| Report on the Financial Statements
We have audited the accompanying financial statements of GANGOTRI IRON
& STEEL COMPANY LIMITED ("the Company"), which comprise the Balance
Sheet as at March 31, 2014, the Statement of Profit and Loss, Cash Flow
Statement for the year then ended, a summary of significant accounting
policies and other explanatory information.
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"). 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 qualified audit opinion.
Basis of Qualified opinion
a) As mentioned in note no 23 of financial statements, the Company has
not provided for the liability towards Gratuity as the necessary
actuarial valuation has not been carried out as required under
Accounting Standard (AS-15).
b) As mentioned in note no 30(d) of financial statements, the company
has not provided for the liability for income-tax and interest thereon
in respect of assessment years 2003- 2004 to 2009-2010 amounting to Rs
77,67,947 and Rs. 43,55,613 respectively. Had the liabilities been
provided, the loss for the year would have been higher by Rs.
1,21,23,560 and the balance of Surplus would have been lower by that
amount Consequently, the long term loans and advances would have been
lower by that amount.
c) As mentioned in note no. 31 of financial statements, we are unable
to form an opinion about the recoverability of a cumulative claims of
Rs.10,49,12,524 as at 31st March, 2014 in respect of subsidy/incentive
on VAT as per Industrial Incentive Scheme, 2006 by the Department of
Industries. Bihar, which includes Rs.2.47,40.315 claimed during the
year ended 31st March, 2014 of which only Rs 1,21,77,779 has been
received by the company for the financial year 2013-14 and Rs.
81.87,907 has been received for the financial year 2012-13.
d) As mentioned in note no. 34 of the financial statements, the company
has not paid the installments of electricity charges and interest
thereon for the months of September 2013 to March 2014 amounting to Rs.
4,86,15,840 The company has also not provided for an estimated interest
on electricity charges of Rs. 41,85,675 for the months of October 2013
to March 2014. Had the liabilities been provided, the loss for the year
would have been higher by Rs. 41,85,675 and the balance of Surplus
would have been lower by that amount. Consequently, the Other Current
Liabilities would have been higher by that amount.
e) As mentioned in note no. 35 , some advance from customers and
security deposit from customers are subject to confirmation /
reconciliation and the consequential adjustment thereof has not been
determined.
f) As mentioned in note no. 36, there may be incidence of bad debts for
which no provision has been made by the Company. In absence of
identification of such bad debts, the amount of provision is
indeterminate.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matters
described in the Basis of Qualified Opinion paragraph as mentioned
above and read together with the other notes, 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) 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 matter described in the paragraph (a), (b). (c) and
(d) of 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 subsection (3C)
of'section 211 of the Companies Act, 1956;
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 THE INDEPENDENT AUDITOR'REPORT
Referred to in paragraph 1 under the heading of "Report on Other Legal
and Regulatory Requirements" of our report of even date to the members
of GANGOTRI IRON AND STEEL COMPANY LIMITED on the financial statements
of the company for the year ended March 31 2014.
On the basis of such checks as we considered appropriate and according
to the information and explanation given to us d uring the course of
our audit, we report that:
1 a) The company is in the process of updating the fixed assets
register.
b) The fixed assets have not been physically verified by the management
during the year
c) Since there is no disposal of substantial part of fixed assets
during the year, paragraph 4(i)(c) of the Companies (Auditor's Report)
Order, 2003 is not applicable.
2. a) The management has conducted the physical verification of
inventory at reasonable intervals during the year. As informed, no
material discrepancies were noticed on such physical verification,
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 nature of its business.
c) The Company has maintained proper record of its inventories and no
discrepancies were noticed on physical verification.
3. a) According to the information and explanation given to us the
company has not granted unsecured loans to a companies covered in the
register maintained under section 301 of the Companies' Act, 1956 and
hence clause nos. 4(iii)(b), 4(iii)(c) and 4(iii)(d) are not
applicable.
b) According to the information and explanation given to us & in our
opinion the company has taken interest free loans from two companies
covered in the register maintained under section 301 of the Companies'
Act, 1956. The maximum amount outstanding during the year was Rs 11.71
crores and the year end balance of loans taken by the company was Rs
10.38 crores
c) In our opinion and according to the information given to us, as the
loans taken are interest free, the clause 4(iii) (f) of the Companies
(Auditor's Report) Order, 2003 is not applicable. However other terms
and conditions on which loans have been taken are not, in our opinion,
prima facie, prejudicial to the interest of the company.
d) Since the loans are in the nature of demand loan same are repayable
as and when the lenders calls back the loans 4
4 In our opinion and according to the information and explanation given
to us. there is an adequate internal control system commensurate with
the size of Company and the nature of its business for the purchase of
inventory and fixed assets and for the sale of goods. During the course
of our audit, we have not observed any continuing failure to correct
major weaknesses in internal control system.
5. a) In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements that need to
be entered into the register in pursuance Section 301 of Act, have been
so entered in the register maintained as per requirement of that
Section.
b) In our opinion and according to the information and explanations
given to us, each of these transactions have been made in pursuance of
such contracts or arrangements at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
6. The company has not accepted any deposits from the public within
the meaning of Section 58A and 58AA or any other relevant provisions of
the Act and the rules framed there under
7. The company did not have any formal internal audit system during
the year under review
8 We have broadly reviewed the books of account maintained by the
company pursuant to the Rules made by the Central Government for the
maintenance of cost records under section 209(1 )(d) of the Companies
Act, 1956 and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained.
9. a) According to the information and explanations given to us and the
books and records examined by us, the company is generally regular in
depositing with the appropriate authorities the undisputed statutory
dues relating to custom duty, service tax. excise duty, cess and other
material statutory dues as applicable to it except for delays in the
case of Provident Fund, ESI and Income Tax(Tax Deducted at Source).
Further, since the Central Government has till date not prescribed the
amount of cess payable under section 441A of the Companies Act, 1956,
we are not in position to comment upon the regularity or otherwise of
the Company in depositing the same
b) According to the information and explanations given to us and the
books and records examined by us, there are no undisputed amount
payable, in respect of income tax, sales tax, wealth tax, service tax.
custom duty. excise duty, cess outstanding as at 31st March, 2014 for a
period exceeding 6 months from the date they become payable except the
followings.
Nature of Nature of Amount Period to Due Date of
Statute Dues (Rs) which the Date Payment
amount
related
Employees Employees 17,925 2009-2010 N.A Unpaid
State State 1,18,392 April '13 N.A Unpaid
Insurance Insurance to
Act, 1948 September'13
53,529 2009-2010 N.A.
Employees Provident 3,35,654 2010-2011 N.A. Unpaid
Provident Fund 2,28,732 2011-2012 N.A. Unpaid
Fund Act, 1,45,740 2012-2013 N.A. Unpaid
1952
2,57,002 April'13 N.A. Unpaid
to
September '13
Unpaid
as the
company's
Bihar Entry Bihar Entry 49,01,921 2011-2012 N.A. claim
Tax Tax for VAT
Subsidy
is
pending
for
approval
10,84,560 2010-2011 Unpaid
as the
Bihar Value 44,13,099 2011-2012 company's
Added value 64,20,140 April'13 N.A. claim for
Tax Act, Added Tax to VAT
2005 September'13 N.A. Subsidy
is
pending
for
approval
Income Tax 5,17,541 2012-13 Unpaid
Tax Deducted at 2,04,327 April'13 N.A.
Act 1961 Source to
September'13
c) As at 31st March 2013 according to the records of the Company, the
following are the particulars of the disputed dues on account of Excise
duty:
NNature of Nature of Amount Period to Forum Where
Statute Dues (Rs) which the distipute
amount is pending
related
Central Excise Duty 14.43,471 1998-2001 High Court
Excise Patna
Act, 1944
10. The Company has incurred cash losses in the financial year ending
31st March, 2014 and also has accumulated losses as on that date In our
opinion, the accumulated losses as at the end of the financial year are
not less than 50% of the net worth of the company after taking into
account quantified qualifications in the audit report
11. The company has defaulted in repayment of dues to banks from 31st
December, 2013 and has been declared as non-performing assets by the
bank The outstanding overdue payment in respect of term loans is Rs
6,93,00,000/- and interest accrued and due Rs. 57,188,161.80/-
12. The company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities
13. The provisions of special nature applicable to chit
fund/nidhi/mutual benefit fund/societies are not applicable to the
Company
14 In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments. Accordingly provisions of
clause (xiv) of the paragraph 4 of the Companies (Auditor's Report)
Order, 2003 are not applicable to the Company
15 In our opinion, and according to the information and explanations
given to us, the company has not given any guarantee for loans taken by
others from banks or financial institutions during the year.
16 In our opinion and according to the information and explanation
given to us, the Company has applied the term loans for the purpose for
which the loans have been obtained
17. On the basis of an overall examination of the balance sheet of the
company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis, which have been used for long-term investments
18 According to the information and explanations given to us, the
company has not made preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Act
19. The Company has not issued any Debenture
20. The Company has not raised any money by way of public issue during
the year.
21 According to the information and explanations given by the
management to us, we report that no fraud on or by the company has been
noticed or reported during the course of our audit.
For ARSK & ASSOCIATES
Chartered Accountants
firm Registration No. 315082E
CA. Ravindra Khandelwal
partner
Membership No 054615
Place: Kolkata
Date: 0 3 SEP 2314
|