| We have audited the accompanying financial statements of GSL-NOVA
PETROCHEMICALS LIMITED which comprise the Balance Sheet as at March 31,
2014, and 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.
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
15/2013 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. 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.
4. Basis for Qualified Opinion
i. The accounts of the Company have been prepared on a going concern
basis, though the company has stopped its manufacturing activities for
more than a year and entire networth of the company has been eroded.
The Financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and
classification of liability that may be necessary if the Company is
unable to continue as a going concern.
ii. Trade Receivables, Other Advances, Deposit and Trade Payables are
subject to confirmation and adjustment if any.
iii. Compound interest, Penal interest and liquidated damages in
respect of all borrowings have not been provided, amount of which is
unascertainable, pending confirmations/ reconciliation(Refer to Note
No.4.6).
5. 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, 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 March 31, 2014;
(b) in the case of the Statement of Profit and Loss, of the profit/
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.
6. Report on Other Legal and Regulatory Requirements
i 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.
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 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 notified under 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 AUDITOR'S REPORT (Referred to in paragraph 6(i)
of "Report on Other Legal and regulatory Requirements" of our report of
even date.)
1. In respect of Fixed Assets :
a. The present register of Fixed Assets requires completion in certain
respects & we have been informed that the work is in progress.
b. As per the information and explanations given to us, the management
at reasonable intervals during the year in accordance with a programme
of physical verification physically verified the fixed assets and no
material discrepancies were noticed on such verification as compared to
the available records.
c. In our opinion, the Company has not disposed off any major /
substantial part of the fixed assets during the year and the going
concern status of the company is not affected.
2. In respect of its Inventories :
a. The inventory other than the inventory of work in process has been
physically verified during the year by the management. We have been
informed that looking at the manufacturing process, it is not possible
to physically verify the inventory of work in process. In our opinion,
the frequency of verification is reasonable.
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 if any on verification between the physical
stocks and books records were not material.
3. In respect of loans, secured or unsecured, granted or taken by the
company to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
a. During the year under audit, the company has not granted any loans,
secured or unsecured, to the companies, firms and other parties covered
in the register maintained under section 301 of the Companies Act, 1956
hence clause 4 (iii) (a), (iii) (b), (iii) (c) and (iii)
(d) of the Companies (Auditor's Report) Order, 2003 are not applicable.
b. There are 7 parties covered in the register maintained under section
301 of the Companies Act, 1956 from whom the company has taken loans.
The maximum amount involved during the year was ' 83,940,000/- and the
year-end balance of loans taken from such parties was ' 81,555,000/-.
c. In our opinion and according to the information and explanations
given to us, in case of loans taken during the year, the rates of
interest, wherever applicable and other terms and conditions are not
prima facie prejudicial to the interest of the company.
d. In respect of loans taken by the company, the company has taken
interest free loans and in case of principal, the terms of repayment
have not been stipulated hence the question of regularity of payment of
interest and principal does not arise.
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 and services. During the course of our
audit, no major weakness has been noticed in the internal controls.
5. In respect of contracts or arrangements covered under Section 301 of
the Companies Act, 1956:
a. 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 contracts or arrangements 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 contracts or
arrangements entered in the registers maintained under section 301 in
respect of any party during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.
6 The company has not accepted any deposits from public.
7 In our Opinion, the Company has internal audit system commensurate
with size and nature of its business.
8 We have been informed that duing the year under review the company
has not made any manufacturing activity, hence company is not required
to maintain the records pursuant to the companies (Cost Accounting
Records) Rules, 2011 prescribed by the Central Government under section
209(1)(d) of the Companies Act, 1956.
9 In respect of Statutory Dues:
a. According to the records of the Company, the Company is regular in
depositing with appropriate authorities undisputed statutory dues
including wealth tax, excise duty, cess and other statutory dues
applicable to it with the appropriate authorities although there has
been delay in depositing Service Tax, Provident fund, Gujarat Value
Added Tax, Central Sales Tax, Professional Tax, Tax deducted at source
and Tax Collected at Source.
b. According to the information and explanations given to us Wealth Tax
of ' 5,00,000/-, Investor Education & Protection Fund of ' 2,85,041/-,
Tax deducted at Source of ' 14,498/-, Gujarat Value Added Tax of3,353/-
and Professional Tax of ' 93,930/- are due for a period more than six
months from the date they became payable and have not been deposited
till balance sheet date, except that no undisputed amounts payable in
respect of Excise duty, Service Tax, Central Sales Tax & Tax Collected
at Source for a period of more than six months from the date they
became payable.
c. On the basis of our examination of the records, following disputed
statutory dues have not been deposited with the appropriate
authorities;
Name of the Statute Nature of the Dues Financial
Year
The Income Tax Act, 1961 Income Tax& Interest 2000-2001
2003-2004
The Income Tax Act, 1961 Interest on Income Tax 2001-02
The Central Excise and Excise Duty and Penalty 2005-06
Customs Act
The Central Excise and Excise Duty and Penalty 2006-2007
Customs Act & 2007-2008
The Central Excise and Excise Duty and Penalty 2003-2004
Customs Act 2004-2005
2006-2007
The Gujarat Value Added Interest & Penalty on 2006-07
Tax Act,2003 Value Added Tax
Service Tax Act Service Tax and Penalty 2007-08
The Textile Committee Textile Cess 1995 to 2005
Amendment Act, 1973
Name of the Amount Forum where dispute is pending
Statue (In Rs.)
The Income Tax Act,
1961 1,33,650 Commissioner of Income Tax, Appeals
11,050
The Income Tax Act,
1961 2,72,135 The Income Tax Appellate Tribunal
The Central Excise and
Customs Act 1,46,479 Assistant Commissioner of Central
Excise & Customs
The Central Excise and
Customs Act 19,59,742 Commissioner of Excise and Customs
(Appeals)
The Central Excise and
Customs Act 32,30,731 Custom Excise and Service Tax
33,98,641 Appellate Tribunal
12,59,207
The Gujarat Value Added
Tax Act,2003 2,69,152 Joint Commissioner Appeals
Service Tax Act 18,53,152 Commissioner of Service Tax (Appeals)
The Textile Committee
Amendment Act, 1973 50,90,119 Textiles Committee, Government of
India, Ministry of Textiles
10 The accumulated losses of the company at the end of the financial
year are more than fifty percent of its net worth. The Company has
incurred cash loss during the year under audit and in the immediately
preceding financial year.
11 In our Opinion and according to the information and explanations
given to us, there was a delay for more than 92 days in repayment of
principal of Rs 50,00,000/- to Bank. Further the company has defaulted
in repayment of principal of Rs.586,244,098/- and in repayment of
interest of Rs.209,249,633/- till balance sheet date.
12 Based on our examination of documents and records and information
and explanations given to us, 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 any special statute applicable to Chit Fund, Nidhi
or Mutual benefit Fund/Societies are not applicable to the Company.
Therefore, clause 4 (xiii) of the Companies (Auditor's Report) Order,
2003 is not applicable to the company.
14 The Company is not dealing or trading in shares, securities,
debentures or other investments and hence, the requirements of Para 4
(xiv) are not applicable to the Company.
15 As per the information provided to us, the Company has not given any
guarantee for loans taken by others from bank or financial
institutions.
16 The company has not obtained any term loans from banks or financial
institutions during the year under audit.
17 According to the information and explanations given to us and on the
basis of an overall examination of the balance sheet of the company, in
our opinion funds amounting to Rs.476,474,011/- raised for short term
basis have been used for long term purpose.
18 During the year, 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.
19 During the year, the company has not issued any debentures.
20 During the year, the Company has not raised any money by way of
Public issues.
21 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 year.
For, J. T. Shah & Co.
Chartered Accountants,
[FRN No. 109616W]
[J. T. Shah]
Place : Ahmedabad Partner
Date : 30/05/2014 [M. No. 3983]
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