To the Members of
Hiran Orgochem Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Hiran Orgochem Limited("the Company") which comprise the Balance Sheet as at March 31 2015 theStatement of Profit and Loss and Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The management and Board of Directors of the Company are responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ('the act') with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with rule 7 of Companies (Accounts) Rules2014. This responsibility includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; design implementation and maintenance of adequate internal financial controlsthat are 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 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 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 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 financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's management and Board of Directors 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 audit opinion on the financial statements.
Basis for Qualified Opinion
1. During the year all the fixed assets of the company (except Motor Car) aresold by asset management company appointed by State bank of India including the land& factory building due to company's inability to repay the loan. However nodocumentary evidence so as to confirm the sale value was available with the company. Alsothere are various legal cases pending against the company and its directors under SARFASEIAct 2002 and Negotiable Instruments Act 1881. So we are unable to comment on whethercompany can operate as going concern.
2. Company has exceeded the limit specified in Section 186 of Companies Act2013 as regards to lending money.
3. Company has not accounted for Foreign exchange gain / loss as required byAccount Standard 11 relating to "Foreign Exchange Transactions".
4. Sales recognized by the company were not in conformity with the sales taxreturns filed by the company. Sales as per books of accounts were 42.22 lakhs howeversales as per returns filed by the company was Nil.
5. During the year Management has provided for doubtful loans and advances forRs. 96.50 lacs. Company has also written off Short term loans and advances aggregating toRs. 202.07 lakhs (net of loans and advances written back). We were not provided with anydocumentary evidence or basis on which management has relied and classified these loans asdoubtful or writing it off.
6. Company has not appointed Chief Financial Officer and a whole time CompanySecretary as on 31 March 2015 as required by Section 203 of Companies Act 2013.
7. We have been informed that there are huge outstanding demands disputed aswell as undisputed against the company with regards to Sales Tax Income Tax ExciseDuty Wealth Tax etc. However the necessary documentary evidences / information were notmade available by the management. Hence we are unable to quantify the same. Loss of theCompany is understated to that extent.
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 aforesaid financial statements give the information required by theAct in the manner so required and give a true and Fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2015 its Loss and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2015 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure a statement on the matters Specified in paragraphs 3 and4 of the Order.
As required by section 143(3) of the Act we further 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 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 applicableAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 except for Accounting Standard 11 relatingto "Foreign Exchange Transactions";
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) of theAct
f) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014:
i. The Company has not disclosed the full impact of pending litigations on account ofExcise Duty Income Tax Sales Tax & other matters on its financial position in itsfinancial statements.
ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon does not arise
iii. The Company is yet to transfer unclaimed dividends outstanding for a period morethan seven years aggregating to Rs. 4.22 lakhs to the Investor Education and ProtectionFund.
For MVK Associates
Firm Reg. No: 120222W
CA. Kapil Gupta
Membership No. : 047911
Place : Mumbai
Date : 30 May 2015
ANNEXURE TO THE AUDITORS' REPORT
Annexure referred to in our Report of even date to the members of Instant HoldingLimited on the accounts of the company for the year ended 31st March 2015
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
I. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets;
(b) As explained to us all the fixed assets at factory were in possession of the assetreconstruction company (ARC) during the whole year and hence could not be physicallyverified. These assets were subsequently sold by the ARC. Other fixed assets have beenphysically verified by the management at regular intervals; as informed to us no materialdiscrepancies were noticed on such verification;
ii. (a) The Physical verification of inventories have been conducted at reasonableintervals by the management;
(b) In our opinion and according to the information and explanation given to us theprocedures of physical verification of inventories followed by the management reasonableand adequate in relation to size of the company and the nature of its business.
(c) Company is maintaining proper records of Inventory and no material discrepanciesfound during the year.
iii. (a) The company has granted unsecured interest free loan to one company covered inthe register maintained under section 189 of the Companies Act.
(b) In the case of loan granted to the party listed in the register maintained undersection 189 of the Act the loan is interest free and principal amounts are being repaidregularly in accordance with the agreed contractual terms.
(c) There are no overdue amount of more than Rupees one lakh in respect of loansgranted to the party listed in the register maintained under section 189 of the Act.
iv. In our opinion and according to the information and explanations given to us thereis no adequate internal control system commensurate with the size of the Company and thenature of its business for the purchase of fixed assets and for the sale of services.
v. The Company has not accepted any deposits from the public covered under Section 73to 76 of the Companies Act 2013
vi. As informed to us the Central Government has not prescribed maintenance of costrecords under subsection (1) of Section 148 of the Act
vii. (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is irregular in depositing theundisputed statutory dues including Provident Fund 'Employees' State InsuranceIncome-tax Sales-tax Wealth Tax Service Tax Custom Duty Excise Duty and othermaterial statutory dues as applicable with the appropriate authorities in India;
According to the information and explanations given to us no undisputed amountspayable in respect of aforesaid dues were in arrears as at March 31 2015 for a period ofmore than six months from the date they became payable.
|Name of Liability ||Amount due for more than 6 months as on 31.03.2015 |
|Service Tax ||229503 |
|Central Sales Tax ||31315 |
|Professional Tax ||9575 |
|Provident fund ||16774 |
|Maharashtra VAT ||13887577 |
|Income Tax ||4644378 |
|Wealth Tax ||7554 |
|Investor Education ||422543 |
|and Protection Fund || |
(b) We have been informed that there are huge outstanding disputed demands against thecompany with regards to Sales Tax Income Tax Excise Duty Wealth Tax etc. However thenecessary documentary evidences / information were not made available. Hence we are unableto quantify the same. Loss of the Company is understated to that extent.
(c) The Company is yet to transfer unclaimed dividends outstanding for a period morethan seven years aggregating to Rs. 4.22 lakhs to the Investor Education and ProtectionFund.
viii. The company does have accumulated losses at the end of the financial year and hasincurred cash losses in the financial year and in the immediately preceding financialyear.
ix. The company examined by us and as per the information and explanations given tous the company has defaulted in repayment of its dues to the banks and financialinstitutions and overdue position to financial institutions and banks are as under.
|Name of Bank/ Institution ||Amount Overdue ||Period of Default |
|State Bank of India* ||Rs. 453642082 ||Loan has been recalled on 23.12.2011 |
|State Bank of Patiala ||Rs. 154288358 ||Loan has been recalled on 28.01.2012 |
|SICOM Ltd. ||Rs. 28390199 ||Loan has been recalled on 23.01.2012 |
|* Total outstanding || |
|Less: Amount recovered from selling off all factory assets of the Company by the ARC || |
|Net outstanding || |
x. The Company has given corporate guarantee of
Rs. 2700 Lacs in the earlier period and is continuing for the loans taken by ActgenPharma Private Limited from Bank of India. The account of Actgen Pharma Private Limitedwith the bank has been classified as NPA w.e.f. 30.06.2013. Also networth of ActgenPharma Private Limited is completely eroded. However company is of the view that assetsof Actgen Pharma Private Limited are sufficient to meet the liabilities of the bank andmanagement does not foresee any development of their liability on the company.
xi. In our opinion and according to the information and explanations given to us thecompany has not raised any term loans during the year.
xii. We are unable to comment on occurrence of any material fraud on or by the Companydue to lack of documentary evidence provided for our verification as envisaged above.
For MVK Associates
Firm Reg. No: 120222W
CA. Kapil Gupta
Membership No. : 047911
Place : Mumbai
Date : 30 May 2015