Report on the Financial Statements
We have audited the accompanying financial statements of M/s Greenearth
Resource & Projects Limited (hereinafter referred to as "the Company")
comprising of 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 (hereinafter referred to as "the financial
statements").
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the preparation of
these financial statements in terms of the requirements of the
Companies Act, 2013 (hereinafter referred to as "the Act") 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. The Board of Directors of the
companies are responsible for 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; the selection and application of appropriate
accounting policies; making judgments and estimates that are reasonable
and prudent; and the 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, which have been used for
the purpose of preparation of the financial statements by the Directors
of the Company, as aforesaid.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. While conducting the 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 but not for the purpose of expressing
an opinion on whether the Company has an adequate internal financial
controls system over financial reporting in place and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Board of Directors,
as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence obtained by us and the audit
evidence obtained by the other auditors in terms of their reports
referred to in sub-paragraph (a) of the Other Matters paragraph below,
is sufficient and appropriate to provide a basis for our qualified
audit opinion on the financial statements.
Opinion
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 March 31,2015;
b) in the case of the Statement of Profit and Loss, of the loss for the
year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matters
We draw attention to the following matters in the Notes to the
financial statements: -
a) Note: 28 in the financial statement which indicates that the Company
has accumulated losses and its Net worth has been fully eroded, the
Company has incurred Net Loss of Rs. 3538.07 Lacs during the current
financial year (Previous Year Rs. 12823.08 Lacs) and net cash loss
during the current year of Rs. 250 Lacs (Previous year Rs. 576 Lacs)
also, the Company current liabilities exceeded its current assets as at
the balance sheet date. These conditions, along with other matters set
forth in Note: 28, indicate the existence of a material uncertainty
that cast significant doubt about the Company's ability to continue as
a going concern. owever, the financial statements of the Company have
been prepared on a going concern basis for the reasons stated in the
Note No.23.
Our opinion is not modified in respect of these matters.
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, based on
the comments in the auditors' reports of the Company,
we give in the Annexure a statement on the matters specified in
paragraphs 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, except information and explanations read with
auditors' report for the year ended 31.03.2010;
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, the 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 comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.
e) The going concern matter described in sub-paragraph (b) under the
Emphasis of Matters paragraph above, in our opinion, may have an
adverse effect on the functioning of the Company.
f) On the basis of written representations received from the directors
as on 31 March, 2015, taken on record by the Board of Directors, none
of the directors is disqualified as on 31 March, 2015, from being
appointed as a director in terms of Section 164(2) of the Act.
g) With respect to the other matters included in the Auditor's Report
and to our best of our information and according to the explanations
given to us we further report that :-
* As per AS-22 Accounting for Taxes on Income, and Note No.24 forming
part of Balance Sheet and Profit & Loss Statement, company has not
provided for deferred tax assets or liabilities that may arise on
account of timing differences which are capable of reversal in one or
more subsequent periods, using the tax rates and tax laws that are
enacted or substantively enacted.
* The Accumulated losses of the Company is Rs.583.18 crores (Previous
period: Loss Rs. 547.81 crores) and its net worth is negative Rs.
258.57 Crores (Previous period: Negative Rs. 223.27 crores) as at the
end of the reporting period which indicates erosion of Net worth of the
Company. The Company can be termed as "SICK" within the meaning of
clause (O) of sub section (1) of section 3 of the Sick Industrial
Companies (Special Provision) Act, 1985. With regard to above, the
Company's ability to continue as going concern is in doubt and will
depend upon any revival programme by Government.
* Company has not made any Provision for Interest on Working Capital
Facility and Term Loan availed from Various Banks, the amounts not
having been ascertained, as the same is not charged by Banks. This is
because of classification of its account by the concerned Banks and
Financial Institution as Non-performing Assets (NPA).
* During the Period under review the company has received the notice of
demand dated 29th March, 2015 under section 156 of the Income Tax Act,
1961 for the assessment year 2012-13 with the demand of Rs.
7,52,47,740/-. However the company has not made any provision towards
the said liability as the management has decided to file appeal against
the said order.
* Company has received Notice u/s. 13(2) and Section 13(4) of
Securitization and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (No.3 of 2002) dated 17th October, 2011
from its banker, as the operation of and conduct of the financial
assistance / credit facilities have become irregular and company's debt
with its bankers has been classified as Non-Performing Asset (NPA) as
per the guidelines issued by RBI.
* During the period under review State Bank of India, Stressed Assets
Management Branch, Mumbai vide their letter no. SBI/SAMB/SB/NIPL/0569
dated 04th June, 2014 have absolutely assigned all the rights, title
and interest in financial assistance in favour of "Invent Assets
Securitisation & Reconstruction Private Limited". Accordingly Invent
Assets Securitisation & Reconstruction Private Limited has become the
secured lender and all the rights, title and interests of State Bank of
India have vested in Invent Assets Securitisation & Reconstruction
Private Limited in respect of the financial assistances granted by
State Bank of India.
* During the period under review the Securities and Exchange Board of
India, Mumbai issued notices dated 26th March, 2014 under Rule 4 of
SEBI (Procedure for Holding Inquiry and Imposing Penalties by
Adjudication officer) Rules, 1995. However the management has submitted
its reply and outcome of the same is still pending.
* During the period under review, an inquiry regarding SFIO are pending
before the Court at Kolkata/CLB at Kolkata Bench as per Note 4(b)
forming part of Balance Sheet and Profit & Loss Statement.
* Balances of Loans, Sundry Debtors, Loans and Advances and Current
Liabilities, are subject to confirmation from the respective parties
and reconciliations, if any.
ANNEXURE TO THE 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:
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets subject to the annexure to the Auditors Report for the period
ended on 31.03.2010.
(b) As explained to us, all fixed assets have not been physically
verified by the management during the period but there is a regular
programme of verification which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets. No
material discrepancies were noticed on such verification.
(ii) (a) As explained to us, inventories have been physically verified
during the reporting period by the management at reasonable intervals.
(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) In our opinion and on the basis of our examination of the records,
the Company is generally maintaining proper records of its inventories.
No material discrepancy was noticed on physical verification of stocks
by the management as compared to book records subject to the annexure
to the Auditors Report for the previous financial period ended on
31.03.2010.
(iii) (a) The Company has granted loans to bodies corporate covered in
the register maintained under section 189 of the Companies Act, 2013
('the Act') The balances as at the close of the reporting period is
Rs. Nil (P.Y. 0.69 Crores).
(b) In the case of the loans granted to the bodies corporate listed in
the register maintained under section 189 of the Act, the Company had
granted interest free unsecured loans. The terms of arrangements do not
stipulate any repayment schedule and the loans are repayable on demand.
Accordingly, paragraph 3(iii)(b) of the Order is not applicable to the
Company in respect of repayment of the principal amount.
(c) According to the information and explanations given to us and on
the basis of our examination of the books of account, the Company had
taken interest free unsecured loans from companies, and other parties
listed in the register maintained under Section 189 of the Companies
Act, 2013, repayable on call basis. The balances as at the close of the
reporting period is Rs. 7.13 Crores (P.Y. 5.75 Crores).
In our opinion, the other terms and conditions on which the loans have
been taken is prima facie, not prejudicial to the interest of the
company.
(d) There are no overdue amounts of more than rupees one lakh in
respect of the loans granted to the bodies corporate listed in the
register maintained under section 189 of the Act.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business. The
activities of the Company do not involve purchase of inventory and the
sale of goods. We have not observed any major weakness in the internal
control system during the course of the audit.
(v) The Company has not accepted any deposits from the public during
the year.
(vi) The Central Government has not prescribed the maintenance of cost
records under section 148(1) of the Act, for any of the services
rendered by the Company.
(vii) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including provident fund, income tax, sales tax, wealth
tax, service tax, duty of customs, value added tax, cess and other
material statutory dues have been regularly deposited during the year
by the Company with the appropriate authorities. According to the
information and explanations given to us, no undisputed amounts payable
in respect of statutory dues were in arrears as at 31 March 2015 for a
period of more than six months from the date they became payable except
Professional tax, Sales tax, and Income tax.
(b) According to information and explanations given to us, some dues of
income tax, sales tax, and service tax have not been deposited by the
Company on account of disputes.
(c) According to the information and explanations given to us the
amounts which were required to be transferred to the investor education
and protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules there under, the company have
not made any provision or transfer of such fund.
(viii) The Accumulated losses of the Company is Rs. 583.18 Crores
(Previous year: Loss Rs. 547.81crores) and its net worth is negative
Rs.258.57 Crores(Previous period: Negative Rs. 223.27crores) at the end
of the reporting period which indicates erosion of Net worth of the
Company. The Company can be termed as"SICK" within the meaning of
clause (O) of sub section (1) of section 3 of the Sick Industrial
Companies (Special Provision) Act, 1985.
(ix) The Company is having outstanding dues to financial institutions
or banks during the year as mentioned under the Emphasis of Matters &
Report on other Legal and Regulatory Requirements paragraph above.
(x) In our opinion and according to the information and the
explanations given to us, the Company has given guarantees for loan
taken by others from a bank or financial institution. In our opinion
and according to the information and explanation given to us, the terms
& conditions of the guarantees given by the company for loans taken by
others form banks and financial institutions, are not prima facie
prejudicial to the interest of the company.
(xi) The Company is having term loans outstanding during the year as
mentioned under the Emphasis of Matters & Report on other Legal and
Regulatory Requirements paragraph above.
(xii) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit
For Arup Das & Associates
(Chartered Accountants)
Sd/-
Arup Das
(Proprietor)
(Membership No. : 053564)
FRN: 318034E
Place : Kolkata
Date : 30.05.2015
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