| We have audited the accompanying financial statements of Pasupati
Spinning Weaving Mills Limited ("the Company") which comprise the
Balance Sheet as at 31 March 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
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.
Auditor's responsibility
Our responsibility is to express an opinion on these financial
statements based on our 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. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, 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 on the financial
statements.
Basis of Qualified Opinion
The company has claimed additional compensation in respect of part of
factory land acquired. The additional compensation demand is
Rs.61464287 (including amount upto previous year Rs. 61464287), which
according to the management shall be accounted for as and when
received. Had the additional compensation been accounted for the profit
for the year and other current assets would have been higher by the
said amount.(Refer Note no. 12 of the accompanying notes to the
financial statements).
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 matter
described in the basis for qualified opinion paragraph above, 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, of the
state of affairs of the Company as at 31st March, 2015, and its profit
and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory requirements
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 Companies Act, 2013, we give in
the Annexure a statement on the matters specified in paragraphs 3 and 4
of the Order, to the extent applicable.
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.
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, the Statement of Profit and Loss, and the 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) As per information and explanations given to us, we report that as
on 31.3.2015 none of the directors of the company are disqualified from
being appointed as a director of the company under Section 164((2) of
the Companies Act, 2013 As the company had not redeemed its debentures
on due dates and as the default continued for more than a year,
directors of the company were not qualified for being appointed as
directors of any other public company in terms of provision of Section
164(2) of the Companies Act, 2013 as amended by the companies Amendment
Act, 2000. Board for Industrial and Financial Reconstruction (BIFR) has
sanctioned rehabilitation scheme for the company vide its order dated
17.2.2012. The said scheme has approved payments of the settled amount
to debenture-holders in instalments. The payment as approved by BIFR
has been made and there is no default in such payment. Besides, four of
the directors have been appointed after the scheme has been sanctioned.
They have certified that they are not disqualified from being appointed
as a director in any other company.
f) In our opinion, the internal financial controls over financial
reporting of the Company and the operating effectiveness of such
controls are adequate.
g) With respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 21 to the
financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure referred to in paragraph (1) under the heading of "Report on
Other Legal and Regulatory requirements" of our report of even date
(i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) All the fixed assets have been physically verified by the
management according to a regular program, which, in our opinion, is
reasonable having regard to the size of the company and the nature of
its assets. No material discrepancies with respect to book records were
noticed on such verification.
(ii) (a) Physical verification of inventory (except material in transit
and lying with third party) has been conducted by the management at
reasonable intervals. In our opinion, the frequency of verification is
reasonable.
(b) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the company and nature of its business.
(c) The company is maintaining proper records of inventory.
Discrepancies noticed on verification of inventory as compared to book
records were not material.
(iii) The company has not granted any loans, secured or unsecured to
companies firms or other parties covered in the register maintained
under section 189 of the Act and as such clauses (iii) (a) and (b), of
the order are not applicable to the company.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business for the purchase of inventory and fixed assets and for sale of
goods and services. During the course of our audit, no major weakness
has been noticed in the internal control system.
(v) According to the information and explanation given to us, the
company has not accepted any deposit from the public.
Therefore, the provisions of clause (v) of the order are not applicable
to the company.
(vi) We have broadly reviewed the books of account maintained by the
company pursuant to the order made by the Central Government for the
maintenance of cost records under section 148(1) of the Act, and we are
of the opinion that prima facie the prescribed accounts and records
have been made and maintained. However, we have not made a detailed
examination of such accounts and records.
(vii) (a) The company is generally regular in depositing with the
appropriate authorities undisputed statutory dues including provident
fund, employees state insurance, income tax, sales tax, wealth tax,
service tax, duty of custom, duty of excise, value added tax, cess and
any other statutory dues applicable to it. According to the information
and explanations given to us, undisputed amounts payable in respect
thereof outstanding as at 31st March,2015 for a period of more than six
months from the date they became payable are as under:-
Name of the
statue Nature of dues Amount
(Rs.) Period to which
amount relates
Income Tax Act Tax deducted at source 555089 31.03.2014
(b) According to the records of the company, dues of income-tax or
Sales tax or wealth-tax or service tax or duty of custom or duty of
excise or value added tax or cess which have not been deposited on
account of any dispute are as under:-
Name of the statue Nature of dues Amount (Rs.) Forum where pending
Central Excise Act Excise Duty 2670382 Hon'ble Supreme
Court
Central Excise Act Excise Duty 2583953 Central Excise &
Service Tax
Tribunal
Haryana Value
Added Tax Act VAT 4222661 Sales Tax Tribunal
Service Tax Act Service Tax 229316 Central Excise &
Service Tax
Tribunal
Income Tax Act, 1961 Income Tax 465270 Income Tax Tribunal
(c) No amount was required to be transferred to investor education and
protection fund in accordance with the relevant provisions of the
Companies Act, 1956 and rules made there under.
(viii) There were no accumulated losses at the end of the financial
year. The company has not incurred any cash losses during the financial
year and in the immediately proceeding financial year.
(ix) In our opinion and according to the information and explanations
given to us, the delay in repayment of dues to a financial institution
or bank or debenture holders are as under :
Nature of
Limit Name of the
Bank Limit Balance Excess Remarks
(Rs. in
lacs) as per
Bank (Rs. in
lacs)
(Rs. in
lacs)
Cash Credit Canara Bank 457.50 462.40 4.90 Due to interest
charged
State Bank
of Patiala 104.00 104.93 0.93 by bank on
31.03.2015
ING Vysya
Bank Ltd 187.25 191.31 4.06 and paid
subsequently
Packing
Credit State Bank
of Patiala 317.00 319.54 2.54
Nature of Limit Name of the
Bank Amount
overdue
(Rs.) Due Date Remarks
Bill discounted/ Bank of Baroda 2261158 13.03.2015 Realized on
06.04.2015
purchased State Bank of
Patiala 5201022 30.03.2015 Realized on
08.04.2015
(x) In our opinion, the company has not given guarantee for loans taken
by others from banks or financial institutions.
(xi) In our opinion, the term loans have been applied for the purposes
for which they were obtained.
(xii) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For B.K.Shroff & Co.
Chartered Accountants
Reg. No. : 302166E
O.P.Shroff
Partner
Membership No. 06329
Place: New Delhi
Date : May 28, 2015
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