The Members of
PACIFIC INDUSTRIES LIMITED
Report on the Financial Statements
We have audited the accompanying standalone financial statements of Pacific Industrieslimited ("the Company")which comprise the Balance Sheet as at March 312016andthe Statement of Profit and Loss and Cash Flow Statement for the year then endedand asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act2013 ("the Act") with respect to the preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial positionfinancial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in Indiaincluding the AccountingStandards specified under Section 133 of the Act.This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and designimplementation andmaintenance of adequate internal financial controlsthat were operating effectively forensuring the accuracy and completeness of the accounting recordsrelevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatementwhether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.We have taken into account the provisions of the Actthe accounting andauditing standards and matters which are required to be included in the audit report underthe provisions of the Act and the Rules made thereunder.
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 financial statements are free from material misstatement.
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 judgmentincluding the assessment of the risks of material misstatement of thefinancial statementswhether due to fraud or error.In making those risk assessmentstheauditor 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 Directorsas 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 audit opinion on the standalone financial statements.
Basis for Qualified Opinion
A) Refer Note no.37 in Notes on Financial Statements regarding confirmation andreconciliation of various Debit and Credit balances appearing under various heads &non provision of exchange fluctuation w.r.t.certain old balances.Finalreconciliations/confirmation of the same may effects our disclosure.
In our opinion and to the best of our information and according to the explanationsgiven to usexcept for the effects of the matter described in the Basis for QualifiedOpinion paragraph abovethe aforesaid standalone financial statements 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 Indiaof the state of affairs of theCompany as at 31st March2016and its profit and its cash flows for the year ended on thatdate.
Report on Other Legal & Regulatory Requirement
1.As required by the Companies (Auditor's Report) Order2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Actwe give in the Annexure a statement on the matters specified in the paragraph 3and 4 of the Orderto the extent applicable.
2.As required by Section 143 (3) of the Actwe report that:
a.We have sought and obtained all the information and explanations which to the best ofour 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 sheetthe statement of profit and loss and the cash flow statement dealtwith by this Report are in agreement with the books of account;
d.In our opinionthe aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Actread with Rule 7 of theCompanies (Accounts) Rules2014;
e.On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directorsnone of the directors is disqualifiedas on 31 March 2016 from being appointed as a director in terms of Section 164 (2) of theAct;
f.As required under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct2013on the Internal Financial Control over Financial Reporting to the extentapplicablerefer our separate report in Annexure II and
g.With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules2014in our opinionand to the best of our information and according to the explanations given to us:
I.The effect of pending litigations are disclosed by way of Note 38 in the financialstatement.
ii.The Company did not have any long term contract including derivatives contracts forwhich there were any material foreseeable losses; and
iii.There were no amounts which were required to be transferredto the InvestorEducation and Protection Fund by the Company.
Annexure I to the Independent Auditors' Report of Pacific Industries Limited
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2016we reportthat:
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) All the assets have been physically verified by the management during the year andthere is a regular program of verification whichin our opinionis reasonable havingregard to the size of the company and the nature of its assetsNo material discrepancieswere noticed on such verification.
(c) The title deeds of immovable properties are held in the name of the company exceptthe land having cost of Rs.64.76 Lacs in Bangalore held in the name of past director ofthe company.
(ii) As explained to usinventories have been physically verified during the year bythe management at reasonable intervals and discrepancies noticed on verification betweenphysical stocks and the book records were not material.
(iii) The Company has not granted loans to companiesfirms Including Limited Liabilitypartnership firms or other parties covered in the register maintained under section 189 ofthe Companies Act2013 ('the Act')hence clause (iii) (a)(b) & (c) of the order arenot applicable.
(iv) In our opinion and according to the information and explanations given to usthecompany has complied with the provisions of section 185 and I86 of the Companies Act2013In respect of loansinvestmentsguaranteesand security
(v) The Company has not accepted any deposits from the Public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules2015 withregard to the deposits accepted from the public are not applicable
(vi) According to the information & explanation given to us the company is notrequired to maintain cost accounts & records as prescribed by the Central Governmentunder Section 148(1) of the Companies Act2013
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Companyamounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fundemployees' stateinsuranceincome taxsales taxservice taxduty of customsduty of excisevalue addedtaxcess and other material statutory dues to the extent applicable have been regularlydeposited during the year by the Company with the appropriate authorities except for a fewdelays and the same are not in arrears as at 31 March 2016 for a period of more than sixmonths from the date they became payable.
(b) According to the information and explanation given to usthere are no pending duesof Income TaxSales TaxWealth TaxService Taxduty of Customduty of ExciseValue AddedTax or Cess which are not deposited on account of dispute except :
|Particulars ||Year ||Amount of demand ||Amount deposite d against demand ||Amount of demand to the extent not deposite d (Rs.) ||Forum where appeal is pending |
|Entry Tax demand paid under ProtestBangalore ||2010-11 ||840669 ||420335 ||420334 ||C.T.D Banglaore |
|Entry Tax demand paid under ProtestBangalore ||2011-12 ||679839 ||339920 ||339919 ||C.T.D Bangalore |
|Sales Tax demand paid under ProtestBangalore ||2010-11 ||2615214 ||1307606 ||1307608 ||C.T.D Bangalore |
|Sa les Tax demand paid under ProtestBangalore ||2011-12 ||1773845 ||886923 ||886922 ||C.T.D Bangalore |
|Excise DemandUdaipur ||No rms 2007-082010-112011-12 ||11196664 ||5595984 ||5600680 ||Comm.AppealJaipur |
|Excise DemandUdaipur ||2013-14 ||3610658 ||270799 ||3339859 ||Ass.Co mm.CED Udaipur |
|Excise DemandUdaipur ||2013-14 ||2255032 ||169128 ||2085904 ||C.T.D Bangalore |
(viii) The Company have not defaulted in repayment of dues to a financialinstitutionsbanks or debenture holders during the year.
(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management during the year under reviewthe company has not raised moneys byway of initial public offer or further public offer including debt instruments.To the bestof our knowledge and belief and according to the Information and Explanation given tousterm loans availed by the company were prima facie applied by the company during theyear for the purpose for which the loan were Obtained.
(x) Based upon the audit procedures performed and the information and explanationsgiven by the managementwe report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
(xi) Based upon the audit procedures performed and the information and explanationsgiven by the managementthe managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act.
(xii) In our opinionthe Company is not a Nidhi Company.Thereforethe provisions ofclause 4 (xii) of the Order are not applicable to the Company.
(xiii) In our opinionall transactions with the related parties are in compliance withsection 177 and 188 of Companies Act2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.
(xiv) Based upon the audit procedures performed and the information and explanationsgiven by the managementthe company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview.Accordinglythe provisions of clause 3 (xiv) of the Order are not applicable to theCompany and hence not commented upon.
(xv) Based upon the audit procedures performed and the information and explanationsgiven by the managementthe company has not entered into any non-cash transactions withdirectors or persons connected with him.Accordinglythe provisions of clause 3 (xv) of theOrder are not applicable to the Company and hence not commented upon.
(xvi) In our opinionthe company is not required to be registered under section 45 IAof the Reserve Bank of India Act1934 and accordinglythe provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon
Annexure II to the Independent Auditors' Report of Pacific Industries Ltd.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act2013 ("the Act")
In conjunction with our audit of the Standalone financial statements of the Company asof and for the year ended March 312016We have audited the internal financial controlsover financial reporting of Pacific Industries Limited (hereinafter referred to as"the Company")which is a company incorporated in Indiaas of that date.
Management's Responsibility for Internal Financial Controls
The respective Board of Directors of the company are responsible for the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.These responsibilities include the designimplementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its businessincluding adherence to therespective company's policiesthe safeguarding of its assetsthe prevention and detectionof frauds and errorsthe accuracy and completeness of the accounting recordsand thetimely preparation of reliable financial informationas required under the CompaniesAct2013.
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 Financial Reporting(the "Guidance Note") and the Standards on Auditingissued by ICAI and deemed tobe prescribed under section 143(10) of the Companies Act2013to the extent applicable toan audit of internal financial controlsboth applicable to an audit of internal financialcontrols andboth issued by the Institute of Chartered Accountants of India.ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 financialreportingassessing the risk that a material weakness existsand testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk.Theprocedures selected depend on the auditor's judgementincluding the assessment of therisks of material misstatement of the financial statementswhether due to fraud or error.
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 of records thatin reasonable detailaccurately andfairly reflect the transactions and dispositions of the assets of the company;
2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciplesand that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisitionuseor disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreportingincluding the possibility of collusion or improper management override ofcontrolsmaterial misstatements due to error or fraud may occur and not bedetected.Alsoprojections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsorthat the degree of compliance with the policies or procedures may deteriorate.
In our opinionthe Company hasin all material respectsan adequate internal financialcontrol system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 312016based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For A.Bafna & Company
Date: 19 May 2016