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ARSS Infrastructure Projects Ltd.

BSE: 533163 Sector: Infrastructure
NSE: ARSSINFRA ISIN Code: INE267I01010
BSE LIVE 15:40 | 02 Dec 68.85 -3.05
(-4.24%)
OPEN

70.70

HIGH

72.00

LOW

68.20

NSE LIVE 15:52 | 02 Dec 68.85 -3.20
(-4.44%)
OPEN

71.45

HIGH

72.10

LOW

68.25

OPEN 70.70
PREVIOUS CLOSE 71.90
VOLUME 84009
52-Week high 113.95
52-Week low 27.00
P/E
Mkt Cap.(Rs cr) 102.17
Buy Price 0.00
Buy Qty 0.00
Sell Price 68.85
Sell Qty 480.00
OPEN 70.70
CLOSE 71.90
VOLUME 84009
52-Week high 113.95
52-Week low 27.00
P/E
Mkt Cap.(Rs cr) 102.17
Buy Price 0.00
Buy Qty 0.00
Sell Price 68.85
Sell Qty 480.00

ARSS Infrastructure Projects Ltd. (ARSSINFRA) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR

To

The Members of ARSS Infrastructure Projects Limited

Report on the Financial Statements

We have audited the accompanying financial statements of ARSS InfrastructureProjects Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2014 the Statement of Profit ended and a summary of significant accountingpolicies and other explanatory information

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in subsection (3C) ofsection 211 of the Companies Act 1956 ("the Act"). This responsibility includesthe design implementation and maintenance of internal control relevant to the preparationand presentation of the financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal control relevant to the Company’s preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified opinion.

Basis for Qualified Opinion

a) In absence of working papers on physical verification of inventories discrepanciesif any between book and physical inventories could not be ascertained including effect ofthe same in the financial statements of the company.

b) Interest on delayed deposit of statutory dues excluding TDS has not been providedfor which has neither been quantified nor the effect of the same on the financialstatements has been ascertained.

c) No provision has been made against performance bank guarantees invoked amounting toRs.89.83 Crores against the company and disputed by it.

d) No provision has been made against claims recoverable amounting to Rs. 734.44 Croresdisputed by the parties and referred for arbitration.

e) Revenue includes Rs. 292.44 Crores against claims raised on different parties whichhas neither been acknowledged nor recoverability of which is ascertainable.

f) The Company has not given effect to the loss of Fixed Assets in fire with a grossvalue ofRs. 3.78 Crores resulting charging of higher depreciation by Rs. 0.67 Crores andreduction in profit by the same amount . The gross value of fixed assets has remainedhigher by Rs. 3.78 crores.

g) In absence of relevant records Contract-wise surplus/loss has neither beenascertained nor recognized in compliance with the requirements of para 34 and 35 of AS-7"Construction Contracts" issued by the Institute of Chartered Accountants ofIndia.

h) In absence of details of potential equity shares diluted earning per share has notbeen ascertained in compliance with AS-20- "Earning per Share" issued by theInstitute of Chartered Accountants of India.

i) Cost of leasehold Land has not been amortized which is not in conformity with AS-19-"Accounting for Leases" issued by the Institute of Chartered Accountants ofIndia. Amount of amortisation not ascertained.

j) Interest amounting to Rs. 3.18 Crores on inter corporate deposits received has notbeen charged to Profit & Loss Account resulting in overstatement of profit to thatextent.

k) In the absence of accounts of ARSS Balajee JV HCIL-Adhikarya-ARSS JV HCIL-ARSSPLJV HCIL-ARSS-Kalindee JV ARSS-MVPL JV and HCIL-ARSSPL-Triveni JV discrepancies if anybetween the said accounts with that of the Company is not ascertainable.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph the aforesaid financial statements give the information required bythe

Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:

(a) in the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2014;

(b) in the case of the Statement of Profit and Loss of the Profit for the year endedon that date; and

(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2003 ("theOrder") as amended issued by the Central Government of India in terms ofsub-section (4A) of section 227 of the Act we give in the Annexure a statement on thematters 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 ourknowledge 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 theCompany so far as appears from our examination of those books;

c) the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account.;

d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph in our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting Standards referred to in subsection (3C) of section211 of the Act.

e) on the basis of written representations received from the directors as on March 312014 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Act.

For P. A. & Associates
Chartered Accountants
Firm Regn. No 313085E
(CA. B. N. Dash)
Bhubaneswar Partner
The 30th day of April 2014 M. No. 062142

Annexure referred to in Paragraph 3 of our report of even date

[Re : ARSS Infrastructure Projects Ltd. ("the Company")]

i) In respect of its Fixed Assets

a) The company has maintained fixed assets register which however is not complete.

b) In absence of the working papers of physical verification methodology adopted bythe Company for the verification of the Fixed Assets could not be ascertained.

c) According to the information and explanation provided to us the Company has notdisposed off a substantial part of its fixed assets during the year and hence the statusof the Company as a going concern is not affected.

ii) In respect of its Inventories

a) As explained to us inventories have been physically verified by the management.However in absence of working papers of physical verification we are unable to commenton the adequacy of frequency of such verification / estimation.

b) According to information and explanations provided to us inventories at differentsites have been visually quantified and the value estimated by respective site in charge.However in absence of working papers as mentioned above we are unable to comment on thecorrectness of the procedure of physical verification of inventories followed by themanagement.

c) In absence of working papers for the physical verification of inventories conductedby the management we are unable to comment on the discrepancies between physical stockand book records if any and adjustment there of in the books of accounts.

iii) a) According to the information and explanations provided to us the company hasgranted loan to one party covered in the register maintained under section 301 of the Act.The maximum amount involved during the year was Rs. 7.65 lacs and the balance at the endof the year is Rs. 7.65 lacs.

b) In our opinion and according to the information and explanations provided to us theaforesaid loan is interest free and other terms and conditions of the loan taken by theparty were not prima facie prejudicial to the interest of the company.

c) The said interest free loan is repayable on demand and there is no repaymentschedule.

d) The company had taken loan from eleven parties covered in the register maintainedU/s 301 of the Act. The maximum amount involved during the year was Rs. 5055.79 lacs andthe balance at the end of the year is Rs. 5005.79 lacs.

e) In our opinion and according to the information and explanations provided to us theaforesaid loans are interest free and other terms and conditions of the loan taken by thecompany were not prima facie prejudicial to the interest of the company.

f) The said interest free loans are repayable on demand and there is no repaymentschedule.

iv) In our opinion and according to the information and explanations provided to usthere is an adequate internal control system commensurate with the size of the Company andthe nature of its business for the purchase of inventory and fixed assets and also forsale of goods and services. During the course of our audit we have not observed anycontinuing failure to correct major weaknesses in internal control system.

v) a) According to the information & explanation provided to us we are of theopinion that the particulars of the contracts or arrangements that need to be entered into the register maintained U/s 301 of the Companies Act 1956 have been so entered.

b) In our opinion and according to the information and explanations provided to us thetransactions (excluding loans reported under paragraph iii above) exceeding the value ofRs. 5 lacs in respect of any party during the year have been made at prices which areprima facie reasonable having regard to the prevailing market prices at the relevant timewhere such market prices are available.

vi) In our opinion and according to the information and explanations provided to usthe Company has not accepted any deposit from public within the meaning of section 58A and58AA or any other provisions of the Act and rules framed there under.

vii) In our opinion and according to the information and explanation provided to us theinternal audit system adopted by the company and reviewed by the audit committee can beconsidered as adequate.

viii) According to the information and explanations provided to us the CentralGovernment has prescribed the maintenance of cost records under section 209(1) (d) of theCompanies Act 1956 which however has not been maintained.

ix) a) According to the information and explanations provided to us and on the basis ofexamination of the records the company is not generally regular in deposit of undisputedstatutory dues including Provident Fund Employees State Insurance Income Tax andService Tax and there is serious delays in large number of cases.

b) According to the information and explanation provided to us in our opinion noundisputed amount payable in respect of the aforesaid dues were outstanding as at 31stMarch2014 for a period of more than six months from the date they became payable exceptEntry tax amounting to Rs. 104.59 lacs and TDS amounting to Rs. 159.82 lacs.

c) According to the information & explanation provided to us the following duesdemanded by the relevant authorities have not been deposited on account of pendingdisputes.

Forum where disputes are Pending Period to which the dispute relates Amount of demand
(Rs. in lacs)
1. Orissa Sales Tax Act.
Appellate Tribunal 2000-01 & 2004-05 52.11
Commissioner of Commercial Taxes 2000-01 to 2002-03 31.86
2. Orissa VAT Act
Commissioner of Commercial Taxes 2004-05 to 2006-07 14.51
Joint Commissioner of Commercial Taxes 2004-05 to 2006-07 & 2010-11 18.70
3. Orissa Entry Tax Act
Joint Commissioner of Commercial Taxes 2005-06 to 2006-07 24.60
Commissioner of Commercial Taxes 2005-06 to 2006-07 9.84
4. Central sales Tax Act
Commissioner of Commercial Taxes 2008-09 to 2010-11 892.61
5. Income Tax Act 1961
ITAT 2004-05 to 2010-11 5469.84
CIT (A) 2010-11 to 2012-13 13.28
6. Andhra Pradesh VAT Act
Appellate Deputy Commissioner(CT) 2008-09 to 2010-11 28.63

x) The Company does not have accumulated losses at the end of the financial year andhas not incurred cash losses in the financial year. However the Company has incurred cashlosses in the immediately preceding financial year

xi) As at the Balance sheet date Interest and principal amounting to Rs. 2369.11 Lacsdue to the financial institutions and banks have not been paid by the company.

xii) According to the information and explanations provided to us the company has notgranted any loans or advances on the basis of security by way of pledge of sharesdebentures or other securities.

xiii) In our opinion the company is not a chit fund or nidhi/mutual benefitfund/society. Therefore the provisions of clause (xiii) of paragraph 4 of the Order arenot applicable to the Company.

xiv) As explained to us and on the basis of information provided to us the company isnot dealing or trading in shares securities debentures and other investments.Accordingly the provisions of clause (xiv) of paragraph 4 of the order are not applicableto the Company.

xv) According to the information and explanations provided to us the company hasextended guarantee to the following parties covered under register maintained undersection 301 in respect of loan taken by them and the terms and conditions of suchguarantees are not prima facie prejudicial to the interest of the company.

a) M/s Anil Contractors Pvt Ltd : Rs. 2.80 Crores
b) M/s ARSS Damoh Hirapur Tolls Pvt Ltd : Rs. 87.00 Crores

According to the information and explanations provided to us loan availed by M/s ARSSDamoh Hirapur Tolls Pvt. Ltd has been classified as NPA by its bankers on 31.03.2014 andthere is a possibility of devolvement of the said liability against the company.

xvi) In our opinion and according to the information and explanations provided to usthe term loans have been applied for the purpose for which they were obtained.

xvii) According to the information and explanations provided to us and on an overallexamination of the books of accounts of the company we are of the opinion that no fundsraised on short-term basis have been utilized for long term investment.

xviii) According to the information and explanations provided to us during the yearthe company has not made any preferential allotments of shares to parties covered in theregister maintained under section 301 of the Act. Accordingly the provisions of clause(xviii) of paragraph 4 of the order are not applicable to the Company.

xix) During the period covered by our audit report the Company has not issued anydebentures. Accordingly the provisions of clause (xix) of paragraph 4 of the order arenot applicable to the Company.

xx) The Company has not raised any monies by way of public issues during the year.Accordingly the provisions of clause (xx) of paragraph 4 of the order are not applicableto the company.

xxi) To the best of our knowledge and belief and according to the information andexplanation provided to us no material fraud on or by the company during the year noticedor reported nor have we been informed of such case by the management.

For P. A. & Associates
Chartered Accountants
Firm Regn. No 313085E
(CA. B. N. Dash)
Bhubaneswar Partner
The 30th day of April 2014 M. No. 062142

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