| We have audited the accompanying standalone financial statements of M/s
Indusfila Limited, ("the Company") which comprise the Balance Sheet as
at 31st March 2015, the Statement of Profit and Loss and 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 Standalone 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 standalone 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 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.
Auditor's Responsibility
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
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 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.
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
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone 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 Matter
a) Without qualifying our opinion, we draw attention to Note (1) of the
Notes to financial statements. The Company's operating results has been
materially affected due to various factors as at 31st March 2015, the
Company's accumulated losses has fully eroded the net worth of the
company. The appropriateness of the going concern assumption is
dependent on the company's ability to establish consistent profitable
operations as well as raising adequate finance to meet its short term
and long term obligations. As discussed in the said note, the
management believes that the going concern assumption is appropriate
and no adjustments have been made in the financial statements for the
year ended 31st March 2015.
b) Without qualifying our opinion, we draw attention to Note 25(k) of
the financial statements towards highlighting the negative income in
the statement of profit and loss for the year ended 31st March 2015.
c) Without qualifying our opinion, we draw attention to Note 25(o) of
the financial statement regarding that the management has not carried
out the impairment analysis in accordance with the requirement of
Accounting Standard-28-lmpairment of Assets" in respect of all its
units that are not in operation for last two years. In the absence of
such analysis, we are unable to comment on the carrying value of the
fixed assets and the consequential impact, if any, on the Profit/loss
for the year 2014-15.
d) Without qualifying our opinion, we draw attention to Note 25(p) of
the financial statements regarding that the management has not prepared
the Bank Reconciliation Statements for the banks due to
non-availability of bank statement or bank confirmation. In the absence
of such statement, we are unable to comment on the correctness of bank
balances and the consequential impact, if any, in the financial
statements for the year 2014-15.
e) Without qualifying our opinion, we draw attention to Note 25(q) of
the financial statements that the management has computed interest on
the term loans and cash credit accounts based on the rates of terms of
sanction due to non-availability of loan statement or confirmation. The
management believes that difference, if any, between the computed
interest and actual interest charged will not be material. In the
absence of such above information, we are unable to comment on the
interest charged and consequential impact, if any, on the profit and
loss account for the year 2014-15.
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 of
statement on the matters specified in 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 sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes 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, 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 aforesaid standalone 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 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; and
(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 litigation on its
financial position in its financial statements - Refer Note: 25 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. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company.
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
INDUSFILA LIMITED
i) a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets.
b) These fixed assets have been physically verified by the management
at reasonable intervals and as explained to us, no material
discrepancies were noticed on such verification during the year.
ii) a) Physical verification of inventory has been conducted at
reasonable intervals by the management.
b) In our opinion and according to the information and explanation
given to us, the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c) The Company is maintaining proper records of inventory. As explained
to us, the discrepancies noticed on physical verification were not
material and the same have been properly dealt with in the books of
account.
iii) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 189 of the Companies Act, 2013. Accordingly, the
provisions stated in paragraph 3(iii)(a) and 3(iii)(b) of the Order are
not applicable.
iv) In our opinion and according to the information and explanations
given to us, the Company has 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. We have not observed any major weakness in
the internal control system during the course of the audit.
v) The Company has not accepted any deposits from the public within the
meaning of Sections 73 to 76 or any other relevant provisions of the
Companies Act and the rules framed thereunder.
vi) We have broadly reviewed the cost records maintained by the Company
in respect of products where the Central Government has prescribed
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,
however, not made a detailed examination of the records with a view to
determine whether they are accurate or complete.
vii) a) The Company is not 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 other statutory dues with the appropriate
authorities . There are no undisputed statutory dues payable in respect
of above which were outstanding as at 31st March 2015 for a period of
more than six months from the date they became payable except for the
following.
Nature of Dues Amount outstanding Period of
Outstanding
Dividend Distribution Tax Rs 16,46,404/- A.Y 2008-09
Provident Fund Contribution Rs. 7,19,169/- F.Y 2011-12
Provident Fund Contribution Rs. 24,98,449/- F.Y 2012-13
Provident Fund Contribution Rs. 14,26,911/- F.Y 2013-14
Employees State Insurance
Corporation Rs. 47,01,239/- F.Y 2012-13
Employees State Insurance
Corporation Rs. 1,03,47,317/- F.Y 2013-14
Tax Deducted at Source Rs. 52,11,725/- A.Y 2011-12
Tax Deducted at Source Rs. 13,70,438/- A.Y 2012-13
Tax Deducted at Source Rs. 33,31,127/- A.Y 2013-14
Tax Deducted at Source Rs. 10,85,097/- A.Y 2014-15
Tax Deducted at Source Rs. 2,02,495/- A.Y 2015-16
Service Tax on reverse
Charge Rs. 32,15,768/- Before FY 2013-14
Tax collected at source Rs. 11,290/- Before FY 2013-14
Profession Tax Rs. 8,74,200/- Before FY 2013-14
b) According to the information and explanations furnished to us, the
details of disputed statutory dues are as under:
Name of the Nature of Amount
Statute dues disputed
(Rs.)
Income Tax
Act, 1961 Income Tax Rs.1670 Lakhs
Income Tax
Act, 1961 Income Tax Rs.503.5 Lakhs
Income Tax
Act, 1961 Income Tax Rs.705.3 Lakhs
Income Tax Income Tax Rs. 1769.47
Act 1961 Lakhs
Karnataka Tax Entry Tax, Rs.0.47 Lakhs
on Entry of interest and
Goods Act penalty
Karnataka KVAT, Rs.45.21 Lakhs
Value Added interest and
Tax Act 2003 penalty
CST Act 1956 CST, interest Rs.1.02 Lakhs
and penalty
CST Act 1956 CST, interest Rs. 1.01 Lakhs
and penalty
Name of the Amount Forum where
Statute Paid dispute is
(Rs.) pending
Income Tax Commissioner of
Act, 1961 Nil Income Tax
(Appeals)
Income Tax Commissioner of
Act, 1961 Nil Income Tax
(Appeals)
Income Tax Commissioner of
Act, 1961 Nil Income Tax
(Appeals)
Income Tax Commissioner of
Act 1961 Nil Income Tax
(Appeals)
Karnataka Tax Joint Commissioner
on Entry of Nil of Commercial Tax
Goods Act
Karnataka Joint Commissioner
Value Added Nil of Commercial Tax
Tax Act 2003
CST Act 1956 Joint Commissioner
Nil of Commercial Tax
CST Act 1956 Joint Commissioner
Nil of Commercial Tax
c) There were no amounts which were required to be transferred to
investor education and protection fund by the Company
viii) The accumulated losses of the Company as on 31st March 2015
exceeds more than 50% of the net worth of the Company. The Company has
incurred cash losses during the financial year and also 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 banks.
The default in respect of principal and interest is Rs. 364.99 crores.
x) According to the information and explanations given to us, the
company has given guarantee for loans taken by subsidiary company/firms
from a bank, the terms and conditions of which are not prima facie
prejudicial to the interest of the Company.
xi) According to the information and explanations given to us the
Company has applied the term loans for the purpose for which they were
obtained. No term loan has been availed during the year.
xii) During the course of examination of the books and records and
according to the information and explanations given to us, no fraud on
or by the company has been noticed or reported during the year.
FOR SURI & CO
CHARTERED ACCOUNTANTS
Firm Regn No: 004283S
(G Rangarajan)
PLACE : Bangalore Partner
DATE : 30/05/2015 M.No: 024107
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