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Gayatri BioOrganics Ltd.

BSE: 524564 Sector: Others
NSE: N.A. ISIN Code: INE052E01015
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VOLUME 1000
52-Week high 23.40
52-Week low 5.85
P/E
Mkt Cap.(Rs cr) 50
Buy Price 0.00
Buy Qty 0.00
Sell Price 6.35
Sell Qty 100.00
OPEN 6.35
CLOSE 6.35
VOLUME 1000
52-Week high 23.40
52-Week low 5.85
P/E
Mkt Cap.(Rs cr) 50
Buy Price 0.00
Buy Qty 0.00
Sell Price 6.35
Sell Qty 100.00

Gayatri BioOrganics Ltd. (GAYATRIBIOORGA) - Auditors Report

Company auditors report

To

The Members of

GAYATRI BIOORGANICS LIMITED

Report on the Financial Statements

We have audited the accompanying Financial Statements of Gayatri BioOrganics Limited("the Company") which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.

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 ofthese 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 provisions 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 judgements 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.

Auditor's 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 accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Financial Statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgement 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 the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the Financial Statements.

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

Basis for Qualified Opinion

The Company's trade receivables include certain trade receivables amounting to Rs.77978564/-- which are overdue and outstanding for a period more than one year andfurther no confirmation of balances is on record for the said receivables. The managementbelieves that the same are fully recoverable as it is in the process of collecting theamounts and no provisions are required. In the absence of adequate documentation we areunable to comment on the timing and the ultimate amount of collection and itsconsequential impact on the Loss for the year.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter described in the basis for qualifiedopinion paragraph the aforesaid financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2016 and its Loss and its cash flows for the year ended on that date.

Emphasis of Matter

Without qualifying our report we draw attention to the following:

Note 2.25 to the financial statements which indicates that the company incurred a lossof Rs.387272125/-during the year ended 31 March 2016 and as on date accumulated lossesamounting to Rs.795843558/- has substantially eroded the net worth of the company. Theseconditions along with other matters as set forth in the said Note indicate the existenceof a material uncertainty that may cast significant doubt about the Company's ability tocontinue as a going concern. The financial statements have been prepared on a goingconcern basis for the reasons stated in the said note.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it 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 aforesaid Financial Statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls we give ourseparate Report in "Annexure A". (g) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us: i. The Company has disclosed the impact of all pendinglitigations on its financial position - refer Note 2.26 & Note 2.35 to the financialstatements. ii. The Company did not have any material foreseeable losses relating tolong-term contracts including derivative contracts. iii. There are no amounts to betransferred to Investor Education and Protection Fund.

2. As required by the Companies (Auditors Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in the"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

for M.BHASKARA RAO & CO.
CHARTERED ACCOUNTANTS
Firm Regn No:000459S
Place: Hyderabad D BAPU RAGHAVENDRA
Date: 30th May 2016 PARTNER
Membership No: 213274

Annexure A to the Independent Auditor's report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Gayatri BioOrganics Limited ("the Company") as of March 31 2016 in conjunction with ouraudit of the Financial Statements of the Company for the year ended 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 FinancialReporting" issued by the Institute of Chartered Accountants of India ('ICAI'). 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 under the Companies Act 2013.

Auditors' 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 "Guidance Note on Audit of Internal Financial Controls over FinancialReporting" (the "Guidance Note") and the Standards on Auditing issued byICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls.

Because of the matter described in Disclaimer of Opinion paragraph below we were notable to obtain sufficient appropriate audit evidence to provide basis for an audit opinionon internal financial controls system over financial reporting of the Company.

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 andexpenditure 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 controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Disclaimer of Opinion

According to the information and explanation given to us the Company is in the processof documenting its internal financial control over financial reporting on criteria basedon or considering the essential components of internal control stated in the Guidance Noteon Audit of Internal Financial Controls over Financial Reporting issued by the Instituteof Chartered Accountants of India.

Because of this reason we are unable to obtain sufficient appropriate audit evidenceto provide a basis for our opinion whether the Company had adequate internal financialcontrols over financial reporting and whether such internal financial controls wereoperating effectively as at March 31 2016.

We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the March 31 2016 financial statements ofthe Company and the disclaimer does not affect our opinion on the financial statements ofthe Company.

for M.BHASKARA RAO & CO.
CHARTERED ACCOUNTANTS
Firm Regn No:000459S
Place: Hyderabad D BAPU RAGHAVENDRA
Date: 30th May 2016 PARTNER
Membership No: 213274

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

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

(i) In respect of its fixed assets:

(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) According to the information and explanation given to us a major portion of fixedassets have been physically verified by its management during the year in accordance witha programme of verification which in our opinion is reasonable having regard to thesize of the Company and the nature of the assets. According to the information andexplanations given to us the discrepancies noticed on such verification were not materialand have been properly dealt with in the books of account.

(c) According to the information and explanations furnished to us and on the basis ofour examination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) In respect of its inventory

(a) According to the information and explanations given to us the Management hasphysically verified the inventory during the year. In our opinion the frequency ofverification is reasonable. The discrepancies noticed on verification between physicalstock and book records were not material in relation to the operations of the Company andthe same have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered byclause (76) of section 2 of the Companies Act 2013. Accordingly reporting under clauses(a) (b) and (c) of paragraph 3(iii) of the Order does not arise.

(iv) According to the information and explanations furnished to us the Company has notgranted any loans nor made any investments or given any guarantees or securities duringthe year to any of the parties specified in the Sections 185 and 186 of the Companies Act2013.

(v) According to the information and explanations furnished to us the Company has notaccepted any deposits from the public. Hence reporting under the provisions of paragraph3(v) of the Order does not arise.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government under sub - section (1) of Section 148 of the Companies Act 2013 andare of the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues during the year under report:

(a) on the basis of our examination of the records of the Company amounts deducted/accrued in the books of account in respect of undisputed statutory dues includingprovident fund income-tax sales tax value added tax duty of customs service tax cessand other material statutory dues have not been regularly deposited during the year by theCompany with the appropriate authorities and there have been serious delays in largenumber of cases.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax cess and other material statutory dues were in arrears as at 31March 2016 for a period of more than six months from the date they became payable

(b) According to the information and explanations given to us there are no materialdues of income tax sales tax service tax and Value added tax which have not beendeposited with the appropriate authorities on account of any dispute. However accordingto information and explanations given to us the following dues of Customs duty and dutyof excise have not been deposited by the Company on account of disputes:

Name of the statute Nature of dues Amount (Rs) Period to which the amount relates Forum where dispute is pending
The Customs Act1962 Customs Duty 41587220* Financial Year 1994-95 CESTAT-Bangalore
Central Excise Act1944 Excise duty including penalty 55955766 02/2010 to 08/2014 CESTAT-Hyderabad
Central Excise Act1944 Excise duty including penalty 8136208 09/2014 to 05/2015 CESTAT-Hyderabad

*Net of deposit. An amount of Rs.3700000 has been paid under protest.

(viii) In our opinion and according to the information and explanations furnished tous the Company has defaulted in repayment of dues on borrowings as at March 31 2016.Instalments amounting to Rs.62000000/- and interest amounting to Rs.52319052/- weredue for payment as at 31st March 2016.(Refer Note 2.7 of the financial statements).

Lender Name Principal (Rs.) Number of Installments Period of delay as on 31.03.2016 (in days)
SICOM Ac.No-F0680 22000000 4 76-260
SICOM Ac.No-F0701 40000000 4 107-382
Lender Name Principal Number of Period of delay as
(Rs.) Installments on 31.03.2016 (in days)
SICOM Ac.No-F0680 4563278 10 32-275
SICOM Ac.No-F0701 47755774 15 32-425

(ix) According to the information and explanations furnished to us the Company hasduring the year under report applied the monies raised by it through term loans for thepurposes for which they were raised. The Company did not make any initial public offer orfurther public offer of any of its securities during the year under report.

(x) According to the information and explanations furnished to us no fraud by theCompany nor any fraud on the Company by any of its officers or its employees has beennoticed or reported during the year under report.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the company the Company has during the year under reportpaid / provided for managerial remuneration in accordance with Section 197 read withSchedule V of the Companies Act 2013.

(xii) In our opinion reporting requirement under Paragraph 3(xii) of the order doesnot arise since according to the information and explanations furnished to us theCompany is not a Nidhi Company.

(xiii) According to the information and explanations furnished to us the transactionsentered into by the Company with its related parties are in compliance with therequirements of the provisions of Sections 177 and 188 of the provisions of the CompaniesAct 2013.

(xiv) According to the information and explanations furnished to us the Company hasmade preferential allotment of shares converting the 1085635 6% cumulative redeemableconvertible preference shares of INR 100 each issued to the promoters with face value ofRs. 100/- each as 10856350 equity shares of Rs. 10/- each on September 10 2015 as thepromoters have exercised the option for conversion.

According to the information and explanations furnished to us the Company has not madeany private placement of its shares or fully or partly convertible debentures during theyear under report.

(xv) According to the information and explanations furnished to us the Company has notentered into any agreements for acquisition of assets from or for transferring its assetsto its directors or the directors of its subsidiary companies or persons connected withsuch directors for a consideration other than cash during the year under report.

(xvi) In our opinion based on the information and explanations furnished to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934.

for M.BHASKARA RAO & CO.
CHARTERED ACCOUNTANTS
Firm Regn No:000459S
Place: Hyderabad D BAPU RAGHAVENDRA
Date: 30th May 2016 PARTNER
Membership No: 213274