| We have audited the accompanying financial statement of K.S.OILS
LIMITED ('the company') which comprise the balance sheet as at 31st
March 2015 and the Statement of Profit & Loss and the cash fow
statement for the period 1st April 2014 to 31 March 2015 and a summary
of significant policies and other explanatory information.
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 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 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 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
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 except with regard to the matters
discussed below where we have not been able to perform the audit in
conformity with the relevant auditing standard on account of
unavailability of adequate documents/information
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. 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.
Basis for qualified opinion
1. As regards trade receivables, inventory, costs, production margin
and sales price of goods sold, we state that:
a) The company has made provision for bad and doubtful debts for
Rs.4736 Lacs (Previous year 87987) on the basis of the management
evaluation.
In absence of confirmation of balances trade receivable as on
31.03.2015 , provision to be made if any for adverse variation in the
carrying amount of these balances are not quantified.
b) Position of inventory is as per management as more details in note
no.36. As explained in the note, we could not observe inventory count
as required under SA 501(Revised) 'Audit evidence -Specific
Consideration for selected Items'.
c) Attention is invited to Note 35 on the explanation of the management
with regard to abnormal variations/fluctuations in costs, production
margin and sales price. We are unable to comment on these, being a
technical matter.
2. In the absence of details of testing for impairment of certain
assets viz. Production plants which were not operational/fully
operational during the period, we are unable to state whether
provision, if any, is required to be made in this regard.
3. Out of transactions of purchase and sales of goods selected on a
sample basis; in some cases, full supporting documents were not made
available for our verification.
4. Loan and Advances include advances aggregating Rs38424 Lacs given
to some of the suppliers which include advances Rs.26514 Lacs
outstanding for more than a year. Relevant documents and confirmations
of balances are yet to be obtained.
5. The company has given loans of Rs.1295 Lacs to its step-down
subsidiary K S OILS SDN BHD. The net worth of the subsidiary is eroded
significantly for the accounting period ended March 31, 2015 due to
accumulated losses of Rs. 549 Lacs . No provision has been made for any
doubtful recovery as it is not ascertainable.
6. Company has taken an average rate (for goods for trading and
manufacturing) to determine the value of cost of goods. Consequently,
the result of such trading transactions and the closing inventory of
such goods have not been disclosed separately. This is also not in
conformity with the requirement of Revised Schedule VI.
7. The company had been served demand notice under section U/s 13(2)
of the Securitization and Reconstruction of Financial Assets and
Enforcement of security Interest Act, 2002 on dated 26th Dec.2013 for
Wind Energy Business and 4th March 2014 for Edible Oil Business for
payment of Outstanding principal amount including interest etc. within
60 days from the date of notice.
As stated in the Note no.33, pending quantification of interest
payable, penalty, other financial charges, the ultimate liability for
financial charges and related impact on reported loss is not|
quantifiable for the period and the Company has not provided interest
liability for the current financial year.
8. The financial statements of company have been prepared on a going
concern assumption, though the company has incurred a net loss of Rs.
22987 Lacs during the twelve months period ended March 31, 2015 and its
net worth has eroded totally, CDR of the company has been called off
and it has been served SARFAESI Notices by bankers & financial
institutions for payment of loans. This situation indicates the
existence of a material uncertainty that may cast significant doubt on
the company's ability to continue as a going concern and therefore it
may be unable to realize its assets and discharge its liabilities in
normal course of business. The Company's ability to continue as a
going concern is dependent upon the factors mentioned in Note 37.
9. Attention is invited to the following Notes forming part of the
financial statements:
a) Note no. 30 With regard to certain contingent liabilities, whose
impact is not ascertainable.
b) Note no. 31 with regard order of settlement passed in the favor of
company the Appeal of Income Tax department is pending before M.P. High
court Gwalior.
c) Note no. 38 (a) & (b) With regard to manner of utilization of fund
raised through preferential allotment of equity shares in previous
years.
d) Note no. 39 With regard to the declared dividend Balance of Rs.90
Lacs has not been transferred to separate bank account.
Qualified opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the matters described in
paragraphs 1 to 8 above, and the resulting effects of all these on the
relevant assets, liabilities and the loss for the period which are not
quantifiable the 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:
(i) In the case of the Balance sheet of the State of affairs of the
Company as at 31st March 2015.
(ii) In the case of the Profit & Loss Account, of the 'LOSS' for the
year ended on that date.
(iii) In the case of the Cash Flow Statement, of the cash fow for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 issued
by the Company Law Board in terms of Sub-Section(11) of
Section143,dated 10,April 2015 of the Companies Act,2013, we give in
Annexure a statement on matters specified in paragraphs 3 and 4 of the
said Order.
2. As required by section 143(3) of the Act, we report that:
a. Except as stated in our comments under Basis of Qualified Opinion
,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 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. In our opinion the aforesaid financial statements complies with the
Accounting Standards specified in section 133 of the Companies Act,
2013, read with Rule 7 of the companies (Accounts) Rule 2014; However
as explained above ,we are unable to comment upon the complete
compliance with accounting standard AS 1" Disclosure of Accounting
Policies," AS 2 " valuation of Inventory ", AS 9 " Revenue
Recognition", AS 28 Impairment of Assets" and AS 29 Provision,
Contingent Liabilities and Contingent Assets.
e. On the basis of the written representations received from the
directors as on 31 March 2015 taken on record by the Board of
Directors, none of the directors (except Mr. Ramesh Chand Garg) 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 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 positions in its financial statements as referred in note no.
30 to the financial Statements.
ii. The Company did not have long-term contracts including derivative
contracts as such the question of commenting on any material
foreseeable losses thereon arise.
iii. According to the information and explanations given to us there
was no delay in transferring amounts , required to be transferred , to
the Investor Education and Protection Fund by the Company.
Annexure to auditors; Report
The Annexure referred to in Auditors' report of even date to the
members of K. S. OILS Limited on the financial statements for the
twelve months period ended March 31, 2015.
(i) (a) As informed to us, the Company has maintained proper records
showing full particulars including quantitative details and situation
of fixed assets on the basis of available information.
(b) During the period, fixed assets have been physically verified by
the management on the test basis. Such verification was made at
reasonable intervals. We are informed that no material discrepancies
were noticed on such observation.
(ii) (a) As informed to us, inventory has been physically verified
during the year by the management. In our opinion, the frequency of
verification needs to be increased in relation to the size of the
company and the nature of its business.
(b) As mentioned in paragraph 2(b) of the Auditors' report and as also
stated in note 36, we are unable to comment upon reasonableness and
adequacy of the procedures of physical verification of inventory
followed during such verification.
(c) In our opinion and according to the information and explanation
provided to us by the Company and as mentioned in paragraph 1 (b) of
the Auditors' Report, the Company has not maintained proper records of
inventory, as major of the inventory remained unmoved during the year.
In the absence of availability of appropriate information, we are
unable to comment upon further adjustments, if any, is required to be
made in such regard.
(iii) During current year the Company has not granted any unsecured
loan to company covered in the register maintained under section 189 of
the Companies Act, 2013.
(a) The earlier loans granted along with interest thereon were re
payable on demand. However no principal/interest has been received
during the year.
(b) As the Company has not demanded repayment of any such
loan/interest, therefore there are no overdue amounts.
(iv) In our opinion and according to. the information and explanations
given to us, in addition to our comments in paragraph 1(b) & (c), 3 and
6, of the Auditors' Report, the existing internal control procedures
are required to be made adequate 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. In our opinion there is a continuing failure
to correct major weakness in the internal control system.
(v) In our opinion and according to the information and explanations
given to us, the company has not accepted any deposits from the public
within the provision of Sections 73 to 76 or any other relevant
provision of the Companies Act, 2013 and the rules framed there under.
(vi) The Central Government has prescribed maintenance of cost records
under section 148 (1) (d) of the Companies Act, 2013 in respect of
Company's Vanaspati, Refined Vegetable Oils and Power Generation'. 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, and are of the opinion that prima facie,
the prescribed accounts and records have not been made and maintained.
(vii) In respect of statutory Dues:
(a) According to the records of the Company, Undisputed statutory dues
including provident fund, investor education and protection fund;
employees' state insurance, income tax, sales tax, wealth-tax, service
tax, customs duty, excise duty, cess and other material statutory dues,
if any applicable to it, have not been regularly deposited with
appropriate authorities and there have been material delays in numerous
number of cases. The Arrears of outstanding dues at the last day of
financial year concerned for a period of more than six months from the
date they became payable are as under:
Name of the Nature of the Amount Period Due Date Date of
statute dues (Rs. in
Lacs) to which
the payment
amount
relates
Income Tax Tax Deducted 12.36 Period
related Various
dates Paid 10.31
Act at Source to 2014-15 Lacs up to
2/11/2015
Employee
State ESIC 2.66 Period
related Various
dates
Insurance
Act to 2012-15
Employees Provident 77.29 Period
related to Various
dates Paid 4.70
Lacs
Provident
Fund Fund 2012-15 up to
and Misce
llaneous 30/09/15
Provisions
Act
Central
Excise & Excise
Duty 2.73 Period
related to Various
dated
Custom Act 2013-15
Service
Tax Service
Tax 59.74 Period
related to Various
dated Paid Rs.
14.23 2013-15 Lacs up
to
7/10/201
State
Sales Tax VAT 877.13 Period
related to Various
dated
2013-15
State
Sales Tax WCT 0.56 Period
related to Various
dated
2012-15
State
Sales Tax Entry
Tax 98.98 Period
related to Various
dated
2012-15
(b) Details of Dues of Income Tax, Sales Tax, Wealth Tax, Service Tax,
duty of custom & Excise, Value Added Tax, Cess which have not been
deposited as on march 31, 2015 on account of disputes are given below
Name of the Nature of
the dues Amount Period Forum where dispute is
pending
statute (Rs. in
lacs) to which
amount
relate
Sales
Tax Act Sales
Tax / CST 11 1998-99 High Court
Sales
Tax Act Sales
Tax / CST 6 2003-04 Revenue Board
Sales
Tax Act Sales
Tax / CST 3 2003-04 Revenue Board
Sales
Tax Act Sales
Tax / CST 4 2007-08 Deputy Commissioner
Appeal, Gwalior
Sales
Tax Act Sales
Tax / CST 119 2008-09 Deputy Commissioner
Appeal, Gwalior
Sales
Tax Act Sales
Tax / CST 52 2010-11 Additional
Commissioner, Gwalior
Madhya
Pradesh VAT 13 2007-08 Deputy Commissioner
Appeal,
VAT Act Gwalior
Madhya
Pradesh VAT 19 2008-09 Tax Board Bhopal
VAT A c t
Madhya
Pradesh VAT 4560 2007-08 Hon'ble Settlement
Commission ,
VAT Act Bhopal
Madhya
Pradesh VAT 10 2009-10 Additional Commissioner,
Gwalior
VAT Act
Madhya
Pradesh VAT 202 2010-11 Additional Commissioner,
Gwalior
VAT Act
Madhya
Pradesh VAT 264 2010-11 Additional Commissioner,
Gwalior
VAT Act
Entry
Tax Act Entry Tax 41 2006-07 Deputy Commissioner
Appeal, Gwalior
Entry
Tax Act Entry Tax 10 2007-08 Deputy Commissioner
Appeal,Gwalior
Entry
Tax Act Entry Tax 1205 2007-08 Hon'ble Settlement
Commission ,Bhopal
Entry
Tax Act Entry Tax 1 2009-10 Tax Board Bhopal
Entry
Tax Act Entry Tax 3 2009-10 Additional Commissioner,
Gwalior
Entry
Tax Act Entry Tax 668 2009-10 Additional Commissioner,
Gwalior
Entry
Tax Act Entry Tax 196 2010-11 Additional Commissioner,
Gwalior
Central
Excise Act Excise Duty 24 2001-02 High Court
Central
Excise Act Excise Duty 3 2002-03 High Court
(C) According to the records of the Company, there are no amounts that
are due to be transferred to the investor Education and Protection Fund
in accordance with the relevant provisions of the Companies Act, 1956
(1of 1956) and rules made there .
(viii) Even after not considering the qualifications which are not
quantifiable, The Company's accumulated losses at the end of the
financial year are more than fifty percent of its net worth. The
Company has incurred cash losses in this year and also in the
immediately preceding financial year.
(ix) As mentioned in paragraph 7 of the Auditors' report and as also
stated in note 33 the company has defaulted in repayment of dues to
bank and financial institutions. According to the information and
explanations given to us the amount and period of default could not be
given as details such as overdue interest, penalties, damages, cost
etc. as considered in their SERFASI Notice by lenders and other parties
have not been mentioned or made available to the company. Further the
Company has not provided any interest liability for the current period
due to non- charging of interest by majority of banks and
unavailability of their statements of accounts.
(x) In our opinion and according to the information and explanations
given to us, the company has not given any guarantee for loans taken by
others from banks or financial institutions during the period
(xi) No Term loan was raised during the year.
(xii) During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the management
For Ladha G. D. & Co.
Chartered Accountants
Firm Registration number: 010962C
New Delhi Nitin Paharia
Dated: December 5, 2015 Partner
Membership number: 409770 |