TO THE MEMBERS OF
GANGOTRI IRON & STEEL COMPANY LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of GANGOTRI IRON & STEELCOMPANY LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31. 2014 the Statement of Profit and Loss Cash Flow Statement for the year thenended a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act 1956 "the Act"). This responsibility includesthe design implementation and maintenance of internal control relevant to the preparationand presentation of the financial statements that give a true and fair view and are freefrom material misstatement 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 issued by theInstitute of Chartered Accountants of India. 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 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 control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management 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.
Basis of Qualified
a) As mentioned in note no. 23 of financial statements the Company has not providedfor the liability towards Gratuity as the necessary actuarial valuation has not beencarried out as required under Accounting Standard (AS-15).
b) As mentioned in note no. 30(d) of financial statements the company has not provideafor the liability for income-tax and interest thereon in respect of assessment years2003-2004 to 2009-2010 amounting to Rs. 77.67.947 and Rs. 43.55.613 respectively. Had theliabilities been provided the loss for the year would have been higher by Rs. 126.96.36.1990and the balance of Surplus would have been lower by that amount. Consequently the longterm loans and advances would have been lower by that amount.
c) As mentioned in note no. 31 of financial statements we are unable to form anopinion about the recoverability of a cumulative claims of Rs.10.49.12.524 as at 31s'March. 2014 in respect of subsidy/incentive on VAT as per Industrial Incentive Scheme.2006 by the Department of industries. Bihar which includes Rs.188.8.131.525 claimed duringthe year ended 31s' March. 2014 of which only Rs 184.108.40.2069 has been received by thecompany for the financial year 2013-14 and Rs. 81.87.907 has been received for thefinancial year 2012-13.
d) As mentioned in note no. 34 of the financial statements the company has not paidthe installments of electricity charges and interest thereon for the months of September2013 to March 2014 amounting to Rs. 48615840 The company has also not provided for anestimated interest on electricity charges of Rs. 41 85.675 for the months of October 2013to March 2014. Had the liabilities been provided the loss for the year would have beenhigher by Rs 41.85.675 and the balance of Surplus would have been lower by that amount.Consequently the Other Current Liabilities would have been higher by that amount.
e) As mentioned in note no. 35 some advance from customers and security deposit fromcustomers are subject to confirmation / reconciliation and the consequential adjustmentthereof has not been determined.
f) As mentioned in note no. 36 there may be incidence of bad debts for which noprovision has been made by the Company. In absence of identification of such bad debtsthe amount of provision is indeterminate.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matters described in the Basis of QualifiedOpinion paragraph as mentioned above and read together with the other notes 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:
(a) in the case of the Balance Sheet of the state of affairs of the Company as atMarch 31 2014;
(b) in the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and
(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.
Report on Other Legal and Regulatory Requirements
1) As required by the Companies (Auditor's Report) Order 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 4 and5 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;
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 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 matter described in the paragraph (a) (b) (c) and (d) of Basis forQualified Opinion paragraph in our opinion the Balance Sheet Statement of Profit andLoss and Cash Flow Statement comply with the Accounting Standards referred to insubsection (3C) of section 211 of the Companies Act 1956
e) on the basis of written representations received from the directors as on March 312014 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act 1956
For ARSK & ASSOCIATES
Firm Registration No 315082E
CA Ravindra Khandelwal Partner
Membership No 054615
Date: 03 SEP 2013
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members of GANGOTRI IRONAND STEEL COMPANY LIMITED on the financial statements of the company for the year endedMarch 31. 2014.
On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that
1 a) The company is in the process of updating the fixed assets register
b) The fixed assets have not been physically verified by the management during the year
c) Since there is no disposal of substantial part of fixed assets during the yearparagraph 4(i)(c) of the Companies (Auditor's Report) Order. 2003 is not applicable
2 a) The management has conducted the physical verification of inventory at reasonableintervals during the year. As informed no material discrepancies were noticed on suchphysical verification
b) In our opinion the procedures of physical verification of inventory followed by themanagement are reasonable and adequate in relation to the size of the Company and natureof its business.
c) The Company has maintained proper record of its inventories and no discrepancieswere noticed on physical verification
3 a) According to the information and explanation given to us the company has notgranted unsecured loans to a companies covered in the register maintained under section301 of the Companies' Act. 1956 and hence clause nos. 4(iii)(b) 4(iii)(c) and 4(iii)(d)are not applicable.
b) According to the information and explanation given to us & in our opinion thecompany has taken interest free loans from two companies covered in the registermaintained under section 301 of the Companies Act. 1956. The maximum amount outstandingduring the year was Rs 11.71 crores and the year end balance of loans taken by the companywas Rs 10 38 crores
c) In our opinion and according to the information given to us as the loans taken areinterest free the clause 4(iii) (f) of the Companies (Auditor's Report) Order 2003 isnot applicable However other terms and conditions on which loans have been taken are notin our opinion prima facie prejudicial to the interest of the company.
d) Since the loans are in the nature of demand loan same are repayable as and when thelenders calls back the loans
4 In our opinion and according to the information and explanation given to us. there isan adequate internal control system commensurate with the size of Company and the natureof its business for the purchase of inventory and fixed assets and for the sale of goodsDuring the course of our audit we have not observed any continuing failure to correctmajor weaknesses in internal control system
5 a) In our opinion and according to the information and explanations given to us theparticulars of contracts or arrangements that need to be entered into the register inpursuance Section 301 of Act have been so entered in the register maintained as perrequirement of that Section.
b) In our opinion and according to the information and explanations given to us eachof these transactions have been made in pursuance of such contracts or arrangements atprices whicn are reasonable having regard to the prevailing market prices at the relevanttime.
6 The company has not accepted any deposits from the public within the meaning ofSection 58A and 58AA or any other relevant provisions of the Act and the rules framedthere under
7. The company did not have any formal internal audit system during the year underreview.
8 We have broadly reviewed the books of account maintained by the company pursuant tothe Rules made by the Central Government for the maintenance of cost records under section209(1)(d) of the Companies Act. 1956 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained.
9. a) According to the information and explanations given to us and the books andrecords examined by us. the company is generally regular in depositing with theappropriate authorities the undisputed statutory dues relating to custom duty servicetax. excise duty cess and other material statutory dues as applicable to it except fordelays in the case of Provident Fund ESI and Income Tax(Tax Deducted at Source).
Further since the Central Government has till date not prescribed the amount of cesspayable under section 441A of the Companies Act 1956. we are not in position to commentupon the regularity or otherwise of the Company in depositing the same
b) According to the information and explanations given to us and the books and recordsexamined by us there are no undisputed amount payable in respect of income tax salestax wealth tax service tax. custom duty excise duty cess outstanding as at 31s' March2014 for a period exceeding 6 months from the date they become payable except thefollowings.
|Nature of Statute ||Nature of Dues ||Amount (Rs) ||Period to which the amount related ||Due Date ||Date of Payment |
|Employees ||Employees ||17925 ||2009-2010 ||N.A ||Unpaid |
|State ||State ||118392 ||April '13 to ||N.A ||Unpaid |
|Insurance Act 1948 ||Insurance || ||September '13 || || |
| || ||53529 ||2009-2010 ||N.A. || |
|Employees ||Provident ||335654 ||2010-2011 ||N.A ||Unpaid |
|Provident Fund Act 1952 ||Fund ||228732 ||2011-2012 ||N.A. ||Unpaid |
| || ||145740 ||2012-2013 ||N.A ||Unpaid |
| || ||257002 ||April '13 to September '13 ||N A ||Unpaid |
|Bihar Entry Tax ||Bihar Entry Tax ||49.01921 ||2011-2012 ||N.A. ||Unpaid as the company's claim for VAT Subsidy is pending for approval |
| || ||10.84.560 ||2010-2011 2011 ||N.A. || |
|Bihar Value Added Tax Act. 2005 ||Value Added Tax ||4413.099 ||2012 April '13 to September '13 ||N.A. ||Unpaid as the company's claim for VAT Subsidy is pending for approval |
| || ||6420.140 || || || |
|Income Tax Act 1961 ||Tax Deducted at Source ||517541 ||2012-13 April '13 to September '13 ||N.A ||Unpaid |
| || ||204327 || || || |
c) As at 31s' March 2013 according to the records of the Company the following are theparticulars of the disputed dues on account of Excise duty:
|Nature of Statute ||Nature of Dues ||Amount (Rs) ||Period to which the amount related ||Forum where dispute is pending |
|Central Excise Act 1944 ||Excise Duty ||14.43.471 ||1998-2001 ||High Court Patna |
10 The Company has incurred cash losses in the financial year ending 31st March. 2014and also has accumulated losses as on that date In our opinion the accumulated losses asat the end of the financial year are not less than 50% of the net worth of the companyafter taking into account quantified qualifications in the audit report
11 The company has defaulted in repayment of dues to banks from 31st December 2013 andhas been declared as non-performing assets by the bank The outstanding overdue payment inrespect of term loans is Rs. 693.00 000/- and interest accrued and due Rs. 57188.16180/-
12 The company has not granted any loans and advances on the basis of security by wayof pledge of shares debentures and other securities.
13 The provisions of special nature applicable to chit fund/nidhi/mutual benefitfund/societies are not applicable to the Company.
14 In our opinion the Company is not a dealer or trader in shares securitiesdebentures and other investments. Accordingly provisions of clause (xiv) of the paragraph4 of the Companies (Auditor's Report) Order. 2003 are not applicable to the Company
15 In our opinion and according to the information and explanations given to us thecompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the year.
16 In our opinion and according to the information and explanation given to us theCompany has applied the term loans for the purpose for which the loans have been obtained.
17 On the basis of an overall examination of the balance sheet of the company in ouropinion and according to the information and explanations given to us there are no fundsraised on a short-term basis which have been used for long-term investments
18 According to the information and explanations given to us the company has not macepreferential allotment of shares to parties and companies covered in the registermaintained under section 301 of the Act.
19. The Company has not issued any Debenture
20. The Company has not raised any money by way of public issue during the year.
21 According to the information and explanations given by the management to us wereport that no fraud on or by the company has been noticed or reported during the courseof our audit.
For ARSK & ASSOCIATES
Firm Registration No. 315082E
CA Ravindra Khandelwal
Membership No 054615
Date: 03 SEP 2013