The Members of
M/s. Empee Distilleries Limited.
Report on Financial Statements
We have audited the accompanying financial statements of M/s. Empee DistilleriesLimited ( the Company ) which comprise the Balance Sheet as at 31st March2016and the Statement of Profit and Loss the Cash Flow statement for the year ended from01/04/2015 to 31/03/2016 and a summary of the significant accounting policies and otherexplanatory information for the year then ended.
Management s Responsibility for the 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 preparation of thesestandalone 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 maintenance of adequate accounting records in accordance withthe preparation of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
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 thereunder.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the companies Act 2013. 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 misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company s preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management aswell 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 audit opinion on the standalone financial statements.
Basis for Qualified Opinion
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India except :-
a. The company has made an investment of Rs.1.59 Crores and given share applicationmoney of Rs.140.36 Crores to its subsidiary Empee Sugars and Chemicals Limited towardspromoters share. The subsidiary company Empee Sugars and Chemicals Limited is incurringlosses and has been registered under BIFR as a sick company. This may result in diminutionin the value of investments for which no provision is considered.
b. Other Loans and advances amounting to 28.80 Crores out of 37.25 Crores under thehead Other Current assets Sundry debtors amounting to Rs. 13.49 Crores and Sundrycreditors amounting to Rs. 35.34 Crores are subject to confirmation and reconciliation.The impact on profitability is not ascertainable.
Qualified Opinion :-
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
Without Qualification we also draw attention to note 4.1.C relating to Punjab NationalBank invoking guarantee and the same being disputed by the Company and hence not providedfor.
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 financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
a) in the case of the Balance Sheet of the state of affairs of the Company for as atMarch 31 2016; b) in the case of the Profit and Loss Account of the profit for theyearended on that date; and c) in the case of the Cash Flow Statement of the cash flowsfor the year ended on that date.
Report on Other Legal and Regulatory Requirements :-
1. As required by the Companies (Auditor s Report) Order 2016( the Order ) issued bythe Central Government of India in terms of sub section (11) of section 143 of the Act wegive in Annexure I a statement on the matters specified in the paragraph 3 and 4 of theOrder to the extent applicable.
2. As required by section 143(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) In our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting Standards notified under the Companies Act read withthe General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairsin respect of section 133 of the Companies Act 2013except for the effects of the matterdescribed in the Basis for Qualified Opinion paragraph.
e) On the basis of written representations received from the directors as on March 312016 and taken on record by the Board of Directors none of the directors aredisqualified as on March 31 2016 from being appointed as a director in terms ofsub-section (2) of section 164 of the Companies Act 2013.
f) The company has adequate internal financial controls system in place and thesecontrols are operating effectively.
g) With respect to the other matters to be included in the Auditor s Reportinaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinionand to the best of our information and according to the explanationsgiven to us :
i. The company has the following pending litigations which would impact its financialposition.
|S No ||Case No ||Amount ||Status |
|1. ||CP309/2014 ||Company Petition for winding up filed by Mohan Breweries Ltd before High Court of Chennai for recovery of dues of Rs.8.50 Crs. ||Compromise entered into for a scheme of payment. |
|2. ||Appeal filed by EDL and others before CE Tribunal Chennai. ||Customs and Excise Tribunal-SZ Bench at Chennai ||The order dt.12-3-2014 of the Commissioner of customs Tuticorin directed to pay differential duty in the purchase of coal amounting to Rs.2860189/- with penalty of Rs 3000000/- and penalty of Rs 100000/-against individual name of GM of EDL. On appeal stay granted to the Company. |
|3. ||Appeal C/41496/ 2014-DB ||Before Customs Excise & Service Tax Appellate Tribunal Chennai ||The commissioner of customs Tuticorin filed an appeal against its orders granting exemption for customs duty to the tune of Rs. 3523458/- under notification 46/2011 of coal import from Asian countries against EDL. Not yet listed. |
|4. ||RFA No 119/2015 filed by us against judgment in OS 537/2008 dt.29-8-2014 filed by M/s Vintage Marketing ||Before High Court of Kerala ||Case relates to marketing services -Judgment and Decree for Rs 1801418 with costs and interest @18% per annum passed by SubJudge Palakkad against EDL. The Company has filed an appeal in this regard. |
|5. ||OP732of 2015 before High Court of Madras against Arbitration Award passed by Retd. ||Before High Court of Kerala ||OP filed against the award of payment of 1500000/- with 12 % interest from the year 2005 against the Arbitration raised by Mrs.Indumathi of RVS EnterprisesPondicherry against EDL and others. Counter Claim by EDL was also filed. Pending for final disposal. |
|6. ||Justice J.Kanakaraj CP No.4/2015 ||Before High Court of Madras ||Winding up petition filed by M/s Hambuja Road- ways for the alleged recovery of debt of principal cost and interest of Rs.1520729/-against EDL. Pending for admission. |
|7. ||First appeal 264 of 2013 Filed by EDL ||Before Dist Court at Nashik Maharastra ||Filed against the judgment in Suit 11 /2002 filed by M/s Dolphin Impressions P LtdNashik for the claim of Rs 543661/ with interest @24% p.a. Pending for Orders. |
|8. ||Arbitration ||Before Retd. Justice K.P. Sivasubramaniam ||Initiated by M/s Khoday India Ltd against EDL for dispute and claim of Rs. 224511819/- with interest.Counter claim was filed by the company for Rs.226965608/-. |
|9. ||MACT OP No.1375 of 2014 ||Small causes Court Motor accident Claims Tribunal Chennai ||Accident -Compensation of Rs 400000/- against involvement of vehicle TN01AC 2460 TATA ACE of Empee Distilleries Ltd by Miss. Abinaya D/o Karunakaran. Not yet listed. |
ii. The company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection fund by the company.
| ||For Venkatesh& Co. |
| ||Chartered Accountants |
| ||F.R.No.004636S |
| ||CA Dasaraty V |
| ||M.No.026336 |
| ||Partner |
|Place : Chennai || |
|Date : 30/05/2016 || |
ANNEXURE TO INDEPENDENT AUDITORS REPORT
(Referred to in paragraph 1 under the heading of Report on other Legal and RegulatoryRequirements of our Report of even date)
1. As required by the Companies (Auditor s Report) Order 2016 issued by the CentralGovernment in terms of section 143 (11) of the Companies Act 2013 and on the basis ofsuch checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us during the course of the auditwe report that
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
b) As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the company and the nature of its assets. No material discrepancieswere noticed on such physical verification.
c) As per information provided to us the title deeds of immovable properties are heldin the name of the company.
2. In our opinion and according to the information and explanations given to us theinventories have been physically verified during the year by the management and nomaterial discrepancies were noticed during the physical verification.
3. The company has granted loans to related parties amounting to Rs.24.88 croreswithout stipulation as to the repayment of principal and interest.
a) In the light of above we do not comment on terms and conditions of grant of suchloans.
b) In the light of above we do not comment on repayment of the principal amount andinterest and other conditions.
c) In the light of above we do not comment on the reasonable steps have been taken bythecompany for recovery of the principal and interest.
4. According to the information and explanations given to us in respect of Loansinvestments guarantees and security the provisions of sections 185 and 186 of CompaniesAct 2013were complied with:
5. According to the information and explanations given to us the Company has notaccepted any deposits from the public. Therefore the provisions of section 73 to section76 the Companies Act 2013 and rules framed there under are not applicable.
6. In our opinion and according to the explanations given to us maintenance of costrecords has been specified by the Central Government under sub-section (1) of section 148of the companies Act2013. We however not made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
7. a) According to the information and explanation given to us and according to thebooks and records as produced and examined by us in our opinion the Company has beendepositing undisputed statutory dues such as Provident fund income tax sales taxcustoms duty cess and other statutory dues with some delay Income tax of Rs. 8.28 Croresfor the FY 2011-12 Rs 1.77 Crore for the FY 2012-13 has not been paid as on date.
b) According to the records of the Company and according to the information andexplanations given to us except the following there are no dues of Income tax Wealthtax Sales tax Excise duty and cess which have not been deposited on account of anydispute except as stated here under:-
|Sl No ||Name of the statue ||Nature of Dues ||Amount ||Period to which the amount relates ||Forum where dispute is pending |
| || || ||In Lacs || || |
|1 ||Income Tax Act 1961 ||Income Tax ||190.00 ||2005-06 ||Income Tax Appellate Tribunal |
|2 ||Income Tax Act 1961 ||Income Tax ||24.49 ||2008-09 ||Commissioner of Income Tax (Appeals) |
|3 ||Income Tax Act 1961 ||Income Tax ||346.09 ||2009-10 ||Commissioner of Income Tax (Appeals) |
|4 ||Income Tax Act 1961 ||Income Tax ||154.10 ||2010-11 ||Commissioner of Income Tax |
| || || || || ||(Appeals) |
|5 ||Income Tax Act 1961 ||Income Tax ||496.25 ||2012-13 ||Commissioner of Income Tax (Appeals) |
|6 ||Income Tax Act 1961 ||Income Tax ||53.92 ||2013-14 ||Commissioner of Income Tax (Appeals) |
|7 ||Central Excise Act 1944 ||Customs and Excise ||59.6 ||2013-14 ||The order dt.12-3-2014 of the Commissioner of customs Tuticorin directed to pay differential duty in the purchase of coal amounting to Rs. 2860189/-with penalty of Rs 3000000/ and penalty of Rs.100000/-against individual name of GM of EDL |
8. Based on our audit procedures and according to the information and explanationsgiven to us except in the following two cases the company has not defaulted in repaymentof dues to financial institutions and banks after restructuring of the loans.
(Amount in Lacs)
|Name of the Bank ||Principal Over Due ||Interest Over Due ||Total Over Due ||Total Liability as on 31.03.2016 |
|Union Bank of India ||246.86 ||144.9 ||391.76 ||1018.21 |
9. In our Opinion and according to the information and explanations given to usthecompany has not issued shares to the public during the year. In respect of the term loansthe company has not obtained any term loans. Hence comments under the clause are notcalled for.
10. In our Opinion and according to information and explanations furnished to us nofraud on or by the Company has been noticed or reported during the year.
11. According to the records of the company provided to us managerial remuneration iswithin requisite approvals mandated by the provisions of section 197 read with schedule Vof Companies Act 2013.
12. The company is not a Nidhi company we do not comment on Net Owned Funds toDeposits ratio and unencumbered term deposits as specified in Nidhi Rules 2014.
13. In our opinion the Company has complied with the provisions of sections 177 and 188of the Companies Act 2013 for all the transactions with related parties and the detailshave been disclosed as required by the applicable accounting standards.
14. The Company has not made any preferential allotment or Private placement of sharesor fully or partly convertible debentures during the year. Hence we do not comment onCompliance of section 42 of Companies Act 2013.
15. According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him. Hencewe do not comment on Compliance of Section 192 of Companies Act 2013.
16. The Company is not required to be registered under 45-IA of the Reserve bank ofIndia Act 1934.
| ||For Venkatesh& Co. |
| ||Chartered Accountants |
| ||F.R.No.004636S |
| ||CA Dasaraty V |
|Place : Chennai ||M.No.026336 |
|Date : 30.05.2016 ||Partner |