| We have audited the accompanying financial statements of Arunoday Mills
Limited ("the Company") which comprise the Balance Sheet as at 31st
March, 2014, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended and accompanying notes thereto.
Management's Responsibility 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 notified under the Companies
Act, 1956 (the "Act") read with the General Circular No. 15/2013
Dt. 13-9-2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013. 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 Responsibility:
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 and other applicable authoritative
pronouncements issued by the Institute of Chartered Accountants of
India. 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 disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment
of risks of material misstatement in 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 and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances but not for the
purpose of expressing an opinion on the effectiveness of the entity's
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by 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.
Basis for Qualified Opinion:
As more explained in note no. 4, no provision has been made in respect
of differential liability of Rs. 339.69 Lacs due to secured lender viz.
Bank of Baroda.
Qualified Opinion:
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matters
described in the Basis for Qualified Opinion paragraph, 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:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2014;
ii. in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter:
We draw attention to:
a) note no. 17 re: Company's net worth being fully eroded due to
accumulated losses, with corresponding effects in the loss for the year
and period end net assets to the extent indicated therein and despite
continued default in re-payment of significant re-called and overdue
loans etc., the accounts have been prepared on 'going concern'
basis as followed hitherto. In view of acquisition of manufacturing
facilities under Securitisation Act and disposal thereof by secured
lenders and in the absence of any other business activity, the
Company's ability to continue as 'going concern' is subject to
and dependent upon future plans of the Company and
b) note no. 18 re: Balances under Current Liabilities and Current
Assets being subject to confirmation and reconciliation, if any
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor's Report) (Amendment) Order,
2004 (the "Order"), as amended, issued by the Central Government of
India in terms of sub-section (4A) of section 227 of the Act, and on
the basis of such checks of the books and records of the Company as we
considered appropriate and according to the information and
explanations given to us, we give in the Annexure a statement on the
matters specified in par agraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit, except for the matter described in the Basis for Qualified
Opinion paragraph;
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, except for the matters described in the Basis of Qualified
Opinion paragraph;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
d. except for the possible effects of the matters described in the
Basis for Qualified Opinion, in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement dealt with by this
report comply with the Accounting Standards notified under the Act,
read with the General Circular No. 15/2013 Dt. 13-9-2013 of the
Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013; and
e. on the basis of written representations received from the directors
as on 31st March, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March, 2014, from
being appointed as a director in terms of clause (g) of sub-section (1)
of section 274 of the Act.
3. As required by the Companies (Auditor's Report) Order, 2004 issued
by the Central Government in terms of Section 227 (4A) of the Companies
Act, 1956 and on the basis of such checks of books and records of the
Company as were considered appropriate and on the basis of information
and explanations given to us during the course of our audit, we further
state on the matters specified in Paragraphs 4 of the said order to the
extent applicable to the Company as follows:
i) All the Fixed Assets of the Company were acquired by Secured Lenders
under Securitisation Act and sold by public auction in the year
2006-07.
ii) The Company did not carry any stocks during the year.
iii) (a) As per the information furnished, the Company has not granted
any loans to Companies,
Firms or other parties covered in the Register maintained under Section
301 of the Companies Act, 1956.
(b) In addition to amounts borrowed in earlier years towards
interest-free, short term loans taken by the Company from associate
bodies corporate, covered in the Register maintained under Section 301
of the Companies Act, 1956 and aggregating to Rs. 256.15 Lacs as stated
below, a further sum of Rs. 11.28 Lacs was received during the year as
under, leaving a balance of Rs. 267.43 Lacs.
Name of the Party Relationship Balance Amt. Balance Amt.
with the as on recd / as on involved
Company 1-4-13 paid / adj 31-3-14 during the
during year
the year
Amount Rs. Lacs
Resons Investments
Pvt. Ltd. Associate 251.15 6.55 257.70 257.70
Udaysons Inves
tments Pvt. Ltd. Associate 5.00 - - 5.00
Ashita K. Sheth Shareholder - 4.62 4.62 4.62
Kantilal K. Sheth Mg. - 0.10 0.10 0.10
Director
(c) The terms and conditions on which the said interest free short term
loans are taken by the Company are not, prima facie, prejudicial to the
interest of the Company.
(d) During the year, Resons Investments Pvt. Ltd. had re-called the
outstanding loan of Rs. 257.70 Lacs. The Company has defaulted in
re-payment of the said loan. The Company is regular in repayment of the
rest of the loans as stipulated.
iv. The Company has not purchased any fixed assets or undertaken any
trading activity during the year. In our opinion and according to the
explanations given to us, there is adequate internal control system
commensurate with the size and nature of the business of the Company.
During the course of our audit, no major weakness has been noticed in
the internal control system.
v. (a) On the basis of the information and explanations given to us and
representations made, we are of the opinion that particulars of
contracts or arrangements referred to in Section 301 of the Act have
been entered in the register required to be maintained under that
Section.
(b) According to the information and explanations given to us, the
Company did not have any transactions in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lacs in
respect of any party during the year.
vi. According to the information and explanations given to us, no
deposits from the public within the meaning of Reserve Bank of India
Directives and Section 58A and 58 AA or any relevant provisions of the
Act and the rules framed thereunder have been accepted by the Company.
vii. During the year under review, no internal audit was carried out.
viii. In the absence of any manufacturing activity the requirements for
maintenance of cost records under section 209 (1) (d) of the Companies
Act, 1956 are not applicable.
ix. (a) In our opinion and according to the information and
explanations given to us, undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees' State
Insurance, Income-tax, Sales-tax, Wealth-tax, Service Tax, Customs
Duty, Excise Duty, Cess and other statutory dues, where applicable,
have generally been regularly deposited in time with the appropriate
authorities.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of aforesaid dues, where
applicable, were in arrears as at 31st March, 2014 for a period of more
than six months from the date they become payable.
(c) The particulars of disputed statutory dues that have not been
deposited with the appropriate authorities on account of dispute and
the forum where the dispute is pending are given below.
Name of Statute Nature of the Dues Amount Forum where Dispute is
(Rs. in Pending
Lacs)
Income-tax Act Re-assessment Dues 999.21 Income-tax Appellate
Tribunal
Electricity Duty Electricity Duty 95.98 Inspecting Authority
Act
E. S. I. Act E. S. I. Contribution 11.73 ESI Appellate Tribunal
Maharashtra VAT VAT & C.S.T. 38.38 Joint Commissioner of
Act Appeals
x. The accumulated losses at the end of the financial year are more
than fifty percent of its net worth. The Company has incurred cash
losses during the current financial year under audit as well as in the
immediately preceding financial year.
xi. The Company has defaulted in repayment of Secured Loans due to a
Bank amounting to Rs. 785.92 Lacs as per Notice of demand issued by
D.R.T. Mumbai under R.D.B. Act.
xii. Based on our examination of records and information and
explanations given to us, as the Company has not granted loans and/or
advances on the basis of security by way of pledge of shares,
debentures and other securities; the requirements of clause 4 (xii) of
the Order relating to maintenance of documents and records in this
regard are not applicable.
xiii. As the Company is not a chit fund, nidhi, mutual benefit fund or
society, the provisions of clause 4 (xiii) of the Companies
(Auditors' Report) Order, 2004 are not applicable to the Company.
xiv. As the Company is not dealing or trading in shares, securities,
debentures & other investments, provisions of clause 4 (xiv) of the
Companies (Auditor's Report) Order, 2004 are not applicable to the
Company.
xv. Based on the records examined by and according to the information
and explanations given to us, as the Company has not given any
guarantee for loans taken by others from Banks or Financial
Institutions, clause 4 (xv) of the Order relating to comments as to the
terms and conditions whereof being prejudicial to the interest of the
Company are not applicable.
xvi. Based on the examination of the books of account and related
records, the Company had, prima facie, applied the term loans for the
purpose for which they were obtained. However, in the recent past the
Company has no fresh borrowings.
xvii. According to information & explanations given to us and on an
overall examination of the financial statements of the Company and
after placing reliance on the reasonable assumptions made by the
Company for classification of the long term and short term usage of the
funds, we are of the opinion that, prima facie, the Company has not
applied short term borrowings for long term use, except for repayment
of overdue loans due to banks & financial institutions classified under
current liability under One Time Settlement.
xviii. The Company has not made any preferential allotment of shares
during the year.
xix. The Company has not issued any debentures during the year.
xx. The Company has not raised any money by way of public issue during
the year.
xxi. According to the information & explanations given to us and to the
best of our knowledge and belief, no material fraud on or by the
Company has been noticed or reported during the year.
For J. C. MISTRY
Chartered Accountants
(J. C. Mistry)
Proprietor
M. No. : 041971
Place : Mumbai
Dated : 27th May, 2014
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