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Gandhidham Spg. & Mfg. Co. Ltd.

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Gandhidham Spg. & Mfg. Co. Ltd. (GANDHIDHAMSPG) - Auditors Report

Company auditors report

The Members

Gandhidham Spinning and Manufacturing Co. Ltd.

Adipur - Kutch

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Gandhidham Spinning &Manufacturing Co. Ltd. ("the Company") which comprise the Balance Sheet as at31st March 2016 the Statement of Profit and Loss Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that are operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on ouraudit. While conducting the audit we have taken into account the provisions of the Actthe accounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit in accordance with the Standards on Auditing specified under Section 143(10) ofthe Act. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statementsare free from material misstatement

An audit involves performing procedures to ODtain auon evidence aoout tne amountsano disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Company's Management and Board of Directors as well as evaluatingthe 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 financial statements.

OPINION

The Manufacturing operations of the company have been stopped with effect from25.07.1986 with a view to prevent further losses. The accounts of the Company for the yearended 31st March 2016 have been prepared on the "GOING CONCERN" basis which isdependent upon the availability of continuing finance and the Company's futureperformance.

In this connection attention is drawn to Board report.

In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements subject to note no. 18(a) about the non-redemptionof 200000 9.5% Redeemable Cumulative Preference Shares of Rs.10 each due for redemptionon 31.12.1990 (see note No. 18(a) of the notes to the accounts) and note no. 19(a) and19(b) about amount of Rs. 2632586.00 (net) due from M/s. Sabnani Export Pvt. Ltd. &Asha Fabrics Rs.871940.00 since had these been provided the loss would have beenincreased by Rs.3504526.00 and debtors would have been reduced by an equal amount andtotal Loss would have been Rs. 31794149.97 instead of Rs. 28289628.97 (see note No.19(a) and 19(b) of the notes to the accounts) read together with notes appearing inschedule of * significant accounting policies and notes to accounts 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:

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

2016; and

(b) in the case of the Profit and Loss Account of the loss for the year ended on thatdate;

(c) in the case of the Cash flow statement of the cash flows of the company.for theyear 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 by the Central Government of India in terms of sub-section (11 )of section 143 ofthe Companies Act 2013 we give in the Annexure-A a statement on the matters specified inparagraphs 3 and 4 of the Order.

a. We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary forthe purpose of ouraudit;

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 aforesaid financial statements comply with the applicableAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e. On the basis of the written representations received from the directors as on 31stMarch 2016 and taken on record by the Board of Director non of the directors isdisqualified as on 31st March 2016 from being appointed as director in termsof Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in 'Annexure-B'; and

g. In our opinion and to the best of our information and according to explanationsgiven to us We Report as under with respect to the matters to be included in theAuditor's Report in accordance with Rule 11 for the Companies (Audit and Auditors) Rules2014:

i. The Company has disclosed the impact of pending litigation on its financial positionin its financial Statements as of March 312016.

ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise.

iii. There has not been an occasion in case of the Company during the year under reportto 59 transfer any sums to the Investor Education and Protection Fund; as such thequestion of delay in transferring such sums does not arise.

For Khimji Kunverji & Co. (Gandhidham)
Chartered Accbuntants
(Registration No: 105147W)
(Padamshi L. Shah)
Place: Gandhidham - Kutch Partner
Date: 26lh August 2016 Membership No. 5136

"Annexure-A" to the Independent Auditors Report

On the basis of such checks as we considered appropriate and according to theinformation

and explanations given to us during the course of our audit we report that: -

(i) (a) The Company has maintained proper records showing full particulars including

quantitative details and situation of its fixed assets.

(b) The fixed assets have not been physically verified by management during the year.We are unable to express our opinion about the discrepancies if any compared to the bookrecords.

(c) The title deeds of immovable properties are not produced before us forverification hence we cannot comment on the same

(ii) In our opinion and according to the information & explanations given to us asthere is no inventory as on Balance sheet date the provisions of clause 3(ii) of theCompanies (Auditor's Report) Order 2016 not applicable to the company.

(iii) The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of The Companies Act 2013. Accordingly the provisions of clause 3 (iii)(a)(b) and (iii)(c) of the Companies (Auditor's Report) Order 2016 are not applicable to thecompany.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the act with respectto the loans investments guarantees and securities made.

(v) The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 312016 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.

(vi) Reporting under clause 3(vi) of the Order is not applicable as the Company'sbusiness are not covered by the Companies (Cost Records and Audit) Rules 2014.

(vii) According to the information and explanations given to us and based on therecords of the company examined by us:

(c) The company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employee's State Insurance Income tax Service Tax ExciseDuty Customs Duty Sales Tax & Value added tax Cess and other material statutorydues as applicable with the appropriate authorities during theyear.

(d) There were no undisputed amounts payable in respect of Provident Fund Employee'sState Insurance Income tax Service Tax Excise Duty Customs Duty Sales Tax & Valueadded tax Cess and other material statutory dues in arrears as at March 31 2016 for aperiod of more than six months from the from the date they became payable.

(e) The dues in respect of Income tax Service Tax Excise Duty Customs Duty SalesTax & Value added tax Cess and other material statutory dues that have not beendeposited with the appropriate authorities on account of dispute and the forum where thedisputes are pending are given below:

No. Name of the Status Nature of the Dues Amount Forum where dispute is pending
1. Sales Tax Act 1969 Sales Tax 226830 Sales Tax Commissioner (Appeals)
2. Income Tax Act 1961 Income Tax 593490 CIT Appels Rajkot

(viii) The Company does not have any loans or borrowings from any financialinstitution banks government or debenture holders during the year. Accordinglyparagraph 3(viii) of the Order is not applicable.

(ix) The company has not raised money by way of initial public offer or further publicoffer (including debt instruments) and term loans. Accordingly the provisions of clause3(ix) of the Companies (Auditor's Report) Order 2016 is not applicable to the company.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of ouraudit. •

(xi) In our opinion and according to the information and explanations given to usmanagerial remuneration has not been paid or provided during the year. Accordingly theprovisions of clause 3(xi) of the Companies (Auditor's Report) Order 2016 is notapplicable to the company.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) In our opinion and according to the information and explanations given to usthe company is in compliance with section 177 & section 188 of Companies Act 2013where applicable for all the transaction with the related parties and the details ofrelated party transactions have been disclosed in the Financial Statements etc. asrequired by the applicable accounting standards.

(xiv) In our opinion and according to the information and explanations given to us thecompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under review. Accordingly the provisions ofclause 3(xiv) of the Companies (Auditor's Report) Order 2016 is not applicable to thecompany.

(xv) In our opinion and according to the information and explanations given to us thecompany

has not entered into any non-cash transactions with directors or persons connected withhim as per the provisions of section 192 of Companies Act 2013. Hence the provisions ofclause 3(xv) of the Companies (Auditor's Report) Order 2016 is not applicable to thecompany. ^

(xvi) The Company is not required to be registered under section 45-IAof the ReserveBank of India Act. 1934.

For Khimji Kunverji & Co. (Gandhidham)
Place: Gandhidham - Kutch Chartered Accountants
Date: 26th August 2016 (Registration No: 105147W)
(Padamshi L. Shah)
Partner
Membership No. 5136

"Annexure - B" to the Independent Auditors Report

(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

REPORT ON THE INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING UNDER CLAUSE (I) OFSUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013 (THE ACT’)

We have audited the internal financial controls over financial reporting of GandhidhamSpinning & Manufacturing Co. Ltd. ("the Company") as of March 312016 inconjunction with our audit of the standalone financial statements of the Company for theyear ended and as on that date.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company's management is responsible for establishing and .maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (the 'Guidance Note'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required undertheAct.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Standards on Auditing prescribed under Section 143(10) of the Act and theGuidance Note to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with the ethical requirements andplan and perform the . audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing .the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors' judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial control over financial reporting is a process designedto provide

reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312016 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note.

For Khimji Kunverji & Co. (Gandhidham)
Chartered Accountants
(Registration No: 105147W)
(Padamshi L. Shah)
Place: Gandhidham - Kutch Partner
Date: 26th August 2016 Membership No. 5136