GSL (INDIA) LIMITED
ANNUAL REPORT 2007-2008
We have audited the attached Balance Sheet of M/s. GSL (India) Limited as
at 31St March, 2008 together with the Profit and Loss Account and also the
Cash Flow Statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an-opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An Audit includes examining, on a test
basis, evidence supporting the amounts. and disclosures in the financial
statements. An Audit also includes assessing the accounting principles used
and significant estimates made by managements, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
1. As required by the Companies (Auditor's Report) Order 2003 as amended by
the Companies (Auditor's Report) (Amendment) Order 2004 (together the
'Order') issued by the Central Government of India in terms of Section
27(4A) of the Companies Act, 1956 and on the basis of such checks as we
considered appropriate and according to the information and explanation
given to us, we annex hereto a statement on the: matters specified in
paragraphs 4 & 5 of the said order.
2. Further to our comments referred to in paragraph (1) above, we report
(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of the
(b) In our opinion, proper books of accounts .as required by law have been
kept by the Company so far as appears from our examination of the books.
(c) The Balance Sheet, Profit and Loss Account and cash flow statement
dealt with by this report are in agreement with the books of accounts.
(d) In our opinion Balance Sheet , Profit and Loss Account and cash flow
statement comply witch the Accounting Standards as specified in sub-section
3 C of Section 211 of the Companies Act, 1956 except such as:
* Accounting Standard-11: - For non-conversion of unsettled liability in
foreign currency as referred in Note No. 32.
* Accounting Standard-15: - On retirement benefit in respect of gratuity
and leave encashment as referred in Note No.3.
(e) Based on representation made by all the directors of the Company and
the information and explanations as made. available; directors do not prima
facie have any disqualification as referred to in clause (g) of sub-section
(1) of section 274 of the Companies Act, 1956.
3. In our opinion and to the best of our information and according to the
explanation given to us, the said accounts read together with the
significant Accounting -Policies and other notes therein, schedule '-14'
generally, give the information as required by the Companies Act, 1956 in
the manner so required and give subject to:-
* Note No. 2 (a) :- Regarding non confirmation of estimated amount of
contract remaining to be executed of Rs. 5,96,50,991/-
* Note No. 2 (e) :- Regarding non-confirmation of guarantees given by
Bankers of Rs. 98, 52, 5471-
* Note No. 3:- In respect of gratuity and leave encashment liability un-
provided for, amount is unascertained.
* Note No. 4:- Sundry balances including Financial Institutions and Bankers
are subject to confirmation, reconciliation and adjustment required, if
any. Amount is unascertained.
* Note No. 5:- Pending effects of ARCIL restructuring proposal for the
Company for which amount is`unascertained.
* Note No. 6:- Non-provision of penal interest/liquidated damages on
various loans. Amount is not ascertained.
* Note No. 7 :-.Non-provision of interest on secured loan from financial
institutions -of Rs: 1,09,32,25,302/- (Accumulated Rs. 6,66,96,12,507/-)
* Note No. 8 :- Non-provision of interest on other secured/unsecured loan
Rs. 7,42,14,497/(Accumulated Rs-74,45,43,051/-)
* Note No.9:- Non-provision of interest on over due hire charges Rs.12.51
Lakhs. (Accumulated Rs.162.64 Lakhs) and non provision of hire charges
* Note No.10:- Non-provision of interest on over due bill Rs. 58,35,577/-
* Note No. 11 :- Non-provision of interest on overdue lease rental amount
unascertainable and because of non provision of lease rentals in earlier
years accumulated losses are lower by Rs. 12,93,39,426/-
* Note No. 13: - Non provision of Depreciation on Fixed Assets up to
Accounting year ended 31St March-2006 Because of that Fixed Assets are over
stated and accumulated losses are still understated to the extent of
* Note No. 15:- Current Liabilities include overdue bills discounting of
Rs. 6,50,71,897/-. Hence unsecured loans are under stated to that extent.
* Note No. 16: - Regarding remuneration to Directors being paid in excess
of Rs 8880/- in previous year and subject to compliance of section 314 of
the Companies Act, 1956.
* Note No. 18:- Regarding non-provision of loss on account of damages in
wind turbine having book value of Rs.876.41 Lakhs. Amount is not
* Note No. 19:- Non-provision of loss on slow moving inventory Rs.30.54
Lakhs. Amount is not ascertained
* Note No. 21:- Non-provision of dividend on cumulative redeemable
Preference Shares of Rs. 35 Lakhs (Accumulated dividend of Rs. 344.15
* Note No. 22 :- Non-provision for impairment in value of capital work in
progress and preoperative expenses amounting to Rs. 2,39,13,753/- and
Rs.9,80,53,916/- respectively as exact amount is not ascertainable at this
* Note No. 23:- Non-provision for doubtful debts and doubtful advances,
amount ks. 2, 21,81,036/- & Rs. 2,99,02,980/- respectively.
* Note No. 26:- Non-provision of sales tax liability of Rs.51,32,327/-. Due
to this loss is under stated to that extent.
* Note No. 33:- Regarding foreign exchange gain of Rs. 37,80,618/- treated
as income which is not accordance with Schedule VI of the Companies Act.
Due to this, loss of the year is under stated to that extent.
Note No.34: - Non Provision of Fringe benefit Tax of Rs3,31,222/- Due to
this, loss of the year is under stated to that extent. Accumulated loss is
lower by Rs.780855)-
* We further report that without considering items mentioned for Note No.
3, 4, 5, 6, 9, 11, 18, 19 & 22 above the effect of which could not be
determined. Had the observations made by us in paragraph :I above been
considered the loss for the year would have been Rs.1,28,69,32,5461- (as
against the reported figure of Rs, 5,23,28,987/-) and accumulated loss
(including loss of earlier years un-provided'for Rs. 8,11,87,61,527/-)
would have been Rs.11,62,60,10,666/- (as against the reported figure of Rs.
2;27,26,46,580/-). Due to increase in loss for the; year after considering
the observations as referred in Para - 3 above, earning per share basic and
diluted (after extra-ordinary items and effects of Depreciation) reported
in Note No. 31 of Schedule - 14 would be Rs. (-) 57.93 as against reported
figure of Rs. (-) 2.47. The information required by the Companies Act, 1956
in the manner so required and give a true and fair view:
(i) In the case of Balance Sheet of the State of affairs of the Company as
at 31St March, 2008.
(ii) In the case of Profit and Loss Account of the 'Loss' for the year
ended on that date.
(iii) In the case of Cash Flow statement of the cash flow of the company
for the year ended on that date
For DINESH S. AGARWAL & ASSOCIATES,
Place: Mumbai DINESH S. AGARWAL
Date : 30.06.2008 PARTNER
MEMBERSHIP NO. 34693
ANNEXURE TO THE AUDITOR'S REPORT
(Referred To its Paragraph 1 thereof)
As required by the Companies (Auditors Report) Order 2003 issued, by the
Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956
and on the basis of such checks. as we considered appropriate, we report
1 a. The Company has not .maintained; proper records showing full
particulars including quantitative details and situation of Fixed Assets-
1 b. We are informed that Fixed Assets has not been physically verified by
the management during the year and discrepancies between book record and
physical verification, if any, will be determined only after the register
is completed /updated and verification is carried out.
1 c. The Company has not disposed off substantial part of Fixed Assets
during the year, which could affect the going concern status of the
2 a. The inventory has been physically verified during the year by the
Management at reasonable intervals.
2 b. The procedures followed by the Management for physical verification of
stock are in our opinion reasonable and adequate' in relation to the size
of the Company and nature of its business. -
2 c. In our opinion and according to the information and explanation given
to us, the Company .has maintained proper records 'of its inventories and
discrepancies were noticed on verification between the physical stock &
book stock were not material-have been- properly dealt with in the books of
3 a. The Company has not granted any loan during the year secured or
unsecured to Companies, Firms or other parties covered in the Register
maintained u/s. 301 of the Companies Act, 1956.
3 b. The Company has not taken any unsecured loan. during the year.
However, the Company had taken an Interest free Unsecured Loan of Rs. 9
Lacs from a Director of the Company in the previous year'. Out of this
amount Rs.6,11,263/- has remained outstanding at the beginning and at the,
end of year. As informed to us, other Terms & Conditions of the said Loan
are not prejudicial to the interest of the Company.
4. In our opinion and according to the information and explanation given to
us, there are adequate internal control procedures commensurate with the
size of the Company and the nature of its business for the purchase and
sale of inventory, fixed assets and with regard to the sale of goods.
During the course of our audit we have not observed any continuing failure
to correct major weakness in internal controls except in respect of
recovery of Debts & Advances to parties for goods supplied which needs to
5 a. In our opinion according to the information and explanation given to
us the contract and arrangement that need to be entered to the register
maintained U/S 301 of the Companies Act, 1956 have been entered in the said
5 b. In our opinion and according to the information and explanation given
to us, the Company has not made any transaction in pursuance of contract or
arrangement entered in the register maintained under section 301 of the
Companies Act, 1956 and aggregating during the year to Rs. 5 Lakhs or more
in respect of any party.
6. In our opinion and according to the information and explanation given to
us, the company has not accepted any deposit during the year within meaning
of Section 58A and 58AA or any other related provisions of the Companies
Act, 1956 and the rules framed there under.
7. The company has internal audit system commensurate with its size and
nature of its business. However, same needs to be regularized and
8. We have broadly reviewed the books of account maintained by the company
pursuant to the order made by the Central Government for the maintenance of
cost records under section 209 (1) (d) of the: Companies Act, 1956 and are
of the opinion that prima facie the prescribed accounts and records have
been maintained. We have not, however, made a detailed examination of the
record so as to ascertain whether they are accurate or complete and these
accounts are subject to audit by Cost Accountants.
9 a. The Company has deposited Employees Staff Insurance dues with some
delay. However, the Company is irregular in depositing undisputed Statutory
dues including Provident Fund, Income Tax, Sales Tax, Wealth Tax, Custom
Duty, Excise Duty, Service Tax, Cess and any other material statutory dues
wherever applicable with the appropriate authorities. We are informed that
there are arrears of outstanding statutory dues as on 315, March 2008 for
more than six months, which are as under:
Provident Fund Dues Rs. 13,53,764 (Since Paid Rs.1,58,305)
Sales Tax Rs. 76,15,972
T C. Cess. Rs. 5,29,619
GEB Payable Rs. 3,74,69,604
Wealth Tax Rs. 5,59,000
Income Tax Rs. 62,50,000
Fringe Benefit Tax Rs. 5,98,680
Service Tax Rs. 46,447
T.D.S. Rs. 51,596
9 b. According to the information and explanation given to us, the
particulars of disputed statutory dues as at 31-03.2008 are listed below:
Name of the Nature of Amount in Period to Forum where
Statute Dues Rs. Which relate dispute ending
Central Excise Central 1990-91 & Asst Commr., of
Duty Act 1944 Excise 2152898 1991-92 Excise Ankleshwar
- - 1480702 1994-95 Add. Commr., of
- - 4130638 1999-2000 CESTAT,
- - 783499 2000-2001 Add. Commr., of
Income Tax Income 38233785 1996-97 ITAT
Act 1961 Tax
Gujarat Sales 1946089 2001-2002 DC of Sales Tax
Sales Tax Tax To Mumbai
Delhi Sales 739003 1996-1997 Asst Commr of Sales
Sales Tax Tax To Tax Delhi
10. The Company have accumulated loss at the end of the Financial Year
which is more then fifty percent of its net worth. The company has neither
incurred cash losses during the financial year ended on that date nor in
the immediately preceding financial year.
11. In our opinion and according to the information and explanation given
to us and with reference to Schedule 3 & 4, the Company has defaulted in
repayment of dues of Rs.2,71,90,01,866/- including interest provided upto
31.03.2000 to Financial institutions, banks and Debenture holders.
12. According to the information and explanation given to us, the Company
has not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
13. In our opinion the Company is, not a chit/nidhi/mutual fund/society.
Therefore, the provisions of Clause 4 (XIII) of the Companies (Auditors
Report) Order 2003 are not applicable to the Company.
14. In our opinion the Company is not dealing in or trading in shares,
securities,, debentures and other investments. Accordingly the provisions
of Clause 4 (XIV) 'of the Companies (Auditors Report) Order 2003 are not
applicable to the Company.
15. In our opinion and with reference to Note 2 (f) of Schedule 14 in
absence of specific terms and conditions on which the Company has given
guarantee of Rs.530. Lakhs for loan taken by others from Bank. We are
unable to comment whether the terms and conditions are prima facie
prejudicial to the interest of the Company.
16. The Company has not taken any term loan during the year.
17. According to the information and explanation given to us and on an
overall examination of the balance sheet of the Company, we report that
fund raised during the year, on short term basis have prima facie, not been
used for long term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under section 301
of the Act during the year.
19. The Company has not issued any Debentures during the year and hence
creation of security or charge for the same is not applicable.
20. The Company has not raised any money by public issue during the year.
21. According to the information and explanation given to us no fraud on or
by the Company has been noticed or reported during the course of our Audit.
For DINESH S. AGARWAL & ASSOCIATES,
DINESH S. AGARWAL
MEMBERSHIP NO. 34693
Date : 30.06.2008