We have audited the accompanying financial statements of GEI Industrial
Systems Limited ("the Company"), which comprise the Balance Sheet as &t
March 31, 2015, the Statement of Profit and Loss and 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 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 financial statements that give a true and
fair view of the financial position, financial performance and cash
flows of the Company in accordance with 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, 2015.
This responsibility includes maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding of the
assets of the Company and for preventing and detecting frauds and other
irregularities; selection And application of appropriate accounting
policies making judgments and its and estimates that are reasonable and
prudent; and the design, implementation and maintenance of adequate
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.
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, as specified under Section 143(10) of the Act. 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. 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 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 effectiveness of such
controls. 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 audit opinion on the standalone financial statements.
Opinion
We report that:
1. Balances of Trade Receivables, Trade Payables, Advance to Suppliers
and Bank accounts have been un-reconciled and unconfirmed.
2. Liability on account of interest on borrowings from financial
institutions/ ICDs where suits were filed by the lenders or the account
is classified as NPA by them, has not been provided in the accounts. It
has been estimated by the management and disclosed as contingent
liability of Rs. 11,06,96,963/- in Note No.26 of the financial
statements.
3. Reconciliation of Intra-head and intra-group accounts and resultant
adjustments are pending which may have impact on intra-head balances
and financial position disclosed in the financial statements.
Subject to our remarks 1 to 3 above and subject to other qualifications
in the report mentioned in Para (1) under "Report on Other Legal and
Regulatory Requirements" below, in our opinion and to the best of our
information and according to the explanations given to us, 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, of the state of
affairs of the Company as at March 31, 2015, its loss and its cash
flows for the year ended on that date.
Emphasis of Matters
We draw attention to Note No. 8.1 to the financial statements regarding
the financial effect of any diminution in value of non-moving
inventories. In the opinion of the company, the realization will be
materialized with the revival of the projects, hence no provision for
any loss thereof is made in the accounts.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's report) Order, 2015 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;
(b) 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, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) In our opinion, the aforesaid 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 March 31, 2015, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2015, from being
appointed as a director in terms of section 164 (2) of the Act;
(d) 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, 2015, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has not disclosed the additional financial impact, if
any, of pending litigations in its financial statements-Refer Notes 4.2
and 4.4 to the financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. As per the information and explanations given to us there were Rs.
4,15,294/- which were required to be transferred to the Investor
Education and Protection Fund by the Company.
Annexure as referred to in paragraph 1 under the heading "Report on
other Regulatory requirements" of our report of even date of GEI
Industrial Systems Limited on the Accounts for the year ended on 31st
March,2015
(i) (a) The company has not maintained up to date records showing full
particulars including quantitative details and situation of fixed
assets.
(b) We have not been provided with evidence of physical verification of
assets by the management as per a program of verification in a
periodical manner, hence unable to comment whether any discrepancies
were noticed on such verification.
(c) In our opinion, the company has not disposed off substantial part
of fixed assets during the year and the going concern status of the
company is not affected.
(ii) (a) We have not been provided with evidence of physical
verification of inventories by the management, hence unable to comment
whether any discrepancies were noticed on such verification.
(b) In view of our remark in sub-para (a) above, we are unable to
comment whether the procedures of physical verification of inventories,
if any, followed by the management during the year, are reasonable and
adequate in relation to the size of the company and the nature of its
business.
(c) The company has maintained records of inventories on computerized
environment. Inventory of work in progress, obsolete material and
project have been determiner certified- by the management arraingment
incorporated the accounts accordingly and not verified by us for want
of proper records.
(iii) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956. Hence provisions of
Clause (iii) of Paragraph 3 are not applicable to the Company.
(iv) In our opinion and according to the information and explanations
given to us, there is no 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. During the course of our audit, we have come
across major weakness in internal controls.
(v) In our opinion and according to the information and explanations
given to us, the company has not accepted any deposits within the
purview of sections 73 to 76 of the Companies Act, 2013 and the rules
framed there under.
(vi) We have not been provided with the cost records as specified by
the Central te Government under sub-section 148 of the Companies Act,
hence we are A unable to comment whether such records are maintained.
(vii) (a) According to the records of the company udisputed statutory
dues including provident fund, employeesstate insurance income tax
sales tax wealth tax, service tax, duty of customs duty mentioned below
have cess and other material stautory dues except those mentioned below
haveauthority. According to the information and explanations given to
us undisputed amounts payable in respect of aforesaid payable as
under:-
Amount (Rs,)
Nature of Liability
ESI 5510997/-
Provident Fund 31217597/-
TDS (Deducted) 43354713/-
on various heads)
1243002/-
Professional Tax
(Employees)
Export Tax 2034991/-
VAT* 13075151/-
SERVICE TAX* 17288058/-
EXCISE DUTY* 46021291/-
CST 10028104/-
* Subject to adjustment for input credit
(b) According to the information and explanations given to us, the
following are the particulars of statutory dues as at 31st 2015 not
deposited on account of a dispute pending.
Name of Nature of Amount Period to Forum Where the
the Dues (Rs.) which amount dispute is pending
Statute relates FY
Sales Tax Central Rs,1747280 2006-2007 Board of Revenue
Law Sales Tax Bhopal
Sales Tax Central Rs, 839541 2007-2008 Board of Revenue
Law Sales Tax Bhopal
Sales Tax Central Rs,4135024 2006-2007 Board of Revenue
Law Sales Tax Bhopal
Sales Tax Central Rs, 166859 2006-2007 Board of Revenue
Law Sales Tax Bhopal
Income Income Tax Rs, 3576166 2006-07 Commissioner of
Tax Act Demand Income Tax
(c) According to the information and the explanations given to us an
amount of Rs.4,15,294/- is required to be transferred to Investor
Education and Protection Fund, for which necessary instruction was
given to the banker. However, no confirmation of such transfer is
available with the company.
(viii) The accumulated losses at the end of the financial year are less
than fifty percent of its net worth and the company has incurred cash
losses during the financial year and in the immediately preceding
financial year.
(ix) In our opinion and according to the information and explanations
given to us, the company has defaulted in repayment of dues to
financial institution or bank as unden-
S/N Name of the Fl/Bank Period of Defult Amount of
0 Default Rs,
1 The HSBC LTD >365 days Rs,37165626/-
2. Citi Bank LTD >365 days Rs.276460387/-
3. Madhya Pradesh
Finance >365 days Rs.2546389/-
Corp.LTD
(x) In terms of the information and explanations given to us, the
company has given corporate guarantee for loans taken by subsidiary
company from banks or financial institutions. In our opinion, the terms
and conditions on which the company has given such guarantees are not
prejudicial to the interest of the company.
(xi) The company has not raised any fresh term lons during the year.
(xii) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
according to the information and explanations given to us by the
management, we report that no fraud on or by the company has been
noticed or reported during the course of our audit.
For A.K. Khabya & Co.
Chartered Accountants
Firm Reg. No. 001994C
Place : Bhopal CA. M.N.G. PILLAI
Date : 14th June, 2015 Partner
M.No.74051 |