| We have audited the accompanying financial statements of M/S Gajra
Bevel Gears Limited which comprise the Balance Sheet as at 31st March
2015, the statement of profit & loss, cash flow statement for the year
ended and a summary of significant accounting policies with other
explanatory information.
Management's Responsibility for the Financial Statement:
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 of 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 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 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 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 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
accounting policies used and the reasonableness of the accounting
estimates made by the Company's Director, 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:
The accumulated losses have eroded entire net worth of the Company and
have made the Company financially sick. Based on the Audited Balance
Sheet as on 30.09.2008 a reference u/s15 (1) of SIC (SP) Act, 1985 has
been filed by Company with the BIFR and the same has been registered as
case no. 27/2009 on 30.07.2009. The BIFR vide its order of hearing held
on 06.01.2010 declared the Company a SICK INDUSTRIAL COMPANY in terms
of section 3(1)(o) of Sick Industrial Companies (Special Provisions)
Act, 1985 and appointed IDBI as the operating agency (OA). As informed
by the management, there is no manufacturing/business activity in the
Company after 31.10.2006. The management of the Company is making
positive efforts for rehabilitation of the Company and in course of
that, has already done the OTS of loan accounts of State Bank of India,
IFCI, IDBI, MPAVN and MPSIDC and the OTS with Madhya Pradesh Financial
Corporation is under process. The Company has paid in full of OTS
amount to SBI, IDBI and IFCI and has also made substantial payment to
MPAVN and MPSIDC towards the OTS, attention is also invited to Note 15.
Subject to above, in our opinion and to the best of information and
according to the explanation given to us, the aforesaid financial
statements give the information required by the Act in the manner so
required and give true and fair views in conformity with the accounting
principles generally accepted in India, of the state of affairs of the
Company as at 31st March, 2015, its profit and its cash flows for the
year ended on that date.
Report on Other Legal and regulatory Requirement:
As required by the Companies (Auditor's Report) Order,2015 ("the
Order") issued by Central Government of India in terms of sub-section
(11) of section 143 of the Act, we give in the Annexure a statement on
the matters specified in paragraph 3 and 4 of the said Order.
As required by section 143(3) of the Act, we report that:
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.
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.
The Balance Sheet, the Statement of Profit and Loss Account and the
Cash Flow Statement dealt with by this report are in agreement with the
books of Accounts.
In our opinion the aforesaid financial statements comply with the
Accounting Standards specified under section 133 of Act, read with Rule
7 of the Companies (Accounts) Rules, 2014.
On the basis of written representations received from the directors as
on March 31st, 2015 taken on record by the Board of Directors, none of
the directors is disqualified as on March 31st, 2015 from being
appointed as the directors in terms of section 164(2) of the Act.
With respect to the other matter 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 explanation given to us:
The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 14.
The Company did not have any long-term contracts including derivative
contracts for which there were material foreseeable losses;
There was no such amount required to be transferred to the Investor
Education and Protection Fund by the Company, hence the matter of delay
does not arise.
Annexure to the Auditor's Report
(Referred to in our report of even date)
1. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) Due to seizer of the premises by the Provident Fund Authorities,
fixed assets of the Company could not be physically verified by the
management of the Company during the year and therefore, we are unable
to express our opinion in this regard.
2. (a) The inventory of Tools & Spares lying in the stores of the
Company has been physically verified by the management of the Company
from time to time during the year and no discrepancy was found during
such verification. The portion of the inventory in respect of the
stocks lying in the machine shop of the factory could not be physically
verified by the management during the year due to the seizer of the
factory premises by the Provident Fund Authorities.
(b) The procedures of physical verification followed by the management
in respect of the inventory of Tools & Spares lying in the stores of
the Company are reasonable in relation to the size of the Company and
nature of its business. Whereas, in respect of the stock lying in the
machine shop of the factory, we have relied upon the undertaking given
by the management about their un-ability in physical verification due
to the seizer of the factory premises by the Provident Fund
Authorities.
(c) The management of the Company has not noticed any discrepancy
between the physical stock and book records in respect of inventory of
Tools and Spares lying in the stores of the Company. The inventories of
stocks lying in the machine shop of the factory could not be physically
verified due to the seizer of factory premises by the Provident Fund
Authorities for which the management of the Company is of the opinion
that the same remained unchanged during the year. In this respect we
had relied upon the undertaking given by the management of the Company.
3. According to the information and explanations given to us, the
Company has not granted any loan, secured or unsecured to companies,
firms or parties covered in the register maintained under section 189
of the Act.
4. There is no manufacturing and business activity in the Company
after 31st October, 2006 and also due to the seizer of factory premises
of the Company by the Provident Fund Authorities there was no need to
commensurate any internal control procedure for the purchase of
inventory and fixed assets and for the sale of goods. During the course
of audit, we have observed that there has not been any purchase of
inventory and fixed assets and sale of goods during the year.
5. In our opinion and according to information and explanation given
to us the Company has not accepted any deposit from the public in
accordance of section 73 to 76 of the Act and Rules framed thereunder
during the year.
6. We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Govt. for the
maintenance of cost records under sub-section (1) of section 148 of the
Act. Having no manufacturing activities in the Company the maintenance
of cost records is not applicable.
7. (a) Owing to the financial sickness, in the operative years, the
Company has been irregular in depositing
with the appropriate authorities even the undisputed statutory dues
like EPF contribution, ESIC contribution, Commercial Tax, Income Tax
and Excise Duty. However, after the grant of installment facility the
Company is regular in payment of installments of Provident Fund dues
and also positive about the payment of other dues subject to getting
installment facility from the respective Authorities. The status of
unpaid dues as on 31.03.2015 is as under:-
Nature of Dues Amount
(Rs. In Lakhs)
Provident Fund Contribution (Net of
Installment payments made) 65.43
As per Demand note dated 03-03-2011
E.S.I.C Contribution 62.50
Commercial Tax 165.63
Income Tax Demand 149.11
Excise Duty 48.51
(b) Assessed demands of commercial tax, against which the Company has
preferred for Revision before the Competent Authority have not been
accounted for as liability are as under:
Assessment Year Assessed demand (Rs. In Lacs.)
1999-2000 16.64
2001- 2002 27.72
2002- 2003 48.09
2005- 2006 267.81
2006- 2007 205.35
TOTAL 565.61
(c) As per the information and explanation given by the management, no
amount is 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 the rules made there under.
8. The net worth of the Company has already been eroded during the
year ended on 30.09.2005 and there were further cash losses incurred by
the Company during the years ended on 30.09.2006 to 31.03.2014.
9. As per the records of the Company and based on our audit
procedures, during the year, the Company has not made any payment of
dues to Madhya Pradesh Financial Corporation. The OTS of loans is
pending.
10. According to the information and explanation given to us, the
Company has not given any guarantee for loans taken by others from the
banks and financial institutions.
11. In our opinion, the Term Loan taken in past have been used for the
purpose for which they were raised.
12. Based on the audit procedure 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 course of our
audit.
For, O.T. Gandhi & Co.
Chartered Accountants
F.R. Number: 001120C
Sameep Gandhi
(Partner)
M.No.411107
Place: Indore
Date: 30th May, 2015
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