| We have audited the accompanying Financial Statements of UNIWORTH
LIMITED ("the Company"), which comprise the Balance Sheet as at 31st
March, 2015, the Statement of Profit and Loss, the Cash Flow Statement,
and a summary of the Significant Accounting Policies and other
explanatory information for the year then ended.
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 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 judgements
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 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
thereunder.
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 judgement, including
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 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 qualified audit opinion on the
Financial Statements.
Basis for Qualified Opinion
1. Footnote (i) to Note No. 23 regarding interest provision on
borrowings from some of the institutions and banks which has been made
in the financial statements under simple interest method at the
prevailing / estimated rates applicable on such loans in absence of
relevant documents/confirmations, as a result of which impact of
compound interest/penal charges, wherever applicable, having not been
ascertained, as well as the note therein regarding the matter of
dispute between the Company and the Bankers/Creditors in connection
with charging of interest payment and payment of principal.
2. Footnote No (ii) to Note No. 23 regarding non-provision of Interest
on certain loans and the impact of the non- provision is not presently
ascertainable.
3. Footnote No. 4 (i) (ii) and (iii) of Note No. 15 regarding overdue
Export Bills amounting to Rs. 31787.31 lacs outstanding for long which,
in our opinion, are doubtful of recovery against which adequate
provision has not been made in the financial statements.
4. Footnote 1 of 17 regarding Claims Receivable amounting to Rs.
689.36 lacs due from various banks outstanding for long which in our
opinion are doubtful of recovery against which adequate provision has
not been made in the financial statements.
5. Footnote 3 of Note No. 17 regarding advance of Rs. 3144.73 lacs due
from certain parties which, in our opinion, are considered doubtful of
recovery against which adequate provision has not been made.
6. Footnote 3 of Note No. 16 relating to non-accounting of withdrawals
/ other transactions from certain Bank accounts during the year due to
reasons stated on the said Note 16 (3).
7. Note No. 30 regarding non-compliance of Accounting Standard (AS) 6
: Depreciation Accounting due to non- adoption of Schedule - II of the
Companies Act, 2013 and also non-compliance of mandatory Accounting
Policy for Depreciation required to be followed by the Company, due to
reasons stated in the said Note.
8. In absence of any workings for impairment of assets as per
Accounting Standard (AS) 28 Impairment of Assets, the impact of such
impairment is not ascertainable.
9. Non-provision / non-compliance of Items indicated in (1) to (8)
above constitute a departure from the Accounting Standards referred to
in Section 133 of the Act. Without considering Item Nos. (1), (2), (6),
(7) and (8) above, whose impact on the Company's Statement of Profit
and Loss is presently non-ascertainable, had the provisions indicated
in Item Nos. (3) to (5) been made,
(i) the Loss for the year would have increased by Rs. 35621.40 lacs
(ii) Trade Receivables would have decreased by Rs. 31787.31 lacs
(iii) Short Term Loans and Advances would decreased by Rs. 3834.09 lacs
(iv) The Shareholders' Fund would have been lower by Rs. 35621.40 lacs
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the like effects of the matters
described in the Basis for Qualified Opinion paragraph above, 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, 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 your attention to the following matters in the Notes to the
Financial Statements:
1. Following Notes to the Financial Statements describe the uncertainty
related to the outcome of the lawsuits / other legal matters and
matters under settlements indicated therein:
(a) Footnote (2) to Note No. 4 regarding legal issues following
securitization of Secured Loans as stated in the said Note.
(b) Footnote (2) of Note No. 15 regarding pending adjustments of Sundry
Debtors against supplies and other liabilities etc. due to the buyers.
In absence of final settlement with the parties and non-receipt of
necessary approval from concerned regulatory authority, extent of the
amount of adjustments so required could not be ascertained.
(c) Footnote to Note No. 6 regarding estimated amount of ' 8722.28 lacs
provided during the year 2002-03 as sales claims and commissions
relating to earlier years from overseas customers of the Company which
is pending for final settlement. Necessary adjustments for such claims
and commissions will be made after final settlement and obtaining
necessary approval from the concerned regulatory authority.
(d) Footnote 1 of Note No 15 and Footnote 2 of Note No. 17 regarding
Debtors and Advances amounting to Rs. 1453.62 lacs and Rs. 1387.19 lacs
respectively relating to Companies, which have become Sick and referred
to BIFR under the Sick Industrial Companies (Special Provisions) Act,
1985. As the rehabilitation scheme of these companies are pending
finalisation, the amount of provision, if any, which may be required
remain unascertainable.
(e) Note No. 32 regarding legal recourse taken by certain banks and
financial institutions for recovery of their dues and the matter is
sub-judice as stated in the said Note.
(f) Note No. 33 regarding non-compliance of certain technical
formalities due to which transfer of certain borrowing facilities to a
body corporate could not be made.
(g) Note No. 34 regarding applications made by the Company with the
Reserve Bank of India from time to time for extension / setting off of
certain overdue bills.
(h) Note No. 35 regarding Debit Note sent by a body corporate in an
earlier year for unilateral transfer back of all assets, not taken into
cognizance by the Company in preparing these Financial Statements as
stated in the said Note.
(i) Note No. 38 regarding claims filed by a body corporate for Rs.
21,625 lacs for non-fulfilment of clauses of the agreement relating to
transfer of Nagpur Unit to them, outcome of which would eventually
arise on finalisation of suit.
(j) Matters disclosed in Note No. 19 relating to Entry Tax,
Central/Commercial Sales Tax Demands, Customs Demands, Professional
Tax/Labour Cases/Water Cess, Electricity Duty, etc., disclosed under
Contingent Liabilities, which are contested by the Company and pending
before various forums / authorities for final decisions.
2. Note No. 4 (Footnote 4), Note No. 7 (Footnote) and Note No. 16
(Footnote 1) to the financial statements regarding non-receipt of
confirmations in respect of borrowings from banks/Financial
Institutions and also debit balances in certain current accounts with
banks due to restructuring being in progress, book balances thereof
have been relied upon.
3. Note No 27 (d) regarding balance with a related party under
reconciliation
4. Footnote 2 & 3 of Note No. 4 to the financial statements regarding
preparation of these financial statements on Going Concern basis for
the reasons stated therein as also the fact that the Company has
accumulated losses and its net worth has been fully eroded Further the
Company has incurred net loss during the current and previous years,
and the Company's current liabilities exceeded its current assets as at
the Balance Sheet date. These conditions, along with other matters set
forth in Notes to Financial Statements, indicate the existence of a
material uncertainty that may cast significant doubt about the
Company's ability to continue as a going concern.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
i) As required by the Companies (Auditor's Report) Order, 2015 issued
by the Central Government in terms of Sub-section (11) of Section 143
of the Act, we enclose in the Annexure a statement on the matters
specified in the said Order, to the extent applicable to the Company.
ii) As required by Section 143(3) of the Act, we report that
a) We have sought and, except for the matters described in the Basis
for Qualified Opinion paragraph, obtained all the information and
explanations which to the best of our knowledge and belief were
necessary for the purpose of our audit.
b) Except for the possible effects of the matters described in the
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 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) Except for the possible effects of the matters described in the
Basis for Qualified Opinion paragraph, in our opinion, the Balance
Sheet, Statement of Profit and Loss and Cash Flow Statement 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 the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the Company;
f) The matters described in sub-paragraph (1) under the Emphasis of
Matters paragraph above, in our opinion, may have an adverse effect on
the functioning of the Company;
g) On the basis of written representations received from the Directors
as on 31st March, 2015 taken on record by the Board of Directors, none
of the Director is disqualified as on 31st March, 2015 from being
appointed as a director in terms of Section 164(2) of the Act.
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, wherever ascertainable.
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
loss.
iii. The Company has not transferred any amount to Investor Education
and Protection Fund (Refer to Footnote No. 1 to Note No.4)
ANNEXURE TO THE AUDITORS' REPORT
The Annexure referred to in our report to the members of UNIWORTH
LIMITED the year ended 31ST March, 2015.
(i) (a) Whether the company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets;
The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. However,
the updation of such records particularly with reference to estimated
useful life of each asset is in process.
(b) Whether these fixed assets have been physically verified by the
management at reasonable intervals; whether any material discrepancies
were noticed on such verification and if so, whether the same have been
properly dealt with in the books of account;
The physical verification of fixed assets, as stated by the management
has been conducted by the Management during the year, wherever
practicable and the reconciliation of the quantities with the book
records in progress. The discrepancies, if any, would be adjusted on
completion of reconciliation / updation of records as stated above.
(ii) (a) Whether physical verification of inventory has been conducted
at reasonable intervals by the management;
Inventories of Raw Materials, Finished Goods, Work in Progress and
Stores & Spares have been physically verified at reasonable intervals
by the Company, except Finished Goods of Rs. 18.40 Lacs lying with
third parties and Rs. 115.51 Lacs under seizure of the Excise
Department
(b) Are the procedures of physical verification of inventory followed
by the management reasonable and adequate in relation to the size of
the company and the nature of its business If not, the inadequacies in
such procedures should be reported;
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) Whether the company is maintaining proper records of inventory and
whether any material discrepancies were noticed on physical
verification and if so, whether the same have been properly dealt with
in the books of account.
On the basis of our examination of the records of inventories, we
are of the opinion that the Company is maintaining proper records of
inventories. The discrepancies noticed on verification between physical
stocks and the book records, which were not material, have been
properly dealt with in the books of account.
(iii) Whether the company has granted any loans, secured or unsecured
to companies, firms or other parties covered in the register maintained
under section 189 of the Companies Act. If so,
(a) Whether receipt of the principal amount and interest are also
regular; and
(b) If overdue amount is more than rupees one lakh, whether reasonable
steps have been taken by the company for recovery of the principal and
interest;
The Company has not granted any loan, secured or unsecured, during the
year to any company, firm or other party covered in the register
maintained under section 189 of the Companies Act, 2013.
In this regard, we have relied upon the entries recorded in the
register maintained under section 189 of the Act.
(iv) Is there an adequate internal control system 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 and services.
Whether there is a continuing failure to correct major weaknesses in
internal control system.
In our opinion and according to the information and explanations given
to us, there are adequate internal control systems commensurate with
the size of the Company and the nature of its business, for the
purchases of inventory and fixed assets and for the sale of goods.
During the course of our audit, no major weakness has been noticed in
the internal control system, nor have there been any continuing failure
on the part of the Company to correct any major weakness.
(v) In case the company has accepted deposits, whether the directives
issued by the Reserve Bank of India and the provisions of sections 73
to 76 or any other relevant provisions of the Companies Act and the
rules framed there under, where applicable, have been complied with?
If not, the nature of contraventions should be stated; If an order has
been passed by Company Law Board or National Company Law Tribunal or
Reserve Bank of India or any court or any other tribunal, whether the
same has been complied with or not?
The Company has not accepted any deposit from the public within the
meaning of sections 73 to 76 or any other relevant provisions of the
Companies Act, 2013.
(vi) Where maintenance of cost records has been specified by the
Central Government under sub- section (1) of section 148 of the
Companies Act, whether such accounts and records have been made and
maintained.
We have broadly reviewed the books of accounts maintained by the
Company pursuant to the rules 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. However,
we have not made a detailed examination of the records with a view to
determine whether they are accurate or complete.
(vii) (a) Is the company regular in depositing undisputed statutory
dues including provident fund, employees' 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 and if not, the extent of the arrears of outstanding
statutory dues as at the last day of the financial year concerned for a
period of more than six months from the date they became payable, shall
be indicated by the auditor.
According to the records of the Company, the Company has been
generally regular in depositing during the year with appropriate
authorities undisputed statutory dues including provident fund,
employees' state insurance, income tax, sales tax, wealth tax, service
tax, customs duty, excise duty, value added tax, cess and any other
statutory dues, where applicable, except in the following cases which
are outstanding for a period of more than six months from the date they
became payable:
VAT Rs. 6.80 lacs
Central Sales Tax Rs. 36.54 lacs
Service tax Rs. 42.81 lacs
Entry Tax Rs. 0.80 lacs
(b) In case dues of income tax or sales tax or wealth tax or service
tax or duty of customs or duty of excise or value added tax or cess
have not been deposited on account of any dispute, then the amounts
involved and the forum where dispute is pending shall be mentioned. (A
mere representation to the concerned Department shall not constitute a
dispute).
According to the records of the Company, following statutory dues
have not been deposited by the Company on account of disputes :
Nature of Amount Period since Forum
dues (Rs. in when
Lacs)
Entry Tax 57.11 1997-98 Appeal with
Commissioner of
Commercial Tax.
Excise Duty 8.64 Prior to 2000 Under Appeal
with CESTAT,
New Delhi
Electricity 18.57 2005 Wit Petition
Duty & before Bilaspur
Cess High Court.
(c) Whether the 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 thereunder has been
transferred to such fund within time.
The Company has not transferred any amount to Investor Education
and Protection Fund. [Refer to Footnote (1) to Note No. 4 (a) ]
(viii) Whether in case of a company which has been registered for a
period not less than five years, its accumulated losses at the end of
the financial year are not less than fifty per cent of its net worth
and whether it has incurred cash losses in such financial year and in
the immediately preceding financial year;
The accumulated losses of the Company at the end of the financial year
have exceeded its net worth and also the Company has incurred cash
losses in the current financial year and in the immediately preceding
financial year.
(ix) Whether the company has defaulted in repayment of dues to a
financial institution or bank or debenture holders? If yes, the period
and amount of default to be reported;
The Company has defaulted in repayment of dues to financial
institutions, banks and debenture holders as under:
(a) As per Original Agreement, all the following Term Loans have become
due for repayments. However, the Company's negotiations with the term
lenders for rescheduling / restructuring is in process:
Nature of Financial Amount Period of
Assistance (Rs. in lacs) Default
a) Term Loan
i) Financial Institution Not Ascertainable
Principal 21172.09
Interest 10686.97
ii) Bank Not Ascertainable
Principal 37585.42
Interest 55087.41
b) Debenture
Nov-convertible Part C
Redeemable Debenture
Principal 1900.62
Interest 196.95
Also refer to Note No. 4
(x) Whether the company has given any guarantee for loans taken by
others from bank or financial institutions, the terms and conditions
whereof are prejudicial to the interest of the company;
The Company has given guarantee for loans taken by Other Company others
from bank or financial institution and the related terms and conditions
are not prejudicial to the interest of the Company.
(xi) Whether term loans were applied for the purpose for which the
loans were obtained;
Based on the information and explanations given to us by the
Management, no Term Loan was obtained by the Company during the year.
(xii) Whether any fraud on or by the company has been noticed or
reported during the year; If yes, the nature and the amount involved is
to be indicated.
Based upon the audit procedures performed during the course of our
audit and information and explanations given by the Management, we
report that no fraud on or by the Company has been noticed or reported
during the year.
For S. S. KOTHARI & CO.
Chartered Accountants
Firm Registration. No. 302034E
A. DATTA
Place : Kolkata Partner
Date : 29th May, 2015. Membership No. 005634 |