| We have audited the accompanying financial statements of Kothari
Industrial Corporation Limited ("the Company"), which comprise the
Balance Sheet as at March 31, 2014, 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 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 15/2013 13th dated September 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013
and in accordance with the accounting principles generally accepted in
India. 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 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 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.
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
The Company has not provided for the following amounts in the accounts
:-
a) Interest payable to a trade creditor amounting to Rs.161.33 lacs
and interest payable on an advance amounting to Rs.74.39 lacs.
b) Any further amount payable to State Bank of India (Assignee : Kotak
Mahindra Bank) in addition to the liability provided for in the books
of accounts (grouped under Long-term borrowings) since the said sum
has not been finally quantified.
c) The effect of such non-provision of (a)and (b) above on the profit
or loss of the Company as well as on the true and fair view of the
state of affairs of the Company as at 31st March 2014 is not
ascertainable.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us except for the effect/ possible effects of
the matters described in the "Basis for Qualified Opinion"
paragraph, 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:
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2014; 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 the Cash Flow Statement, of the cash flows for the year ended
on that date.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor's Report) Order, 2003 ("the
Order") 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 by section 227(3) of the Act, we report that:
a) Except for the effect of the matters described in para "Basis for
Qualified Opinion", 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 matters described in para "Basis for Qualified
Opinion", in our opinion, the Balance Sheet, Statement of Profit and
Loss and Cash Flow Statement comply with the Accounting Standards
referred to in subsection (3C) of section 211 of the Companies Act,
1956 read with the general circular 15/2013 dated 13th September, 2013
of the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013.
e) On the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 1 under the heading "Report on other Legal
and Regulatory Requirements" Section of our report even date.
1. In Respect of Fixed Assets:
a) the company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets on
the basis of available information.
b) as explained to us, fixed assets have been physically verified by
the management at reasonable intervals; no material discrepancies were
noticed on such verification.
c) in our opinion and according to the information and explanations
given to us, the company has not disposed off substantial part of its
fixed asset during the year and the going concern status is not
affected.
2. In Respect of Inventories:
a) inventories have been physically verified during the year by the
management at reasonable intervals. In our opinion the frequency of
verification is reasonable.
b) in our opinion and according to the information and explanations
given to us, 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 the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed during physical verification
between the physical stocks and the book records were not material.
3. a) The company has not granted any loans, secured/unsecured, from
companies, firms (or) other parties listed in the register maintained
under Section 301 of the Companies Act, 1956.
b) The company has not taken any loans during the year from parties
listed in the register maintained under section 301 of the Companies
Act, 1956.
4 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 with regard to purchases of inventory, fixed assets and with
regard to the sale of goods. During the course of our audit, no major
weakness has been noticed in the aforesaid internal controls.
5. a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, the
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) As per information & explanations given to us and in our opinion,
the company has not made any transactions exceeding the value of five
lakhs rupees in pursuance of contract or arrangements entered in the
register maintained u/s 301 of the Companies Act. 1956.
6. The Company has not accepted any deposits from public. Hence the
directions issued by the Reserve Bank of India and the provisions of
Section 58A and 58AA of the Companies Act 1956 and the Companies
(Acceptance of Deposits) Rules, 1975 do not apply.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8. We have broadly reviewed the cost records maintained by the company
pursuant to the companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government of India under Section 209(1)(d)
of the Companies Act, 1956, and are opinion that prima 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.
9. a) The Company is not regularly depositing undisputed statutory
dues including provident fund, service tax, income tax (tax deducted
at source), professional tax and property tax.
b) According to the information and explanations given to us, the
extent of arrears outstanding as on 31st March 2014 for a period of
more than six months from the date they became payable, as certified
by the Management is as under :-
Service Tax 18.88
Income Tax (TDS) 25.50
Provident Fund 1.01
Professional Tax 14.07
Property Tax 42.18
c) According to the information and explanations given to us, details
of disputed Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise
Duty, Value Added Tax and Cess which have not been deposited on
account of disputes are given below.
10 The Company has accumulated losses at the end of the financial year
which are more than 50% of its net worth of the Company. The Company
has incurred cash loss during the current year as well in the
immediate preceding financial year also.
11. Based on our examination of the books and on the information and
explanation given by the management, the company has defaulted in
repayment of dues to financial institutions and banker(s) and the
matter is pending adjudication before the Hon'ble Debt Recovery
Tribunal, Chennai.
12. The company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion, the company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore, clause 4(xiii) of the Companies
(Auditor's Report) Order, 2003 is not applicable to the Company.
14. Based on our examination of the records and evaluation of the
related internal controls, we are of the opinion that proper records
have been maintained of the transaction and contracts in relation to
shares, debentures and other instruments and timely entries have been
made in those records. We also report that the company has held the
shares, securities in its own name
15. The Company has not given any guarantee for loans taken by others
from bank or financial institutions during the year.
16. According to the information and explanations given to us, the
Company has not taken any term loan during the year.
17. According to the information and explanations given to us and on
an overall examination of the financial statement of the Company,
funds raised on short term basis have, prima facie, not been utilized
for long term investment.
18. 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.
19. During the period covered by our audit report, the Company has not
issued any debentures.
20. The Company has not raised any money by way of public issues
during the year.
21. Based upon the audit procedures performed and based on the
available 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 M/s. B.B.Naidu & Co.
Chartered Accountants
Firm Reg.No:002291S
(A.Sekar)
Place: Chennai Partner
Date: 28th May 2014 Membership No. :18784 |