| REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Flawless
Diamond (India) Limited, ("the Company") which comprise the Balance
Sheet as at 318* March, 2013, 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 informations.
MANAGEMENT'S RESPONSIBILTY FOR THE FINANCIAL STATEMENTS
The Company's 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. 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 RESPONSIBILTY
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
AccolintantS of India/Those Standards require that we comply with the
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 the internal control relevant to me
Company's preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by the 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 audit opinion.
OPINION
In our opinion and to the best of our information and according to the
explanations given to us, 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:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2013;
(b) In the case oj: the Statement of Profit and Loss, of the loss of
the Company 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 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 thafe
(a) As more explained in Note 5 of Notes on Accounts to the financial
saietment and to the following paragraph qualified in the annexure to
the Auditor's Report;
Paragraph No. Regarding:
Annexure 4 Recovery of debts . ;
Annexure 9'(by Income Tax Liabilities
Annexure 11 , Defaulted in repayment of loans to banks
Note 4 of Notes on Accounts No Manufacturing Activity - u
(b) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes of our
audit.
(c) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appearfcfrom our examination of
those books.
(d) The Balance Sheet, Statement of Profit and Loss, and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
(e) In our opinion, the Balance Sheet, Statement of Profit and Loss,
and the Cash Flow Statement comply with the Accounting Standards
referred to in sub-section (3Cj). of section 211 of the Act.
(f) On the basis of the written representations received from the
directors as on 3 ls< March, 2013 taken on record by the Board of
Directors, none ofthe dtrectois is disqualified as on 31st March,;2G13
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Act.
ANNEXURE TO INDEPENDENT AUDITORS'REPORT
[Referred to in Paragraph 1 under the heading of "Report on Other Legal
and Regulatry Requirement" of our report of even date]
Re :- Flawless Diamond (India) Limited ("die company")
In terms of information and explanations given to us and the books and
records examined by us in the normal course of audit and to the best of
our knowledge and belief, we state as under:
1. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
b. As explained to us, the fixed assets have been physically verified
by'the Management during the year in a periodical manner, which in our
opinion is reasonable, having regard to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
physical verification.
c. In our opinion, the Company has not disposed off substantial part
of fixed assets during the year and the going concern status of the
Company is not affected.
2. In respect of its inventories: ;j,
a. The inventories have been physically verified by the management at
regular intervals during the year. In our opinion frequency of
verification is reasonable
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the Management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed on
physical verification of inventory as compared to the book records.
3. a. The company has not granted any secured.dr unsecured loan to
companies, firms or otiier parties covered in the register maintained
under section 301 of the Companies Act, 1961.
b. In respect of loans, secured or unsecured taken by me company from
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956
i. The company has taken loan from 3 parties and the amount involved
is Rs.1,78,50,000/-
ii. The* company has taken the interest free loan and the terms and
conditions of loan taken are not prejudicial to the interest of the
company.
iii. The payment of principal is not regular
4. In our opinion and according to the information and explanations
given to us and as verified by us, internal control procedures is not
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and also for the
sale of goods. iDuting the course of our audit, we have observed that
me company is in continuous failures with regard to collection of
foreign debtors. The company has not taken any major initiative to
recover the dues from the debtors.
5. In respect of transactions covered under Section 301 of the
Companies Act, 1956, in our opinion and according to the information
and explanations given to us, the transactions made in pursuance of
contracts or arrangements, that needed to be entered into in the
register maintained under Section 301 of the Companies Act, 1956, have
been so entered. The transaction made pursuant to the contracts have
been made at prices which are reasonable having regards to prevailing
market price at the relevant time.
6. The Company has not accepted any deposits from the public in
contravention of provisions of section 58A, 58AA or any other relevant
provisions of the Companies Act, 1956 except that the loan taken from
the directors of the company.
7. In our opinion, the internal audit system of the company is in
commensurate with its size and nature of its business. However the
company has not appointed an internal auditor as required under the
Companies Act, 1956
8. The Central Government has not prescribed maintenance of cost
records under Section 209 (1) (d) of the Companies Act, 1956.
9. In respect of statutory dues:
a. According to the records of the Company, there are no dues of
Provident Fund, Investor Education and Protection Fund, Employees'
State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty,
Excise Duty, Cess and other statutory dues which has not deposited with
the appropriate authorities. According to the information and
explanations given to us, no undisputed amounts payable in respect of
the aforesaid dues whiclrNverdonistariding 4s at 31st Kfareh, 2013 for
a period of more than six months from the date they became due except a
sum of Rs. 31,90,460/- due in respect of Income Tax demand for A.Y.
2010-11
b. The disputed statutory dues aggregating ofRs. 15.56 Crore that have
not been deposited on account of disputed matters pending before
appropriate authorities are as under: Ý ;* :/* * Hy
Sr. Name of Statute Nature of Amount Period to
which the Forum wh&fe dispute
No. Dues (Rs. In
crore) amount
relates is pending
1 Income Tax
Act, 1961 Income
Tax 7.51 Amount
relates
to A. Y Income Tax Appellate
2008-09 Tribunal
2 Income Tax
Act, 1961 Income
Tax 3.47 Amount
relates
to A.Y. Income Tax Appellate
2009-10 Tribunal
3 Income Tax
Act, 1961 Income
Tax 4.58 Amount
relates
to A.Y. Commissioner of
2010-11 Income Tirx
(Appeal)
10. The Company does not have accumulated losses. The company has
incurred cash losses during the financial year'ctfvered by our audit
and also incurred cash losses in the immediately preceding financial
year.
11. Based on our audit procedures and according to the information and
explanation given to us, we are of the opinion that the Company has
defaulted in repayment of below mentioned dues to its bankers.
Name of the
Bank Period from which
payment Outstanding Defaulted Amount
(Rs. In Crore) as on
31.03.201:3
ICICI Bank Since 30.06.2011 26.75
Punjab and
Sind Bank Since 30.06.2011 16.44
12. In our opinion and according to the information and explanation
given to us, no loans and advances have been granted by the Company on
the basis of security by way of pledge of shares, debentures and other
securities.
13. In our opinion and according to the information and explanation
given to us, the Company is not a chit fund or a nidhi / mutual benefit
fund / society.
14. According to information and explanation given to us, the Company
is not dealing or trading in securities, debentures and other
investments.
15. The Company has not given guarantees for loans taken by others
from banks or financial institutions.
16. According to the information and explanations given to us, the
Company has not taken any term loan during the year.
17. According to the Cash Flow Statement and others records examined
and the information and explanation given to us on overall basis, funds
raised for short term basis have prima-facie not been used during the
year for long-term investments.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the companies act, 1956.
19. The Company has not raised any money by way of issue of
debentures.
20. The Company has not raised any money by way of Public Issue during
the year
21. In our opinion and according to the information and explanations
given to us, no fraud on or by the Company has been noticed or reported
during the year that causes the financial statements to be materially
misstated.
FOR SURESHAN CHALIYA & CO.
Chartered Accountants
Firm Regn.No: 112492W
SURESH ANCHALIYA
Place: Mumbai Partner.
Date :30th May, 2013 Membership No. 044960 |