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Futura Polyesters Ltd.

BSE: 500720 Sector: Industrials
NSE: INDIANORG ISIN Code: INE564A01017
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Futura Polyesters Ltd. (INDIANORG) - Auditors Report

Company auditors report

To the Members of M/s FUTURA POLYESTERS LIMITED

We have audited the accompanying financial statements of M/s FUTURA POLYESTERSLIMITED. ("the Company") which comprise the Balance Sheet as at March 312014 and the Statement of Profit and Loss Cash flow for the period then ended (15Months) and a summary of significant accounting policies and other explanatoryinformation.

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 sub-section (3C) ofsection 211 of the Companies Act 1956 ("the Act") read with the GeneralCircular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs inrespect of Section 133 of the Companies Act 2013 and in accordance with the accountingprinciples generally accepted in India. This responsibility includes the designimplementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial 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 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 but not for the purpose of expressing an opinion on the effectiveness ofthe Company's internal control. 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 audit opinion.

Opinion

1. Attention is invited to: a) Note No. 22(A) for assuming ‘going concern basis'despite closure of manufacturing operation sale of all the immovable assets of thecompany suffering recurring losses from discontinued operations having negative networth and thus have substantial doubt about the intention of the company to continue as a‘going concern'. b) Note No. 22(B) in respect of no recovery and non charging ofinterest from GSPL which is due since 19-12-2012 and there is no certainty of recoveryduring reasonable period of time leading to undue delay in settling the dues ofbanks/creditors and statutory authority and consequent monetary losses impact thereof areunascertainable. c) Note No. 3(b) regarding not recognising the impact of the OTSfinalised with consortium of banks amounting to Rs. 44.01 lakhs as against amountrecognised in books of account by which the liabilities are over recorded and consequentimpact on the Loss of the Company. d) Note No.10 regarding amounts of bank balances incurrent and deposit account of Rs. 450.85 lakhs which are already adjusted against theagreed OTS liability of the banks and thus the liability of OTS is under stated andconsequently losses of the company are under stated. e) Note No 4(a) regarding recordingof excess liabilities of Rs. 11.32 Crores toward Daewoo International Corporation than theamount actually payable in terms of courts directives but the same are still not paidfully. f) Trade Payable Trade Receivable Loans Advances deposit and other currentliabilities are subject to confirmation reconciliation and consequent adjustment as toits recoverability and payment obligation effect thereof shall be recognised in the yearof such confirmation / reconciliation. The amount of such impact is not being quantified.g) Sale of Plant and machineries/scrap for GSPL of Rs. 31.73 Crores for which invoicesare made by the Company and dues of excise/vat collected thereon but no legal compliancewas made by the company. h) Note No. 22(C)(ii) regarding contingent liabilities of Rs.1916.20 Lakhs details thereof are not available for verification. i) Note no. 22(C)(ii)regarding contingent liabilities reflected as of 31-12-2012 of Rs. 2318.38 lakhs but areno longer are contingent for which the required information is not available with thecompany.

2. In our opinion and to the best of our information and according to the explanationsgiven to us and for the matters stated in 1(a) to (i) above we are unable to expressour opinion as to its impact on the asset/ liabilities and profit/loss of the Company. Saveand except above the financial statements give the information required by the Act in themanner 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 stateof affairs of the Company as at March 31 2014; b) In the case of the Profit and LossAccount of the LOSS for the Period ended on that date. c) In the case of the CashFlow Statement of the cash flow for the period ended on that date.

Report on Other Legal and Regulatory Requirements

1. 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 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.

2. As required by section 227 (3) of the Act we report that: a. We have obtained allthe information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit; b. In our opinion proper books of account asrequired by law have been kept by the Company so far as appears from our examination ofsuch books; c. The Balance Sheet the Statement of Profit and Loss the statement of cashflow dealt with by this Report are in agreement with the books of account. d. In ouropinion the Balance Sheet the Statement of Profit and Loss comply with AccountingStandards notified under the Act read with the General Circular 15/2013 dated 13thSeptember 2013 of the Ministry of Corporate Affairs in respect of Section 133 of theCompanies Act 2013. e. On the basis of written representation received from the directorsof the Company as at 31 March 2014 and taken on record by the Board of Directors none ofthe directors are disqualified as on 31 March 2014 from being appointed as a director interms of clause (g) of sub-section (1) of section 274 of the Companies Act 1956.

For LLB & CO.
Chartered Accountants
Firm's Registration No.: 117758W
Lalit Bajaj
Place: Mumbai Partner
Date: January 19 2017 Membership No.: 104234

The Annexure referred to in paragraph 1 of the Our Report of even date to the membersof M/s FUTURA POLYESTERS LIMITED on the accounts of the Company for the period (15 Months)ended 31st March 2014.

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

1. (a) The company does not have any fixed assets accordingly paragraph 4(i)(a) is notapplicable. (b) In our opinion and according to the information and explanations given tous the entire fixed asset has been disposed in the previous year except the fixed assetsconsisting vehicles having gross block of Rs. 44.30 Lakhs which have been written offduring the year as the fixed assets were untraceable.

2. (a) As explained to us the company does not hold any inventories. Accordinglyparagraph 4(ii)(a) (b) and (c) of the Order is not applicable.

3. (a) According to the information and explanations given to us and on the basis ofour examination of the books of account the Company has not granted any loans secured orunsecured to companies firms or other parties listed in the register maintained underSection 301 of the Companies Act 1956. Consequently the provisions of clauses iii (b)iii (c) and iii (d) of the order are not applicable to the Company. (e) According to theinformation and explanations given to us and on the basis of our examination of the booksof account the Company has taken interest free unsecured loans the balance of which wasRs. 4144.46 lakhs as on 31-03-2014 from related parties as listed in the registermaintained under Section 301 of the Companies Act 1956 and other terms and conditions arenot prejudicial to the interest of the company.

4. According to the information and explanations given to us and as the examination ofthe books of accounts the company do not have either fixed assets or the inventory andalso do not have any sale of goods during the year thus the reporting requirement ofhaving adequate internal control procedure is not applicable.

5. a) The particulars of contracts or arrangements referred to in section 301 of theAct have been entered in the register required to be maintained under that section. b) Asper information & explanations given to us and in our opinion the company has enteredin to transaction with parties covered u/s 301 exceeding Rs. Five lakhs. The transactionsmade in pursuance of such contracts or arrangements are not detrimental to the interest ofthe company. The transactions for reimbursement of expenses in normal course of businessare not considered for this purpose.

6. The Company has not complied the directives issued by Reserve Bank of India and theprovision of the section 58A and 58AA of the companies act 1956 and the rules framedunder where applicable. a) There were delays in the repayment of matured Fixed Deposits.b) There were delays in intimating to the tribunal about deposits in respect of repaymentof Fixed Deposits. c) There were delays in filling of return of Deposits with theRegistrar of Companies. d) The company did not provide or invest at least 15% of totaldeposits maturing during the next financial year.

7. As per information & explanations given by the management the Company doesnot have a internal audit system commensurate with its size and the nature of itsbusiness.

8. As per information & explanation given by the management the company do not haveany operations thus the requirement of maintenance of cost records under clause (d) ofSub-section (1) of section 209 of the Act are not applicable to the company.

9. (a) According to the records of the company undisputed statutory dues includingProvident Fund Investor Education and Protection Fund Employees' State InsuranceIncome-tax Sales-tax Wealth Tax Service Tax Custom Duty Excise Duty cess to theextent applicable and any other statutory dues have generally not been regularly depositedwith the appropriate authorities.

According to the information and explanations given to us undisputed amount payable inrespect of the wealth tax income tax property tax excise duty service tax and otherswere outstanding as at 31st March 2014 for a period of more than six monthsfrom the date they became payable Statement of arrears of statutory dues outstanding formore than six months.

Name of Nature of Dues Amount
the Statute (Rs. In lakhs)
Employees Provident Provident Fund 44.46
Fund Act 1948
Local Body Act Property Tax 78.89
Chennai Corporation
Excise Act 1944 Excise Duty 352.96
Tamil Nadu Vat Act VAT 25.39
Finance Act 1994 Service Tax 09.66

 

Name of Nature of Dues Amount
the Statute (Rs. In lakhs)
Foreign Trade (Development and regulation) Act 1992 Income Tax Act 1961 Penalty for advance license 52.00
Tax Deducted at Source 161.69
Professional Tax 4.24
Central Sales Tax Act 1956 CST 3241.13
Various Statute ESIC Labour
Welfare Fund EPS etc. 8.95

given by the management the details of dues of income tax/ sales tax/ wealth tax/custom duty/ excise duty/ cess which have not been deposited with the appropriateauthorities on account of dispute are given in the Appendix to this report.

10. The Company have accumulated losses at the end of the period which are more thanfifty per cent of its net worth. The company has incurred cash losses during the periodcovered by our report has also incurred cash losses in the immediately preceding financialyear.

11. Based on our audit procedures and on the information and explanations given by themanagement we are of the opinion that the Company has defaulted in repayment of dues offinancial institution/banks to the tune of Rs. 146.22 Crores. However the OTS offered tothe lenders was valid to be honoured till 31-12-2016. 12. According to the information andexplanations given to us the Company has not granted loans and advances on the basis ofsecurity by way of pledge of shares debentures and other securities.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society.

14. According to information and explanations given to us the Company is not a dealeror trader in shares securities debentures and other investments further investmentsspecified are held in their own name.

15. During the period the Company has not given any guarantees for loan taken byothers from a bank or financial institution.

16. During the period the company has not obtained any term loan from banks.

17. Based on the information and explanations given to us and on an overall examinationof the Balance Sheet of the Company as at 31st March 2014 we report that nofunds raised on short-term basis have been used for long-term investment by the Company18. Based on the audit procedures performed and the information and explanations given tous by the management we report that the Company has not made any preferential allotmentof shares during the year. 19. The Company has no outstanding debentures during the periodunder audit.

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations givento us we report that no fraud on or by the Company has been noticed or reported duringthe year nor have we been informed of such case by the management.

For LLB & CO.
Chartered Accountants
Firm's Registration No.: 117758W
Lalit Bajaj
Place: Mumbai Partner
Date: January 19 2017 Membership No.: 104234

Appendix to Auditor's Report

Name of the Nature of Amount Assessment to which Forum where
Statute Dues (Rs. in lakhs) the matter pertains dispute is pending
The Central Excise Act 1944 Service Excise Duty 4588.43 Various Periods Various Forums
Service Tax 501.76 Various Periods CESTAT
Tax Act 1994 Income Tax Act 1961 82.92 Various Periods Commissioner (Appeals)
Income Tax 12592.81 2013-14 Commissioner (Appeals)
Interest 1.50 2012-13 Commissioner (Appeals)
0.34 2011-12 Commissioner (Appeals)
449.03 2008-09 ITAT
131.60 2007-08 ITAT
Govt of Maharashtra- Irrigation Department Water Charges 185.38 High Court
Foreign Trade (Development and Regulation) Act 1992 Penalty 52.00 2010-11 2011-12 Joint Director General

The Customs Excise and Service Tax Appellate Tribunal