| 1. We have audited the accompanying financial statements of Sonal
Adhesives Limited, ('the Company'), which comprise the Balance Sheet as
at 31 Mar 2015, the Statement of Profit and Loss and 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
2. 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 and presentation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash fows of the Company in accordance with
the accounting principles generally accepted in India, including
Accounting Standards specified under section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility
includes the 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 accounting records, relevant
to the preparation and presentation of financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
Auditor's responsibility
3. 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 the Rules made there under.
4. 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.
5. An audit involved performing procedures to obtain audit evidence
about the amounts and disclosures in financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of risks of material misstatements 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 that give a true and fair view in order to design
audit 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 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 that we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid 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;
a. In the case of the Balance Sheet, of the state of affairs of the
Company as at 31 Mar 2015
b. In the case of the Statement of Profit and Loss, of the Profit for
the year ended on that date
c. In the case of the Cash Flow Statement, of the cash fows for the
year ended on that date.
Emphasis of Matter
7. Considering the overall financial health of the Company, it may
require further fund infusion for growth and expansion.
Report on other legal and regulatory requirements
8. 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 paragraphs 3 and 4 of the said
Order.
9. 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
purpose of our audit.
b. In our opinion, proper books of accounts 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 of accounts.
d. In our opinion, the aforesaid 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 written representation received from the directors
as on 31 Mar 2015 and taken on record by the Board of Directors, none
of the directors is disqualified as at 31 Mar 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 information and according
to the explanations given to us:
i. The Sales Tax Authorities have raised a demand of Rs 1,82,97,552
pertaining to VAT dues and Rs 2,11,41,834 pertaining to CST dues. The
Company has contested this demand before the appropriate appellate
forum. The Company been advised by its legal consultants that it is
more than likely than not that the verdict will be in Company's favor.
Hence, no provision for the same has been made in the books of
accounts.
ii. There are no long term contracts, including derivative contracts.
Hence the question of provision of for any losses on the same does not
arise.
iii. The Company has been informed by its Bankers that an amount of Rs
35595 is lying to the credit of the account of the Company. This amount
pertains to the year 1999. The Company has instructed the Bankers to
deposit the amount into the Investor Education and Protection Fund. The
Bankers are yet to do the needful in the matter.
i) [a] The company has maintained proper records showing full
particulars including quantitative details and situation of its fixed
assets.
[b] Fixed assets have been physically verified by the management and
the company has regular program of verification which, in our opinion,
is reasonable having regard to the size of the company and the nature
of its assets. No material discrepancy was noticed on such
verification.
ii) [a] According to the information and explanations given to us,
physical verification of inventory has been carried out at reasonable
intervals.
[b] In our opinion, the procedures of physical verification of
inventory followed by the Management are reasonable and adequate in
relation to the size of the Company and nature of its business.
[c] In our opinion, the Company has maintained proper records of
inventory and no material discrepancies were noticed on physical
verification.
iii) [a] According to the information and explanation given to us, 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 Act, and hence this clause, along with sub clauses (a) and
(b) of the Order, are not applicable to the Company.
iv) According to the information and explanations given to us, there is
adequate internal control system commensurate with the size of the
Company and nature of its business, for purchase of inventory and fixed
assets and for sale of goods.
v) The Company has not accepted deposits and hence the question of
contravention of provisions of sections 73 to 76 of the Act, or any
other relevant provisions of the Act and the Rules framed there under
does not arise.
vi) According to the information and explanations given to us, the
Government has not prescribed maintenance of cost records under section
148 (1) of the Act, for any of the goods sold by the Company.
vii) [a] According to the information and explanations given to us and
on the basis of examination of records of the Company, the Company is
generally 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 any other material statutory dues with the appropriate
authorities. As explained to us, the Company did not have any dues on
account of wealth tax.
According to the information and explanations given to us, no
undisputed amounts in respect of provident fund, income tax, sales tax,
wealth tax, service tax, duty of customs, value added tax, cess and
other material statutory dues were in arrears as at 31 March 2015 for a
period of more than six months from the date they became payable.
[b] According to the information and explanations given to us, the
following dues of sales tax / VAT have not been deposited on account of
disputes.
Sr Name of the Nature of Dues Amount (Rs)
No Statute
1 MVAT Act, 2005 Sales Tax 1,82,97,552
2 CST Act Central Sales 2,11,41,834
Tax
Name of the Period to which the Forum where the dispute
Statute amount relates is pending
MVAT Act, 2005 01 April 2010 -
31 March Deputy Commissioner of
2011 Sales Tax, Mumbai
CST Act 01 April 2010 -
31 March Deputy Commissioner of
2011 Sales Tax, Mumbai
[c] According to the information and explanations given to us, an
amount of Rs 35595 is required to be transferred to Investor Education
and Protection Fund in accordance with the relevant provisions of the
Act and the rules made there under. As explained in point 9 (f) (iii)
above, the Company has initiated the process of transferring the funds
to the Investor Education and Protection Fund. However, the bankers of
the Company are yet to do the needful on the matter.
viii) The Company does not have any accumulated losses at the end of
the financial year. The Company has not incurred cash losses in the
current financial year and in the immediately preceding financial year.
ix) The Company has availed itself of financial facilities, funded and
non - funded, from banks such as cash credit, letter of credit and term
loans. As on 31 March 2015, the Company has utilized cash credit
facility in excess of the limit sanctioned by the Bank in respect of
such facility. Thus, the account with such credit facility became
irregular since February 2015.
x) According to the information and explanations given to us, the
Company has given a guarantee for loans taken by others from banks and
financial institutions; the terms and conditions thereof are prima
facie, not prejudicial to the interest of the Company.
xi) According to the information and explanations given to us, the term
loans were applied for the purpose for which they were obtained.
xii) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed and reported
during the course of our audit.
For K S Sanghvi and Co
Chartered Accountants
Firm Registration Number 116714W
Tapan Sanghvi
Partner
Membership No: 122244
Place of signature: Mumbai
Date: 29/05/2015
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