THE MEMBERS OF
KUMAKA INDUSTRIES LIMITED
We have audited the accompanying Financial Statements of KUMAKA INDUSTRIES LIMITED("the company") which comprises the Balance Sheet as at 31st March 2017 and TheStatement of Profit and Loss and Cash flow Statement for the year then ended and a summaryof significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's 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 the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal Financialcontrol that were operating efectively 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 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 true and fair view in order to design audit procedures thatare appropriate in the circumstances but not for the purpose of expressing an opinion onwhether the company has in place an adequate internal financial control system overfinancial reporting and the operating effectiveness of such control. 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 the overallpresentation 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 aforesaid Financial statements give the information required by the Actin the manner 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 31stMarch 2017 and its Loss and its cash flows for the year ended on that date.
Emphasis of Matters
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 statement on the matters specified in paragraphs 3 and4 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 Statements dealt withby this Report are in agreement with the books of account;
d. In our opinion the aforesaid Financial statements comply with the AccountingStandards specifed 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 31 March2017 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2017 from being appointed as a director in terms of Section 164(2) of theAct;
f. with respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014in our opinion and to thebest of our information and according to the explanations given to us:
1. The Company has disclosed the impact of pending litigations on its Financialposition in its Financial statements - Refer Additional Note No. 01 to Note No. 14 onFinancial Statements and in Para (vii)(b) of CARO 2016;
2. The company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;
3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
| ||FOR M. B. MAJMUDAR & CO. |
| ||CHARTERED ACCOUNTANTS |
|Place : VADODARA ||FIRM REGI. NO.: 105884W |
|Date : 30.05.2017 ||(MANOJ B MAJMUDAR) |
| ||(PROPRIETOR) |
| ||MEMBERSHIP NO.: 014426 |
Annexure referred to in the Audit Report
(As Per Para 3 and 4 of the Companies Auditor's Report order 2016.)
(3)(i) (a) The Company maintains proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) These fixed assets are physically verified by the management from time to time. Thematerial discrepancies do not seem to have been noticed by the management.
(c) (i) From the Lease Deed dated 29th May 1982 with Gujarat Industrial DevelopmentCorporation it is observed that the said Lease Deed for land at GIDC Ankleshwar is inthe name of former Company viz. M/s Ashok Organic Industries Ltd. (known as KumakaIndustries Ltd.) however the name is not changed as Kumaka Industries Ltd. till date. Weare informed by the management that the change of name with GIDC is under process.
(ii) For office at Ahmedabad copy of Share Certificate is in the name of M/s AshokOrganic Industries Ltd. (known as Kumaka Industries Ltd.). The Office Premises was soldduring the year under report.
(iii) Stock of Raw Materials and Finished Goods are physically verified by themanagement from time to time and material discrepancies do not seem to have been noticed.
(iv) The Company had granted unsecured loan to a former subsidiary company viz. KadakiaAlkalies and Chemicals Ltd. Rs. 5976.15 Lakhs during past years against which Rs. 976.15Lakhs are outstanding as at 31st March 2017 and had given advance to a related firm Rs.624.48 Lakhs also during the past years which is outstanding as at 31st March 2017covered in the register maintained u/s189 of the Companies Act 2013.
(a) As per the explanation given by the company because of the stringent financialcondition of the said former subsidiary company and the firm respectively Company hasneither charged nor received interest on the above unsecured loan and advance and has alsonot recovered the principal amount during the year. In our opinion the terms andconditions of grant of such loan and advance seems to be prejudicial to the interest ofthe Company however the scope of recovery of principal amount and interest thereon seemremote in case of the above entities.
(b) There is neither recovery of principal amount nor interest during the year due toreason as stated in (a) above.
(c) No steps for recovery of principal amount and interest have been taken by theCompany during the year due to reason as stated in (a) above.
(v) During the Financial year ended 31st March 2017 there are no Loans given or noinvestments are made or no guarantees are given as referred in Sections 185 and 186 of theCompanies Act 2013. However in the past years the company had given unsecured loan andhad acquired equity shares in former subsidiary company in which the key managerialpersonnel are directors and has given advance in the past years to a partnership firm inwhich relatives of a director are partners within the meaning of section 185 and 186 ofthe Companies Act 2013.
(vi) In our Opinion and according to the information and explanations given to us thecompany has not accepted deposits from the public and provisions of section 73 to 76 ofthe Act and the Rules framed there under are not applicable We are informed by theManagement that no order has been passed by the Company Law Board National Company LawTribunal or Reserve Bank of India or any Court or any other Tribunal.
(vii) Maintenance of cost records has not been prescribed by the Central Governmentunder section 148 of the Act and hence this clause is not applicable.
(viii) (a) No. According to the records of the company no delayed undisputed statutorydues outstanding for more than 6 months as at 31st March 2017 were observed during theyear under Report.
(b) The disputed statutory dues observed are as under (under litigation):-
|Particulars ||Period to which the amount relates ||Amount(Rs.) ||Forum where the dispute is pending |
|Income Tax ||A.Y.1995-96 ||3697936/- ||Mumbai High Court Maharashtra |
|Income Tax ||A.Y.1996-97 ||3035118/- ||CIT (Appeal) Mumbai |
|Income Tax ||A.Y.2012-13 ||3051500/- ||Dy.Commisioner of Income Tax Mumbai |
|Excise Matters* ||1996-97 ||9000000/- ||CESTAT(Tribunal) Ahmedabad |
|Income Tax** ||A.Y. 2014-15 ||4451160/- ||CIT (Appeals) Mumbai |
* Against the Statutory due of Rs. 9000000/- towards Excise Duty Rs. 675151/ - havebeen paid in earlier years.
** Against Income Tax Liability of Rs. 4451160/- for the Asst. Year 2014-15 Rs.250000/- have been paid during the current financial year.
(ix) The instances of default in repayment of dues to Financial Institutions or Banksor debenture holders have not been observed.
(x) Instances of money raised by way of Public issue/Follow-on offer Term Loans raisedduring the year were not observed and hence this clause is not applicable.
(xii) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the company by its officers/employeeshas been noticed or reported during the year.
(xiii) The Company has incurred Loss of Rs. 4551855/- during the year. Managerialremuneration has been paid/provided Rs. 1200000/- during the year (Excluding Directors'Sitting Fees and other expenses) as per Section 197 read with Section III of Schedule-V ofthe Companies Act 2013.
(xiv) The Company is not a Nidhi Company and hence this clause is not applicable.
(xv) Instances of transactions with the related parties as referred in sections 188 and177 of the Companies Act 2013 are as disclosed in Note No. 11(c) and 11(d) to theBalance Sheet as at 31st March 2017.
(xvi) The Company has neither made any preferential allotment nor private placement ofshares or fully or partly convertible debentures during the year and hence this clause isnot applicable.
(xvii) Instances of any non-cash transactions entered into by the Company with itsdirectors have not been observed during the year. However there were amounts received asAdvance from two persons connected with the Directors against Sale of Plot of Land totalamounting to Rs. 2623750/- which have been written back to Profit and loss Account as thesaid transaction did not materialise.
(xvii) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
4. Reasons for unfavorable /qualified answers:-
No unfavorable/qualified matter was observed during the year.
| ||FOR M. B. MAJMUDAR & CO. |
| ||CHARTERED ACCOUNTANTS |
| ||FIRM REGI. NO.: 105884W |
|PLACE : VADODARA ||(MANOJ B MAJMUDAR) |
|DATE : 30.05-2017 ||(PROPRIETOR) |
| ||MEMBERSHIP NO.: 014426 |