| We have audited the accompanying standalone financial statements of
SHREE GANESH JEWELLERY HOUSE (I) LIMITED ("the Company"), which
comprise the Balance Sheet as at 31st March, 2015, the Statement of
Profit and Loss, the Cash Flow Statement for the year then ended, and a
summary of the significant accounting policies and other explanatory
information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these standalone 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
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting 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 adequate internal financial controls,
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 standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
there under.
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 the 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 a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the company has in place an adequate internal
financial control system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Director, 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 on the
standalone financial statements.
Basis for Qualified opinion
(i) Note No. 52 regarding fixed Deposits amounting to Rs. 3,031.08 Lacs
pledged as security with axis bank against cash credit sanctioned was
adjusted with cash credit balance in the company's book on maturity of
the fixed deposits. However as per cash credit account statement
furnished by the bank, fixed deposits figure was not adjusted with the
cash credit account balance. Thus, cash credit balance as per bank
statement showed excess by Rs. 3,031.08 lacs;
(ii) Note No. 53 regarding Cash credit balance of Dhanalaxmi bank was
Rs. 1,827.27 Lacs and Rs. 91.59 Lacs reflecting less balance in
Company's books. The Company had contested the excess amount claimed by
the bank in the High Court of Kolkata and had received a stay order on
the excess claim made by the bank;
(iii) Note No.7 regarding Cash Credit A/c (Account No: 911030049091869)
balance of Rs. 98,641.67 Lacs as on March 31, 2015 in which impact of
Rs. 18.20 Lacs debited by Bank on dated 31st January, 2014 and Rs.
290.27 Lacs credited by Bank on 28th August, 2014 in the CC account has
not been considered. These are subject to reconciliation and
consequential impact if any, presently not ascertainable;
(iv) Note No.7 includes Short-term borrowings of Rs. 44,655.46 Lacs
have not been confirmed as on March 31, 2015, hence we are unable to
comment the consequential impact on confirmation/ reconciliation of
such balances if any,
We further report that the overall impact of the matters reported by us
in the aforesaid paragraphs cannot be determined and commented.
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 matter described in
the Basis for Qualified Opinion paragraph, the aforesaid standalone
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, of the state of
affairs of the company as at 31st March, 2015, and its Loss and its
cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following notes :
a) Note No.33 Contingent Liability, which describes the uncertainty
related to the outcome of the demand raised against the Company by
Sales Tax authorities;
b) Note No. 51 and 54 in the financial statements regarding preparation
of these accounts on going concern basis and is facing financial crunch
with its inability to meet the financial obligations. The Company had
applied for Composite Corporate Debt Restructuring with the banks to
mitigate the above which was withdrawn by the banks in the consortium
meeting held on 22nd January, 2015. As stated the company had again
requested for reconsideration of restructuring proposal by all the
lenders. These facts have been disclosed in above referred notes by the
management, in view of which, the accounts have been continued to be
prepared under the going concern assumption.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 3 and 4 of the 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, except as reported in clause (iii) & (iv) of the
Basis for Qualified Opinion Paragraph above;
b) Except the effects of matters referred in Basis for Qualified
Opinion Paragraph above, in our opinion, 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) 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) The matters described in Basis for Qualified Opinion paragraph and
Emphasis of Matters paragraph above, in our opinion, may have an
adverse effect on the functioning of the Company.
f) On the basis of written representations received from the directors
as on March 31, 2015, and taken on record by the Board of Directors,
except two directors, none of the other directors is disqualified as on
March 31, 2015 from being appointed as director under the sub-section
(2) of Section 164 of the Companies Act.
g) The qualification relating to the maintenance of accounts and other
matters connected therewith, are as stated in the Basis for Qualified
Opinion Paragraph and Emphasis of Matters paragraph above.
h) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements. [Refer Note No.33(i)&
(ii)]
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company.
Annexure to the Auditors' Report
(Referred to in Paragraph 1 of "Other Legal and Regulatory
requirements" of our Audit Report)
i) In respect of Fixed Assets:
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets.
b) The Company has a regular program of physical verification of fixed
assets by which fixed assets are verified in a phased manner over a
period of three years. In accordance with this program, certain fixed
assets were verified during the year and no material discrepancies were
noticed on such verification. In our opinion, this periodicity of
physical verification is reasonable having regard to the size of the
company and the nature of its assets.
ii) In respect of Inventories:
a) The inventories have been physically verified by the management as
at year end. In our opinion, the frequency of such verification is
reasonable.
b) In our opinion, and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are 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 is maintaining proper records of its
inventories and no material discrepancies noticed on such physical
verification.
iii) The Company has granted loans to its subsidiary companies covered
in register maintained under Section 189 of the Companies Act, 2013.The
maximum amount involved during the year and the year-end balance was
INR. 6,763.51 Lacs and INR. 6,763.51 Lacs respectively.
a) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions on
which loans have been granted to its subsidiary companies and listed in
the register maintained under section 189 of the Companies Act, 2013
are not prima facie, prejudicial to the interest of the Company.
b) According to the information and explanation given to us, loans
granted and interest thereon are recoverable on demand. There are no
stipulations made for the recovery of the loan. Hence we cannot comment
on the regularity of receipt of principal amounts and interest thereon.
c) Based on the information and explanations, there is no overdue
amount outstanding at the end of the year in respect of the above said
loans.
iv) 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, fixed assets and with regard to the sale of
goods and services. We have not observed any major weakness in internal
control system during the course of the audit.
v) According to the information and explanations given to us, the
Company has not accepted any deposits from the public within the
meaning of directives issued by the Reserve Bank of India and
provisions of Sections 73 to 76 or any other relevant provisions of the
Companies Act, 2013 and the rules framed there under.
vi) We have broadly reviewed the cost records maintained by the Company
pursuant to the Rule made by the Central Government for the maintenance
of cost records under Section 148(1) of the Companies Act, 2013 and we
are of the opinion that prima facie the prescribed accounts and records
have been made and maintained. However, we have not made a detailed
examination of the cost records with the view to determine whether they
are accurate or complete.
vii) a) According to the information and explanations given to us and
on the basis of our examination of the books of accounts,the Company is
generally been deposited regularly the undisputed statutory dues
including Provident Fund, Employee State Insurance, Income Tax, Sales
Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value
Added Tax, Cess and any other statutory dues with the appropriate
authorities except delay some cases and some of the amounts are still
not paid as detailed below:-
Service Tax -Rs. 2.20 Lacs and
Sales Tax -Rs. 94.68 Lacs
Except West Bengal Value Added Tax aggregating of' 41.34 Lacs, there
were no un-disputed statutory dues as at the end of the year concerned
outstanding for a period of more than six months from the date they
became payable.
b) According to the information and explanations given to us, there
were no dues of Wealth Tax, Custom Duty, and Cess which have not been
deposited with the appropriate authorities on account of any dispute.
Based on the information and explanations available, the following
Sales Tax dues have not been deposited with the appropriate authorities
on account of Dispute:-
Sl. Name of the Status Nature of Dues
No.
1. West Bengal Sales Tax Act/ Claim of Export rejected by Appellate
Central Sales Tax Act Authority on ground of non accepting
Form 12A on quarterly basis but the
commercial taxes authority issued it
on quarterly basis.
2. West Bengal Sales Tax Act/ Export Sales and Input Tax Credit
Central Sales Tax Act disallowed and Gross Turnover
enhanced by 63%.
3. West Bengal Sales Tax Act/ Input tax disallowed due to Purchase
Central Sales Tax Act / Sale from the same party and
further,Purchase tax levied on fixed
assets purchased during the year.
4. West Bengal Sales Tax Act/ Tax on sales at branch outside the
Central Sales Tax Act State of West Bengal @ 12.5% and
CST sales taxed @ 1% thereon.
5. West Bengal Sales Tax Act/ Disallowance of export sale and
Central Sales Tax Act purchase tax on Unregistered
purchase.
6 West Bengal Sales Tax Act/ Disallowance of "Form F'
Central Sales Tax Act
Sl. Name of the Status Amount Period to which
No. ( Rs.In Lacs) the Amount
Relates
1. West Bengal Sales Tax Act/ 291.07 2006-07
Central Sales Tax Act
2. West Bengal Sales Tax Act/ 1,807.33 2007-08
Central Sales Tax Act
3. West Bengal Sales Tax Act/ 27.44 2008-09
Central Sales Tax Act
4. West Bengal Sales Tax Act/ 519.46 2009-10
Central Sales Tax Act
5. West Bengal Sales Tax Act/ 2,078.83 2010-11
Central Sales Tax Act
6 West Bengal Sales Tax Act/ 83.18 2011-12
Central Sales Tax Act
Sl. Name of the Status Forum Where the dispute is
No. Pending
1. West Bengal Sales Tax Act/ Revisional Board, Sales tax
Central Sales Tax Act Kolkata (South Circle)
2. West Bengal Sales Tax Act/ Appellate Authority, Sales
Central Sales Tax Act Tax Kolkata (South Circle)
3. West Bengal Sales Tax Act/ Appellate Authority, Sales
Central Sales Tax Act Tax Kolkata (South Circle)
4. West Bengal Sales Tax Act/ Appellate Authority, Sales
Central Sales Tax Act Tax Kolkata (South Circle)
5. West Bengal Sales Tax Act/ Senior Joint Commissioner
Central Sales Tax Act Kolkata (South Circle)
6 West Bengal Sales Tax Act/ Appellate Authority, Sales
Central Sales Tax Act Tax, Kolkata (South Circle)
c) According to the information and explanations given to us, there is
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 there under during the
year.
viii) The Company has no accumulated losses at the end of the financial
year and has incurred cash losses amounting to Rs. 76,037.33 Lacs
during current financial year. The Company had incurred cash losses in
the immediately preceding financial year also.
ix) In our opinion and according to the information and explanations
given to us, the Company has defaulted in repayment of dues to its
banker and debenture holders. The Company has applied for
reconsideration of Composite Corporate Debt Restructuring as stated by
the management in Note No.51 of the financial statements.
x) In our opinion and according to the information given to us, in
respect of the guarantee given by the Company for the loans taken by
others from a bank, the terms and conditions thereof are not, prima
facie, prejudicial to the interest of the company.
xi) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purpose for which
they were raised.
xii) As represented to us by the management and based on our
examination of the books and records of the Company in accordance with
the generally accepted auditing practices in India, we have neither
come across any material fraud on or by the Company noticed or reported
during the year nor we have been informed of any such case by the
management that causes the financial statements to be materially
misstated.
For CHATURVEDI & PARTNERS
Chartered Accountants
Firm Registration No.307068E
Sd/-
Pratik Niyogi
Date: 30th May, 2015 Partner
Place: Kolkata Membership No.066514
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