To the Members of Arunoday Mills Limited
Report on the Financial Statements:
We have audited the accompanying financial statements of Arunoday Mills Limited(the Company) which comprise the Balance Sheet as at 31st March2014 the Statement of Profit and Loss and the Cash Flow Statement for the year then endedand accompanying notes thereto.
Managements Responsibility for the Financial Statements:
The Company's Management is responsible for the preparation of these financialstatements that give a true and fair view of the financial position financial performanceand cash flows of the Company in accordance with the Accounting Standards notified underthe Companies Act 1956 (the "Act") read with the General Circular No. 15/2013Dt. 13-9-2013 of the Ministry of Corporate Affairs in respect of Section 133 of theCompanies Act 2013. This responsibility includes the design implementation andmaintenance of internal control relevant to the preparation and presentation of thefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing and otherapplicable authoritative pronouncements issued by the Institute of Chartered Accountantsof India. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statementsare free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of risks of material misstatement in thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal control relevant to the Companys preparation and fairpresentation of the financial statements in order to design audit procedures that areappropriate in the circumstances but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by management as well as evaluating the overall presentation of thefinancial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
Basis for Qualified Opinion:
As more explained in note no. 4 no provision has been made in respect of differentialliability of Rs. 339.69 Lacs due to secured lender viz. Bank of Baroda.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matters described in the Basis for QualifiedOpinion paragraph the financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:
i. in the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2014;
ii. in the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and
iii. in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.
Emphasis of Matter:
We draw attention to:
a) note no. 17 re: Companys net worth being fully eroded due to accumulatedlosses with corresponding effects in the loss for the year and period end net assets tothe extent indicated therein and despite continued default in re-payment of significantre-called and overdue loans etc. the accounts have been prepared on goingconcern basis as followed hitherto. In view of acquisition of manufacturingfacilities under Securitisation Act and disposal thereof by secured lenders and in theabsence of any other business activity the Companys ability to continue asgoing concern is subject to and dependent upon future plans of the Company and
b) note no. 18 re: Balances under Current Liabilities and Current Assets being subjectto confirmation and reconciliation if any
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditors Report) (Amendment) Order 2004 (the"Order") as amended issued by the Central Government of India in terms ofsub-section (4A) of section 227 of the Act and on the basis of such checks of the booksand records of the Company as we considered appropriate and according to the informationand explanations given to us we give in the Annexure a statement on the matters specifiedin paragraphs 4 and 5 of the Order.
2. As required by section 227(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 except for the matterdescribed in the Basis for Qualified Opinion paragraph;
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 except for the mattersdescribed in the Basis of Qualified Opinion 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. except for the possible effects of the matters described in the Basis for QualifiedOpinion in our opinion the Balance Sheet Statement of Profit and Loss and Cash FlowStatement dealt with by this report comply with the Accounting Standards notified underthe Act read with the General Circular No. 15/2013 Dt. 13-9-2013 of the Ministry ofCorporate Affairs in respect of Section 133 of the Companies Act 2013; and
e. on the basis of written representations received from the directors as on 31stMarch 2014 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2014 from being appointed as a director interms of clause (g) of sub-section (1) of section 274 of the Act.
3. As required by the Companies (Auditor's Report) Order 2004 issued by the CentralGovernment in terms of Section 227 (4A) of the Companies Act 1956 and on the basis ofsuch checks of books and records of the Company as were considered appropriate and on thebasis of information and explanations given to us during the course of our audit wefurther state on the matters specified in Paragraphs 4 of the said order to the extentapplicable to the Company as follows:
i) All the Fixed Assets of the Company were acquired by Secured Lenders underSecuritisation Act and sold by public auction in the year 2006-07.
ii) The Company did not carry any stocks during the year.
iii) (a) As per the information furnished the Company has not granted any loans toCompanies Firms or other parties covered in the Register maintained under Section 301 ofthe Companies Act 1956.
(b) In addition to amounts borrowed in earlier years towards interest-free short termloans taken by the Company from associate bodies corporate covered in the Registermaintained under Section 301 of the Companies Act 1956 and aggregating to Rs. 256.15 Lacsas stated below a further sum of Rs. 11.28 Lacs was received during the year as underleaving a balance of Rs. 267.43 Lacs.
|Name of the Party ||Relationship with the Company ||Balance as on1-4-13 ||Amt. recd / paid / adj during the year ||Balance as on31-3-14 ||Amt. involved during the year |
| || ||Amount Rs. Lacs |
|Resons Investments Pvt. Ltd. ||Associate ||251.15 ||6.55 ||257.70 ||257.70 |
|Udaysons Investments Pvt. Ltd. ||Associate ||5.00 ||- ||- ||5.00 |
|Ashita K. Sheth ||Shareholder ||- ||4.62 ||4.62 ||4.62 |
|Kantilal K. Sheth ||Mg. Director ||- ||0.10 ||0.10 ||0.10 |
(c) The terms and conditions on which the said interest free short term loans are takenby the Company are not prima facie prejudicial to the interest of the Company.
(d) During the year Resons Investments Pvt. Ltd. had re-called the outstanding loan ofRs. 257.70 Lacs. The Company has defaulted in re-payment of the said loan. The Company isregular in repayment of the rest of the loans as stipulated.
iv. The Company has not purchased any fixed assets or undertaken any trading activityduring the year. In our opinion and according to the explanations given to us there isadequate internal control system commensurate with the size and nature of the business ofthe Company. During the course of our audit no major weakness has been noticed in theinternal control system.
v. (a) On the basis of the information and explanations given to us and representationsmade we are of the opinion that particulars of contracts or arrangements referred to inSection 301 of the Act have been entered in the register required to be maintained underthat Section.
(b) According to the information and explanations given to us the Company did not haveany transactions in pursuance of contracts or arrangements entered in the registermaintained under Section 301 of the Companies Act 1956 and exceeding the value of rupeesfive lacs in respect of any party during the year.
vi. According to the information and explanations given to us no deposits from thepublic within the meaning of Reserve Bank of India Directives and Section 58A and 58 AA orany relevant provisions of the Act and the rules framed thereunder have been accepted bythe Company.
vii. During the year under review no internal audit was carried out.
viii. In the absence of any manufacturing activity the requirements for maintenance ofcost records under section 209 (1) (d) of the Companies Act 1956 are not applicable.
ix. (a) In our opinion and according to the information and explanations given to usundisputed statutory dues including Provident Fund Investor Education and ProtectionFund Employees State Insurance Income-tax Sales-tax Wealth-tax Service TaxCustoms Duty Excise Duty Cess and other statutory dues where applicable have generallybeen regularly deposited in time with the appropriate authorities.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of aforesaid dues where applicable were in arrears as at 31st March2014 for a period of more than six months from the date they become payable.
(c) The particulars of disputed statutory dues that have not been deposited with theappropriate authorities on account of dispute and the forum where the dispute is pendingare given below.
|Name of Statute ||Nature of the Dues ||Amount ||Forum where Dispute is Pending |
| || ||(Rs. in Lacs) || |
|Income-tax Act ||Re-assessment Dues ||999.21 ||Income-tax Appellate Tribunal |
|Electricity Duty Act ||Electricity Duty ||95.98 ||Inspecting Authority |
|E. S. I. Act ||E. S. I. Contribution ||11.73 ||ESI Appellate Tribunal |
|Maharashtra VAT Act ||VAT & C.S.T. ||38.38 ||Joint Commissioner of Appeals |
x. The accumulated losses at the end of the financial year are more than fifty percentof its net worth. The Company has incurred cash losses during the current financial yearunder audit as well as in the immediately preceding financial year.
xi. The Company has defaulted in repayment of Secured Loans due to a Bank amounting toRs. 785.92 Lacs as per Notice of demand issued by D.R.T. Mumbai under R.D.B. Act.
xii. Based on our examination of records and information and explanations given to usas the Company has not granted loans and/or advances on the basis of security by way ofpledge of shares debentures and other securities; the requirements of clause 4 (xii) ofthe Order relating to maintenance of documents and records in this regard are notapplicable.
xiii. As the Company is not a chit fund nidhi mutual benefit fund or society theprovisions of clause 4 (xiii) of the Companies (Auditors Report) Order 2004 are notapplicable to the Company.
xiv. As the Company is not dealing or trading in shares securities debentures &other investments provisions of clause 4 (xiv) of the Companies (Auditors Report)Order 2004 are not applicable to the Company.
xv. Based on the records examined by and according to the information and explanationsgiven to us as the Company has not given any guarantee for loans taken by others fromBanks or Financial Institutions clause 4 (xv) of the Order relating to comments as to theterms and conditions whereof being prejudicial to the interest of the Company are notapplicable.
xvi. Based on the examination of the books of account and related records the Companyhad prima facie applied the term loans for the purpose for which they wereobtained. However in the recent past the Company has no fresh borrowings.
xvii. According to information & explanations given to us and on an overallexamination of the financial statements of the Company and after placing reliance on thereasonable assumptions made by the Company for classification of the long term and shortterm usage of the funds we are of the opinion that prima facie the Company hasnot applied short term borrowings for long term use except for repayment of overdue loansdue to banks & financial institutions classified under current liability under OneTime Settlement.
xviii. The Company has not made any preferential allotment of shares during the year.
xix. The Company has not issued any debentures during the year.
xx. The Company has not raised any money by way of public issue during the year.
xxi. According to the information & explanations given to us and to the best of ourknowledge and belief no material fraud on or by the Company has been noticed or reportedduring the year.
| ||For J. C. MISTRY |
| ||Chartered Accountants |
| ||(J. C. Mistry) |
| ||Proprietor |
|Place : Mumbai ||M. No. : 041971 |
|Dated : 27th May 2014 || |