We have audited the accompanying Financial Statements of S. Kumars
Nationwide Limited ('the Company') which comprise the Balance Sheet as
at 31st March, 2013 and the Statement of Profit and Loss and also the
Cash Flow Statement for the year then ended and a summary of Significant
Accounting Policies and other explanatory information.
Management Responsibility for the Financial Statements
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 referred to in Subsection (3C) of the Section
211 of the Companies Act, 1956 ('the Act'). 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 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 issued by the Institute of Chartered
Accountants of India (ICAI). Those Standards require that we comply
with the 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 Financial Statements. The procedures
selected depend on the auditors' 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 auditors
consider 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.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion.
Basis for Qualified Opinion
1. The outstanding balances of trade receivables, trade payables,
loans & advances and capital advances are subject to confirmation and
reconciliation. The consequential adjustments, if any, arising out of
these are not quantifiable.
2. Inventories lying with third parties and fixed assets have not been
physically verified completely and up to date position of records of
fixed assets have not been compiled. The consequential impairment/write
down, if any, is not quantifiable {Refer Note 33 (b)}.
Qualified Opinion
In our opinion and to the best of information and according to the
explanations given to us, except for the effects of the matter
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:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2013;
(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 Cash Flow Statement, of the cash flows for the year
ended on that date.
Emphasis of Matter:
We draw attention to -
1. Note 35 of the Financial Statements with regard to the Company
facing mismatch in its cash flows and in case the required financial
resources are not raised on a timely basis, the operations of the
Company may get impacted, thereby affecting the assumption of 'going
concern'.
2. Note 31 of the Financial Statements with regard to invocation of
Shares in Reid & Taylor (India) Limited (unlisted Indian subsidiary of
the Company) pledged by the Company with IL&FS and thereby adjusting
its dues amounting to Rs. 11,691.51 Lacs. The Company has not accounted
for the effect of such invocation and it continues to show the loan
liability and the investments at cost of such pledged shares.
Our opinion is not qualified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2003, (as
amended), issued by the Central Government of India in terms of
Sub-section (4A) of Section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required under the provisions of 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;
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, 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 effects of the matter described in the Basis for
Qualified Opinion paragraph, in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement comply with the
Accounting Standards referred to in Sub-section (3C) of Section 211 of
the Companies Act, 1956;
e. Pursuant to Circular No. 8/2002 dated March 22, 2002 issued by the
Department of Company Affairs, Ministry of Law, Justice & Company
Affairs, Government of India, directors nominated by the Public
Financial Institutions / Banks/ Central & State Government are not
liable to be disqualified for appointment as directors under the
provisions of clause (g) of Sub-section (1) of Section 274 of the
Companies Act, 1956. In respect of other directors, on the basis of the
written representations received from the directors, as on 31st March,
2013 and taken on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2013 from being appointed as
a director in terms of clause (g) of Sub-section (1) of Section 274 of
the Companies Act, 1956;
[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory
Requirements' in the Independent Auditors' Report of even date to the
members of S. Kumars Nationwide Limited ('the Company') on the
Financial Statements for the year ended 31st March, 2013].
(i) (a) The Company is in the process of maintaining proper records of
its fixed assets so as to show specific identification of the said assets,
including its quantitative details and situation in respect of fixed
assets capitalized after 31st March, 2011.
(b) As per documents produced before us, the Company has a regular
programme of verification of fixed assets wherein all fixed assets are
verified once in a period of three years, which in our opinion, is
reasonable having regard to the size of the Company and the nature of
its assets. As informed, no material discrepancies were noticed on such
verification.
(c) In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
off by the Company during the year.
(ii) (a) As per documents produced before us, the inventories has been
physically verified by the Management during the year. In respect of
inventories lying with third parties, these have substantially been
confirmed by them along with certification of physical verification of
such inventories from an independent Chartered Accountant form. In our
opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of inventories as referred
to in (a) above 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 inventories and no
material discrepancies were noticed on physical verification carried out
as mentioned in Para (a) above during the year.
(iii) (a) The Company has granted loan to a party covered in the
register maintained under Section 301 of the Companies Act, 1956. The
maximum amount involved during the year and the yearend balance of
loan granted to such party was Rs. 41.25 lacs.
(b) In our opinion and according to the information and explanations
given to us, the terms and conditions for such interest free loan are
not, prima facie, prejudicial to the interest of the Company.
(c) The said loans are repayable on demand.
(d) There is no overdue amount of loan granted to the Company listed in
the register maintained under Section 301 of the Companies Act, 1956.
(e) The Company had taken loans (interest-bearing as well as
interest-free) from a Company covered in the register maintained under
Section 301 of the Companies Act, 1956. The maximum amount involved
during the year was Rs. 23,250 lacs and the yearend balance of loans
taken from such Company was Rs. 23,250 lacs, of which an amount of Rs.
4,000 lacs is interest free.
(f) In our opinion and according to the information and explanations
given to us, the rate of interest, wherever applicable and other terms
and conditions for such loans are not, prima facie, prejudicial to the
interest of the Company.
(g) The Company has not repaid the principal amount as stipulated and
also not been regular in the payment of interest to the Company.
(iv) In our opinion and according to the information and explanations
given to us, the internal control system prevailing in the Company
needs to be strengthened so as to make it commensurate with the size of
the Company and the nature of its business with regard to purchase of
inventory, fixed assets and with regard to the sale of goods and
services. During
the course of audit, we have not observed continuing failure to correct
any major weaknesses in internal control system of the Company.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the particulars of contracts or arrangements
referred to in Section 301 of the Companies Act, 1956 that need to be
entered into the register maintained under Section 301 have been so
entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements exceeding value of Rs. five lacs have been entered into
during the financial year at prices which are reasonable having regard
to the prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has not complied with the provisions of
Section 58A or any other relevant provisions of the Companies Act, 1956
and the Companies (Acceptance of Deposits) Rules, 1975 with regard to
the deposits accepted from the public.
(vii) The Company has an internal audit system, which in our opinion,
requires to be strengthened to make it commensurate with the size and
nature of its business.
(viii) We have not been made available the books of account maintained
by the Company in respect of products where, pursuant to the Rules made
by the Central Government of India, the maintenance of cost records has
been prescribed under clause (d) of sub-Section (1) of Section 209 of
the Act and hence, we are unable to comment upon whether prescribed
records have been made and maintained.
(ix) (a) 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
have not been regularly deposited with the appropriate authorities and
there have been serious delays in many cases.
(b) According to the information and explanations given to us,
undisputed dues in respect of provident fund, investor education and
protection fund, employees' state insurance, income-tax, wealth-tax,
service tax, sales-tax, customs duty, excise duty, cess and other
statutory dues which were outstanding, at the yearend for a period of
more than six months from the date they became payable are as follows:
Name of the Statute Nature of the Dues Amount ( Rs,in lacs)
Income Tax Act, 1961 Income Tax 7,332.25
Income Tax Act, 1961 Tax Deducted at Source 1,170.55
Provident Fund
Act, 1952 Provident Fund 121.40
Employees' State
Insurance Act, 1948 ESIC 30.28
Madhya Pradesh Land
Revenue Act, 1959 Property Tax 70.23
Value Added Tax
Act, 2005 Value Added Tax 17.12
Entry Tax Act, 1976 Entry Tax 4.26
Central Sales Tax
Act, 1956 Central Sales Tax 3.60
Income Tax
Act, 1961 Tax Collected at Source 0.03
c) According to the records of the Company, the dues outstanding of
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
duty and cess which have not been paid on account of disputes, are as
follows:
Name of
the Statute Nature of
the Dues Amount Period to
which the Forum where dispute
(Rs,in lacs) amount
relates is pending
Income Tax
Act, 1961 Income
Tax 29.75 FY 2008-09 Commissioner of
Income Tax (Appeals)
Income Tax
Act, 1961 Tax
Deducted
at 514.31 FY 2006-07
to 2008-09 Commissioner of
Source Income
Tax (Appeals)
(x) In our opinion, the accumulated losses of the Company are not more
than fifty percent of its net worth. Further, the Company has not
incurred cash losses during the financial year covered by our audit and
the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the Company has defaulted in repayment of dues to banks,
financial institutions and debenture holder as mentioned below:
Defaults in payment of Interest and Principal:
Period of Default Amount of Interest
(Rs,in lacs) Amount of Principal
( Rs, in lacs)
0 - 3 Months 4,191.09 18,625.11
(Including interest
of Rs,2,317.54 lacs on (Including borrowings of
Rs,16,861.16
borrowings recalled
by lenders) lacs recalled by lenders)
3 - 6 Months 9,413.80 33,509.97
(Including borrowings
of Rs,9,385.63 lacs (Including borrowings of
Rs, 33,071.05
recalled by lenders) lacs recalled by lenders)
6 - 12 Months 11,094.87 4,947.82
The above defaults do not include repayments which have been
rescheduled by one of the lender as explained in Note 38.
(xii) According to the information and explanations given to us and
based on the documents and records produced to us, the Company has not
granted loans & advances on the basis of security by way of pledge of
shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/
mutual benefit fund/ society. Therefore, the provisions of clause (xiii)
of paragraph 4 of the Companies (Auditor's Report) Order, 2003 (as
amended) are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause (xiv) of paragraph 4 of the Companies (Auditor's
Report) Order, 2003 (as amended) are not applicable.
(xv) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company during the year, for loans taken by others from banks or
financial institutions, are not prejudicial to the interest of the
Company.
(xvi) During the year, the Company has not obtained any term loans.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that the Company has used funds raised on short term basis amounting to
Rs. 3,937.22 lacs for long term investment.
(xviii)According to the information and explanation 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.
(xix) According to the information and explanations given to us, no
debentures have been issued by the Company during the year.
(xx) The Company has not raised money by way of public issue during the
year.
(xxi) During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the Management.
For Haribhakti & Co
Chartered Accountants
Firm Registration No. 103523W
RAKESH RATHI
Partner Membership No.45228
Place : Mumbai
Date : 16th July, 2013
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