TO THE MEMBERS OF
DECOLIGHT CERAMICS LIMITED
Report on Audited Financial Statements:
We have audited the accompanying financial statements of DECOLIGHT CERAMICS LIMITED(the Company) which comprise the Balance Sheet as at March 31 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.
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 including the Accounting Standardsspecified under . Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial 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. While conducting the audit we have taken into account the provisions of the Actthe accounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under.
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 misstatements.
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 the risks of material misstatement ofthe financial statements whether due to fraud or error.
In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstancesbut not for the purpose of expressing an opinion on whether the Company has an adequateinternal financial controls system over financial reporting in place and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates made bythe Companys Board of Directors as well as evaluating the overall presentation ofthe financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements read together with and subject to the notes thereongive 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 to theextent applicable; subject to-
a) Unutilized fund of equity preferential issue privately placed lying in InterCorporate Deposits to the tune of Rs. 27.57/- crores is pending for renewal / receipt fromthe respective parties. Refer Note 27(10);
b) The reasons pertaining to highly uncertainty about the Going Concern aspect of thecompany. Refer Notes 27(11).
i. In the case of the Balance Sheet of the state of affairs of the Company as at 31stMarch 2015;
ii. In the case of the Statement of Profit and Loss of the loss of the Company for theyear ended on that date; and
iii. In the case of the Cash Flow Statement of the cash flows of the Company for theyear ended on that date.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditors Report) Order 2015 (theOrder) issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
As required by section 143(3) 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;
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 Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this report are in agreement with the books of account as submitted to us;
d) in our opinion the aforesaid financial statements comply with the accountingstandards specified under Section 133 of the Companies Act read with Rule 7 of theCompanies (Accounts) Rules 2014 to the extent applicable;
e) on the basis of written representations received from the directors as on 31stMarch 2015 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 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 Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in ouropinion and 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 in its financial statements as referred to in Note 27(12) to financialstatements which may affect the financial position of the company.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any and as required on long-term contractsincluding derivative contracts except as referred to in Note 27(13) to the financialstatements.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
| ||For SVK & ASSOCIATES |
| ||Chartered Accountants |
| ||Firm No.: 118564W |
| ||Shilpang V. Karia |
|Place: Morbi ||Partner |
|Date: 30th May 2015 ||M. No.: 102114 |
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 1 of our Report of even date on the Statement of Accounts ofDECOLIGHT CERAMICS LIMITED for the year ended on 31st March 2015)
i. FIXED ASSETS:
a. In our opinion the company has generally maintained proper records showing fullparticulars including quantitative details and situation of fixed assets on the basis ofavailable information.
b. As explained to us the fixed assets have been physically verified by the managementduring the year in a phased periodical manner which in our opinion is reasonable havingregard to size of the company and nature of its assets however certain materialdiscrepancies with respect to book records were noticed on such verification by bank / itsauthorized representatives as mentioned in Note 27(11)(g) to the financial statements.
a. As explained to us physical verification of inventory has been conducted by themanagement at reasonable intervals. In our opinion the frequency of verification isreasonable in relation to its size and nature of business.
b. In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation its size and nature of business.
c. In our opinion the company is generally maintaining proper records of inventory inrelation to its size and nature of business. However as reported by the bank there werecertain material discrepancies noticed with respect to stock statements submitted to thebank by the company compared to its physical verification of inventory carried out by bank/ its authorized representatives. As explained to us by management of the company therewere no material discrepancies on physical verification as compared to the book records.However the year end inventory of the company was NIL.
a. According to the information and explanations given to us and on the basis of ourexamination of the books of account the company has not granted any loans secured orunsecured to companies firms or other parties covered in the register maintained underSection 189 of the Companies Act 2013 during the year under review. Consequently theprovisions of clause (iii) of the order are not applicable to the company.
iv. INTERNAL CONTROL:
In our opinion and according to the information and explanations given to us there isan adequate internal control system commensurate with the size of the company and natureof its business with regard to purchase of inventory and fixed assets and with regard tosale of goods and services. During the course of our audit no major weakness has beennoticed in the internal control system in these areas.
As explained to us the company has not accepted any loans or deposits within meaningof Section 73 to 76 of the Companies Act 2013 read with Rule 2(b) of the Companies(Acceptance of Deposits) Rules 2014 during the year under review.
vi. COST RECORDS:
According to the information and explanations provided by the management to us and tothe best of our knowledge the Company is not engaged in production of any such goods orproduction of any such services for which the Central Government has prescribedparticulars relating to utilization of material or labour or other items of cost. Hencethe provisions of section 148(1) of the Act do not apply to the Company.
vii. STATUTORY DUES:
a. According to the records of the company and on the basis of information andexplanation explained to us undisputed statutory dues including provident fundemployees state insurance income-tax sales-tax wealth tax service tax customduty excise duty value added tax cess to the extent applicable and any other statutorydues applicable to it were being generally deposited delayed / not deposited with theappropriate authorities. Further according to information and explanation given to usundisputed statutory dues accounted and applicable to the company as per the opinion ofthe management outstanding as at 31st March 2015 for a period of more than 6 months fromthe date they become payable are Central Excise Duty Rs. 0.64 Lacs Value Added Tax &Central Sales Tax of Rs. 6.59 lacs TDS of Rs. 0.89 Lacs Provident Fund Rs. 0.94 lacsand Professional tax of Rs. 0.11 lacs.
b. According to the information and explanation available to us details of dues ofExcise Duty VAT and Cess which have not been deposited on account of any dispute withappellate authority are given below:
|Sr. No. ||Name of the statue ||Nature of dues ||Amount under dispute Rs. In lacs ||Period to which amount relates ||Forum where dispute is pending |
|1. ||The Central Excise Act 1944* ||Excise duty including interest and penalty as applicable ||4.65 ||2004-05 ||Tribunal |
|2. ||The GVAT Act 2003 ||Central Sales Tax (excluding applicable interest and penalty ||146.90 ||2009-10 ||Commissioner (Appeals) |
|3 ||The GVAT Act 2003 ||Central Sales Tax (excluding applicable interest and penalty) ||1631.29 ||2010-11 ||Commissioner (Appeals) |
The excise department had issued certain show cause notices amounting to tax liabilityof Rs. 493.96 lacs which are pending at adjudication level and amount paid under protestfor the same amounting to Rs. 408.79 lacs.
* However the company has paid under protest Rs. 2.60 lacs for the above.
c. As per the information and explanation available to us and to the best of ourknowledge there were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
viii. CASH LOSSES AND ACCUMULATED LOSSES:
The company has accumulated losses of Rs. 6066.84 Lacs which have exceeded fiftypercent of its net worth as at the end of the financial year under review. The company hasincurred cash loss in the year under review to the tune of Rs. 2329.80 Lacs and it hasincurred cash loss of Rs. 3045.16 Lacs in the immediately preceding financial year.
ix. DUES TO FINANCIAL INSTITUTION BANKS OR DEBENTURE HOLDER:
Based on our audit procedures and as per information and explanation given to us by themanagement of the company we are of the opinion that company has defaulted in repaymentof dues to banks during the year under review. The short term borrowings from the banks bythe company have been classified as Non Performing Assets (NPA) w.e.f. 28th October 2013.Details of default at year end are as follows:
|Period of Default ||Amount (Rs. In lacs) |
|Less than 30 days ||0.21 |
|30 to 90 days ||0.41 |
|More than 90 days (Excluding uncharged interest of Rs. 791.21 Lacs) ||3434.85 |
x. GUARANTEE FOR LOANS TAKEN BY OTHERS:
According to the information and explanations given to us the company has not givenany guarantee for loans taken by others from any bank or financial institutions.
xi. TERM LOANS:
Based on our audit procedures and according to information and explanations given tous the existing term loans have been applied for the purpose for which they wereobtained.
Based upon the audit procedures performed and as per the information and explanationgiven to us by the management we report that no fraud on or by the company has beennoticed or reported during the course of our audit except plant & machineries not inuse having book value of Rs. 159.53/- Lacs have been sold at Rs. 40.96/- Lacs withouttaking prior permission of the bankers to whom such plant & machineries werehypothecated. As explained by the management they have satisfactorily replied to thebankers in this aspect.
| ||For SVK & ASSOCIATES |
| ||Chartered Accountants |
| ||Shilpang V. Karia |
| ||Partner |
|Place: Morbi ||M. No.: 102114 |
|Date: 30th May 2015 ||Firm No.: 118564W |