,18 Sr Joint Commissioner,
WB
Tax Act, 1994 VAT
The Central
Sales Tax Sales Tax- 2006-07 26,50 Additional Commissioner
of
1956 CST Sales Tax, WB
The Central
Sales Tax Sales Tax- 31,29 Sr Joint Commissioner,
CST
1956 CST
The Central
Sales Tax Sales Tax- 2009-10 1,75,46 Additional
Commissioner of Sales
1956 CST
The TN General
sales Sales Tax 1994-95 28,99 Tamil Nadu Sales Tax
Appellate
Tax Act 1959 Tribunal, Chennai
The TN General
sales Sales Tax 1998-99 6,18 Tamil Nadu Sales Tax
Appellate
Tax Act 1959 Tribunal, Chennai
The TN General
sales Sales Tax 2000-01 2,89 Tamil Nadu Sales Tax
Appellate
Tax Act 1959 Tribunal, Chennai
Central
Excise Act, Excise
Duty 1994 to
1997 28,98 Appellate Tribunal -
CESTAT,
1944 Kolkata
Central
Excise Act, Excise
Duty January
2005 - 8,74 Customs,Excise and
Service
1944 December 2007 Tax Appellate Tribunal
Central
Excise Act, Excise
Duty January 2008 1.47 Commissioner
(Appeals)
1944 September 2008
(x) The accumulated losses of the Company at the end of the financial
period are not less than fifty per cent of its net worth and the
Company has incurred cash losses during the financial period covered by
our audit and the immediately preceding financial year. Attention is
also invited to our comments on the matters described in paragraph 1
under 'Basis for Disclaimer of Opinion' of the Independent Auditors'
Report.
(xi) In our opinion and according to the information and explanations
given to us, the Company has defaulted in the repayment of dues to
banks and a financial institution. As indicated in Note 3 to the
financial statements, certain Banks (namely Allahabad Bank, Bank of
India and Axis Bank) and a Financial Institution (SICOM) have initiated
legal proceedings against the Company for non-payment of dues. The
Company has also initiated legal proceedings against the said Banks and
Financial Institution. The details of such default as on 31 March, 2013
is as given below:
Bank/Financial Institution Amount of Period of
Default default
(Rs. in Rs.000) (in days) upto
the period end
ALLAHABAD BANK-CASH CREDIT 18,81,89 609
INTEREST ACCRUED & DUE 6,19,14 1 to 609
ALLAHABAD BANK-FUNDED
INTEREST TERM LOAN 50 821
4,25 731
4,25 640
94,57 609
INTEREST ACCRUED & DUE 1,00 701
1,23 670
1,21 640
1,27 609
22,82 1 to 609
ALLAHABAD BANK-WORKING
CAPITAL TERM LOAN 9,50 821
49,50 731
49,50 640
11,00,49 609
INTEREST ACCRUED & DUE 11,34 821
14,38 731
14,16 640
14,78 640
2,66,63 1 to 609
ALLAHABAD BANK-TERM LOAN 6,50 821
6,75 731
6,75 640
94,92 609
INTEREST ACCRUED & DUE 1,38 640
1,42 609
30,50 1 to 609
BANK OF INDIA-CASH CREDIT 3,87,56 587
INTEREST ACCRUED & DUE 1,38,33 1 to 587
BANK OF INDIA - FUNDED
INTEREST TERM LOAN 2 1005
1,49 913
1,49 821
1.49 731
1.50 640
43,97 588
INTEREST ACCRUED & DUE 37 882
51 852
55 821
57 790
51 762
57 731
57 701
61 670
59 640
62 609
62 578
10,05 1 to 588
BANK OF INDIA-WORKING
CAPITAL TERM LOAN 10,83 913
10,83 821
10,83 731
10,75 640
2,31,01 1 to 588
INTEREST ACCRUED & DUE 79 882
2,94 852
2,97 821
3,17 790
2,87 762
3,17 731
3,19 701
3,40 670
3,30 640
3,45 609
3,47 578
56,45 1 to 588
BANK OF INDIA-TERM LOAN 7,85 913
7,85 821
7,85 731
7,75 640
1,67,27 588
INTEREST ACCRUED &
DUE 2,03 913
1.98 882
2,08 852
2,10 821
2,23 790
2,02 762
2.23 731
2.24 701
2.39 670
2,33 640
2,43 609
2.45 578
37,41 1 to 588
AXIS BANK - CASH CREDIT 9,02,85 584
INTEREST ACCRUED & DUE 3,21,25 1 to 584
AXIS BANK - TERM LOAN 22,50 913
22,50 821
22,50 731
22,50 640
3,59,64 584
INTEREST ACCRUED & DUE 4,30 943
4,20 913
4,50 882
4.40 852
4,74 821
4,83 790
4,30 762
5,06 731
4.99 701
5,32 670
5,17 640
5.46 609
5,54 578
81,11 1 to 584
SICOM LIMITED-TERM LOAN 46,00 1421
60,00 1415
74,00 1367
18,61 1333
91,36 1324
INTEREST ACCRUED & DUE 1,54,18 1 to 1324
ICICI BANK - TERM LOAN 2,12 23
2,12 23
2,12 26
2,12 23
2,12 22
2,12 21
(xii) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained.
(xiii) In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet, we
report that funds raised on short-term basis to the extent of
Rs.51,12,47 thousands have been used for long term business purpose.
Attention is also invited to our comments on the matters described in
paragraph 1 under 'Basis for Disclaimer of Opinion' of the independent
Auditors' Report.
(xiv)To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm Registration No.302009E)
A. Bhattacharya
Partner
Kolkata, July 22, 2013 (Membership No. 054110) |