The Members of
Goenka Diamond and Jewels Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Goenka Diamond andJewels Limited ("the Company") which comprise the Balance Sheet as at March 312015 the Statement of Profit and Loss the Cash Flow Statement for the year then endedand a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Standalone Financial Statements
The Companys 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting 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 also includes maintenance of adequate accounting recordsin accordance 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 and ensuring their operating effectiveness and the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error. Auditors Responsibility
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 there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCompanys preparation of the standalone financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstancesbut not for the purpose of expressing an opinion on whether the Company has in place anadequate internal financial controls system over financial reporting and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by theCompanys Directors as well as evaluating the overall presentation of the standalonefinancial 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 of Qualified Opinion
Refer Note No. 16 (footnote) of Notes on financial statements regarding TradeReceivables amounting to '6278240130/- which includes Rs.5387316029/- outstandingfor more than 6 months from due date. Though confirmations amounting toRs.3616647379/- were received from Trade receivables on request by the managementthere have been defaults on payment obligations by the debtors on due date and recoveriesfrom these debtors are not significant. In view of the above we are unable to comment onthe realisability of the debts and any provision to be made for unrealisability of thesebalances and the consequential impact on the financial statements.
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 above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2015 its profit and its cash flows for the yearended on that date.
Emphasis of Matter We draw attention to
i. Significant Accounting Policies No. 1(F) regarding Inventories wherein thedetermination of estimated net realizable value and specification identification involvestechnical judgment of the management which has been relied upon by us.
ii. Note No.37 (a) of Notes on Financial statements regarding dispute which hasarisen in earlier year amongst promoters subsequent to which various allegations/counterallegation and legal cases were made amongst promoters and on the company. Thereafter thepromoters arrived at family settlement agreement the terms and conditions of which arepartially executed. The management has confirmed that there is no impact of aboveincidences on the financial statements of the company.
iii. Refer Note No.37 (b) regarding non-realization of debtors overall substantialdecrease in volume of business and sales non-payment of statutory dues and taxes overduecreditors defaults in repayment of loans and interest owing to which some banks haveclassified account as NPA dispute amongst promoters. Though the company has made profitsfor the year these factors indicate liquidity crunch faced by the company and thereforeits future operations are largely dependent on recoveries from overseas debtors infusionof fresh capital and restructuring/ release of additional working capital from banks.
iv. Note No.37 (c) of the Notes on Financial Statements wherein certain banks haveclassified its advance to company as NPA and are not charging interest or have reversedthe interest earlier charged. In order to account all probable liabilities the managementin its best judgment has provided interest on such borrowings. Further the company hasnot provided for Rs.14961987/- on account of excess interest charged by one of thebanks against which company has made representation. The management is of the opinion thatany difference on account of interest penal interest shall be accounted for as and whenthe interest is charged or settled by the banks.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditors Report) Order 2015 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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 standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e. On the basis of written representations received from the directors as on March 312015 except in case of Mr. Nitin Goenka Managing Director and taken on record by theBoard of Directors none of other directors are disqualified as on March 312015 frombeing appointed as a director in terms of Section 164 (2) of the Act. However we areunable to comment of the said clause in respect of Mr. Nitin Goenka Managing Director ofthe Company as no written representation was received from him as on March 31 2015.
f. With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Note 35 and 37(a) to thestandalone financial statements;
ii. The Company did not have any long-term contracts including derivative contractshence the question of any material foreseeable losses does not arise;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
|For B. Khosla & Co. ||For RSVA and Company |
|Chartered Accountants ||Chartered Accountants |
|FRN No.000205C ||FRN No.110504W |
|Sandeep Mundra ||B.N.Rao |
|Partner ||Partner |
|Membership No. 75482 ||Membership No. 039555 |
|Place: Mumbai ||Place: Mumbai |
|Date : May 30 2015 ||Date : May 30 2015 |
ANNEXURE TO INDEPENDENT AUDITORS REPORT
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements in the Independent Auditors Report of even date to the members ofGoenka Diamond and Jewels Limited on the standalone financial statements for the yearended March 31 2015].
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) During the year the fixed assets of the Company have been physically verified bythe management and as informed no material discrepancies were noticed on suchverification. In our opinion the frequency of verification is reasonable having regard tothe size of the Company and the nature of its assets.
(ii) (a) The inventory has been physically verified by the management during the year.In our opinion the frequency of verification is reasonable.
(b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) The Company is maintaining proper records of inventory of raw material and finishedgoods except day to day production records. As informed no material discrepancies werenoticed on physical verification carried out during the year.
(iii) The Company has granted unsecured loans to 1 subsidiary covered in the registermaintained under section 189 of the Companies Act 2013. The maximum amount involvedduring the year was Rs.12.21 Crores and the year-end balance was Rs. 12.21 Crores.
(a) The terms of recovery of the loan made have not been stipulated and so we are notin a position to make specific comment as regard to the repayment of the principal amountto the Company.
(b) As informed to us there is no overdue amount of interest and loans granted tocompanies firms or other parties listed in the register maintained under section 189 ofthe Companies Act 2013.
(iv) In our opinion and according to the information and explanations given to usthere exists an adequate internal control system commensurate with the size of the Companyand the nature of its business for the purchase of inventory and fixed assets and for thesale of goods and services. During the course of our audit we have not observed anycontinuing failure to correct major weaknesses in internal control system of the Company.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the provisions of Sections 73to 76 of the Act and the rules framed there under.
(vi) As explained to us the maintenance of cost records under sub section (i) ofSection 148 of the Companies Act 2013 has not been prescribed by the Central Governmentfor the Company.
(vii) (a) The Company is not regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees state insuranceincome tax wealth tax service tax value added tax and any other material statutory duesapplicable to it.
According to the information and explanations given to us undisputed amounts payablein respect of provident fund employees state insurance income tax service taxand any other material statutory dues applicable to it were outstanding at the year endfor a period of more than six months are as under: -
|Nature of Statute ||Nature of Dues ||Amount (Rs.) ||Period to which the amount relates ||Due Date ||Date of Payment |
|Income Tax Act 1961 ||TDS ||270957 ||01/04/2014 to 30/09/2014 ||07th of Next Month ||Not Yet paid |
|Employee Provident Fund Organization ||Provident Fund ||129150 ||01/04/2014 to 30/09/2014 ||21st day of next month ||Not Yet paid |
|Central Excise and Customs Act ||Service Tax ||7788 ||01/06/2014 to 30/09/2014 ||05th of Next Month ||Not Yet paid |
|Employee State Insurance Corporation ||E.S.I.C. ||51709 ||01/06/2014 to 30/09/2014 ||21st day of next month ||Not Yet paid |
|Department of Sales Tax Maharashtra ||Profession Tax ||24650 ||01/07/2014 to 30/09/2014 ||31st day of next month ||Not Yet paid |
|Income Tax Act 1961 ||Income Tax ||Rs.203.07 Lacs (excluding Interest) ||Financial Year 2012-13 ||March 312013 ||Not Yet paid |
|Income Tax Act 1961 ||Income Tax (Advance Tax) ||15.75 Lacs ||Financial Year 2014-15 ||15th Sept 2014 ||Not Yet paid |
|Income Tax Act 1961 ||Tax on Dividend ||5387415 (excluding Interest) ||Financial Year 2012-2013 ||14th Oct 2013 ||Not Yet paid |
(b) According to the information and explanation given to us the dues outstanding withrespect to income tax sales tax wealth tax service tax value added tax customs dutyexcise duty cess and any other material statutory dues applicable to it on account ofany dispute are as follows:
|Nature of Statute ||Nature of Dues ||Amount (Rs.) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||753690 ||AY 2008-2009 ||ITAT - Jaipur |
| || ||11402209* ||AY 2010-2011 ||ITAT - Jaipur |
| || ||4065043 ||AY 2011-2012 ||ITAT - Jaipur |
|Central Excise and Customs Act ||Service Tax ||622540 ||FY 2008-2009 FY 2011-2012 ||Commissioner of Central Excise (Appeal) |
(c) According to the information and explanations given to us there has been no delayin transferring amounts required to be transferred to the Investor Education andProtection Fund by the Company.
(viii) In our opinion there are no accumulated losses of the Company as at the end offinancial year. Further the Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.
(ix) The Company has defaulted to various banks in re-payment of working capital -export credit facilities which have been crystallized and/or became overdue at variousdates the summarized position of such defaults as the balance sheet date is as under: -
|Amount* of Default with various banks ||Date of Default Started ||Date of default ended |
|3437985 ||January-14 ||March-15 |
|10902500 ||March-14 ||August-14 |
|14511510 ||March-14 ||September-14 |
|11716548 ||April-14 ||September-14 |
|78964671 ||June-14 ||July-14 |
|9000000 ||September-14 ||March-15 |
|38282102 ||September-14 ||October-14 |
|124466955 ||January-15 ||March-15 |
|44111331 ||January-15 ||February-15 |
|45179495 ||February-15 ||March-15 |
|32918379 ||January-14 ||Continuing |
|17890000 ||March-14 ||Continuing |
|28077000 ||April-14 ||Continuing |
|5800000 ||May-14 ||Continuing |
|252023742 ||September-14 ||Continuing |
|29751480 ||November-14 ||Continuing |
|61955032 ||December-14 ||Continuing |
|142387556 ||February-15 ||Continuing |
|117053417 ||March-15 ||Continuing |
*includes interest charged by bank up to date of crystallization.
The above defaults are the amounts as on the date of the defaults as mentioned hereinabove and do not consider any levies of interest and penal interest charged by thebanks/provided by the company after the date of the defaults or its subsequent reversalsby some banks. We are unable to quantify and give period wise details of the defaults ininterest for the reasons referred in Note No. 6B (footnote) of financial statement.However under the head "Other Current Liabilities" (Note No. 8) amounts ofRs.10286943/- and Rs.73357031/- being the "Interest Accrued and due" and"Other Payables - Overdrawn Current Account Bank Balances" respectively includesinterest which is default the amount and period of which is unascertainable.
We have not received balance confirmation from some banks and have relied on year-endbalance statements of the banks.
(x) In our opinion and according to the information and explanations given to us theCompany has not given any guarantee for loan taken by others from banks or financialinstitutions during the year.
(xi) The Company during the year has obtained Corporate Loan of Rs.2.50 Crores from abank which according to information and explanations was applied for the purpose for whichit was obtained.
(xii) We draw attention to Note No.37(a) of Notes on financial statement whereinmanagement has stated various allegations counter allegation legal cases are amongstpromoters and there is no case of fraud on or by the company is pending which we haverelied upon. Subject to the this during the course of our examination of the books andrecords of the company carried out in accordance with the generally accepted auditingpractices in India and according to the information and explanations given to us we haveneither come across any instance of fraud by the company noticed or reported during theyear nor have we been informed of such case by the management.
|As per our report of even date attached || |
|For B. KHOSLA & CO. ||For RSVA & CO. |
|Chartered Accountants ||Chartered Accountants |
|F.R. No.: 000205C ||F.R. No.: 110504W |
|SANDEEP MUNDRA ||B N RAO |
|Partner ||Partner |
|M.No.: 075482 ||M.No.: 039555 |
|Place - Mumbai ||Place - Mumbai |
|Date - May 30 2015 ||Date - May 30 2015 |