We have audited the accompanying financial statements of MACKINNON
MACKENZIE & COMPANY LIMITED ("the Company"), which comprise the Balance
Sheet as at 31st March, 2014, the Statement of Profit and Loss, for the
year then ended, and a summary of the significant accounting policies
and other explanatory information.
2. Management's Responsibility for the Financial Statements
The Company's 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 notifed under the Companies
Act, 1956 read with the General Circular 15/2013 dated September 13,
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 the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessments 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, An audit also includes evaluating the appropriateness of
the accounting policies used and the reasonableness of the accounting
estimates made by the Management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is suffcient and
appropriate to provide a basis for our audit opinion.
4. Basis of Qualified Opinion
As mentioned in Note 10 (c) of the financial statements, the investments
made at Kolkata Rs 56000/- are presently not available for verifcation
as the building is destroyed by fre. As such, we are unable to express
an opinion as to the effect of financial statements for the year.
As mentioned in Note 30 of the financial statements despite continued
huge losses resulting in total erosion of the net worth of the company,
the accounts for the year have been prepared on the assumption of going
concern basis. Should the company be unable to continue as a going
concern , the extent of effect the resultant adjustments would have on
the net worth at the year end as the losses for the year is not
ascertainable. As such, we are unable to express an opinion as to the
effect of financial statements for the year.
As mentioned in Note 15 of the financial statements Loans and Advances
includes certain old balances amounting to Rs 8,18,785 for which no
provision for doubtful items if any has been made in the accounts
pending review confirmation of the same. As a result the effect of
non-provision on the loss for the year cannot be ascertained. As such,
we are unable to express an opinion as to the effect of financial
statements for the year.
As mentioned in Note 7 of the financial statements Trade Payables
include an amount of Rs.26,51,925/- which represent old balances for
which no write back has been made in the accounts pending the review/
confirmation of the same. As a result, the effect of such write back,
if any on the loss for the year cannot be ascertained. As such, we are
unable to express an opinion as to the effect of financial statements
for the year.
As mentioned in Note 8 of the financial statements certain old credit
balances outstanding in various accounts amounting to Rs.1,48,52,774
for which no write back has been made in accounts pending the review
/confirmation of the same. As a result, the effect of such write back,
if any on the loss for the year cannot be ascertained. As such, we are
unable to express an opinion as to the effect of financial statements
for the year.
As mentioned in Note 5 of the financial statements the Company's bankers
had fled suit in Bombay High Court for recovery of loans which were
transferred to the Debt Recovery Tribunal. The bankers have assigned
entire debt due to them to a Company and suit fled by these banks have
been transferred back to Bombay High Court. Suits are for recovery of
Rs.61,66,05,621/- outstanding as on 31st March 1991. However loans
along with interest accrued and due to the Company which has taken over
the Debt as per the terms of loans and subsequent understanding with
the Company amounting to Rs 8,256,129,338 are outstanding as on 31st
March 2014 However no confirmations are available from Bank and the
Company which has taken over the Debt for the same. We are therefore
unable to comment on the effect of the same if any on secured loans due
to Company which has taken over the Debt and the debit balance of
Surplus in Statement of Profit & Loss Account as at 31st March 2014. As
such, we are unable to express an opinion as to the effect of financial
statements for the year.
As mentioned in Note 31 of the financial statements non availability of
confirmations in respect of balances of secured and unsecured loans,
debtors, certain bank balances, deposits, and creditors appearing in
Schedule 5,7,8,10, 13, 14 and 15 of the accounts respectively. As such,
we are unable to express an opinion as to the effect of financial
statements for the year.
As mentioned in Note 24 of the financial statements provision for
accrued liability for the year in respect of gratuity and long term
compensated absences has been made on arithmetical basis instead of
based on actuarial valuation as required by Accounting Standard -15
"Employee benefits" (the Standard). The effect on the Profit & Loss
Account for the year had the Company determined the accrued liability
for gratuity and long term compensated absences based on actuarial
valuation has not been ascertained. Accordingly, the disclosure
requirement regarding the actuarial assumptions used for actuarial
valuation is not complied with. Further, the transitional
liability/gain as at April 1, 2007, which is required to be determined
in terms of the transitional provisions of the Standard, has not been
ascertained and accounted for. As a result the effect of on the loss
for the year and debit balance of Surplus in Statement of Profit & Loss
Account as at 31st March 2014 cannot be ascertained As such, we are
unable to express an opinion as to the effect of financial statements
for the year.
As mentioned in Note 27 of the financial statements, regarding non
compliance of requirements under Micro, Small and Medium Enterprise
Development Act, 2006 in absence of information available with the
company. As such, we are unable to express an opinion as to the effect
of financial statements for the year.
5. Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matters in the
Basis of Qualified Opinion paragraph as mentioned above and read
together with the other notes thereon 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 ,2014;
(b) in the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date; and
(c) in the case of Cash Flow Statement , of the cash flows for the year
ended on that date.
6. Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors 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) Except for the matters described in the Basis for Qualified opinion
paragraph above, 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) Except for the effects of the matters described in the Basis for
Qualified opinion 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 Cash Flow
Statement dealt with by this Report are in agreement with the books of
account.
(d) Except for the matter described in the Basis for Qualified Opinion
paragraph 4(b),in our opinion, the Balance Sheet, the Statement of
Profit and Loss, and Cash Flow Statement comply with the Accounting
Standards referred to in Section 211(3C) of the Act.
(e) Except for the effects of the matters described in the Basis for
Qualified opinion paragraph above, in our opinion, the Balance Sheet,
Statement of Profit & Loss comply with the Accounting Standards notifed
under 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;
(f) On the basis of the written representations received from the
directors as on 31st March, 2014 taken on record by the Board of
Directors, none of the directors is disQualified as on 31st March, 2014
from being appointed as a director in terms of section 274(1) (g) of
the Act.
(g) Since the Central Government has not issued any notifcation as to
the rate at which the cess is to be paid under section 441A of the
Companies Act,1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
ANNEXURE REFFERED TO IN PARAGRAPH 1 under REPORT ON OTHER LEGAL AND
REGULATORY REQUIREMENTS.
(i) (a) In our opinion, the Company, the Company has maintained proper
records showing full particulars including quantitative details and
situation of fixed assets.
(b) As explained to us, all fixed assets have been physically verifed by
the management according to a regular program which in our opinion is
reasonable having regard to the size of the company and nature of its
assets. No material discrepancies with respect to book records were
noticed on such verifcation.
(c) There was no substantial disposal of fixed assets during the year.
(ii) Clause regarding Inventory records and verifcation is not
applicable to the Company as the Company is carrying on agency
business.
(iii) As informed, the Company has not taken or given any loans,
secured or unsecured from companies, firms or other parties listed in
register maintained under section 301 of the Companies Act 1956.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business for the purchase of inventory and fixed assets and for the sale
of goods. During the course of our audit no major weakness have been
observed in the internal controls.
(v) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management. We are of
the opinion that all transactions that need to be entered into the
register in pursuance of Section 301 of the Act have been so entered.
b) Based on the information and explanations given to us, it is our
opinion that these transactions have been made at reasonable prices
having regards to the prevailing market prices at the relevant time.
vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the meaning of Section 58A and 58AA of the Companies Act, 1956
and the rules framed there under.
vii) The requirement of having an internal audit system is not
applicable to the Company.
viii) As informed to us, the maintenance of cost records has not been
prescribed by the Central Government u/s.209 (1)
(d) of the Companies Act, 1956, in respect of the activities carried on
by the Company.
ix) (a) According to the information and explanation given to us, there
are no undisputed amounts payable in respect of Income tax, (other than
Service Tax Rs 585349), Wealth Tax, Sales Tax, Customs Duty and Excise
Duty, and Cess outstanding as at the year end of a period of more than
six months from the date they become payable.
b) According to the information and explanation given to us, there are
no dues of Income tax, Sales tax, Wealth tax, Customs duty, Excise duty
or Cess outstanding on account of any dispute, except for the
following.
S. Name of Statute Nature of Dues Amount Rs.
No
1 Foreign Exchange 10,02,97,000
Regulation Act Fine for alleged
violation of For-
eign Exchange
Regulation Act
by the Company
and its officer
2 Income Tax Act Income Tax 86,37,784
Name of Statute Period to Forum where
which it relates dispute is pending
Foreign Exchange 1979 Foreign Exchange Appellate
Regulation Act Tribunal has allowed Companies
Appeal against which the
concerned Govt.
Dept. fled an appeal with High
Court of Bombay. The Hon.
High Court of Bombay has
referred the matter back to
the Appellate Tribunal
Income Tax Act A.Y. 2011-12 Commissioner of Income Tax
(Appeals)
x) (a) The Company total accumulated losses far exceed its capital and
Reserves. (b) The Company has suffered cash losses during the year.
xi) According to the information and explanations given to us and the
records examined by us, Company has not been able to repay loan and
interest on secured loans and suits fled by Banks with Debt Recovery
Tribunal and suit fled by the Company which has taken over debt from
Banks are pending with High Court of Bombay.
xii) According to the information and explanations given to us and the
records examined by us, the Company has not granted any loan against
security of pledge of shares.
xiii) In our opinion and according to the information and explanations
given to us, the nature of the activities of the Company does not
attract any special statute applicable to chit fund and Nidhi/mutual
benefit fund/societies.
xiv) As per information given to us the Company is not dealing in
shares and securities .
xv) According to the information and explanations given to us and the
records examined by us, the Company has not given any guarantees for
loans taken by others from banks or financial institutions, the terms
and conditions whereof are prima facie prejudicial to the interest of
the Company.
xvi) As informed to us, Secured loans were taken in past for purchase
of ships which have already been sold off but the Company is not in a
position to repay the balance loan. Company's fixed assets like Building
are mortgaged to the Company which has taken over debt due to Banks.
Outstanding secured loans including interest as on 31St March 2014 is
Rs. 8,256,129,338.
xvii) On the basis of an overall examinations of the balance sheet and
cash fow of the Company and the information and explanations given to
us, we report that the Company has not utilised any funds raised on
short term basis of long term investments and vice- versa.
xviii) The Company has not made any preferential allotment of shares to
parties or companies covered under Section 301 of the Act.
xix) Company has not issued any debentures.
xx) The Company has not raised any money through a public issue during
the year.
xxi) Based upon the audit procedures performed and the information and
explanation given by the management, we report that, no fraud on or by
the Company has been noticed or reported during the year.
For SACHIN P. MULGAOKAR & CO
(Chartered Accountants)
Firm Regn No:108945W
Sachin P. Mulgaokar
(Proprietor)
Membership No. 40942
Mumbai
Dated: 30th May 2014 |