To the Members of
Report on the Financial Statements
We have audited the accompanying Financial Statements of UNIWORTH LIMITED("the Company") which comprise the Balance Sheet as at 31st March 2015 theStatement of Profit and Loss the Cash Flow Statement and a summary of the SignificantAccounting Policies and other explanatory information for the year then ended.
Managements Responsibility for the 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 Financial Statements that give a true and 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 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 the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgements 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.
Our responsibility is to express an opinion on these Financial Statements based on ouraudit.
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 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 theauditors judgement including assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrol system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Companys Directors aswell as evaluating 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 qualified audit opinion on the Financial Statements.
Basis for Qualified Opinion
1. Footnote (i) to Note No. 23 regarding interest provision on borrowings from some ofthe institutions and banks which has been made in the financial statements under simpleinterest method at the prevailing / estimated rates applicable on such loans in absence ofrelevant documents/confirmations as a result of which impact of compound interest/penalcharges wherever applicable having not been ascertained as well as the note thereinregarding the matter of dispute between the Company and the Bankers/Creditors inconnection with charging of interest payment and payment of principal.
2. Footnote No (ii) to Note No. 23 regarding non-provision of Interest on certain loansand the impact of the non-provision is not presently ascertainable.
3. Footnote No. 4 (i) (ii) and (iii) of Note No. 15 regarding overdue Export Billsamounting to Rs. 31787.31 lacs outstanding for long which in our opinion are doubtful ofrecovery against which adequate provision has not been made in the financial statements.
4. Footnote 1 of 17 regarding Claims Receivable amounting to Rs. 689.36 lacs due fromvarious banks outstanding for long which in our opinion are doubtful of recovery againstwhich adequate provision has not been made in the financial statements.
5. Footnote 3 of Note No. 17 regarding advance of Rs. 3144.73 lacs due from certainparties which in our opinion are considered doubtful of recovery against which adequateprovision has not been made.
6. Footnote 3 of Note No. 16 relating to non-accounting of withdrawals / othertransactions from certain Bank accounts during the year due to reasons stated on the saidNote 16 (3).
7. Note No. 30 regarding non-compliance of Accounting Standard (AS) 6 : DepreciationAccounting due to non-adoption of Schedule II of the Companies Act 2013 and alsonon-compliance of mandatory Accounting Policy for Depreciation required to be followed bythe Company due to reasons stated in the said Note.
8. In absence of any workings for impairment of assets as per Accounting Standard (AS)28 Impairment of Assets the impact of such impairment is not ascertainable.
9. Non-provision / non-compliance of Items indicated in (1) to (8) above constitute adeparture from the Accounting Standards referred to in Section 133 of the Act. Withoutconsidering Item Nos. (1) (2) (6) (7) and (8) above whose impact on the CompanysStatement of Profit and Loss is presently non-ascertainable had the provisions indicatedin Item Nos. (3) to (5) been made
(i) the Loss for the year would have increased by Rs. 35621.40 lacs
(ii) Trade Receivables would have decreased by Rs. 31787.31 lacs
(iii) Short Term Loans and Advances would decreased by Rs. 3834.09 lacs
(iv) The Shareholders Fund would have been lower by Rs. 35621.40 lacs
In our opinion and to the best of our information and according to the explanationsgiven to us except for the like effects of the matters described in the Basis forQualified Opinion paragraph above the aforesaid 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 and its loss and its cash flows for the yearended on that date.
Emphasis of Matters
We draw your attention to the following matters in the Notes to the FinancialStatements:
1. Following Notes to the Financial Statements describe the uncertainty related to theoutcome of the lawsuits / other legal matters and matters under settlements indicatedtherein:
(a) Footnote (2) to Note No. 4 regarding legal issues following securitization ofSecured Loans as stated in the said Note.
(b) Footnote (2) of Note No. 15 regarding pending adjustments of Sundry Debtors againstsupplies and other liabilities etc. due to the buyers. In absence of final settlement withthe parties and non-receipt of necessary approval from concerned regulatory authorityextent of the amount of adjustments so required could not be ascertained.
(c) Footnote to Note No. 6 regarding estimated amount of Rs. 8722.28 lacs providedduring the year 2002-03 as sales claims and commissions relating to earlier years fromoverseas customers of the Company which is pending for final settlement. Necessaryadjustments for such claims and commissions will be made after final settlement andobtaining necessary approval from the concerned regulatory authority.
(d) Footnote 1 of Note No 15 and Footnote 2 of Note No. 17 regarding Debtors andAdvances amounting to Rs. 1453.62 lacs and Rs. 1387.19 lacs respectively relating toCompanies which have become Sick and referred to BIFR under the Sick Industrial Companies(Special Provisions) Act 1985. As the rehabilitation scheme of these companies arepending finalisation the amount of provision if any which may be required remainunascertainable.
(e) Note No. 32 regarding legal recourse taken by certain banks and financialinstitutions for recovery of their dues and the matter is sub-judice as stated in the saidNote.
(f) Note No. 33 regarding non-compliance of certain technical formalities due to whichtransfer of certain borrowing facilities to a body corporate could not be made.
(g) Note No. 34 regarding applications made by the Company with the Reserve Bank ofIndia from time to time for extension / setting off of certain overdue bills.
(h) Note No. 35 regarding Debit Note sent by a body corporate in an earlier year forunilateral transfer back of all assets not taken into cognizance by the Company inpreparing these Financial Statements as stated in the said Note.
(i) Note No. 38 regarding claims filed by a body corporate for Rs. 21625 lacs fornon-fulfilment of clauses of the agreement relating to transfer of Nagpur Unit to themoutcome of which would eventually arise on finalisation of suit.
(j) Matters disclosed in Note No. 19 relating to Entry Tax Central/Commercial SalesTax Demands Customs Demands Professional Tax/Labour Cases/Water Cess Electricity Dutyetc. disclosed under Contingent Liabilities which are contested by the Company andpending before various forums / authorities for final decisions.
2. Note No. 4 (Footnote 4) Note No. 7 (Footnote) and Note No. 16 (Footnote 1) to thefinancial statements regarding non-receipt of confirmations in respect of borrowings frombanks/Financial Institutions and also debit balances in certain current accounts withbanks due to restructuring being in progress book balances thereof have been relied upon.
3. Note No 27 (d) regarding balance with a related party under reconciliation
4. Footnote 2 & 3 of Note No. 4 to the financial statements regarding preparationof these financial statements on Going Concern basis for the reasons stated therein asalso the fact that the Company has accumulated losses and its net worth has been fullyeroded Further the Company has incurred net loss during the current and previous yearsand the Companys current liabilities exceeded its current assets as at the BalanceSheet date. These conditions along with other matters set forth in Notes to FinancialStatements indicate the existence of a material uncertainty that may cast significantdoubt about the Companys ability to continue as a going concern.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
i) As required by the Companies (Auditors Report) Order 2015 issued by theCentral Government in terms of Sub-section (11) of Section 143 of the Act we enclose inthe Annexure a statement on the matters specified in the said Order to the extentapplicable to the Company.
ii) As required by Section 143(3) of the Act we report that
a) We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit.
b) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept 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) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the Balance Sheet Statement of Profit and Loss andCash Flow Statement comply with the Accounting Standards specified under Section 133 ofthe Act read with Rule 7 of the Companies(Accounts) Rules 2014;
e) The matters described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company;
f) The matters described in sub-paragraph (1) under the Emphasis of Matters paragraphabove in our opinion may have an adverse effect on the functioning of the Company;
g) On the basis of written representations received from the Directors as on 31stMarch 2015 taken on record by the Board of Directors none of the Director isdisqualified as on 31st March 2015 from being appointed as a director in terms of Section164(2) of the Act.
h) 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 wherever ascertainable.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable loss.
iii. The Company has not transferred any amount to Investor Education and ProtectionFund (Refer to Footnote No. 1 to Note No.4)
| ||For S. S. KOTHARI & CO. |
| ||Chartered Accountants |
| ||Firm Registration. No. 302034E |
| ||A. DATTA |
|Place : Kolkata ||Partner |
|Date : 29th May 2015. ||Membership No. 005634 |
ANNEXURE TO THE AUDITORS REPORT
The Annexure referred to in our report to the members of UNIWORTH LIMITED theyear ended 31ST March 2015.
|(i) (a) Whether the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets; ||(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. However the updation of such records particularly with reference to estimated useful life of each asset is in process. || || || |
|(b) Whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so whether the same have been properly dealt with in the books of account; ||(b) The physical verification of fixed assets as stated by the management has been conducted by the Management during the year wherever practicable and the reconciliation of the quantities with the book records in progress. The discrepancies if any would be adjusted on completion of reconciliation / updation of records as stated above. || || || |
|(ii) (a) Whether physical verification of inventory has been conducted at reasonable intervals by the management; ||(ii) (a) Inventories of Raw Materials Finished Goods Work in Progress and Stores & Spares have been physically verified at reasonable intervals by the Company except Finished Goods of Rs. 18.40 Lacs lying with third parties and Rs. 115.51 Lacs under seizure of the Excise Department || || || |
|(b) Are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business If not the inadequacies in such procedures should be reported; ||(b) The procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business. || || || |
|(c) Whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so whether the same have been properly dealt with in the books of account. ||(c) On the basis of our examination of the records of inventories we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on verification between physical stocks and the book records which were not material have been properly dealt with in the books of account. || || || |
|(iii) Whether the company has granted any loans secured or unsecured to companies firms or other parties covered in the register maintained under section 189 of the Companies Act. If so ||(iii) The Company has not granted any loan secured or unsecured during the year to any company firm or other party covered in the register maintained under section 189 of the Companies Act 2013. || || || |
|(a) Whether receipt of the principal amount and interest are also regular; and ||In this regard we have relied upon the entries recorded in the register maintained under section 189 of the Act. || || || |
|(b) If overdue amount is more than rupees one lakh whether reasonable steps have been taken by the company for recovery of the principal and interest; || || || || |
|(iv) Is there an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Whether there is a continuing failure to correct major weaknesses in internal control system. ||(iv) In our opinion and according to the information and explanations given to us there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods. During the course of our audit no major weakness has been noticed in the internal control system nor have there been any continuing failure on the part of the Company to correct any major weakness. || || || |
|(v) In case the company has accepted deposits whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under where applicable have been complied with? If not the nature of contraventions should be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal whether the same has been complied with or not? ||(v) The Company has not accepted any deposit from the public within the meaning of sections 73 to 76 or any other relevant provisions of the Companies Act 2013. || || || |
|(vi) Where maintenance of cost records has been specified by the Central Government under sub- section (1) of section 148 of the Companies Act whether such accounts and records have been made and maintained. ||(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under sub- section (1) of section 148 of the Companies Act 2013 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However we have not made a detailed examination of the records with a view to determine whether they are accurate or complete. || || || |
|(vii) (a) Is the company regular in depositing undisputed statutory dues including provident fund employees state insurance income-tax sales-tax wealth tax service tax duty of customs duty of excise value added tax cess and any other statutory dues with the appropriate authorities and if not the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable shall be indicated by the auditor. ||(vii) (a) According to the records of the Company the Company has been generally regular in depositing during the year with appropriate authorities undisputed statutory dues including provident fund employees state insurance income tax sales tax wealth tax service tax customs duty excise duty value added tax cess and any other statutory dues where applicable except in the following cases which are outstanding for a period of more than six months from the date they became payable: || || || |
| ||VAT ||Rs. 6.80 lacs || || |
| ||Central Sales Tax ||Rs. 36.54 lacs || || |
| ||Service tax ||Rs. 42.81 lacs || || |
| ||Entry Tax ||Rs. 0.80 lacs || || |
|(b) In case dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not constitute a dispute). ||(b) According to the records of the Company following statutory dues have not been deposited by the Company on account of disputes : || || || |
| ||Nature of dues ||Amount (Rs. in Lacs) ||Period since when ||Forum |
| ||Entry Tax ||57.11 ||1997-98 ||Appeal with Commissioner of Commercial Tax. |
| ||Excise Duty ||8.64 ||Prior to 2000 ||Under Appeal with CESTAT New Delhi |
| ||Electricity Duty & Cess ||18.57 ||2005 ||Writ Petition before Bilaspur High Court. |
|(c) Whether the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time. ||(c) The Company has not transferred any amount to Investor Education and Protection Fund. [Refer to Footnote (1) to Note No. 4 (a) ] || || || |
|(viii) Whether in case of a company which has been registered for a period not less than five years its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year; ||(viii) The accumulated losses of the Company at the end of the financial year have exceeded its net worth and also the Company has incurred cash losses in the current financial year and in the immediately preceding financial year. || || || |
|(ix) Whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes the period and amount of default to be reported; ||(ix) The Company has defaulted in repayment of dues to financial institutions banks and debenture holders as under: || || || |
| ||(a) As per Original Agreement all the following Term Loans have become due for repayments. However the Companys negotiations with the term lenders for rescheduling / restructuring is in process: || || || |
| ||Nature of Financial Assistance ||Amount ||Period of Default || |
| || ||(Rs. in lacs) || || |
| ||a) Term Loan || || || |
| ||i) Financial Institution || ||Not Ascertainable || |
| ||Principal ||21172.09 || || |
| ||Interest ||10686.97 || || |
| ||ii) Bank || ||Not Ascertainable || |
| ||Principal ||37585.42 || || |
| ||Interest ||55087.41 || || |
| ||b) Debenture || || || |
| ||Nov-convertible Part C || || || |
| ||Redeemable Debenture || || || |
| ||Principal ||1900.62 || || |
| ||Interest ||196.95 || || |
| ||Also refer to Note No. 4 || || || |
|(x) Whether the company has given any guarantee for loans taken by others from bank or financial institutions the terms and conditions whereof are prejudicial to the interest of the company; ||(x) The Company has given guarantee for loans taken by Other Company others from bank or financial institution and the related terms and conditions are not prejudicial to the interest of the Company. || || || |
|(xi) Whether term loans were applied for the purpose for which the loans were obtained; ||(xi) Based on the information and explanations given to us by the Management no Term Loan was obtained by the Company during the year. || || || |
|(xii) Whether any fraud on or by the company has been noticed or reported during the year; If yes the nature and the amount involved is to be indicated. ||(xii) Based upon the audit procedures performed during the course of our audit and information and explanations given by the Management we report that no fraud on or by the Company has been noticed or reported during the year. || || || |
| ||For S. S. KOTHARI & CO. |
| ||Chartered Accountants |
| ||Firm Registration. No. 302034E |
| ||A. DATTA |
|Place : Kolkata ||Partner |
|Date : 29th May 2015. ||Membership No. 005634 |