1. We have audited the accompanying financial statements of Modern
Steels Limited, which comprise the Balance Sheet as at 31st March,
2015, the Statement of Profit and Loss and Cash Flow Statement for the
year ended, and a summary of significant accounting policies and other
explanatory information.
Management's Responsibility for the Financial Statements
2. The Company's Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 with respect to the
preparation and presentation of these standalone financial statements
that give a true and fair view of the financial position, financial
performance and cash fows 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.
Auditors' Responsibility
3. 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.
4. 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.
5. 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 controls 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 Directors, as well as
evaluating the overall presentation of the financial statements.
6. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
7. 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 31st March, 2015;
(b) In the case of the Statement of Profit and Loss, of the Profit/loss
of the Company for the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
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 the paragraph 3 and 4 of the
Order, to the extent applicable.
2. As required by Section 143(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 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, 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 Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with Accounting Standards
specified under section 133 of the Act read with Rule 7, The Companies
(Accounts) Rules, 2014.
e. On the basis of the written representations received from the
directors as on 31st March, 2015, taken on record by the Board of
Directors, 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. 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
ii. the Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long-term contracts including derivative contracts
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
ANNEXURE TO THE AUDITORS' REPORT
The Annexure referred to in our report to the members of the Company
for the year ended 31st March, 2015. To the best of our knowledge and
belief and information & explanation given to us, we further report
that:- 1. a) Company has maintained proper records to show full
particulars including quantitative details & situation of its fixed
assets. b) As explained to us, the fixed assets have been physically
verified by the management at reasonable intervals which in our opinion
is appropriate having regards to size of the Company and nature of its
assets. No material discrepancies have been noticed during the year.
2. a) The inventory of the Company has been physically verified by the
management at reasonable intervals during the year. 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 are reasonable and adequate in relation to the size of the
Company and nature of its business. c) The Company has maintained
proper records of its inventories and no material discrepancies were
noticed on physical verification.
3. The Company has granted loans, secured or unsecured to Companies,
Firms or other parties covered in the register maintained under Section
189 of the Companies Act, 2013. The same is mentioned herein as per the
information and explanation given to us by the management.
a) The Company has granted unsecured loan to Modern Automotives Limited
during the year. The maximum amount involved during the year is A 1.86
crores & yearend outstanding is A1.86 crores.
b) The rate of interest and other term & conditions of the above loan
is, in our opinion, not prima facie prejudicial to the interest of the
Company.
c) The receipts of principal amounts and interest have been regular as
per stipulations.
d) There was no overdue amount.
4. In our opinion the Company's present internal audit system is
commensurate with its size and nature of business, for purchase of
inventory and fixed assets and for the sale of goods and services. The
Company has regularly identified any weakness & corrective steps have
been taken.
5. The Company has accepted deposits from Directors amounting to A
2.68 crores (including unpaid interest A 0.56 crores) as well as from
corporate bodies amounting to A 3.94 crores (including unpaid interest
A 0.16 crores). As per CDR report the amount of A 3.50 crores need to
be infused & A 2.38 crores needed to be retained separately in form of
unsecured loans by the Company. The Company has complied with the
directives issued by the Reserve Bank of India & with the provisions of
Section 73 to 76 of the Companies Act, 2013 and the rules framed there
under with regard to the deposits accepted from the public. No order
has been passed by the Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any court or any other Tribunal.
6. On the basis of records produced to us, we are of the opinion that
prima facie the cost records prescribed by the Central Government of
India under Section 148(1) of the Companies Act, 2013 have been made &
maintained & also cost audit will be conducted. We have not carried out
any detailed examination of such account & records.
7. (a) According to the books and records as produced
and examined by us in accordance with generally accepted auditing
practices in India and also based on management representations,
undisputed statutory dues in respect of Provident Fund, Employee's
State Insurance dues, Investor Education and Protection Fund, Income
Tax, Wealth Tax, Service Tax, Cess and other material statutory dues
have generally been regularly deposited by the Company during the year
with the appropriate authorities in India and there were no arrear
outstanding in respect of above for a period of more than six months as
on 31st March, 2015. (b) According to the records of the Company
examined by us and the information and explanations given to us, there
are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service
Tax, Excise Duty and Cess which have not been deposited on account of
any dispute other than the following amounting to A 1.93 crores. The
details are as under:-
NATURE OF FORUM WHERE YEAR DISPUTED
DUES/NAME OF DISPUTE IS PENDING AMOUNT
STATUTES (RS.)
EXCISE DUTY
CENTRAL PUNJAB AND HARYANA 1989-90 6,47,885
EXCISE ACT 1944 HIGH COURT
CENTRAL COMMISSIONER 2007-08 2,56,533
EXCISE ACT 1944 (APPEALS),
CHANDIGARH
CENTRAL COMMISSIONER 2007-08 to 2,59,085
EXCISE ACT 1944 (APPEALS), 2008-09
CHANDIGARH
CENTRAL COMMISSIONER 2004-05 to 89,56,212
EXCISE ACT 1944 (APPEALS), 2006-07
CHANDIGARH
CENTRAL CESTAT, NEW DELHI 2004-05 78,579
EXCISE ACT 1944
CENTRAL CESTAT, NEW DELHI 2002-03 to 15,87,580
EXCISE ACT 1944 2004-05
CENTRAL CESTAT, NEW DELHI 2005-06 to 11,30,998
EXCISE ACT 1944 2006-07
CENTRAL COMMISSIONER 2007-08 2,64,934
EXCISE ACT 1944 (APPEALS),
CHANDIGARH
CENTRAL COMMISSIONER 2007-08 to 3,11,332
EXCISE ACT 1944 (APPEALS), 2008-09
CHANDIGARH
CENTRAL CESTAT, NEW DELHI 2004-05 to 3,55,235
EXCISE ACT 1944 2005-06
CENTRAL CESTAE, NEW DELHI 2008-09 1,10,550
EXCISE ACT 1944
CENTRAL CESTAT, NEW DELHI 2003-04 to 20,78,246
EXCISE ACT 1944 2007-08
CENTRAL COMMISSIONER 2004-05 5,16,272
EXCISE ACT 1944 (APPEALS),
CHANDIGARH
CUSTOMS DUTY
CUSTOMS ACT CESTAT, AHMEDABAD 2004-05 25,35,450
1962
INCOME TAX
INCOME TAX ACT INCOME TAX A/Y 2005-06 1,64,482
1961 APPELLATE TRIBUNAL, & 2006-07
CHANDIGARH
8. The Company has accumulated losses as at 31st March, 2015 which are
more than 50% of the net worth as on that date. It has suffered cash
loss during the financial year ended on that date and also in the
immediately preceding financial year.
6. There are no dues payable to financial institutions or
debenture-holders. During the year ended 31st March 2015, the company
has defaulted on timely payment of principal and payment of interest on
term loans and cash credits. The delay with respect to interest and
principal on term loans, up to 30 days amounting to A 8,68,820 and A
25,49,000 respectively and delay between 31-90 days amounted to A
3,34,51,204 and A 47,77,571 respectively. The delay with respect to
interest on cash credit up to 30 days amounted to A 40,52,000 and delay
between 31-90 days amounted to A 2,00,87,889
Apart from above as at the year end, the interest and principal
outstanding on term loans amounting to A 1,68,59,586 and A 47,77,571 on
cash credit interest amounted to A 75,61,309 has not been paid toll
31st March, 2015. As at the balance sheet date the periods of delay in
these cases were up to 60 days
7. The Company has not given any guarantee for loans taken by others
from bank or financial institutions.
8. In our opinion & according to information & explanation given to us
the term loans raised during the year have been applied for the purpose
for which they were raised during the year.
9. As per the information and explanation given to us and on the basis
of examination of records, no material fraud on or by the Company was
noticed or reported during the course of our audit.
For Aaryaa & Associates
Chartered Accountants
Firm Registration No. 015935N
Krishan Joshi
Place: Chandigarh Partner
Dated: 28th May, 2015 M. No.094478 |