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IAG Glass Company Ltd.

BSE: 502241 Sector: Industrials
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IAG Glass Company Ltd. (INDOASAHI) - Auditors Report

Company auditors report


The members of

IAG Glass Company Limited

Report on the financial statements

We have audited the accompanying financial statements of IAG Glass Company Limitedwhich comprise the Balance Sheet as at 31st March 2016 and statement of Profit & Lossand Cash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act. 2013 ("the Act") with respect to the preparation andpresentation of these financial statements that give a true and far 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) Rules2014. This responsibility also includes the maintenance of adequate accounting records inaccordance with the provisions of the act for safeguarding the assets of the company andfor preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies: making judgment and estimates that arereasonable and prudent; and design implementation and maintenance of internal financialcontrol that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatementswhether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.

We have taken into accounts 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 rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified undersection 143 (10) of the Act and other applicable authoritative pronouncements issues bythe Institute of Chartered Accountants of India. Those Standards and pronouncementsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatements.

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 risk of material misstatements of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders 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 but not for the purpose of expressing anopinion on whether the company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by company 's directors as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is not sufficient and appropriateto provide a basis for our audit opinion on the financial statements.


In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements subject to qualified opinion given below and readtogether with the notes and significant accounting policies thereon and attached theretogive the information required by the Companies Act 2013 in the manner so required and inview of qualifications we are unable to confirm whether the accounts give a true &fair view in conformity with the accounting principles generally accepted in India.

a) In the case of Balance Sheet of the state of affairs of the Company as at March 312016.

b) In the case of the statement of Profit and Loss of the loss for the year ended onthat date and

c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.

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 Act we give in the Annexure a statements on the matters specified in paragraphs 3 and4 of the order.

2. As required by section 143 (3) of the Act we report that :

a. We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.

b. In our opinion proper books of account as required by law have not been properlymaintained by the company 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 Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with accounting standards referred to in section 133 of the CompaniesAct 2013 read with rule 7 of the Companies (Accounts) Rule 2014 except non provisionsof depreciation non provisions/deductions of P.F. Pension ESI and other statutory duesagainst payment of salary & wages non provisions of Gratuity Bonus & Leaveencashment non provisions of interest on Unsecured loans taken excepting two parties nonprovisions of impairments loss on Fixed Assets cash basis treatment of Administrative& Other expenses and as disclosed in qualified opinion mentioned below. Financialimpact of the same could not be ascertained at this stage.

e. On the basis of written representation received from the directors as on March 312016 and 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 sub section (2) ofsection 164 of the Companies Act 2013 except one director.

f. With respect to the other matters to be included in the Auditor's 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 financial statements if any (Refer note No 27)

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) There were no amounts required to be transferred to the Investor Education andProtection Fund by the Company.

Qualified Opinion

(a) The Company has not followed the SEBI guidelines of publishing of unauditedfinancial results of the year within the prescribed time.

(b) Due to closure of Factory from 01.04.2015 to till date we could not visit theFactory and as such we have relied upon consumption and stock statements of Inventory ascertified by the management.

(c) These Accounts have been prepared on going concern basis. Net Worth of the companyhas been fully eroded. However in our opinion the ability of the Company to continue asa going concern depends on introduction of sufficient injection of funds and itsprofitability.

(d) As stipulated by the State Bank of India Unsecured Loans of Rs 24.50 croresobtained by the Company from a party had to be converted into Non Cumulative 0% dividendpaying Preference Shares within March 2010. Out of the above Rs.6.50 crores PreferenceShares have been issued so far and the balance remains outstanding. During the year theCompany has taken Rs.437.40 lakhs Unsecured Inter Corporate Loans from two parties forwhich no terms & conditions have been stipulated. Interest provided for on the aboveUn-Secured loans are prejudicial to the interest of the company.

(e) Gratuity premium of Rs.22.76 Lakhs claimed by L.I.C during the year for 2008-09have not been paid. Loans of Rs.72.40 Lakhs taken by the Company from the Gratuity fundhave not been repaid. Employees Group Gratuity Policy with LIC of India has not beenrenewed and the gratuity for the year has not been provided for.

(f) In absence of reconciliation and balance confirmation from unsecured Loansreceived debtors creditors advances and deposits we have relied on the company's bookbalances and is subject to scrutiny. There are several debit/credit balances of differentdebtors/creditors for which no party wise details were available. Substantial amounts duefrom debtors other debts and advances to suppliers appear to be doubtful of recovery. Weare unable to quantify the same at this stage.

(g) On the basis of balance confirmation certificates obtained from banks loan amountsto together with interest accrued thereon have been adjusted. Punjab National Bank Ranchihas revised their interest computation on Term Loan and Cash Credit during the year.

(h) Depreciation on tangible assets has neither been provided for last 4 years nor theuseful lives together with scrap percentage of the assets has been determined by thecompany.

(i) Fire and burglary insurances of the factory expired on 31.12.2010 and are yet to berenewed.

(j) No provisions have been made for wages & salary for Factory for the period from01.04.2015 to 30.11.2015. Statutory dues pertaining to salary & wages paid haveneither been deducted nor provided.

(k) Service Tax Excise Duty & Cenvat recoverable balances need reconciliation andadjustment with the Excise Records.

(l) We have been informed that various bank accounts of the Company have been attachedby the Income tax and P.F. Authorities.

(m) We observed substantial cash transactions and same should be avoided.

(n) Capital work-in-Progress amounting to Rs.986.85 lakhs out of Rs.1052.82 lakhs isoutstanding for a long time and needs to be looked into.

(o) We have been informed that the company has no possessional right on the premises at3 Hungerford Street Kolkata - 700017 (Refer note no.33)

For D. Basu & Co.
Chartered Accountants
Firm Registration No. 301111E
Malay Bhaduri FCA
Place : Kolkata Partner
Date : 24.08.2016 Membership No. : 012724


The Annexure referred to paragraph (1) under the heading "Report on Other legaland regulatory requirements" of Independent Auditors' report of even date:

On the basis of such checks as we consider appropriate and according to the informationand explanations given to us during the course of audit we report that :

(i) (a) The company has maintained proper records showing full particulars includingquantities details and situation of fixed assets but need to be updated.

(b) No physical verification has been conducted by the management during the year andas such we are unable to comment whether there is material discrepancies with bookrecords. Technical assessment is required to be made to determine condition/obsolation.

(c) As explained to us that the title deeds of immovable properties are held in thename of the company but are mortgaged against bank finance.

(ii) As informed by the management during the year no physical verification ofInventory have been conducted.

No records of inventories were made available to us hence we are unable to commentwhether there is material discrepancies with book records.

Step should be taking to indentify obsolete/damage inventories.

iii) The Company has not granted any loan secured or unsecured to any companies firmsor other parties covered in the register maintained under section 189 of the CompaniesAct 2013 (the Act).

iv) According to the information and explanations given to us the Company has compliedwith the provisions of Sections 185 and 186 of the Companies Act 2013 in respect ofinvestments guarantees and securities.

v) The Company has not accepted any deposits from the public within the meaning ofSection 737475 and 76 of the Act and the rules framed there under to the extentnotified.

(vi) No cost records has made available to us.

(vii) (a) In our opinion and according to the information and explanations given to usthe Company is not regular in depositing with appropriate authorities undisputed statutorydues in respect of provident fund investor education protection fund employees stateinsurance income tax sales tax excise duty service tax and other statutory duesapplicable to it.

(b) According to the information and explanations given to us there are no undisputedamounts payable in respect of income tax sales tax excise duty service tax etc. as at31.03.2016 except the following statutory dues are outstanding for more than six months asat the end of the financial year.

Particulars Amount (Rs. In Lakhs)
Provident Fund 223.42
Interest on Employees State Insurance 0.79
Tax Deducted at Sources (Payable) 22.53
Particulars Amount (Rs. In Lakhs)
Sales Tax 16.48
Consumer Durable Loan 19.56
Recurring Deposit/CTD with Post Office 20.40
LIC (Factory) 32.61
Salary & Wages (Head Office & Factory) 553.82
Employees State Insurance 73.69
Statutory Bonus (2008-2009)

(For 2009-10 to 2015-16 amount not ascertained)

Interest due on Bank Loans not paid 5822.71
Gratuity Premium 68.25
Term Loan and Cash credit from Banks and Financial Institution 4515.73

(c) According to records of the company the undernoted dues of Sales Tax Income TaxExcise duty and Provident Fund are pending on account of disputes :

Name of the Statute Nature of Dues Amount (Rs. In Lakhs) Period to which the amount relates Forum where dispute is pending
1. The Central Excise Act Excise duty Leviable on special packing & forwarding Unascertainable 1987 CEGAT-DELHI
2. Income Tax Act 1961 Exchange Fluctuation Losses on foreign currency loan Unascertainable 1989-1990 to 1992-1993 IT Deptt.
3. The Employees Provident Fund & Misc Act 1952 Penal Damage 214.68 (Net of Deposit of Rs. 25 Lakhs) April 2001 to September 2004 Employees P.F Appellate Tribunal New Delhi
4. West Bengal Sales Tax Act 1949 Import of machinery for Repair treated as turnover(ex-parte) 26.01 2003-04 West Bengal Sales Tax Tribunal remanded back to Department for examination.

(viii) The Company is defaulter in payment of interest and installment tobanks/financial institution loan of Rs. 4515.73 lakhs and interest of Rs. 5822.71 lakhs.

(ix) Neither any term has been obtained nor any money was raised by way of initialpublic offer or further public offer (including debt instruments) by the Company duringthe year.

(x) During the course of our examination of the books of account carried out inaccordance with the generally accepted auditing practices in India as far as verified byus we have neither come across any incident of fraud by the Company or on the Company byits officers or employees nor have we been informed of any such cases by the management.

(xi) The managerial remuneration has been paid or provided in accordance with theprovisions of Section 197 read with Schedule V of the Act.

(xii) The Company is not a Nidhi Company accordingly paragraph 3(xii) of the Order isnot applicable.

(xiii) The details of related parties transactions have been disclosed in the FinancialStatements as required by AS-18.

(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year.

(xv) According to information and explanations by the management the Company has notentered into any non-cash transactions with the directors or persons connected with him.

(xvi) The Company is not required to be registered under Section 451A of the ReserveBank of India Act 1934.

For D. Basu & Co.
Chartered Accountants
Firm Registration No. 301111E
Malay Bhaduri FCA
Place : Kolkata Partner
Date : 24.08.2016 Membership No. : 012724