| 1. We have audited the accompanying financial statements of M/s
Gangotri Textiles Limited (the Company), which comprise the Balance
Sheet as at March 31,2015, 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 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 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.. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of 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 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.
AUDITORS' RESPONSIBILITY
3. Our responsibility is to express an opinion on these financial
statements based on our audit.
4. We have taken in to account the provisions of the Act and the Rules
made there under including the accounting standardsand matters which are
required to be included in the audit report.
5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act and other applicable
authoritative pronouncements issued by the Institute of Chartered
Accountants of India. Those Standards and pronouncements 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.
6. 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 the risks of material misstatement 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 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 management, as well as evaluating the overall
presentation of the financial statements.
7. 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
1. In our opinion, there prevails material uncertainty related to
events /conditions which individually / collectively cast significant
doubts on going concern assumption.
2. The Debtors and Loans & Advances are subject to confirmation. As at
advance of Rs.423 lakhs continues to be doubtful of recovery, the same
has been provided for in the accounts of the company during year ended
31.03.2014. However, repeated reminders are being received from
lenders for the recovery of the same.
3. The interest provisions for all loans from Banks have been worked
based on the then prevailing CDR Package and not on the original
sanction/revised floating rates. Consequent to the company's non
compliance with CDR package and reverting back to the original
sanction, the differentials interest that ought to have been provided
for in the accounts is estimated at Rs 103.00 Crores (from 01.07.2008
to 31.03.2015) cumulatively for the above periods. The estimated loss
due to the above is understated to the extent of Rs. 18 crores for the
year ended 31.3.2015.
4. On examination of the books of accounts and the information and
explanations given to us, the internal control system continue to be
not commensurate considering the nature of company's business.
5. The Company has been adopting the method of Accounting for also
NETTING of balance when transactions are made with the same party. For
the year ended 31.03.2015 the company has NETTED the debit and credit
balances of the same party. Hence, Debtors and Creditors have got
reduced by Rs. 37.59 Crores each as on 31.03.2015.
6. The State Bank of India vide its letter dated the 24.04.15 has
declared company as willful defaulters and has given an opportunity to
the company to submit its representation.
7. The balances shown under Secured Loans and Balances with bank,
conlirmation of balance is yet to be given by the Bankers. Hence, the
balances reflected under these two heads are as per the books of
account of the company.
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 matter described
in the Basis for qualified opinion paragragh, 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 31 March 2015;
(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.
Other Matters
The Ministry of Corporate Affairs had on 1st April 2014, vide its
General Circular No.07/2014, Dissemination of Information with Regards
to the Provisions of the Companies Act, 2013, as Notified Till date vis
a vis corresponding Provisions of the Companies Act, 1956, identified
such sections of the Companies Act, 1956 that would cease/continue to
have effect from 1st April 2014. Accordingly, in terms of the aforesaid
Circular, our reporting in respect of Section 227 (3)(f) of the
Companies Act, 1956, and clauses (iii), (v)(a) and (b), (vi), (viii),
(xiv), (xviii) of the Companies (Auditor's Report) Order, 2003 (dealing
with Sections 49, 58A, 58AA, 209(1)(d) and 301 of the Companies Act,
1956) is only for the period beginning from 1.4.2004 till 31st March
2015 since as per the aforementioned MCA Circular these Sections have
ceased to have effect from 1st April 2014.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 issued
by the Central Government of India in terms of sub-section (11) of
section 143 of the Act (hereinafter referred to as the 'Order') 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 paragraphs 3 and 4 of the Order.
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
purpose of our audit;
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;
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. 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 representations received from the directors
as on 31 March 2015, and 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) Act..
f. With respect to the other matters to be included in the Auditors'
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules 2014, in our opinion and to the best of our knowledge and belief
and according to the information and explanation given to us.
i. The Company has disclosed the impact of pending litigations as at
March 31,2015 on its financial position in its financial statements.
ii. The Company has made provision as at March 31,2015 as required
under the applicable law or accounting standards for material
foreseeable losses, if any, on long term contracts including derivative
contracts.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company during the year ended 31 March 2015.
Annexure to the Auditors' Report
Referred to In paragraph 9 of the Independent Auditors Report of even
date to the members of M/s Gangotri Textiles Limited on the financial
statements as of and for the year ended 31 March 2015.
I) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) The Company has a regular programme of physical verification of its
fixed assets by which fixed assets are verified in a phased manner over
a period of three years. In accordance with this programme, certain
fixed assets were verified during the year and no material
discrepancies were noticed on such verification. In our opinion, this
periodicity of physical verification is reasonable having regard to the
size of the Company and the nature of its assets.
II) (a) As explained to us, inventories of the company at all its
location have been physically verified at reasonable intervals by the
management during the year.
(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 the nature of its business
(c) The Company is maintaining proper records of inventory and material
discrepancies, noticed on physical verification have been properly
dealt with in the books of account.
III) The company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the registered maintained
under section 189 of the Companies Act, 2013.
IV) On examination of the books of accounts and the information and
explanation given to us, the internal control systems continous to be
not commensurate considering the nature of its business.
(V) The company has not accepted any deposit from the public during the
year.
(VI) We have broadly reviewed the regards maintained by the company
pursuant the Rules made by the Central Government for the maintenance
of the cost records under 148(1) of the Companies Act. We are of the
opinion that, prima facie, the prescribed accounts and records have
been made and maintained. We have not, however, made a detailed
examination of the records with a view of determining whether they are
accurate or complete.
(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, Investor Education and
Protection Fund, Income-tax, Sales-tax, Wealth tax, Service tax and
other material statutory dues have been regularly deposited during the
year by the Company with the appropriate authorities. As explained to
us, the Company did not have any dues on account of Employees' State
Insurance, Customs duty and Excise duty except the following.
Particulars 31.03.2015 (in Rs.Lakhs) 31.03.2014 (in Rs. Lakhs)
Name of the Amount
Statue Year Nature of Dues in lakhs
TamilNadu Additional 1996-97 Additional
Sales Tax Act, 1970 Sales Tax 20 07
CST Acts 2002-03 TNGST,Surcharge 1.82
AST, Penalty
TNGST, CST Acts 2003-04 TNGST, Surcharge 13.54
AST, Penalty
Income Tax Act, 2004-05 Interest U/S 5.85
1961 234B/234C
Name of the Forum Provided in the Amount
Statue where dispute books of in lakhs
TamilNadu Additional Supreme Court of yes 20 07
Sales Tax Act, 1970 India
CST Acts STAT Coimbatore No 1.82
TNGST, CST Acts STAT Coimbatore No 13.54
Income Tax Act, ITAT Chennai No 5.85
1961
(b) According to the records of the Company, there are no Statutory
dues, which have not been deposited in account of any disputes.
c) There has been no delay in transfering unpaid divident amount,
required to be trasnsfer to the Investor's Education and Protection
Fund by the Company.
(viii) The units of the company has acumulated losses at the end of
financial year. The company has incurred cash losses during the
financial year and also the during the immediately preceding financial
year
(ix) The company has defaulted in repayment of interest and principal
to bank and financial institutions.
(x) During the year the company has not given any guarantee for loan
taken from others rom bank or financial institution
(xi) The company has not optained any term loan during this year.
(xii) To the best of our knowledge and belief and according to the
information explanation given to us, no fraud or by the company was
noticed or reported during the year.
For THAKKER & SANGHANI
Firm Registration No:004351S
Coimbatore Chartered Accountants
28-5-2015 Aswin.C
Partner
Membership No:22204
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