To the members
I) Report on the Financial Statements
We have audited the attached financial statements of Entegra Limited (hereinafterreferred to as the Company) comprising of the Balance Sheet as at 31st March 2014 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended alongwith the Significant Accounting Policies and other explanatory information forming anintegral part thereof.
II) Managements 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 Section 211(3C) of theCompanies Act 1956 (hereinafter referred to as the Act) read with General Circular15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect ofSection 133 of the Companies Act 2013 and in accordance with the accounting principlesgenerally accepted in India. This responsibility includes the design implementation andmaintenance of internal control relevant to the preparation and presentation of thefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
III) Auditors 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 of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theAuditors judgment including assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal control relevant to the Companys preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances but not for the purpose of expressing opinion on theeffectiveness of the Companys internal control. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of the accountingestimates made by the management as well as evaluating the overall financial statementpresentation.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a reasonable basis for our audit opinion.
(i) Non availability of Confirmation for a loan amounting to Rs 2750000000 fromCentral Bank of India (CBI) shown under the head Short term Borrowing as CBI hasabsolutely assigned all rights and interests in the financial assistance granted to theCompany in favour of Edelweiss Asset Reconstruction Companywide Assignment Agreement dated28.03.2014.
Accordingly Edelweiss Asset Reconstruction Company (EARC) has become the secured lenderand all rights title and interest of CBI have vested in EARC.
In our opinion and to the best of information and according to the explanations givento us the financial statements give the information required by the Act in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) In the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2014;
(b) In the case of the Statement of Profit and Loss of the Profit / Loss of theCompany 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 theyear ended on that date
Emphasis of Matter
We draw attention to
Note 3(b) which states that in respect of payable to a bank in absence of formalcommunication from the bank an interest amounting to Rs. 478146932 has been providedin the books in the current year and total interest liability on account of the said loanis Rs 1469056211 based on managements estimate and the final liability will bedetermined on conclusion of settlement with bank.
Note No. 37 of the financial statements In respect of Deposit given to one of theparty which is shown under the head Long term loans and advances amounting to Rs200000000. The said deposit is given for occupying rent free area in the proposed newlyconstructed building. However the said project is still on hold by the developer but themanagement is hopeful of its performance in near future.
IV) Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2003 as amended by theCompanies (Auditors Report) (Amendment) Order 2004 issued by the Central Governmentof India in terms of sub-section (4A) of Section 227 of the Act we enclose in theAnnexure a statement on the matters specified in paragraph 4 & 5 of the said Order tothe extent applicable to the Company during the year under review.
2. Further to our comments in the Annexure referred to in 1. above as required bySection 227(3) of the Act we report as follows:
(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 the Statement of Profit and Loss and the Cash Flow Statementdealt with by this report are in agreement with the books of account;
(d) In our opinion the Balance Sheet and Cash Flow Statement comply with theaccounting standards referred to in sub- section (3C) of section 211 of the Act;
(e) Pursuant to Circular No. 8/2002 dated March 22 2002 issued by the Department ofCompany Affairs Ministry of Law Justice & Company Affairs Government of Indiadirectors nominated by the Public Financial Institutions / Banks / Central & StateGovernment are not liable to be disqualified for appointment as directors under theprovisions of clause (g) of sub section (1) of Section 274 of the Companies Act 1956. Inrespect of other directors on the basis of the written representations received from thedirectors as on March 31 2014 and taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2013 from being appointed as a director in termsof clause (g) of sub-section (1) of Section 274 of the Companies Act 1956;
For Shyam Malpani & Associates
Firm Registration No. 120438 W
Membership No. F- 34171
Place : Mumbai
Date : 21st August 2014
Annexure to the Auditors Report
(Referred to in Paragraph IV (1) of our Report of Even Date)
Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit we report as under:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets have been physically verified by the management during the yearand no material discrepancies were noticed on such verification. In our opinion thefrequency of verification of the fixed assets is reasonable having regard to the size ofthe Company and the nature of its assets.
(c) In our opinion a substantial part of fixed assets has not been disposed off duringthe year.
(ii) The Company does not have any inventory during the year under review.
(a) The Company has not granted any loan any loans to any party covered under theregister maintained under section 301 of the Act.
(b) In our opinion the rate of interest and other terms and conditions for such loanis not prima facie prejudicial to the interest of the Company.
(c) In respect of the loan granted repayment of the principal amount is as stipulatedhowever the interest payment has not been regular.
(d) The overdue amount in respect of interest due on the loan granted is more thanrupees one lakh and reasonable steps have not been taken by the Company for therecovery of such interest.
(e) The Company has taken a loan from one companies covered in the register maintainedunder section 301 of the Act. The maximum amount involved during the year was Rs.260723456 and the year-end balance of loans taken from such party was Rs. 260723456.
(f) In our opinion the rate of interest and other terms and conditions for such loanis not prima facie prejudicial to the interest of the Company.
(g) In respect of loans taken the principal is repayable on demand and such loan isinterest free.
(iv) In our opinion there is an adequate internal control system commensurate with thesize of the Company and the nature of its business for the purchase of inventory and fixedassets and for the sale of goods and services. During the course of our audit no majorweakness has been noticed in the internal controls in respect of these areas.
(v) The Company has not entered into contracts or arrangements referred to in section301 of the Act. Accordingly the provisions of clause 4(v) of the Order are notapplicable.
(vi) The Company has not accepted any deposits from the public within the meaning ofsections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules 1975.
(vii) In our opinion the Company has an internal audit system commensurate with itssize and the nature of its business.
(viii) The maintenance of cost records pursuant to the Rules made by the CentralGovernment under section 209 (1)(d) of the Companies Act 1956 has been prescribed inrespect of the class of the Company (Electricity industry). However the Company is exemptfrom the maintenance of such records as the aggregate value of the machinery and plantinstalled as on the last date of the preceding financial year does not exceed the limitsas specified for a small scale undertaking under the provisions of the Industries(Development and Regulation) Act 1951 (65 of 91) i.e. Rs 100 Lakh.
(ix) (a) Undisputed statutory dues including provident fund investor education andprotection fund employees state insurance income-tax sales-tax wealth-taxservice-tax custom duty excise duty cess and other material statutory dues asapplicable have generally been regularly deposited with the appropriate authoritiesthough there has been a slight delay in a few cases. No undisputed amounts payable inrespect thereof were outstanding as at the year end for a period of more than six monthsfrom the date they became payable.
(b) There are no dues in respect of income tax sales tax wealth tax service taxcustoms duty excise duty and cess that have not been deposited with the appropriateauthorities on account of any dispute.
(x) In our opinion the Companys accumulated losses at the end of the financialyear are less than fifty per cent of its net worth.
Further the Company has incurred cash losses of Rs 515556950 during the financialyear covered by our audit and Rs. 631068430 in the immediately preceding financialyear.
(xi) As stated in Note 3(b) and for the reasons stated in paragraph 4(i) of our auditreport we are unable to comment on the extent of default in respect of period and amountpayable to the bank in respect of the principal dues aggregating Rs. 2750000000
Further as explained in Note 3 (c) to the financial statements the Company has filedan application with MPSIDC for agreeing the terms of closure against an outstanding loanwhich is currently under evaluation and the Company expects that it would not be requiredto repay an amount exceeding the liability of Rs. 522753000 which is already providedin the books of account.
The Company has no dues to any debenture holders.
(xii) The Company has not granted any loans and advances on the basis of security byway of pledge of shares debentures and other securities. Accordingly the provisions ofclause 4(xii) of the Order are not applicable.
(xiii) In our opinion the Company is not a chit fund or a nidhi/ mutual benefit fund/society. Accordingly the provisions of clause 4(xiii) of the Order are not applicable.
(xiv) In our opinion the Company is not dealing in or trading in shares securitiesdebentures and other investments. Accordingly the provisions of clause 4(xiv) of theOrder are not applicable.
(xv) In our opinion the terms and conditions on which the Company has given guaranteefor loans taken by others from banks or financial institutions are not prima facieprejudicial to the interest of the Company.
(xvi) In our opinion the Company has applied the term loans for the purpose for whichthe loans were obtained.
(xvii) In our opinion no funds raised on short-term basis have been used for long-terminvestment.
(xviii)During the year the Company has not made any preferential allotment of sharesto parties or companies covered in the register maintained under section 301 of the Act.Accordingly the provisions of clause 4(xviii) of the Order are not applicable.
(xix) The Company has neither issued nor had any outstanding debentures during theyear. Accordingly the provisions of clause 4(xix) of the Order are not applicable.
(xx) The Company has not raised any money by public issues during the year.Accordingly the provisions of clause 4(xx) of the Order are not applicable.
(xxi) In our opinion no fraud on or by the Company has been noticed or reported duringthe period covered by our audit.
For Shyam Malpani & Associates
Firm Registration No. 120438 W
Membership No. F- 34171
Place : Mumbai
Date : 21st August 2014