| We have audited the accompanying financial statements of Golkonda
Aluminium Extrusions Limited (Formerly known as Alumeco India Extrusion
Limited) ("the Company") which comprise the Balance Sheet as at
30thJune, 2015, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information, which we have
signed under reference to this report.
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 thereunder. 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 for Qualified Opinion
The company has accumulated losses of Rs. 161,161,535 as at 30th June
2015 which has exceeded the paid up capital and reserves of Rs.
160,522,805 of the company as at that date. The company has been
declared sick on 9th February 2009 and had made a reference to the
Board of Industrial & Financial Reconstruction (BIFR) in terms of
section 15(1) of the Sick Industrial Companies (Special Provisions)
Act, 1985.During the year, company ceases to be a sick industrial
company vide order dated 08 June 2015 within the meaning of Section
3(1)(o) of Sick Industrial Companies Act (SICA) as its net worth has
turned positive as on 31st December 2014.However as on 30 June 2015,
the net worth has turned negative amounting to Rs.639,730.
Considering the financial position of the Company as at 30th June 2015
and the subsequent financial stress caused by the Alumeco Group
withdrawing extended credit terms for supply of raw material, there
exists significant uncertainty as to whether the Company will be able
to continue as a going concern. The Management is in the process of
evaluating available options to rehabilitate the Company. The financial
results for the year ended 30th June 2015 have been prepared on a going
concern basis and do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or, to
amounts or classification of liabilities that may be necessary if the
Company is unable to continue as a going concern.
Matter of Emphasis
We draw attention to the following matters as stated in notes to the
financial statements
1. Note 2.25(h) which describes the uncertainty related to the outcome
of the lawsuit filed against the Company by the workers regarding
settlement of compensation amounting to Rs.10,816,903.
2. Note 2.27 (C) with regards to extraordinary item on account of write
back of Rs. 96,456,372 (excluding exchange effect) payable to creditors
with mutual consent for which direct confirmation is not received till
date.
3. Note 2.29 regarding provision of gratuity amounting Rs. 4,945,334
and compensated absences amounting to Rs. 988,708 is provided on actual
basis and no actuarial valuation has been made as per the requirement
of Accounting Standard -15 - Employee Benefits.
4. As per Sec. 138 of Companies Act, 2013 internal audit has not been
carried out by the company as there were no operations in the company
during the year.
Our opinion is not qualified in respect of matters as stated above.
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 (amount of which
is not ascertainable), 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 30 June 2015;
(b) in the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) 2015 issued by
Central Government 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.
2. 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 underSection 133 ofthe Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the
directors as on 30 June, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 30 June, 2015
from being appointed as a director in terms of Section 164 (2) of the
Act.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
Golkonda Aluminum Extrusions Limited
(Formerly known as Alumeco India Extrusion Limited)
(i) a. The Company is maintaining proper records showing full
particulars including quantitative details and situation of fixed
assets.
b. All the assets have not been physically verified by the Management
during the year but there is a phased programme of verification, which
in our opinion, is reasonable having regard to the size of the Company
and the nature of its assets. However since the production is closed
since July 2013 and it is unlikely to do the physical verification on a
regular interval.
(ii) a. There is no inventory except for stores and spares items which
are under controlled environment. Hence no physical verification has
been done on regular intervals. Therefore clause (ii)(b) of Paragraph 4
of the Order is not applicable.
(iii) According to the information and explanations given to us, the
Company has not granted loans, secured or unsecured, to Companies,
Firms or other parties
covered in the register maintained under Section 189 of the Companies
Act, 2013.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to the purchases of inventory, fixed assets and with regard to the sale
of goods and services. During the course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
controls.
(v) In our opinion and according to the information and explanations
given to us, the company has not accepted any deposits from the public
within the meaning of Section 73 to 76 or any other relevant provisions
of the Companies Act, 2013 and the rules framed there under.
Accordingly, Paragraph 3(v) of the Order is not applicable to the
Company.
(vi) According to the information and explanation given by the company,
the Central government has not specified maintenance of cost records
under sub- section (1) of section 148 of Companies act 2013.Further
production is closed since July 2013.Therefore clause (vi) of Paragraph
4 of the order is not applicable.
(vii) a. According to the information and explanations given to us and
the records of the company examined by us, the company is generally
regular in depositing with appropriate authorities undisputed statutory
dues including Provident Fund, Employees' State Insurance, Income tax,
Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Value
added tax, Cess and any other statutory dues applicable to it as on
30.06.2015 b. According to the information and explanations given to
us, there are no dues of Income tax, Sales tax, Wealth Tax, Service
tax, Customs duty, Excise duty, Value added tax and Cess which have not
been deposited with the appropriate authorities on account of any
dispute except as under:
Relevant Income under dispute Forum where dispute is
Assessment Year (Rs.) pending
1994- 95 2,03,59,259 Honourable High Court of Andhra
Pradesh
1995- 96 51,72,082
2003- 04 2,89,37,712
2004- 05 1,82,56,357
2005- 06 1,85,46,533 ITAT has redirected the case
to TPO.
2006- 07 3,51,83,477 The case is pending before TPO
2007- 08 14,61,08,591
2008- 09 12,83,00,000
2010- 11 7,22,81,070 Income Tax Appellate Tribunal
2011- 12 1,09,90,023 Commissioner of Income-Tax
(Appeal)
c. According to information and explanation given to us and the records
of the company examined by us, company has not declared any dividend
since its incorporation. Therefore clause (vii)(c) of Paragraph 4 of
the Order is not applicable.
(viii). The accumulated losses at the end of the financial year are more
than 50% of its net worth. The company has incurred cash losses of Rs.
1, 03, 84, 478 in the financial year ended on that date.
(ix). According to the information and explanation given to us, the
company has no borrowings Therefore clause (ix) of Paragraph 4 of the
Order is not applicable.
(x). 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, the terms and conditions whereof are
prejudicial to the interest of the company.
(xi). According to the information and explanations given to us, no term
loans are availed by the company during the year. Therefore clause (xi)
of Paragraph 4 of the Order is not applicable.
(xii) To the best of our knowledge and according to the information and
explanation given to us, no fraud by the company and no material fraud
on the company has been noticed or reported during the year nor have
been informed of such case by the management.
for Laxminiwas & Jain
Chartered Accountants
Firm's registration number: 001859S
Place: Hyderabad Laxminiwas Sharma
Date: 29 August 2015 Partner
Membership No: 014244
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