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Parasrampuria Synthetics Ltd.

BSE: 514017 Sector: Industrials
NSE: PARSSYNTH ISIN Code: N.A.
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Parasrampuria Synthetics Ltd. (PARSSYNTH) - Auditors Report

Company auditors report

To the Members of Parasrampuria Synthetics Limited

Report on the financial statements

We have audited the accompanying the standalone financial statements of ParasrampuriaSynthetics Limited which comprises the balance sheet as at 31 st March 2015 and theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statement.

The Company's Board of Directors for the matters stated in sub-section 5 of section134of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true & 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 standard 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 judgments 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 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 undersub-section 10 of Section 143 of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the 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 theauditors' 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 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 the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the 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 standalone financial statements.

Basis of Adverse Opinion:

1. Refer Note 20.04 regarding non-compliance of Accounting Standard AS 15"Employees Benefits (revised)" to the extent of non provision of leaveencashment and inadequate provision for gratuity without ascertaining actuarial valuation;

2. Refer Note No. 20.05 regarding non-prevision of pre- lease charges for the year ofRs 8888.91 lacs

3. Refer Note No. 20.07 regarding non-provision of interest on debentures InterCorporate Deposits suppliers outstanding and lease rental dues for the year of Rs12963.93 lacs;

4. Refer Note no. 20.08 regarding non-provision of Import Duty of Rs 780.65 lacsbecoming due in earlier years

5. Refer Note No.20.21(d) non-provision of interest on loan liabilities demurrage andinsurance charges relating to imported machinery lying at port of Rs.280774.94 lacsRs.106.97 lacs and Rs.118.34 lacs respectively

6. Interest and pre lease liabilities reported at Rs 113225.31 lacs and otherliabilities for project including abandoned project reported as Rs.2158.60 lacs beingstated lower by Rs 302853.09 lacs Rs 1642783.91 lacs (including 1340156.12 lacs ofinterest and pre lease liabilities of earlier years) and Rs. 2803.72 lacs respectivelybalance of fixed assets (gross) reported at Rs 39980.33 lacs being stated lower by Rs48498.15 lacs accumulated losses reported at Rs 166253.96 lacs being stated lower by Rs1642943.88 lacs and other payable reported at Rs 48362.42 lacs being stated lower by Rs780.65 lacs;

7. Non compliance of Accounting Standard AS - 28 "Impairment of Assets" tothe extent the management is unable to ascertain the impact of such impairment owing toits inability to determine the value in business and/or net realizable values;

8. Refer Note No. 20.10 regarding part recovery of Rs 13554.76 lacs from debtors byway of purchase of land and building in earlier period. The Management is of the view thatthe value at which the said properties had been acquired is fair as the same were valuedby Government approved valuer We express our inability to comment on the same in theabsence of current valuation and any variance which may arise in future on realisation;

9. Refer note No 20.11(c) regarding Capital Work in Progress and pre-operative Expensesamounting to Rs 20941.82 lacs relating to abandoned project. We are unable to comment onthe reafiseability and subsequent loss that may arise in due course especially in view ofaccidental fire at port;

10. Refer Note No. 20.20 (a) in view of company's reference pending before Hon'bleBIFR and in expectancy of reliefs and concessions in the form of restructuring of termsloan liabilities & interest waivers the management being of the view that Company'sfinancial position will improve the accounts have been prepared on going concern basis.Whereas the circumstances demonstrates otherwise therefore we are unable to comment onthe assumption of going concern;

11. Refer Note No.20.14 regarding non confirmation of balances with customerssuppliers other creditors recoverable advances loans from financial institutions &banks and working capital facilities from various banks and by bank for fixed depositslying with them for renewal consequential impact of which cannot be determined at thisstage;

Adverse Opinion:

In our opinion because of significance of the matter described in para 1 to 11 ofBasis of Adverse Opinion and due to the cumulative impact being unascertainable thereforethe aforesaid financial statements do not give a true and fair viewin conformity with theaccounting principles generally accepted in India :

(a) In the case of Balance Sheet of the state of affairs of the Company as at 31stMarch 2015;

(b) In the case of Statement of Profit & Loss of the loss for the year ended onthat date; and

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

Emphasis of Matter:

1. Refer Note No. 1.1 & 1.2 relating to nonredemption of preference Shares and NoteNo. 5.7 regarding non- creation of debenture redemption reserve;

2. Refer note No.20.03 regarding non-renewal of insurance policies on Fixed and CurrentAssets expired in earlier years resulting in contravention of provision contained inrespective loan agreements with secured lenders;

3. Refer Note No 20.21(a) regarding disposal of assets of khushkhera units by ARCIL;

Report on Other Legal and Regulatory Matters

1. As required by the Companies (Auditors' Report) Order 2015 issued by the centralgovernment of India in exercise of power conferred by sub section 11 of section 143 of theAct we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5of the said Order.

2. As required by sub section 3 of section 143 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 and found themto be satisfactory;

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 except those stated in ouropinion paragraph;

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 standalone financial statement comply with theaccounting standards specified under section 133 of the Act read with rule 7 of Companies(Accounts) Rules2014 except AS 15 and AS 28.

e) The Company had defaulted in redemption of debentures and payment of interestthereon on due dates resulting into disqualification of directors as per section 164 ofthe Companies Act 2013.

For Jain Raj Associates
(Chartered Accountants)
FRN 007535N
Place: New Delhi (CA. P.K. Jain)
Date : June 30 2015 Partner
(M.No. 86396)

Annexure to the Independent Auditors' Report (Referred to in our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) AH the assets have not been physically verified by the Management during the yearbut there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification. As regards Plant & Machinery andequipment lying at Custom warehouse partly damaged by fire as reported by CWC we havebeen informed that they are still under the charge of Court Receiver appointed by theHon’ble Bombay High Court (refer Note No.20.11).

(ii) (a) The inventory has been physically verified during the year by the Management.In our opinion the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by *he Managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) On the basis of our examination of the records of inventory we are of the opinionthat the Company is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and the book records were not material and havebeen suitably adjusted in the books of account.

(iii) a) According to the information and explanations given to us the Company has notgranted loans secured or unsecured to companies firms and other parties covered in theregister maintained under Section 189 of the Companies Act 2013.

b) According to the information and explanations given to us the Company has not takenany loans secured or unsecured from companies firms and other parties covered in theregister maintained under Section 189 of the Companies Act 2013.

c) Since there are no such loans the comments regarding terms & conditionsrepayment of the principal amount & interest thereon and overdue amounts are notrequired.

(iv) As per the information and explanations given to us certain contracts of job work& sale of goods are of specialized nature for which comparable prices are notavailable. Read with above in our opinion there is an adequate internal controlprocedure commensurate with the size of the Company and the nature of its business for thepurchase of inventory and fixed assets and for sale of goods. Further on the basis of ourexamination of the books of records of the company carried out in accordance with thegenerally accepted auditing practices in India we have neither come across nor have webeen informed of major weaknesses in the aforesaid internal control procedures.

(v) The Company has not accepted any deposits from the public during the year inaccordance with the provision of section 73 to section 76 of the Act and the rules framedthere under.

(vi) In respect of activities of the Company covered by the Order issued by CentralGovernment under section 148(1) of the Companies Act 2013 for maintenance of costrecords we have relied upon the Cost Audit Report and are of the opinion that primafacie the prescribed accounts and records have been made and maintained.

(vii) (a) As per the books and records examined by us and information &explanations given to us the company has not been regular in depositing the undisputedstatutory dues including Provident Fund Employees State Insurance Income Tax Sales TaxService Tax Custom Duty Excise Duty Cess and other material statutory dues whereverapplicable with the appropriate authorities.

The arrears on account of such dues relating to Provident fund Employees StateInsurance TDS sales tax Excise duty & outstanding at the end of financial year fora period of more than six months from the date they became payable are Rs.34.90 lacsRs.40.64 lacs Rs. 9.00 lacs Rs. 132.78 lacs & Rs.146.02 lacs respectively

(b) According to the information and explanations given to us and as per the books andrecords examined by us the dues of sales tax entry tax purchase tax wealth taxService Tax excise duty custom duty & cess which have not been deposited on accountof any dispute and the forum where the dispute is pending are as under:

S. NO STATUS NATURE OF LIABILITY AMOUNT NOT DEPOSITED (Rs. In lacs) YEAR TO WHICH IT PERTAINS FORUM IN WHICH DISPUTES IS PENDING
01. Custom Duty Act 1962 Custom Duty 57.20 2003-2004 Hon’ble Supreme Court
02. State Sales Tax Act 1944 Entry Tax/ Sales Tax 95.80 27.94 6.44 8.44 7.59 347.17 2002- 2003 2003- 2004 2004- 2005 2005- 2006 2006- 2007 2007- 2008 Appellant Board Bhopal Appellant Board Bhopal D.C. Appeal Indore D.C. Appeal Indore Appellant Board Bhopal D.C. Appeal Alwar
03. Central Excise Act 1944 Excise Duty 485.96 2001-2002 2005-2006 Commissioner Indore
04. Central Excise Act 1944 Differential Duty 23.20 2002-2003 Hon’ble Supreme Court
05. Sales Tax Act 1994 Sales Tax 0.37 1998-1999 Asstt. Sales Tax Officer- IV
06. Central Excise Act 1944 Excise Duty 3628.40 2002-2003 Special Leave Petition is pending before Hon’ble Supreme Court
07. Central Excise Act 1944 Excise Duty (T&TA) 93.27 2000-2001 Protective SCN against Refund. Appellant Forum
08. Central Excise Act 1944 Excise Duty 122.04 2007- 2008 2008- 2009 CESTAT New Delhi
09. FEMA 1973 Foreign Exchange 1003.00 2003-2004 Hon’ble High Court Delhi
10. FEMA 1973 Foreign Exchange 78.60 2004-05 Tribunal Enforcement Directorate
11. Central Excise Act 1944 Excise Duty 33.64 2000-01 Matter Pending before Hon'ble Rajasthan High Court
12. Central Excise Act 1944 Demand about effective rate of duty 18.50 2000-01 Matter Pending before CESTAT
13. Central Excise Act 1944 SLP against the order of CESTAT - Rajsthan High Court 404.36 408.29 15.03 2.00 July 04 to March 09 100% penalty Demand Penalty Matter Pending before Hon'ble Supreme Court
14. Central Excise Act 1944 Cenvat 17.17 Khushkhera unit Department has filed SLP in Supreme Court
15. Central ExciseAct 1944 Cenvat 10.43 Khushkhera Unit Department has filed SLP in Supreme Court

(c) No amount is required to transferred to investor education and protection fund inaccordance with relevant provisions of the Companies Act.

(viii) The Company has accumulated losses of Rs. 166253.96 lacs as on 31st March 2015which is exceeding the net worth. Further the Company has incurred cash loss of Rs. 483.52lacs during this current financial year but has not incurred any cash loss in theimmediately preceding financial year.

(ix) The company has defaulted in repayment of dues to financial institutionsbanks and debenture holders. The period of default and the amounts involved alongwith the first date of defaults are as under:

(Rs. in lacs)

INSTITUTIONS/ BANKS RUPEE TERM LOAN & FOREIGN CURRENCY LOAN NCD / DEBENTURES WORKING CAPITAL LOAN UNSECURED LOAN FIRST DATE OF DEFAULTS
IDBI 5613.26 30.06.97
IFCI 8850.35 30.06.97
ICICI 6320.14 30.06.97
RIICO 87.44 30.06.97
SCICI LTD 2963.75 30.06.97
AXIS BANK 950.00 30.06.97
PNB 2986.96 30.06.97
CANARA BANK 1092.02 30.06.97
S.B.B.J 58.98 30.06.97
S.B.I (HOMEFINANCE) 369.08 30.06.97
SBOP 785.59 30.06.97
NCD (14%) Series A 1200.00 Refer below
NCD (14%) Series B 1016.79 Refer below
NCD (15%) Series C 1300.00 Refer below
NCD (17.5%) Series D 1513.20 Refer below
UTI (17.5%) Series E 700.00 Refer below
CANARA BANK 4025.16 30.06.97
S.B.B.J 520.49 30.06.97
P.N.B 3103.93 30.06.97
BANK OF BARODA 1006.88 30.06.97
S.B.T 604.42 30.06.97
S.B.O.P 1814.38 30.06.97
AXIS BANK 1009.66 30.06.97
NOVA SCOTIA 3199.91 30.06.97
I.R.B.I. 500.00 30.06.97
S.B.O.T. 555.60 30.06.97
I.D.B.I. 353.35 30.06.97
BANQUE INDOSUZI 448.29 30.06.97
S.I.D.B.I 131.28 30.06.97
U.T.I. 400.00 30.06.97

 

DEBENTURES HOLDERS NCD DEBENTURES FIRST DATEOF DEFAULTS
SERIES A 280.00 25.12.97
SERIES A 280.00 25.12.98
SERIES A 280.00 25.12.99
SERIES A 52.50 08.01.98
SERIES A 52.50 08.01.99
SERIES A 52.50 08.01.00
SERIES A 8.75 04.04.98
SERIES A 8.75 04.04.99
SERIES A 8.75 04.04.00
SERIES A 70.00 10.03.98
SERIES A 70.00 10.03.99
SERIES A 70.00 10.03.00
SERIES A 8.75 31.08.98
SERIES A 8.75 31.08.99
SERIES A 8.75 31.08.00
SERIES B 323.54 04.04.98
SERIES B 323.54 04.04.99
SERIES B 369.71 04.04.00
SERIES C 945.00 31.01.99
SERIES C 420.00 17.04.99
SERIES D 529.62 21.01.99
SERIES D 529.62 21.01.00
: SERIES D 529.62 21.01.01
SERIES E 700.00 25.02.99

Company has also defaulted in payment of lnterest in respect of above mentioned loansto financial Institutions Banks and Debentures Holders and the same is continuing till31st March 2015. The above liabilities are net off of an amount ofRs.2006.92 lacs whichhas been adjusted from the loan liabilities of IFCI and SBI Home Finance Ltd in pursuanceof sale certificate issued by ARCIL under the SARFAESI Act Furtherthe change in the nameof lenders due to assignment to such loan liabilities has not beenincorporated.

(x) As explained to us the company had given a guarantee in the past for loan taken byothers from banks/ financial institutions the conditions whereof were not prejudicial tothe interest of the company.

(xi) We are informed that the Company has not obtained any term loan during the year.

(xii) During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India we haveneither come across any instance of fraud on or by the company noticedand reported duringthe year nor have we been informed of such case by the management.

For Jain Raj Associates
(Chartered Accountants)
FRN 007535N
Place: New Delhi (CA. P. K. Jain)
Date : June 30th 2015 Proprietor
(M.No. 86396)