1. Report on The Financial Statements
We have audited the accompanying financial statements of UNIWORTH
TEXTILES LTD, which comprise the Balance Sheet as at 31st March, 2014
and the Statement of Profit & Loss and the Cash Flow Statement for the
year then ended, and a summary of significant accounting policies and
other explanatory information.
2. Management's 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 sub-section (3C) of section 211
of the Companies Act, 1956 (the Act) read with the General Circular
dated 13th September, 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.
3. Auditors' 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. 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 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 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.
4. Attention is invited to the following:
(a) Pending Decision of the Board for Industrial and Financial
Reconstruction (BIFR) under the Sick Industrial Companies (Special
Provision) Act, 1985 the accounts have been prepared on Going Concern
assumption. In the event of adverse Decision, the financial statements
may require necessary adjustment if the company ceases to be a Going
Concern. Further more, the company has received an intimation from
secured lenders that financial assistance together with all security
interest in respect thereof and its rights in respect thereof have been
absolutely assigned by the said lender to Asset Reconstruction Company
Ltd a company formed under the Companies Act, 1956 and registered with
Reserve Bank of India as a Securitization and Reconstruction Company
pursuant to the necessary provisions of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002.
(b) Footnote to Note No.23 regarding interest provision on borrowing
from some of the institutions and banks made in the accounts under
simple interest method at the prevailing/estimated rates applicable on
such loans in absence of relevant documents/confirmations, the impact
of which cannot be ascertained as well as the note therein regarding
the matter of dispute between the Company and the Bankers/Creditors in
connection with charging of interest payment and payment of principal.
(c) Note No.4 (Footnote), Note No.7(iii) and Note No.16(i) regarding
non-receipt of confirmations in respect of borrowings from financial
institutions / banks and also debit balances in certain Current
Accounts with banks due to restructuring being in progress, book
balances thereof have been relied upon.
(d) Note No.7 (ii) regarding application filed against the Company
before Debts Recovery Tribunal for recovery of the dues by certain
banks.
(e) Note No.15 (iii) regarding non provision of certain debts.
(f) Note No. 17 (iv) regarding advance of Rs. 539 lacs due from a
party, in respect of which we are unable to form any opinion as to the
nature and purpose of making such advance as also recoverability of the
same.
(g) Note No. 17 (v) regarding non-provision for advance of Rs. 211.70
lacs paid to an Overseas Consultant due to reasons stated therein.
(h) Note No.12 (i) regarding investment amounting to Rs.14.05 Lacs in
and Note No. 16 (iii) regarding advance amounting to Rs. 33.90 lacs due
from the Companies which have become Sick and referred to BIFR under
the Sick Industrial Companies (Special Provisions) Act, 1985. In
absence of rehabilitation scheme of these companies we are unable to
comment on the amount of provision, if any, which may be required.
(i) Note No.6 (Footnote) regarding estimated amount of Rs.1674.44 Lacs
having been provided during the year 2002-03 as sales claims and
commission relating to earlier years from overseas customers of the
company which is pending for final settlement. The necessary adjustment
for such claims and commission will be made after final settlement and
obtaining necessary approval from concerned regulatory authorities in
absence of which we are unable to express our opinion on such
adjustments.
Impact of our observations in the aforesaid paragraphs (a) to (i) above
on the results for the year and on the year end net assets is not
ascertainable.
5. Opinion
Subject to our remarks in paragraph 4 above, in our opinion and to the
best of our information and according to the explanations given to us,
the said financial statements, read with other notes thereon, give the
information required by the Companies Act, 1956 in the manner so
required and also 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, 2014, and
b. In the case of the Statement of Profit & Loss of the Loss for the
year ended on that date
c. In the case of cash flow statement of the Cash flows for the year
ended on that date.
6. Report on Other Legal and Regulatory Requirements
i) As required by the Companies (Auditor's Report) Order 2003 issued by
the Central Government in terms of Section 227 (4A) 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 to the extent
applicable to the company.
ii) 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.
b) In our opinion, proper books of account as required by the law have
been kept by the Company so far as appears from our examination of
those books.
c) The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
accounts.
d) In our opinion the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement dealt with by this Report comply with the
Accounting Standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956 read with the General Circular dated 13th
September, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013, except in the case of Leave
Encashment which is provided on accrual basis instead of actuarial
basis as prescribed by Companies (Accounting Standard) Rules, 2006.
e) On the basis of written representations received from the Directors
as on 31st March, 2014 and taken on records by the Board of Directors,
we report that none of Directors are disqualified as on 31st March,
2014 from being appointed as Director in terms of clause (g) of
sub-section (1) of Section 274 of the Companies Act 1956.
Annexure referred to in the Auditors' Report to the members of UNIWORTH
TEXTILES LTD on the Accounts for the year ended 31st March, 2014.
I. (a) The Company has maintained proper records showing full
particular including quantitative
details and situation of fixed assets.
(b) As stated by the Management, the Fixed Assets have been
physically verified during the year/ at the year-end by the Company.
The physical verification so conducted did not reveal any discrepancies
(c) Substantial part of the Fixed Assets has not been disposed of
during the year.
II. (a) The inventory has been physically verified during the year by
the Management
(b) The procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
(c) On the basis of our examination of the records of inventory,
we are of opinion that the company is maintaining proper records of
Inventory.The discrepancies noticed on verification between physical
stocks and the book records were not material.
III. (a) The Company has not granted any loan, secured or unsecured
during the year to company,firms or other parties covered in the
Register maintained under section 301 of Companies Act.
(b) The company has not taken any loan, secured or unsecured
during the year from company, firms or other parties covered in the
Register maintained under section 301 of the Companies Act.
In respect of (a) & (b) above, we have relied upon entries recorded in
the register maintained under section 301 of the Act.
Accordingly clauses 4 (III) (a) to 4 (III) (g) of the Order are not
applicable.
IV. In our opinion and according to the information and explanation
given to us there are adequate internal control procedures commensurate
with the size of the Company and nature of its business for the
purchase of inventory, fixed assets and for the sale of goods. During
the course of our audit, no major weakness has been noticed in the
internal controls, nor have there been any continuing failure on the
part of the Company to rectify any major weakness.
V. Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the there are no transactions that need to be entered in
the register maintained under section 301 of the Companies Act,1956.
Accordingly clause 4 (v) (b) of the Order is not applicable.
VI. The Company has not accepted deposits from the public within the
meaning of section 58A and 58AA of the Companies Act, 1956 during the
year.
VII. The present internal audit system of the company is commensurate
with the size of the company and nature of the business.
VIII. We have broadly reviewed the books of accounts maintained by the
company pursuant to the rules made by the Central Government for the
maintenance of cost records under clause (d) of sub- section (1) of
section 209 of the Companies Act, 1956 and are of the opinion that
prime facie, the prescribed accounts and records have been made and
maintained. We have, however, not made a detailed examination of the
records with a view to determine whether they are accurate or complete.
IX. (a) According to the records of the company, the company is
regular in depositing with appropriate
authorities undisputed statutory dues including Provident Fund,
Investor Education & Protection Fund, Employees' State Insurance,
Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise
Duty, Cess and any other statutory dues where applicable.
(b) According to the information and explanations given to us, no
undisputed amount payable in respect of income tax, wealth tax, Service
Tax, sales tax, customs and excise duties were outstanding as at 31st
March, 2014 for a period of more than six months from the date, they
become payable.
(c) According to the records of the company, the following
statutory dues have not been deposited on account of dispute:
(i) Excise duty payable amounting to Rs.13676.37 lacs (including
interest & penalty) under Central Excise Act & Customs Valuation Act
have not been deposited with appropriate authorities as these are
disputed by the company and lying in appeal with CEGAT Mumbai/
Calcutta/New Delhi. Against the above, a deposit of Rs.0.79 Lacs has
been made pursuant to the order of Excise Authorities, pending
resolution of the appeal.
(ii) Amount payable amounting to Rs.37.03 Lacs in respect of Interest
on Entry Tax though provided has not been deposited with appropriate
authorities as these are disputed by the company and lying in appeal
with Commercial Tax Officer, Raipur. Against the above, Rs.7.45 Lacs
have been deposited.
(iii) Income Tax amounting to Rs.15.31 Lacs under Income Tax Act, 1962
as these are disputed and are lying in appeal with I.T Appellate
Authorities. However, an amount of Rs.13.50 Lacs has been paid under
protest.
X. The accumulated losses of the company are more than its net worth.
The company has incurred cash losses during the current financial year
covered by our audit and in the immediately preceding financial year.
XI. The Company has defaulted in repayment of dues to the Financial
Institutions or banks. The Company has issued zero coupon debentures in
an earlier year and the same has not become due for repayment.
XII. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, Debentures and other security.
XIII. The Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/
Society
XIV. The Company is not in the business of dealing or trading in
shares. Based on our examination of records and evaluation of the
related internal control, we are of the opinion that proper records
have been maintained of transaction and contracts in respect of shares,
securities, debentures and other investments and timely entries have
been made therein. We also report that the company has held shares,
securities, debentures and other securities in its own name.
XV. The Company has given guarantee for loans taken by Other Company
from banks or Financial Institutions and the related term and
conditions are not prejudicial to the interests of the company.
XVI. Based on information and explanation given to us by the
Management, term Loans were applied for the purpose of which the loans
were obtained.
XVII. On the basis of our overall examination of the Balance Sheet,
the fund raised on short term basis has not been used for long term
investment and vice - versa.
XVIII. During the year under audit, the company has not made a
preferential allotment of the shares to parties or company covered in
the register maintained under section 301 of the Companies Act, 1956.
XIX. The Company has not issued any debenture during the year.
XX. The Company has not made any Public issue during the year.
XXI. Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the company has been noticed or reported during the course of our
audit.
For S.S. KOTHARI & CO.
Chartered Accountants
Firm Registration No. 302034E
A.Datta
Place : Kolkata Partner
Date : 29th May, 2014 Membership No. 5634 |