| We have audited the accompanying financial statements of MORGAN
INDUSTRIES LIMITED, which comprise of the Balance Sheet as at March
31,2014, 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 Financial Statements
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 referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act") read with General Circular No.
15/2013 dated 13th September 2013 of Ministry of Corporate Affairs(MCA)
in respect of Section 133 of the Companies Act, 2013 and in accordance
with the accounting principles generally accepted in India. 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.
Auditor's 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 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 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 but not for the
purpose of expressing an opinion on the effectiveness of the Company's
internal control. 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 qualified audit opinion.
Basis for Qualified Opinion
Attention is invited to the following:
1) Note No:6 Regarding non-receipt of confirmation of the closing
balances/ not reconciling balances as on 31.03.2014 In respect of Trade
Payables, Trade Receivables, Loans & Advances, Unsecured Loans,
creditors, other liabilities and group company accounts. The adjustment
if any which may be required consequent to receipt of confirmation/
completion of reconciliation is unascertainable at this stage and not
provided for.
2) Regarding non capitalization / non adjustment of amount of Rs.17.91
Crores kept under capital work in progress (CWIP) suitably for more
than 3 years and consequently non provision of depreciation on the
assets which would have otherwise suffered depreciation in the normal
course. Also no impairment test has been done in respect of this
capital wont in progress and in respect of other fixed assets. The
impact on account of depreciation/impairment loss is unascertainable
and has not been provided for.
The impact on account of the above qualification on the Statement of
Profit and Loss and Balance Sheet is not ascertainable and hence not
quantified.
QUALIFIED OPINION
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matters
described in the Basis for Qualified Opinion paragraph, the financial
statements give the information required by the Companies 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 Profit for
the year ended on that date; and
c) In the case of the Cash Flow Statement, of the Cash Flows of the
Company for the year ended on that date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor's Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 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) We have 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 with records 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 the Cash
Flow Statement dealt with by this Report are in agreement with the
books ofaccount.
d) In our opinion, the Balance Sheet, the Statement of Profit and Loss
and Cash Flow Statement comply with the Accounting Standards referred
to in subsection (3C) of section 211 of the Companies Act, 1956, read
with General Circular No. 15/2013 dated 13th September 2013 of the
Companies Act, 2013, except AS-28 "Impairment of Assets".
e) On the basis of written representations received from directors as
on March 31 2014, and taken on record by the board of directors, none
of the directors is disqualified as on March 31 2014, from being
appointed as a director in terms of Clause (i)(g) sec 274 of Companies
Act 1956.
1) (a) The Company has not maintained adequate records showing full
Particulars including quantitative details and situation of fixed
assets.
(b) According to information and explanations furnished to us, fixed
assets have been physically verified by the management during the year.
We were informed that no material discrepancies were noticed on such
physical verification. However, in the absence of updated fixed assets
records, we are unable to comment on the discrepancies that may arise
consequent to updation and reconciliation of Fixed Assets records.
(c) There was no disposal of substantial part of the fixed assets
during the year.
2) (a) According to information and explanation furnished to us, the
inventory, has been physically verified by the management.
(b) The procedures for the physical verification of inventories
followed by the management appear to be reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) As per information furnished to us, the company has maintained
records of inventory and the discrepancies noticed on verification
between the physical stocks and the Books stocks were not material
3) a) The company has taken loans from Companies and Parties covered in
the register maintained under section 301 of the Companies Act, 1956.
No interest is applicable to these loans. In our opinion, the terms and
conditions on which the loans have been taken are prima-facie not
prejudicial to the interest of the company. No terms of repayment have
been stipulated by the parties.
No. of Parties 5
Amount Outstanding at the close of the year Rs. 13,17,33,380
Maximum amount outstanding during the year Rs. 13,17,33,380
b) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties listed in the register maintained
under section 301 of the Companies Act, 1956.
4) 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 with regard to purchase and sale of goods, purchase of
inventory and fixed assets. During the course of audit, we have not
observed any continuing failure to correct major weakness in the
internal control system in respect of these areas.
5) Based on our review and according to the information and
explanations given to us, the transactions that need to be entered in
the register maintained in pursuance of section 301 of the companies
Act 1956 have been so entered. In our opinion these transactions made
in pursuance of contracts or agreements entered in the register
maintained under section 301 of the Companies Act, 1956, have been made
at prices which are reasonable having regard to the prevailing market
prices at the relevant time.
6) The company has not accepted any deposits from the public requiring
compliance of Provisions of Sections 58A and 58AA and any other
relevant provisions of the Companies Act, 1956 and the rules made there
under.
7) The company does not have an internal audit system commensurate with
the size and nature of its business.
8) To the best of our knowledge and according to the information and
explanations given to us, the Central Government has not prescribed
maintenance of cost records under section 209 (1) (d) of the Companies
Act, 1956.
9) (a) The company is not regular in depositing undisputed statutory
dues with appropriate authorities. According to the information and
explanations given to us the undisputed amounts payable in respect of
ESI, Income tax, FBT, TDS and Sales tax wherever applicable were in
arrears as at 31st march 2014 for a period of more than six months from
the date they became payable as given below:
Nature of Dues Amount (Rs. In lakhs)
ESI 4.64
PF 1.97
TDS 15.06
Service Tax 6.79
Sales Tax (CST/VAT) 21.54
Income Tax - 6.25
Fringe Benefit Tax 12.64
(b) According to information and explanations given to us, there are no
amounts payable in respect of Income Tax, Sales Tax, Service Tax,
Excise duty and cess which have not been deposited with the appropriate
authorities on account of any dispute.
10) The company has accumulated losses at the end of the current
financial year and has not incurred cash losses during the current and
the immediately preceding financial years.
11) As per information and explanations made available to us, the
company has not defaulted in repayment of dues to financial
institutions and banks during the year.
12) Based on our examination of documents and records, the company has
not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
13) The provisions of special statute applicable to Chit Fund, Nidhi,
Mutual Benefit Fund and Societies are not applicable to the company.
14) In our opinion and according to the information and explanations
given to us, the company has not given any guarantee for any loans
taken by others from Banks and Financial Institutions.
15) The company had not availed any term loans from Banks in the
current financial year.
16) According to the information and explanations given to us and on an
overall examination of the balance sheet of the company, we report the
fund raised on short term basis have not been used to finance long term
investment.
17) The Company has not made preferential allotment of shares during
the year to parties and companies covered in the register maintained
under Section 301 of the Companies Act, 1956.
18) The company has not raised any money by way of public issue of
shares during the year.
19) The Company has not raised any money by way of Public issue of
debentures during the year.
20) To the best of our Knowledge and belief and according to
information and explanations given to us, no fraud on or by the company
was noticed or reported during the year.
21) Clause (xiv) of the Companies Auditors Report Order 2003 is not
applicable to the company.
R.SUBRAMANIAN & COMPANY
Chartered Accountants
(Regn.No.004137-S)
CA.KJAYASANKAR
Partner
M.No. 014156
Date: 04.10.2014
Place: Chennai.
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