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Baroda Rayon Corporation Ltd.

BSE: 500270 Sector: Industrials
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Baroda Rayon Corporation Ltd. (BARODARAYN) - Auditors Report

Company auditors report

To The Members of The Baroda Rayon Corporation Limited Report on the FinancialStatements

We have audited the accompanying Standalone financial statements of The Baroda RayonCorporation Limited (‘the Company’) which comprise the Balance Sheet as atMarch 31 2015 the Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.

Management’s responsibility for the (Standalone) Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section134 (5) of the Companies Act 2013 ( "the Act")with respect to the preparationof these financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the Accountingprinciples generally accepted in India including the accounting standards specified undersection 133 of the act read with rule 7 of the companies (Accounts) Rules 2014.Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provisions of the act for safeguarding the assets of the company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgment and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the act and the rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

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 of thefinancial statements that give true and fair view in order to design audit procedures thatare appropriate in the circumstances but not for the purpose of expressing an opinion onwhether the Company has in place an adequate internal financial controls system overfinancial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by companies directors as well as evaluating the overallpresentation of the financial statements.

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


Attention is invited to followings:

a. As stated in note No.19 ( a) in financial statementsthe accounts have been preparedon going concern basis. However the net worth of the Company had been fully eroded due tothe continued losses the Company’s entire operations have been suspended sinceAugust’ 2008 and there are many legal cases pending against the Company which mayaffect the future functioning of the Company. In our opinion the Company is not a goingconcern though accounts have been prepared on historic cost basis. No valuation reportsis obtained for arriving at the fair market value of the assets hence we are unable toreport on the realizable value of the asset valuation as well as the provision forimpairment.

In the absence of key personnel in accounting and finance departments and thenon-availability of adequate data and information for its accounting compilation theCompany had to prepare the accounts ongoing concern basis. Consequently no adjustmentshave been made in the accounts relating to the recoverability of recorded assets and inrespect of recorded liabilities and contingent liabilities that might devolve on theCompany.

b. The Company could not make full payment of settled past dues as desired in the termsof wage settlement agreement referred in Note 22 of financial statements during its tenureand no fresh renewal agreement was entered. Subsequently employee Union has filed thelitigation in September’ 2008 for recovery of their total dues against the Company atGujarat High court. The Hon’ble High court has directed to resolve the litigation byway of arbitration process. Thereafter arbitrator had issued impugned award then theCompany has challenged the said award Order Under provision of Section 34 of Arbitrationand Conciliation Act 1996.Consequently the award is automatically stayed.

Simultaneously the Company has referred the said matter with Hon’ble BIFR formaking necessary modification in Modified Draft Rehabilitation Scheme (MDRS). The matteris pending with the Board. Subject to the final verdict we are unable to express anyopinion on probable liabilities on account of the non compliance of the pending disposalof final verdict in arbitration award.

c. The balances for Sundry Debtors Sundry creditors secured and unsecured loansloans & advances bank balances statutory and other liabilities as on 31st March’2015 are subject to confirmation. The figures reported in the financial statement are asper the ledger account.

d. On account of closure of operation since August’ 2008 and loss of keypersonnel we have not physically verified the stores & spares and fixed assets of theCompany as on 31st March’ 2015.

e. No information is available regarding the amount payable to suppliers under MicroSmall and Medium Enterprises Development Act 2006. Accordingly interest provisionrequired under the said Act is not made.

f. Company has not applied the Schedule II of Companies Act’ 2013 for chargingdepreciation for details refer to Note 8 under Fixed Assets as per residuary method andthe effect of the changed depreciation is not arrived hence we cannot quantify itseffects on the reported losses resulting understatement of current losses andoverstatement of carrying value of fixed assets.

Subject to above paragraph from a) to f) and paragraph mentioned under Report on OtherLegal and Regulatory Requirements 2d) relating non-compliance of Accounting standards fromI) to IV) In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:

(i) in the case of the Balance sheet of the state of affairs of the company as atMarch 31 2015; (ii) in the case of the Statement of Profit and Loss of the loss for theyear ended on that date; and (iii) in the case of the Cash Flow Statement of the cashflows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies ( Auditor’s Report) Order2015 ( ‘theOrder’) issued by the Central Government of India in terms of sub-section(11) of thesection 143 of the Act we give in the Annexure a statement on the matters specified inthe paragraph 3 and 4 of the Order.

2. As required by section 143(3) of the Act we report that:

a. In view of huge accumulated losses of Rs 3592540756 and financial constraintsthere was loss of key personnel and staff responsible for financial and accountingmatters as such the financial information and accounting data were prepared on the basisof available information and we are expressing our opinion with such limitation subjectto above 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. we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit; c. in our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books; d. the Balance Sheet Statement of Profit andLoss and Cash Flow Statement dealt with by this report are in agreement with the books ofaccount; e. Except for the following Accounting Standards as referred below in ouropinion the aforesaid Financial Statements comply with the Accounting Standards referredto in section 133 of the Companies Act 2013 read with rule 7 of the Companies (Accounts)Rules 2014; i. We are unable to express an opinion on the financial impact notascertained by the Company that may arise on account of impairment of assets related todiscontinued operations for details refer to note 34 of financial statements. No separatedisclosure has been made in the profit and loss account and Cash flow statements for theyear for the discontinued operations. Non-disclosure of information with respect todiscontinued operation and non-provision of impairment value in assets are inconsistentwith the compliance of Accounting Standard - 24 relating to discontinuing operation andAccounting Standard -28 relating to Impairment of Assets.

ii. No information is disclosed of related party disclosure in the financial statementwhich is contrary to AS 18.

iii. The Company has not made any provision for the decline in the value of investmentrelated to investment in unquoted shares of Thai Baroda Industries Ltd for Rs 57484744and equity shares in TAIB Capital Corporation Ltd for Rs 2450000 which is contrary tothe Accounting Standard 13.

iv. The provision has been made for P.F E.S.I.C. and leave salary as perCompany’s own estimate up to 31ST March’ 2009; no liabilities havebeen ascertained for the financial year 2009-10 2010-11 2011-12 2012-13 2013-14 &2014-15. The provision for gratuities has been made up to financial year 2013-14 as perCompany’s own estimates. Hence the reported losses and accumulated losses areunderstated to the extent of such non-provision. The accounting of said employees dues arenot as per the actuary valuation which is contrary to Accounting Standard AS


f. on the basis of written representations received from the directors as on March 312015 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2015 from being appointed as a director in terms of sub section (2) ofsection 164 of the Companies Act 2013;

g. With respect to the other matters included in the auditor’s report inaccordance with Rule 11 of the Companies ( Audit and Auditors) Rules 2014 in our opinionand to best of our information and according to the explanation & information providedto us:-

i) The company has pending litigation with labour as referred in paragraph ( b) aboveunder opinion which would impact its financial position;

ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

iii) There has not been any occasion in case of the Company during the year underreport to transfer any sums to the Investor Education & Protection Fund.

For AMPAC & Associates

Chartered Accountants

Firm’s Registration No.: 112236W

CA Piyush B. Sheth


Membership No.:44062


May 30 2015


On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of audit we report that

1. (i) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of its fixed assets however the fixed assetsregister is not up dated due to loss of key personal responsible for its maintenance.

(ii) According to the information given to us the Management has not physicallyverified the Fixed Assets of the Company since 1998-99 We are unable to express anycomments for any physical discrepancies/differences that may arise in respect of theverification of Fixed Assets.

2. a) As per the information and explanations given to us the inventories have notbeen physically verified by the management at reasonable intervals as Company is not inoperation since August’ 2008. However the Company does not have any inventory exceptfew stores of Rs 1789072/-.

b) The Company was maintaining proper records of inventory however after closure ofmanufacturing activity there are no records required to be maintained as there were noactivity accordingly there is no question of any discrepancies to be reported. Howeverthe Company has not considered the impairment aspect for the carrying value of stockwhich are old and obsolete.

c) Since the Company has not verified physically inventory no discrepancies arearrived.

3. As per information furnished the company has not granted any loans tocompanies firms or other parties covered in the register maintained under section 189 ofthe Act.

4. Since there is closure of operation from August 2008 in our opinion thereis no internal control procedure commensurate with the size of the company and the natureof business. On account of the closure of operation there is no sale or purchase of goodsand purchase of fixed assets; however there is no internal control on safeguarding theasset of the Company like scrap materials stores and other movable assets. In additionthe system of confirmation / reconciliation of balances of parties as well as inoperativebank accounts for details refer to note 13 of financial statements need to be strengthenedto make them commensurate with the size of the Company and the nature of its business.

5. In our opinion and according to the information and explanation given to usthe Company has contravened the provisions of repayment of deposits along with interestthereon as contemplated in Section 73 to 76 of the Companies Act 2013 and the rulesframed there under with regard to deposits accepted from public which are overdue.However the Company is declared sick by The Board for Industrial and FinancialReconstruction ( now referred BIFR) under section 3(1)(0) of the Sick Industrial Companies( Special Provisions) Act’1985. By virtue of the rehabilitation scheme of BIFR allthe claims relating to future and past interest is waived and the Company has to repay the100% principal dues as on 31.03.2003 in five equal installments after 5 years from22.05.2006 viz. date of the scheme. The Company has started repayment of fixed deposits.However the company has yet to comply for intimating the Company Law Board (CLB) on amonthly basis.

6. We are of the opinion that the company is not required to maintain books ofaccount pursuant to the order made by the Central Government for the maintenance of costrecords under Section 148 of the Companies Act 2013 as the Company does not have anymanufacturing activities..

7. (a) The statutory liabilities are restructured and deferred as per thecomprehensive rehabilitation scheme approved by the BIFR however various statutoryagencies are in process of granting their sanction as per said scheme for deferment andsettlement of said liabilities. Hence we are reporting the Undisputed Statutory dueswhich is subject to confirmation from respective departments and shown as per the ledgeraccount including provident fund Investor Education and Protection fund Employee’sState Insurance Income tax Sales tax Custom duty Excise duty cess and otherstatutory dues with appropriate authorities for a period more than six months from thedate they became payable which are as under;



( Rs )

a. Sales Tax/VAT & interest thereon


b. Custom Duty


c. Excise Duty


d. Interest on excise duty


e. Income Tax/TDS/Wealth Tax/FBT


f. Provident Fund dues & interest thereon


g. Employee’s State Insurance dues


h. Water Tax & interest thereon


i. Gujarat Electricity Board & interest thereon


j. Textile Committee Cess


k. Water Cess (Gujarat Pollution Control Board)


l. Electricity Duty (Power plant)


m. Professional Tax


n. Revenue Tax – Mamlatdar Surat



The said statutory dues are given as per the information and records produced beforeus. The company has received various notices from E.S.I. Provident fund offices GEB etcclaiming penal interest damages and penalty for delay in deposit of their dues Which isnot ascertainable hence it is not provided in the books.

(b) According to the information and explanation given to us the company has disputeddues of Excise duties which are given below.

1. Central


Excise Duty



Tribunal (CESTAT)

Act 1944
2. Central Excise Excise Duty 816033/- 1995-1996 Asst. Commissioner
Act 1944 Central Excise
3. Central Excise Excise Duty 1212545/- 1996-1997 Asst. Commissioner
Act 1944

Central Excise

4. Central


Excise Duty

1172313/- 1996-1997 Commissioner
Act 1944 Appeals
5. Central


Excise Duty



Tribunal (CESTAT)

Act 1944
6. Central Excise Excise Duty 2915835/- 1997-1998 Asst. Commissioner
Act 1944 Central Excise
7. Central Excise Excise Duty 311579/- 1998-1999 Asst. Commissioner
Act 1944

Central Excise

8. Central Act 1944


Excise Duty



Tribunal (CESTAT)

9. Central Excise Excise Duty 189748/- 2006-2013 Asst. Commissioner
Act 1944

Central Excise

10. Central Act 1944


Excise Duty



Tribunal (CESTAT)

(c) There has not been any occasion in case of the Company during the year underreport to transfer any sums to the Investor Education & Protection Fund.

8. The company has accumulated losses at the end of the financial year of Rs 3592540756/-;however it has generated cash loss Rs 4693239/- in the current year against thecash losses of Rs 2994609/- for immediately preceding year.

9. The Company has paid all the dues to CDR members however PNB AssetManagement Limited which is not participating member under CDR scheme is as under:.





Debenture Holders


19677668/- Not Ascertained Not ascertained (Up to P.Y. 840.04)


(Up to P.Y.. 466.13)

However as per company the settlement with the unsecured lenders under the CDR wasmade a part of the scheme filed with BIFR and pursuant to the sanction of the scheme theamount payable to Principal PNB mutual fund is Rs 7766556/- being 42% of the principalamount of Rs 18491800. The Company has made a payment of Rs 776656/- on 11.11.2006against the said liability and the balance amount of Rs 6989900 is awaiting confirmationof the same.

Note: The above balance is subject to confirmation.

10. According to information and explanations given to us the Company has notgiven any guarantee for loans taken by others from banks or financial institutions duringthe year.

11. According to information and explanations given to us the Company has not raisedterm loans during the year.

12. As per the information and explanations given to us no fraud on or by the Companyhas been noticed or reported during the year.

For AMPAC & Associates

Chartered Accountants

Firm’s Registration No.: 112236W

CA Piyush B. Sheth



May 30 2015

Membership No.:44062

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