| 1. We have audited the attached Balance Sheet of INDAGE VINTNERS
LIMITED ("The Company") formerly known as CHAMPAGNE INDAGE LIMITED, as
at 31st March 2010, the Profit and Loss Account and the Cash Flow
Statement for the year ended on that date both annexed thereto. These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act. 1956,we enclose in the Annexure, a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report as follows:
i) 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;
ii) 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 and proper returns adequate for the purposes of our audit
have been received from the branches not visited by us;
iii) The accounts of the various branches of the Company have been
audited by other firms of Chartered Accountants appointed by the
Company under Sec. 228 of the Companies Act, 1956, and their reports
have been considered and appropriately dealt with while preparing our
report.
iv) The Balance Sheet and Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
v) In our opinion, the Balance Sheet and Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
applicable accounting standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956; except AS-2 "Valuation of
Inventories", AS-11 "The Effects of Changes in Foreign Exchange Rates",
AS- 13 "Accounting for Investments" and AS- 15 "Employee Benefits" and.
vi) Attention is invited to the following:
a. Note no 2.14 of Schedule 18 explaining the amount written off as
Exceptional items in respect of "Advances against Retail Initiative"
amounting to Rs. 1,369,932,889.
b. We are unable to opine on the fall in the value of Investments in
subsidiary companies costing Rs. 94,48,03,718 as the necessary
information was not available for our audit. (AS - 13)
c. Note no. 1.6 of Schedule 18 - Accounting Policy on Foreign Currency
Transactions according to which the Exchange Difference pertaining to
Investments in International Operations is transferred to a Foreign
Currency Translation Reserve, which is not in accordance with AS-11.
d. Loans and Advances of Rs. 33,46,32,330 considered good by the
Management includes Rs. 1,30,73,067 old deposits given to certain
parties. In the absence of confirmations for the same, we are unable to
opine on the recoverability of these deposits. The balance amount of
Rs.32,15,59,263 includes advances made to employees, subsidiary
companies and sister concerns. We are unable to opine on the
recoverability of the said entire amount.
e. No confirmation of balances have been received for Secured Loans
amounting to Rs. 2,66,30,72,663 and Unsecured Loans amounting to Rs.
1,21,48,18,895 taken from Banks, Financial institutions and others.
Under the circumstances we are unable to ascertain the correctness of
the balances shown.
f. The Company has not obtained acturial valuation for the gratuity
liability as required under AS -15 "Employee Benefits". The liability
for Gratuity is provided on adhoc basis amounting to Rs. 32,00,000 for
the year ended 31st March, 2010.
g. Sundry Debtors (Unsecured) considered good by the Management
includes old outstandings over 6 months aggregating to Rs.66,94,48,625.
In the absence of bill wise details we are unable to comment on the
recoverability of the said amount.
h. We are unable to opine on the recoverability of dues from certain
subsidiary Companies on account of Interest Receivable from them
amounting to Rs. 4,19,83,794 which is included in Loans and Advances.
i. We are unable to opine on the recoverability of Stocks lying with
third parties as confirmations for the same have not been received.
j. Bank statements and confirmations from certain banks have not been
received by the Company. Under the circumstances we are unable to
ascertain the correctness of the balances shown under Cash and Bank
balances.
Due to uncertainties involved we are unable to quantify the effect of
these observations on the accounts.
vii) Without qualifying our opinion we draw attention to:
a. Note 2.17 of Schedule 18 of the financial statements, wherein as
explained, the Companys outstanding liabilities are being restructured
under the aegis of Corporate Debt Restructuring Scheme (CDR) with
effect from 1st October, 2009 and as required by the Scheme, the Master
Restructuring Agreement (MRA) has been executed. Other necessary
documents including security documents are in the process of being
executed.
b. Note 2.21 of Schedule 18 of the financial statements, wherein as
explained, winding up order against the Company has been passed by the
Honble High Court of Bombay. However a stay has been granted to the
company by the Honble High Court. The matter is sub judice and outcome
of the same cannot be currently ascertained.
The Companys ability to continue as a going concern is-dependent on
the Company being able to successfully implement the actions proposed
in the CDR Scheme and outcome of winding up petitions in favour of the
Company.
viii) On the basis of written representations received from the
Directors, as on 31st March 2010 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March 2010 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
5. Subject to our observations in Para (v) and (vi) above, in our
opinion and to the best of our information and according to the
explanations given to us, the said accounts read together with notes
thereon give the information required by the Companies Act, 1956 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 2010;
ii. In the case of the Profit & Loss account, of the Loss of the
Company for the year ended on that date and
iii. In the case of the Cash Flow Statement, of the Cash Flows of the
Company for the year ended on that date.
ANNEXURE TO AUDITORS REPORT TO THE MEMBERS OF INDAGE VINTERS LIMITED
Referred to in paragraph 3 of our Report of even date.
i. (a) The Company is maintaining proper records of its fixed assets.
(b) Physical verification of all fixed assets has not been conducted
during the year.
(c) In our opinion and according to the information and explanations
given to us, the Company has not disposed off substantial part of its
fixed assets during the year.
ii. (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion and according to the information and explanations
given to us, the procedure of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the Company is maintaining proper records of
inventory. During the year certain material discrepancies were noticed
on verification between the physical stocks and the book records. The
same have been properly dealt with in the books of accounts.
iii. (a) The Company has not granted any loans, secured or unsecured to
companies, firm or other parties during the year covered in Register
maintained under Section 301 of the Companies Act, 1956. Hence clauses
(b) to (d) are not applicable.
(b) The Company has taken unsecured loans from five companies and two
firms, covered in Register maintained under Section 301 of the
Companies Act, 1956, amounting to Rs.3,90,62,625. The year end balance
of loans taken from parties was Rs. 4,53,85,631.
(c) In our opinion, the terms and conditions on which loans has been
taken from Companies and Firms covered in the Register maintained under
Section 301 of the Companies Act, 1956 are not prima facie, prejudicial
to the interest of the Company.
(d) The payment of Principal and Interest on the Loans taken by the
Company are as per the agreed terms.
iv. In our opinion and according to the information and explanations
given to us, the Company requires strengthing of its internal control
procedures to make it commensurate with the size of the Company and the
nature of its business, with regard to purchases of inventory and fixed
assets and for the sale of goods and services. Attention is invited to
the matters stated in Note 2.15 of Schedule 18.
v. (a) The company has not entered particulars of some of the contracts
and arrangements referred to in Section 301 of the Act.
(b) In our opinion and according to the information and explanation
given to us, the transactions made in pursuance of such contracts or
arrangements have been made at prices which are prima facie reasonable
having regard to prevailing market price of similar goods and services
at the relevant time.
vi. In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Section
58A, 58AA and other relevant provisions of Companies Act 1956 and the
rules framed there under. No order regarding public deposit has been
passed by the Company Law Board or National Company Law Tribunal or
Reserve Bank of India or any Court or any other Tribunal. Public
deposits amounting to Rs. 390,000 are matured but not claimed.
vii. Internal audit has not been conducted during the year.
viii. According to the information and explanations given to us, the
maintenance of cost records has not been prescribed by the Central
Government under Section 209 (1) (d) of the Companies Act, 1956 for any
of the Companys products.
ix. (a) According to the information and explanations given to us and
as per the records of the Company, undisputed statutory dues including
Income Tax, Provident Fund, Employees State Insurance, Sales Tax,
Wealth Tax, Service Tax and Customs Duty have not been regularly
deposited with the appropriate authorities. The undisputed amounts
outstanding as or. 31st March 2010 for a period of more than six months
from the date they became payable, are:
Particulars Amount (Rs.)
Provident Fund 21,14,799
ESIC 81,923
Wealth Tax 1,53,298
Central Sales Tax 12,71,252
Value Added Tax 1,68,73,803
Maharashtra Value Added Tax 34,23,742
Service Tax 1,94,576
Professional Tax 7,84,570
Works Contract Tax 41,252
Cess Payable 1,51,750
Maharashtra Labour Welfare Fund 7,606
Dividend Distribution Tax 5,452,296
(b) According to the information and explanation given to us and as per
the records of the Company as at 31st March 2010, the following are the
particulars of disputed dues on account of Sales Tax and Income Tax
matters, which have not been deposited by the Company:
Name of the Nature of Dues Period to Amount Forum
which where
Statute amount (Rs.) dispute is
relates Pending
Income Tax Act, 1998-99;2004- 27 91,895 ITAT
1961 Income Tax 2005;2005,06
x. In our opinion, the accumulated losses at the end of the financial
year are more than 50 % of its net worth.
The Company has incurred cash losses both in the present financial
year, and in the immediately preceding financial year.
xi. In our opinion and according to the information and explanations
given to us, during the year the Company has defaulted in the repayment
of its dues to financial institutions and banks. The period and the
amounts could not be ascertained due to lack of data availability.
xii. In our opinion and according to the information and explanations
given to us, the Company has not granted any loans and advances on the
basis of security by way of pledge of Shares, Debentures or any other
securities.
xiii. The Company is not a chit fund or a nidhi / mutual benefit fund /
society. Therefore, the provisions of clause 4 (xiii) of the Order are
not applicable.
xiv. In our opinion the Company is not dealing in or trading in shares,
securities, debentures and other investments. Therefore, the provisions
of clause 4(xiv) of the Order are not applicable.
xv. In our opinion and according to the information and explanations
given by the Management, the Company has given corporate guarantees for
loans taken by others from banks and financial institutions. We are
unable to ascertain whether the terms and conditions on which these
guarantees have been given are prejudicial to the interest of the
company.
xvi. On the basis of the records examined by us, and relying on the
information compiled by the Company for co-relating the funds raised to
the end use of term loans, we state that the Company has, prima facie,
applied the term loans for the purposes for which they were obtained.
xvii. According to the information and explanations given to us, and on
an overall examination of the financial statements and after placing
reliance on the reasonable assumptions made by the Company for
classification of short term and long term usage of the funds, we are
of the opinion that, prima facie, no funds raised on short term basis
have been utilized for long term investment.
xviii. According to information and explanations given to us, 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. However the Company has allotted 1,000,000
equity share warrants to Arsh Advisors & Owners Ltd.
xix. According to information and explanations given to us the Company
has not issued any secured debentures during the year.
xx. The Company has not raised any money by way of public issue during
the year.
xxi. Based upon the audit procedures performed and the information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the year.
For Sorab S. Engineer and Co.
Chartered Accountants
Firm Regn. No.: 110417W
Sd/-
CA. M.P. ANTIA
Partner
Place: Mumbai
Membership Number: 7825
Date: 7th October, 2010
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