To The Members of
GEI Industrial Systems Limited
Report on the Financial Statements
We have audited the accompanying financial statements of GEI Industrial SystemsLimited ("the Company") which comprise the Balance Sheet as Et March 312015 the Statement of Profit and Loss and Cash Flow Statement for the year then ended anda summary 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 in accordance with accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2015.
This responsibility includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrol that were operating effectively for ensuring the accuracy and completeness of theaccounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue 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 as specified under Section 143(10) of theAct. 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. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether 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 theauditors judgment including the 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 financialcontrols system over financial reporting and the effectiveness of such controls. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management as well as evaluating theoverall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe standalone financial statements.
We report that:
1. Balances of Trade Receivables Trade Payables Advance to Suppliers and Bankaccounts have been un-reconciled and unconfirmed.
2. Liability on account of interest on borrowings from financial institutions/ ICDswhere suits were filed by the lenders or the account is classified as NPA by them has notbeen provided in the accounts. It has been estimated by the management and disclosed ascontingent liability of Rs. 110696963/- in Note No.26 of the financial statements.
3. Reconciliation of Intra-head and intra-group accounts and resultant adjustments arepending which may have impact on intra-head balances and financial position disclosed inthe financial statements.
Subject to our remarks 1 to 3 above and subject to other qualifications in the reportmentioned in Para (1) under "Report on Other Legal and Regulatory Requirements"below in our opinion and to the best of our information and according to the explanationsgiven to us the financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2015 its loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to Note No. 8.1 to the financial statements regarding the financialeffect of any diminution in value of non-moving inventories. In the opinion of thecompany the realization will be materialized with the revival of the projects hence noprovision for any loss thereof is made in the accounts.
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 subsection (11) ofsection 143 of the Act we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. 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 purpose 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;
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
(e) On the basis of written representations received from the directors as on March 312015 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2015 from being appointed as a director in terms of section 164 (2) ofthe 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 2015 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has not disclosed the additional financial impact if any of pendinglitigations in its financial statements-Refer Notes 4.2 and 4.4 to the financialstatements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. As per the information and explanations given to us there were Rs. 415294/-which were required to be transferred to the Investor Education and Protection Fund by theCompany.
| ||For A.K. Khabya & Co. |
| ||Chartered Accountants |
| ||Firm Reg. No. 001994C |
|Piace : Bhopai ||Ca. M.N.G. PiLLAI |
|Date : 14th June 2015 ||Partner |
| ||M.No.74051 |
Annexure as referred to in paragraph 1 under the heading "Report on otherRegulatory requirements" of our report of even date of GEI Industrial Systems Limitedon the Accounts for the year ended on 31st March 2015
(i) (a) The company has not maintained up to date records showing full particularsincluding quantitative details and situation of fixed assets.
(b) We have not been provided with evidence of physical verification of assets by themanagement as per a program of verification in a periodical manner hence unable tocomment whether any discrepancies were noticed on such verification.
(c) In our opinion the company has not disposed off substantial part of fixed assetsduring the year and the going concern status of the company is not affected.
(ii) (a) We have not been provided with evidence of physical verification ofinventories by the management hence unable to comment whether any discrepancies werenoticed on such verification.
(b) In view of our remark in sub-para (a) above we are unable to comment whether theprocedures of physical verification of inventories if any followed by the managementduring the year are reasonable and adequate in relation to the size of the company andthe nature of its business.
(c) The company has maintained records of inventories on computerized environment.Inventory of work in progress obsolete material and project have been determinedcertified by the management and incorporated in the accounts accordingly and not verifiedby us for want of proper records.
(iii) The Company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under section 301 of the CompaniesAct 1956. Hence provisions of Clause (iii) of Paragraph 3 are not applicable to theCompany.
(iv) In our opinion and according to the information and explanations given to usthere is no adequate internal control system commensurate with the size of the company andthe nature of its business with regard to purchases of inventory fixed assets and withregard to the sale of goods and services. During the course of our audit we have comeacross major weakness in internal controls.
(v) In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits within the purview of sections 73 to 76 of theCompanies Act 2013 and the rules framed there under.
(vi) We have not been provided with the cost records as specified by the CentralGovernment under sub-section 148 of the Companies Act hence we are Enable to commentwhether such records are maintained.
(vii) (a) According to the records of the company undisputed statutory dues includingprovident fund employees state insurance income tax sales tax wealth taxservice tax duty of customs duty of excise value added tax cess and other materialstatutory dues except those mentioned below have been generally deposited with theappropriate authority. According to the information and explanations given to usundisputed amounts payable in respect of aforesaid dues were in arrears as at 31stMarch 2015 for a period of more than six months from the date they became payable asunder: -
|Nature of Liability ||Amount (Rs..) |
|ESI ||5510997/- |
|Provident Fund ||31217597/- |
|TDS (Deducted) ||43354713/- |
|on various heads) || |
|Professional Tax ||1243002/- |
|(Employees) || |
|Export Tax ||2034991/- |
|VAT* ||13075151/- |
|SERVICE TAX* ||17288058/- |
|EXCISE DUTY* ||46021291/- |
|CST ||10028104/- |
*subject to adjustment for input credit
(b) According to the information and explanations given to us the following are theparticulars of statutory dues as at 31st March 2015 not deposited on accountof a dispute pending:
|Name of the Statute ||Nature of Dues ||Amount (Rs.) ||Period to which amount relates F.Y. ||Forum where the dispute is pending |
|Sales Tax Law ||Central Sales Tax ||Rs. 1747280 ||2006-2007 ||Board of Revenue Bhopal |
|Sales Tax Law ||Central Sales Tax ||Rs..839541 ||2007-2008 ||Board of Revenue Bhopal |
|Sales Tax Law ||Central Sales Tax ||Rs..4135024 ||2008-09 ||Board of Revenue Bhopal |
|Sales Tax Law ||Central Sales Tax ||Rs. 166859 ||2009-10 ||Board of Revenue Bhopal |
|Income Tax Act ||Income Tax Demand ||Rs. 3576166 ||2006-07 ||Commissioner of Income Tax |
(c) According to the information and the explanations given to us an amount ofRs.415294/- is required to be transferred to Investor Education and Protection Fund forwhich necessary instruction was given to the banker. However no confirmation of suchtransfer is available with the company.
(viii) The accumulated losses at the end of the financial year are less than fiftypercent of its net worth and the company has incurred cash losses during the financialyear and in the immediately preceding financial year.
(ix) In our opinion and according to the information and explanations given to us thecompany has defaulted in repayment of dues to financial institution or bank as under:-
|Name of the FI/ Bank ||Period of Defult ||Amount of Default X |
|1. ||The HSBC LTD ||>365 days ||Rs. 37165626/- |
|2. ||Citi Bank LTD ||>365 days ||Rs. 276460387/- |
|3. ||MadhyaPradesh Finance Corp.LTD ||>365 days ||Rs. 2546389/- |
(x) In terms of the information and explanations given to us the company has givencorporate guarantee for loans taken by subsidiary company from banks or financialinstitutions. In our opinion the terms and conditions on which the company has given suchguarantees are not prejudicial to the interest of the company.
(xi) The Company has not raised any fresh term-loans during the year.
(xii) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given to us by the management we report that no fraud on or by the companyhas been noticed or reported during the course of our audit.
| ||For A.K. Khabya & Co. |
| ||Chartered Accountants |
| ||Firm Reg. No. 001994C |
|Place : Bhopal ||CA. M.N.G. PILLAI |
|Date : 14th June 2015 ||Partner M. No.74051 |