| We have audited the accompanying standalone financial statements of
EVERONN EDUCATION 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 the
significant accounting policies and other explanatory information for
the year then ended.
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 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.
Auditors' 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.
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 qualified audit opinion on the
standalone financial statements.
Basis for Qualified Opinion
i) We draw attention to Note No 2.27 - Deferred tax asset has been
carried over as at year end 31st March, 2015, as the company is of the
view that there is virtual certainty and has ability to continue as a
going concern depends on the successful outcome of the management
plans. However on a prudent basis the company has not made any
additional provision in the current year towards deferred tax asset.
ii) We draw attention to Note No 2.36 towards Non-provision for Leave
Encashment as specified under Accounting Standard 15 issued by ICAI. In
the absence of Actuarial Valuation, we are unable to ascertain the
effect of such non-provisioning.
iii) We draw attention to Note No. 2.42 wherein the company has
indicated that it is assessing the carrying value of investment in
subsidiaries and advances to subsidiaries, after taking into account
the future operational plans and cash flows and accordingly no
impairment loss has been recognized at this stage.
iv) We draw attention to Note No.2.43 - Lease Charges amounting to
Rs.23,43,35('000) for the year ended March 2015 has not been provided
in the books for some parties as required by the contractual terms. The
overall non-provisioning of lease rental as at 31st March 2015 amounts
to Rs.46,29,56('000). Had this been considered in the audited results
for the period ended March, 2015 the loss would have been Rs.
107,82,35('000) as against reported loss of Rs 84,39,00('000) and
retained earning would have been Rs. 62,23,27(000) as against reported
balance of Rs. 108,52,83(000)
v) We draw attention to Note No.2.47 regarding non ascertaining of
complete particulars of dues to Micro, Small and Medium Enterprises, if
any, under MSMED Act, 2006, and provision towards interest, if any, is
not ascertained at this stage.
vi) We draw attention to Note No.2.49 of Financial Statements with
regard to non-receipt of Confirmation of balances from Debitors
including dues from Government Companies, Creditors, Loans and
Advances, Investments, banks and Other Liabilities. These amounts are
subject to adjustments, if any, after reconciliation and for
identification of doubtful debts/advances, which are not ascertainable
at this stage.
vii) We draw attention to Note No 2.50, wherein the company has stated
that provision towards impairment/ loss under AS 28 has not been
ascertained.
viii) We draw attention to Note No. 2.51 wherein the company has
indicated the receipt of income tax demand notices for various
assessment years commencing from AY 06-07 amounting to Rs.
97,83,39(000) and appeals filed against the orders. The Company has
sought the stay of demand of tax inclusive of interest for which no
provision has been made beneficial .
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects/ possible effects of
the matter described in the Basis for Qualified Opinion paragraph to
the audited financials which are not ascertainable, had the
observations in the note number 2.43 of the financial statement with
regards to the lease charges had been considered the loss for the year
ended March,31,2015 would have been a loss of Rs 107,82,35('000) as
against reported loss of Rs 84,39,00('000) and retained earning would
have been Rs 62,23,27(000) as against reported balance of Rs.
108,52,83(000), subject to paragraphs above the 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, attention is drawn to accounting
policy no. 2.1 of wherein, in the opinion of the management, despite
incurring of substantial losses during the current financial year,
erosion of net worth and existence of certain liabilities including
banks, and other commitments, which are due for payment during the
subsequent financial year the financial statements have been prepared
on a going concern basis in view of the matters more fully explained in
the said note.. The company's ability to continue as a going concern
is dependent on the successful outcome of the management plans.
b) We draw attention to Note no: 2.56 The company in accordance with
the order of Hon'ble High Court of Madras had utilised an amount of Rs.
65,66,64(000) from the Business Restructuring Reserve created in the
earlier year.
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 a
statement on the matters specified in the 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 and 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. The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the Company.
a. 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.
b. 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) Based on the information and explanation given to us, the Company
has disclosed the impact of pending litigations on its financial
position in its financial statements in Note no. 2.41 & 2.54.
ii) The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii) There has been 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 our Independent Auditors' Report to the
members of the Company on the standalone financial statements for the
year ended 31 March 2015, we report that:
Based on the audit procedures performed for the purpose of reporting,
true and fair view of the financial statements of the company and
taking into consideration, the informations and explanations given to
us, and the books of accounts and other records examined by us, in the
normal course of audit, we report that;
i. (a) The Company has not maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has not carried out physical verification of fixed
assets during the year. The company does not have a regular program of
physical verification of its fixed assets. In our opinion the frequency
of physical verification is not reasonable having regard to the size of
the company and nature of its assets. Fixed Assets lying with third
parties are also subject to confirmation. We are therefore unable to
comment on the discrepancies, if any, which could have arisen on such
verification.
(c) The management has also represented that no substantial part of
fixed assets have been disposed off during the year, to affect the
going concern.
ii. The company did not held any inventory during the year accordingly
this clause is not applicable.
iii. 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 an amount of Rs 150,40,15( '000)
is outstanding as on 31st March 2015.
(a) In respect of loans given as there is no written repayment schedule
we are unable to comment as to whether the payment of principal amount
is regular.
(b) As there is no written repayment schedule and based on the
information and explanation provided to us no amount has been demanded
accordingly there is no amount overdue for more than Rs one Lakh.
iv. In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are customized and are of special nature and suitable
alternative sources are not readily available for obtaining comparable
quotations. Additional strengthening of the internal control procedures
with regard to purchase of fixed assets is recommended so as to be
commensurate with the current size of the Company and nature of its
business. However, the management has represented that it is taking
reasonable steps to correct the said weaknesses and in our opinion,
there is a continuing failure to correct major weaknesses in internal
control system relating to purchase of fixed assets.
v. As per the information and explanation provided to us the Company
has not accepted any deposits from the public. However, temporary loans
have been taken from employee welfare trust without adequate records.
vi. As per the information and explanations given to us the
maintenance of cost records has not been prescribed by the Central
Government under sub-section (1) of Section 148 of the Companies Act,
2013.
vii. The company is generally regular in depositing, undisputed
statutory dues including provident fund, employees' state insurance,
income tax, sales tax, wealth tax, service tax, custom duty, excise
duty, cess and other material statutory dues, wherever applicable to
it.
According to the information and explanations given to us, no
undisputed amounts payable in respect of income tax, wealth tax,
service tax, sales tax, customs duty, excise duty and cess were in
arrears, as at 31st March, 2015 for a period of more than six months
from the date they became payable except following:-
Particulars Amount
Professional Tax 16,85 ('000)
Details of dues of Income-Tax, Sales Tax, Wealth Tax, Service Tax,
Custom Duty, Excise Duty, Value Added Tax and Cess which have not been
deposited as on March 31,2015 on account of disputes are given below:
Statute Nature of Dues Forum where
Dispute is pending
Income Tax Act,1961 Income Tax Dues CIT Appeals
Statute Period to which the Amount
amount relates (Rs. '000)
Income Tax Act,1961 AY 2005-06 to AY 2011-12 97,83,39
The Company has been generally regular in transferring amounts to the
Investor Education and Protection Fund in accordance with the relevant
provisions of the Companies Act, 1956 (1 of 1956) and Rules made there
under within time.
viii. The company had accumulated losses at the end of the financial
year and has incurred cash losses in the current and in the immediately
preceding financial year.
ix. In our opinion and according to the information and explanations
given to us, the Company had restructured its loans with various banks
and in accordance to the revised repayment schedule the company has not
defaulted in repayment of dues to a financial institution, bank or
debenture holders subject to borrowing Standard Chartered Bank, which
is currently under the DRT.
x. According to the information and explanations given to us, the
Company has given guarantee towards loans taken by others from banks
and financial institutions, for which no counter guarantee has been
obtained from the parties.
xi. According to the information and explanations given to us, the
Company has used the Term Loan availed during the current year for the
purpose for which it was availed.
xii. During the course of our examination of the books and records of
the company, carried in accordance with the auditing standards
generally accepted in India and based on information and explanation
given to us, we have neither come across any instance of fraud on or by
the Company noticed or reported during the course of our audit nor have
we been informed of any such instance by the Management.
For M/s. P CHANDRASEKAR
Chartered Accountants
Firm Registration No.000580S
P Chandrasekaran
Partner
Membership No.026037
Place : Chennai
Date: 18th August, 2015
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