To the members of IAG Glass Company Limited Report on the financial statements
We have audited the accompanying financial statements of IAG Glass Company Limitedwhich comprise the Balance Sheet as at 31st March 2017 and statement of Profit & Lossand Cash Flow Statement for the year then ended and a summary of significant accountingpolicies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act. 2013 ("the Act") with respect to the preparation andpresentation of these financial statements that give a true and far 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 the Companies (Accounts) Rules2014. This responsibility also includes the maintenance of adequate accounting records inaccordance with the provisions of the act for safeguarding the assets of the company andfor preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies: making judgment and estimates that arereasonable and prudent; and design implementation and maintenance of 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 misstatementswhether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into accounts 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 rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143 (10) of the Act and other applicable authoritative pronouncements issues bythe Institute of Chartered Accountants of India. Those Standards and pronouncementsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatements.
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 risk of material misstatements 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 company 's directors as well as evaluating theoverall 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.
In our opinion and to the best of our information and according to the explanationsgiven to us the financial statements subject to qualified opinion given below and readtogether with the notes and significant accounting policies thereon and attached theretogive the information required by the Companies Act 2013 in the manner so required and inview of qualifications we are unable to confirm whether the accounts give a true &fair view in conformity with the accounting principles generally accepted in India.
a) In the case of Balance Sheet of the state of affairs of the Company as at March312017.
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 on thatdate.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies(Auditor's Report) order 2016 ("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" statements 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 obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have not been properlymaintained by the company 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 Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with accounting standards referred to in section 133 of the CompaniesAct 2013 read with rule 7 of the Companies(Accounts) Rule 2014 except non provisionsof depreciation non provisions/deductions of P.F. Pension ESI and other statutory duesagainst payment of salary & wages non provisions of Gratuity Bonus & Leaveencashment non provisions of interest on
Unsecured loans non provisions of impairments loss on Fixed Assets cash basistreatment of Administrative & Other expenses and as disclosed in qualified opinionmentioned below. Financial impact of the same could not be ascertained at this stage.
e. On the basis of written representation received from the directors as on March312017 and taken on record by the Board of directors none of the directors isdisqualified as on March 31 2017 from being appointed as a director in terms of subsection(2) of section 164 of the Companies Act 2013 except one director.
f. With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controls overfinancial reporting.
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies ( Audit and Auditors) Rules2014 in our opinionand 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 if any( Refer note No 26)
(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
(iii) There were no amounts required to be transferred to the Investor Education andProtection Fund by the Company.
(iv) The company has provided requisite disclosures in its financial statements asregards dealing in Specified Bank Notes during the period from November 8 2016 toDecember 30 2016 and these are in accordance with the books of accounts maintained by thecompany. (Refer Note No- 34)
(a) The Company has not followed the SEBI guidelines of publishing of unauditedfinancial results of the year within the prescribed time.
(b) Due to closure of Factory during the year we could not visit the Factory and assuch we have relied upon consumption and stock statements of Inventory as certified by themanagement.
(c) These Accounts have been prepared on going concern basis. Net Worth of the companyhas been fully eroded. However in our opinion the ability of the Company to continue asa going concern depends on introduction of sufficient injection of funds and itsprofitability.
(d) As stipulated by the State Bank of India Unsecured Loans of Rs 24.50 croresobtained by the Company from a party had to be converted into Non Cumulative 0% dividendpaying Preference Shares within March 2010. Out of the above Rs.6.50 crores PreferenceShares have been issued so far and the balance remains outstanding. No interest has beenprovided on other inter corporate loans. During the year the company has taken Rs 64.19Lacs unsecured loan from a party.
(e) Gratuity premium of Rs.22.76 Lakhs claimed by L.I.C during the year for 2008-09have not been paid. Loans of Rs.72.40 Lakhs taken by the Company from the Gratuity fundhave not been repaid. Employees Group Gratuity Policy with LIC of India has not beenrenewed and the gratuity for the year has not been provided for.
(f) In absence of reconciliation and balance confirmation from unsecured Loansreceived debtors creditors advances and deposits we have relied on the company's bookbalances and is subject to scrutiny. There are several debit/credit balances of differentdebtors/creditors for which no party wise details were available. Substantial amounts duefrom debtors other debts and advances to suppliers appear to be doubtful of recovery. Weare unable to quantify the same at this stage.
(g) Depreciation on tangible assets has neither been provided for last 5 years nor theuseful lives together with scrap percentage of the assets has been determined by thecompany.
(h) Interest have not been provided on the unsecured loans taken from two parties asthe matter is subjudice.
(i) Fire and burglary insurances of the factory expired on 31.12.2010 and are yet to berenewed.
(j) No provisions have been made for wages & salary for Factory for the period from01.07.2016 to 31.03.2017. Statutory dues pertaining to salary & wages paid haveneither been deducted nor provided.
(k) Service Tax Excise Duty & Cenvat recoverable balances need reconciliation andadjustment with the Excise Records.
(l) We have been informed that various bank accounts of the Company have been attachedby the Income tax and P.F. Authorities.
(m) We observed substantial cash transactions and same should be avoided.
(n) Capital work-in-Progress amounting to Rs.986.85 lakhs out of Rs.1052.82 lakhs isoutstanding for a long time and needs to be looked into.
(o) We have been informed that the company has no possessional right on the premises at3 Hungerford Street Kolkata 700017 and E-auction Sale notice has been issues for thesame. (Refer note no. 32)
| ||For D. Basu & Co. |
| ||Chartered Accountants |
| ||Firm Registration No. 301111E |
|Place: Kolkata ||Malay Bhaduri FCA |
|Date: 30.05.2017 ||Membership/C.P. No.:012724 |
ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT
The Annexure referred to paragraph (1) under the heading "Report on Other legaland regulatory requirements" of Independent Auditors' report of even date :
On the basis of such checks as we consider appropriate and according to the informationand explanations given to us during the course of audit we report that:
(i) (a) The company has maintained proper records showing full particulars includingquantities details and situation of fixed assets but need to be updated.
(b) No physical verification has been conducted by the management during the year andas such we are unable to comment whether there is material discrepancies with bookrecords. Technical assessment is required to be made to determine condition/obsolation.
(c) As explained to us that the title deeds of immovable properties are held in thename of the company but are mortgaged against bank finance
(ii) As informed by the management during the year no physical verification ofInventory have been conducted.
No records of inventories were made available to us hence we are unable to commentwhether there is material discrepancies with book records.
Step should be taken to indentify obsolete / damage inventories.
iii) The Company has not granted any loan secured or unsecured to any companies firmsor other parties covered in the register maintained under section 189 of the CompaniesAct2013 ( the Act ).
iv) According to the information and explanations given to us the Company has compliedwith the provisions of Sections 185 and 186 of the Companies Act 2013 in respect ofinvestments guarantees and securities.
v) The Company has not accepted any deposits from the public within the meaning ofSection 737475 and 76 of the Act and the rules framed there under to the extentnotified.
(vi) No cost records has made available to us.
(vii) (a) In our opinion and according to the information and explanations given to usthe Company is not regular in depositing with appropriate authorities undisputed statutorydues in respect of provident fund investor education protection fund employees stateinsurance income tax sales tax excise duty service tax and other statutory duesapplicable to it.
(b) According to the information and explanations given to us there are no undisputedamounts payable in respect of income tax sales tax excise duty service tax etc. as at31.03.2017 except the following statutory dues are outstanding for more than six months asat the end of the financial year.
|Particulars ||Amount (Rs. In Lakhs) |
|Provident Fund ||207.77 |
|Interest On Employees State Insurance ||0.79 |
|Tax Deducted At Sources(Payable) ||22.53 |
|Sales Tax ||16.48 |
|Consumer Durable Loan ||19.56 |
|Recurring Deposit/CTD with Post Office ||20.40 |
|LIC(Factory) ||32.61 |
|Salary & wages(Head Office & Factory) ||586.56 |
|Employees State Insurance ||73.69 |
|Statutory Bonus(2008-2009) || |
|(For 2009-10 to 2015-16 amount not ascertained) ||12.56 |
|Interest due on Bank Loans not paid ||7764.06 |
|Gratuity Premium ||68.25 |
|Term Loan and Cash credit from Banks and financial institution ||4478.99 |
(c) According to records of the company the undernoted dues of Sales Tax Income TaxExcise duty and Provident Fund are pending on account of disputes:
|Name of the Statute ||Nature of Dues ||Amount (Rs. In Lakhs) ||Period to which the amount relates ||Forum where dispute is pendinq |
|1 The Central Excise Act ||Excise duty Leviable on special packing & forwarding ||Unascertainable ||1987 ||CEGAT-DELHI |
|2 Income Tax Act 1961 ||Exchange Fluctuation Losses on foreign currency loan ||Unascertainable ||1989-1990 to 19921993 ||IT Deptt. |
|3 The Employees Provident Fund & Misc Act 1952 4 West Bengal Sales Tax Act 1949 ||Penal Damage Import of machinery for Repair treated as turnover(ex- parte) ||214.68(Net of Deposit of Rs. 25 Lakhs) 26.01 ||April 2001 to September 2004 2003-04 ||Employees P.F Appellate Tribunal New Delhi West Bengal Sales Tax Tribunal remanded back to Department for examination. |
(viii) The Company is has not made payments of interest and installment to banks /financial institution loan of Rs. 4478.99 lakhs and interest of Rs. 7764.06 lakhs
(ix) Neither any term loan has been obtained nor any money was raised by way of initialpublic offer or further public offer (including debt instruments) by the Company duringthe year.
(x) During the course of our examination of the books of account carried out inaccordance with the generally accepted auditing practices in India as far as verified byus we have neither come across any incident of fraud by the Company or on the Company byits officers or employees nor have we been informed of any such cases by the management.
(xi) The managerial remuneration has been paid or provided in accordance with theprovisions of Section 197 read with Schedule V of the Act.
(xii) The Company is not a Nidhi Company accordingly paragraph 3(xii) of the Order isnot applicable.
(xiii) The details of related parties transactions have been disclosed in the FinancialStatements as required by AS-18.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year.
(xv) According to information and explanations by the management the Company has notentered into any non-cash transactions with the directors or persons connected with him.
(xvi) The Company is not required to be registered under Section 451A of the ReserveBank of India Act 1934.
For D BASU & CO.
Firm Registration No. 301111E
Malay Bhaduri FCA
Place: Kolkata Date: 30/05/2017
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
Referred to paragraph 2 (f) under the heading "Report on Other legal andregulatory requirements" of the Independent Auditors' report of even date of themembers of IAG GLASS COMPANY LIMITED on the financial statements for the year ended March312017.
Report on the Internal financial controls under Clause (i) of Sub- section 3 of section143 of the Act.
1. We have audited the internal financial controls over financial reporting of IAGGlass Company Limited ("the Company") as of March 31 2017 in conjunction withour audit of the financial statement of the Company for the year ended on that date.
Management's Responsibility for Internal Financial controls.
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalFinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of fraud and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable Financialinformation as required under the Act.
2 Our responsibility is to express an opinion on the Company's internal financialcontrols over Financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Over Financial Reporting (the"Guidance Note") and the Standards on Auditing deemed to be prescribe undersection 143 (10) of the Act to the extent applicable to an audit of internal controlsboth applicable to an audit of internal financial controls and both issued by the ICAI.Those standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.
3. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand reporting effectiveness of internal controls based on the assessed risk. The procedureselected depended on the auditors' judgment including the assessment of the risks ofmaterials misstatement of the financial statements whether due to fraud or error.
4. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
5. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purpose in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable details accurately and fairly reflect thattransactions and depositions of the assets the company; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statementsin accordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a materials effect on the financial statement.
Inherent Limitation of Internal Financial Controls Over Financial Reporting
6. Because of the inherent limitations financial control over financial reportingincluding the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over finaial reportingperiod are subject to the risk that the internal financial control over financialreporting may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
7. In our opinion the Company has in all materials respects internal financialcontrols systems over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2017 based on internalcontrol over financial reporting criteria established by the company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India. Internal Financial controls systems need improvement.
| ||For D. BASU & CO. |
| ||Chartered Accountants |
| ||Firm Registration No. 301111E |
|Place: Kolkata ||MALAY BHADURI FCA |
|Date: 30/05/2017 ||Membership/C.P. No.:012724 |