| We have audited the accompanying financial statements of Gupta
Synthetics Limited ("the company"), which comprise the Balance Sheet as
at 31 March 2015, the Statement of Profit and Loss, the 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 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 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 the maintenance of
adequate accounting records in accordance with the provision of the Act
for safeguarding of the assets of the Company and for preventing and
detecting the 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 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.
Auditor's Responsibility
Our responsibility is to express an opinion on these 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 mis-statement.
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 true and fair view in
order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by Company's Directors, 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 financial
statements.
Opinion
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; subject to points mentioned below:
1. Loss of Stock in Fire of Rs. 2162.93 Lacs of earlier years yet not
provided by the company as mentioned in the Note No. 42 forming part
of balance sheet.
2. The ING Vysya Bank Ltd., have written off Rs. 18,14,90,530.05 in
Term Loan Account during FY 2013-14. The company have written a letter
to the Bank to know the reason for the said writing off. The company
has not received any explanations about the same and therefore said
amount is not written off by the company in its books of account and
therefore the balance outstanding in the name of ING Vysya Bank Ltd is
shown higher by that amount Rs. 18,14,90,530.05 and correspondingly the
Profit & Loss Account balance in Balance Sheet show the loss figure
higher by the amount Rs. 18,14,90,530.05.
3. The Standard Chartered Bank have written off Rs. 20,29,76,713.71 in
the Term Loan Account during FY 2013-14. The company have written a
letter to the Bank to know the reason for the said writing off. The
company has not received any explanations about the same and therefore
said amount is not written off by the company in its books of account
and therefore the balance outstanding in the name of Standard Chartered
Bank is shown higher by that amount Rs. 20,29,76,713.71 and
correspondingly the Profit & Loss Account balance in Balance Sheet show
the loss figure by the amount Rs. 20,29,76,713.71.
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2015;
b) in the case of the Statement of Profit and Loss, of the loss for the
year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on other Legal and Regulatory Requirements
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 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) 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 31 March, 2015, taken on record by the Board of Directors, none
of the directors is disqualified as on 31 March, 2015, from being
appointed as a director in terms of Section 164(2) of the Act.
f) With respect to the other matters included in Annexure 'A" of the
Auditor's Report attached herewith and to our 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 as referred to in Note
No. 7(b) of the Annexure 'A' to the Audit Report and Note No. 44 to the
financial statements.
ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, and the
Company did not have any long-term contracts including derivatives
contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
ANNEXURE 'A' TO AUDITORS' REPORT
1. In respect of fixed assets :
a. The Company has maintained proper records showing full particulars
including quantitative details and situation of Fixed Assets on the
basis of available information.
b. As explained to us, the physical verification of the assets has
been carried by the management at reasonable intervals and no material
discrepancies were noticed on such verification.
2. In respect of its inventories :
a. As explained to us, inventories have been physically verified by
the management at reasonable intervals during the year.
b. In our opinion and according to information and explanations given
to us, the procedure of physical verification of inventories followed
by the management is reasonable and adequate in relation to the size of
the company and nature of its business.
c. In our opinion and according to the information and explanations
given to us, the company has maintained proper record of its
inventories and no material discrepancies noticed on physical
verification.
3. In respect of loans, secured or unsecured, granted by the company
to Companies, firms or other parties covered in the register maintained
under Section 189 of the Companies Act, 2015.
a. The company has granted unsecured loans to company and other
parties covered in the register maintained under Section 189 of the
Companies Act.
b. The loan granted by the company is interest free and, the principal
amount is repayable on demand and there is no repayment schedule.
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control procedure that
commensurate with the size of the company and the nature of its
business with regard to purchase of inventory, fixed assets and with
regard to sale of goods. During the course of our audit, we have not
observed any major weakness in internal controls.
5. In our opinion and according to the information and explanations
given to us, the company has accepted deposits against the terms of
provisions of Section 73 and 76 of the Companies Act, 2013.
6. We have broadly reviewed the Cost Audit Report for the year ended
as on 31-03-2014 regarding books of accounts pursuant to the rule made
by the Central Government for the maintenance of cost records under sub
section (1) of Section 148 of the Companies Act, 2013 and are of the
opinion that prima facie, the prescribed accounts and records have been
made and maintained. We have not, however, made a detailed examination
of the records with a view to determining whether they are accurate or
complete.
7. In respect of statutory dues:
a. According to the records of the Company, undisputed statutory dues
including Provident Fund, Income tax, Sales tax, Custom Duty, Excise
Duty, Cess and other material statutory dues have been generally
regularly deposited with the appropriate authorities.
According to the information and explanation given to us, no undisputed
amounts payable in respect of Income tax, Sales tax, Custom Duty,
Excise Duty, Cess and other material statutory dues as at 31st March,
2015 which are outstanding for a period of more than six months from
the date they become payable, except income tax of Rs. 30.09 lacs,
fringe benefit tax of Rs. 16.33 lacs, tax on proposed dividend of Rs.
5.03 lacs and provident fund (earlier years) of Rs. 6.52 lacs are
outstanding exceeding six month from the end of the financial year.
b. According to the information and explanations given to us and the
records produced before us, the particulars of commercial tax and
excise duty and service tax as at 31st March, 2015 which have not been
deposited as on 31st March, 2015 on account of dispute pending are as
under:
Nature of Statute Nature of Dues Rs. in Lacs
Gujarat Commercial Tax Value Added Tax 33.48
/ Penalities
80.83
4.12
172.22
87.56
Central Excise Act,1944 Excise Duty 26.45
and Service Tax
63.92
53.41
Total 521.99
Nature of Statute Period to which Forum where dispute
Amount relates is pending
Gujarat Commercial Tax 2006-07 Gujarat Value Added Tax
Appellate Tribunal
2007-08 Deputy Commissioner of
Commercial Tax
2008-09
2009-10
2010-11
Central Excise Act,1944 Various years Customs,Excise & Service
from 2002-03 Tax Appellate Tribunal
to 2007-08
Various years Commissioner of Central
from 2005-06 Excise (Appeals)
to 2010-11
Various years Additional Commissioner
from 2006-07 of Central Excise &
to 2010-11 Service Tax
c. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
8. At the end of the financial year the accumulated losses of the
Company have exceeds its net worth. Further the company has incurred
cash loss during current and preceding financial years. The Company has
an accumulated loss of INR 18245.12 Lacs as on 31st March 2015 and the
Company has incurred cash losses of INR 2556.73 Lacs during the
financial year and cash losses of INR 2786.04 Lacs in the immediately
preceding financial year.
9. Based on our audit procedures and according to the information and
explanations given to us, the company has defaulted in repayment of
dues towards their Term Loan Accounts with ING Vysya Bank Ltd.,
Oriental Bank of Commerce, Industrial Development Bank of India and
State Bank of India. Details of period and amount of default are as
under:
Sr. Name of the Bank Amount of default
No. As on 31.03.2015
(Rs. in lacs)
1 ING Vysya Bank Ltd. 2135.83
2 Oriental Bank of Commerce 2600.40
3 Industrial Development Bank of India 1605.74
4 State Bank of India 3023.00
Total 9364.97
The amount of default includes principal and interest. Note that
company has not paid any installments and above bank accounts have
become Non-Performing Assets, therefore entire term loan accounts are
shown as default.
10. The company has pledge certain shares held as investments as
guarantees for loans taken by others from banks or financial
institutions.
11. According to the information and explanations given to us, term
loan were applied for the purpose for which the loans were obtained.
12. In our opinion and according to the information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the course of our audit.
For R. R. PATCHIGAR & CO.
Chartered Accountants
FRN: 107639W
Rupin Patchigar
Place : Surat Proprietor
Date : 14.08.2015 Membership No.:31172 |