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Shri Gang Industries & Allied Products Ltd.

BSE: 523309 Sector: Others
NSE: N.A. ISIN Code: INE241V01018
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Shri Gang Industries & Allied Products Ltd. (SHRIGANGINDUS) - Auditors Report

Company auditors report

To the Members of

Shri Gang Industries & Allied Products Limited Delhi Report on the FinancialStatements

We have audited the accompanying financial statements of Shri Gang Industries &Allied Products Limited Delhi (“the Company”) which comprise the BalanceSheet as at June 30 2015 Statement of Profit & Loss and Cash Flow Statement for theyear ended on that date and a summary of significant accounting policies and otherexplanatory 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 to give a true and fair view of the financial positionfinancial performance and cash flow 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 of the assets of the Company and for preventingand detecting frauds and other irregularities selection and application of appropriateaccounting policies making judgment 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 in to account the provisions of the Act and the Rules made thereunderincluding the Accounting Standards and matters which are required to be included in theaudit report. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act and other applicable authoritative announcementissued by the Institute of Chartered Accountants of India. Those Standards andpronouncements require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

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 the risks of material misstatement 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 control 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 the Company's Directors as well as evaluating theoverall presentation of the financial statements.

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

Matter for Emphasis

Attention of the members is drawn to-

(a) With reference to note no 6 & 11 these accounts have been prepared without anyprovision of interest if any payable on the overdue amount of interest free loan in lieuof Trade Tax of Rs.446.00 lacs from PICUP. In the absence of any documentary evidences weare not in a position to state / qualify whether any interest is payable on such amounts.

(b) With reference to note no 7 & 11 these accounts have been prepared without anyprovision of interest if any payable to Government of UP on overdue deferred Trade Tax& Power Charges amounting to Rs.3657.22 lacs. In the absence of any documentaryevidences we are not in a position to state / qualify whether any interest is payable onsuch amounts.

(c) Note no 23 to these accounts to the facts that the company suspended itsmanufacturing activities since 25.03.2010 and accordingly declared ‘lay off' forindefinite period and board has not yet made out any detailed plan. Such long suspendedactivities coupled with the fact that the company's accumulated losses have exceeded itsnet worth indicates the existence of a material uncertainty about the company's abilityto recommence its operations and severally affecting the ‘going concern assumption'.However these accounts have been prepared by the management on ‘going concernassumption' in view of the pending reference before BIFR under the Sick IndustrialCompanies (Special Provisions) Act 1985 as explained in note 23.

Basis for Qualified Audit Opinion

1. Attention is drawn that the inventories of Rs.135.13 lacs includes Stores Spares& Packing Material which in the absence of physical verification may not be realizedat the values shown in these financial statements and for which no provision for itsimpairment in its value if any is made. Accordingly the losses for the current year andaccumulated losses are shown less and current assets are shown in excess of Rs.135.13lacs.

2. Attention is drawn that the Capital Work in Progress of Rs.9.96 lacs which has notyet been Completed and commissioned may not be realized at the values shown in thesefinancial statements and for which no provision for its impairment in its value if any ismade. Accordingly the losses for the current year and accumulated losses are shown lessand non current assets are shown in excess of Rs.9.96 lacs.

3. Interest on unpaid overdue Public Deposits of Rs.30.00 lacs for the year has notbeen provided for amounting to Rs.3.00 lacs (accumulated Rs.15.00 lacs approx. up to dateof Balance Sheet). Accordingly loss for the current year and accumulated losses are lessand current liabilities are also less by Rs.15.00 lacs.

4. In the absence of adequate documentation and documentary proofs we are unable tocomment whether there is any impairment in the value of the fixed assets due to efflux oftime and suspension of manufacturing activities since March 2010 and requirement ofprovision for the same which might be required to be provided for. In the absence ofadequate records and any proofs of physical verification the discrepanciesrealizable/salvage value the impact of impairment can not be ascertained.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us subject to the matters of emphasis and except for the effects of the mattersdescribed in Basis for Qualified Opinion paragraph the aforesaid financial statementsgive the information required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet of the state of affairs of the Company as at June30 2015;

b) in the case of the Statement of Profit & Loss of the Profit for the year endedon that date and

c) in case of Cash Flow Statement cash flow for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor's Report) Order 2015 (“the Order”)issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act and on the basis of such checks of the books and records of the Company as weconsider appropriate and according to the information and explanations given to us weenclose in the Annexure a statement on the matters specified in paragraphs 3 and 4 of thesaid 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 purpose of our audit;

(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;

(c) The Balance Sheet the Statement of Profit & Loss and Cash Flow Statementdealt with by this report are in agreement with the books of accounts;

(d) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph in our opinion the Balance Sheet the Statement of Profit and Loss and CashFlow Statement comply with the Accounting Standards specified in Section 133 of the Act;read with Rule 7 of the Companies (Accounts) Rules 2014.

(e) On the basis of written representation received from the Directors as on June 302015 and taken on record by the Board of Directors we report that none of the Directorsis disqualified as on June 30 2015 from being appointed as a Director in terms of section164(2) of the Act.

(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 knowledge and belief and according to the information andexplanations given to us-

(i) The Company has disclosed the impact of pending litigations as at June 30 2015 onits financial position in its financial statements.

(ii) The Company has made provision as at June 30 2015 as required under theapplicable law or accounting standards for material foreseeable losses if any on longterm contracts including derivative contracts.

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund if any by the Company during the year endedJune 30 2015.

For Satendra Rawat & Co

Chartered Accountants

FRN- 008298C

(CA. Satendra Rawat)

Partner

Membership No. - 074126

Date: 28.08.2015

Place: New Delhi

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date for the year ended June 30 2015)

1. a) In view of the suspended manufacturing activities by the company since March2010 we are unable to state whether the company has maintained proper records showingfull particulars including quantitative details and situation of fixed assets.

b) As explained and informed to us that the manufacturing activities of the company aresuspended since March 2010 and the Management has stated to have carried out the physicalverification of part of the fixed assets during the year under consideration. In theabsence of adequate documents we are unable to comment whether such physical verificationof the fixed assets was carried out or the frequency of such physical verification wasreasonable having regard to the size of the company and the nature of its fixed assets. Inabsence of any such record of physical verification the discrepancies if any betweenthe physical assets and the book records are not ascertainable.

c) As explained to us the company has not disposed off any substantial part of itsfixed assets during the year.

(a) Since the company has suspended its activities since March 2010 we are unable tostate whether the company has carried out physical verification of its inventories and atreasonable periods. We are unable to comment whether the frequency of physicalverification is reasonable.

(b) In the absence of any records for physical verification of the inventories we areunable to comment on the reasonableness and adequacy of the procedures followed by themanagement in relation to the size and nature of its business.

(c) On the basis of our examination of the records of the inventories we are of theopinion that the company is maintaining proper records of the inventory. In absence of anyrecords for physical verification of inventoriesthe discrepancies if any between thephysical stock and the book records are not ascertainable.

3. The company has not granted any loan secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Act.

4 In our opinion and according to the information and explanations given to us thereis an adequate internal control procedure commensurate with the size of the company andthe nature of its business for the purpose of purchase and sale of goods material fixedassets and services. During the course of our audit on random test check basis no majorweakness has been noticed in the internal controls in respect of these areas.

5. According to the information and explanation given to us the Company has notcomplied with the provisions of section 73 and 74 of the Act and the rules framed thereunder so far as applicable to the repayment of principal amount and interest on due datesor the renewal thereof in respect of overdue public deposit of Rs.30 lacs.

6. Pursuant to the rules made by the Central Government for the maintenance of costrecords in respect of the Vanaspati segment under section 148 of the Act we are of theopinion that as the company has suspended its manufacturing activities since March 2010the company is not required to maintain the prescribed accounts and records relating tomaterials labour and other items of cost.

7. a) According to the information and explanations given to us and the records of theCompany examined by us we are of the opinion that the Company is regular in depositingthe undisputed statutory dues including Investor Education Protection Fund Employees'State Insurance Income Tax Sales Tax VAT Wealth Tax Service Tax Custom Duty ExciseDuty Cess and other statutory dues applicable to it except the following-

(i) Deferred Trade Tax/ Vat amounting to Rs.3016.09 lacs (Previous year Rs.2929.68lacs) in terms of order of BIFR for the rehabilitation. Pl see also note no. 23 of thesefinancial statements.

b) According to the records of the company and information and explanations given tous there are no dues of Sales Tax Income Tax Custom Duty Service Tax Wealth TaxExcise Duty and Cess on account of any dispute except the following-

S. No. Statute Nature of dues Forum where dispute is pending Amount (Rs.) Period to which the amount relates
1 Income Tax Act Penalty u/s 271(1)(c ) CIT (A) 1195732/- AY 2008-09.
2 U.P. Trade Tax Act Demand on regular assessment Trade Tax Tribunal 46703355/- FY 2005-06
3 U.P. Vat Act Demand on regular assessmen Trade Tax Tribunal 215000/- FY 2009-10

8. The company has accumulated losses of Rs. 6530.85 lacs (Rs. 6533.73Lacs in Previousyear) which are more than its net worth as at March 31st 2015. It has not incurred cashloss during the current year. (It incurred cash loss of Rs.2.20lacs during the previousyear).

9. Based on our audit procedures and on the information and explanations given bymanagement we are of the opinion that the company has defaulted in repayment of dues toPICUP in terms of the rehabilitation plan sanctioned by BIFR and an amount of Rs. 446 lacswas overdue and which is not yet paid by the company in view of the ModifiedRehabilitation Scheme submitted by the company to BIFR seeking more time for therepayment.

10. Based on our audit procedure and on the information and explanations given to usthe Company has not given any guarantee for loans taken by others from bank or financialinstitutions.

11. In our opinion and according to the information and explanation provided to us noterm loan was raised or taken by the company during the year.

12. 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 andaccording to the information and explanation provided to us we have neither come acrossany instance of material fraud on or by the company noticed or reported during the yearnor have been informed of any such case by the management.

For SatendraRawat& Co

Chartered Accountants

FRN-008298C

(CA. SatendraRawat)

Partner

Membership No.- 074126

Date: 28.08.2015

Place: New Delhi