TO THE MEMBERS OF VTX INDUSTRIES LIMITED
Report on Financial Statements
We have audited the accompanying financial statements of VTX Industries Limited("The Company") which comprise the Balance Sheet as at March 31 2014 and theStatement of Profit and Loss and Cash Flow Statement for the year ended and a summary ofsignificant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position financial performance and cash flows of theCompany in accordance with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act 1956 ("the Act") read with the GeneralCircular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairsin respect of section 133 of the Companies Act 2013. This responsibility includes thedesign implementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due 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. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether 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 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 control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made bymanagement as well 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.
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:
a) in the case of the Balance Sheet of the state of affairs of the Company as at March31 2014;
b) in the case of the Statement of Profit and Loss of the losses 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.
Emphasis of Matter:
We draw attention to Note No.40 of the statement which indicates that the company hasincurred a net loss of Rs.23696.51 Lacs during the year ended March 31 2014 and as ofthat date the Company's total liabilities exceeds its total assets by Rs.14417.02 Lacs.These conditions along with other matters set forth in Note No.43 indicates the existenceof the material uncertainty regarding the Company's ability to continue as a goingconcern. Attention is also drawn to the fact explained by the management that necessaryefforts are being taken for revival of the unit. We have not qualified our opinion inrespect of this matter.
We draw attention to Note No.41 of the statement that balances under Trade ReceivablesOther Current and Non Current Assets Loans & Advances Trade Payables Other CurrentLiabilities and Long term and short term borrowings from Banks and financial institutionsare subject to confirmation and reconciliation if any. We have not qualified our opinionin respect of this matter.
We draw attention to Note No.42 to the financial statements regarding adoption ofdepreciation rates applicable to continuous process plant in respect of plant andmachinery of spinning and processing units and wind mills which is a technical matter. Dueto this policy adopted by the company the depreciation for the year is lowered byRs.287.21 Lacs (PY Rs.488.01 Lacs) with consequential effect on the loss for the year andalso on reserves and surplus. We have not qualified our opinion in respect of this matter.
1. As required by the Companies (Auditor's Report) Order 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 4 and5 of the Order.
Report on other Legal and Regulatory Requirements:
2. As required by section 227(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 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 Balance Sheet Statement of Profit and Loss and Cash FlowStatement comply with the Accounting Standards referred to in subsection (3C) of section211 of the Companies Act 1956 read with the General Circular 15/2013 dated 13h September2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act2013;
e) On the basis of written representations received from the directors as on March 312014 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2014 from being appointed as a director in terms of clause (g) ofsub-section (1) of section 274 of the Companies Act 1956.
f) Since the Central Government has not issued any notification as to the rate at whichthe cess is to be paid under section 441A of the Companies Act 1956 nor has it issued anyRules under the said section prescribing the manner in which such cess is to be paid nocess is due and payable by the Company.
For Suri & Co.
Chartered Accountants Firm Regn. No: 004283S
| ||M. Sivaram |
|Place : Coimbatore ||(Partner) |
|Date : 28.06.2014 ||Membership No. :211916 |
ANNEXURE TO THE AUDITORS' REPORT
The Annexure referred to in paragraph 1 of our report of even date to the members ofVTX Industries Limited of the accounts of the company for the year ended 31stMarch 2014:
1. In respect of its fixed assets
(a) The company is in the process of updating its fixed asset register.
(b) The fixed assets have been physically verified by the management in accordance witha phased programme of verification which in our opinion is reasonable considering thesize and nature of business. The frequency of verification is reasonable and discrepanciesnoticed on such physical verification were not material and have been properly dealt within books of account.
(c) In our opinion the company has not disposed off a substantial part of its fixedassets during the year and the going concern status of the company is not affected.
2. In respect of its inventories
(a) According to information and explanation furnished to us the inventories have beenphysically verified by the management at reasonable intervals.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.
(c) The company has maintained proper records of inventories and no materialdiscrepancies were noticed on such physical verification of inventories and otherdiscrepancies noticed have been appropriately dealt with.
3. (a) According to the information and explanations given to us and on the basis ofour examination of the books of account the Company has neither taken nor granted anyloans secured or unsecured to or from parties covered in the register maintained underSection 301 of the Companies Act 1956. Consequently the provisions of clauses iii (a) toiii (g) are not applicable.
4. In our opinion and according to the information and explanations given to us thereis an adequate internal control procedure commensurate with the size of the company andthe nature of its business for the purchase of inventories fixed assets and for the saleof goods and services. During the course of our audit we have not observed any continuingfailure to correct any major weaknesses in the internal control system.
5. a) Based on the audit procedures applied
by us and according to the information and explanations provided by the management theparticulars of contracts or arrangements referred to in section 301 of the Act have beenentered in the register required to be maintained under that section.
b) According to the information and explanation furnished to us these transactions havebeen made at prices which are reasonable having regard to the prevailing market prices atthe relevant time.
6. The Company has accepted deposits from the public within the meaning of Section 58Aof the Companies Act 1956. The company has complied with the directives issued by ReserveBank of India and the provisions of section 58A and section 58AA of the companies Act1956and the companies (Acceptance of Deposits) Rules1975With regard to the deposits from thepublic.
7. As per information & explanations given by the management the Company has aninternal audit system commensurate with its size and the nature of its business.
8. We have broadly reviewed the cost records maintained by the company pursuant to thecompanies (Cost Accounting Records) Rules 2011 prescribed by the central government undersection 209(1) (d) of the companies Act 1956 and are of the opinion that prima facie theprescribed cost records have been maintained. We have however not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.
9. (a) According to the records of the company undisputed statutory dues includingProvident Fund Investor Education and Protection Fund Employees' State InsuranceIncome-tax Sales-tax Wealth Tax Service Tax Custom Duty Excise Duty Cess to theextent applicable and any other statutory dues have generally been regularly depositedwith the appropriate authorities during the year except the following cases which areoutstanding as on 31"' March 2014 for a period of more than 6 months from the datethey became payable:
|No. ||Nature of Dues ||Amount Rs in Lakhs |
|1. ||Provident Fund ||149.58 |
|2. ||Employees State Insurance ||20.27 |
|3. ||Wealth Tax ||0.96 |
|4. ||Income Tax ||162.68 |
|5. ||Fringe Benefit Tax ||1.11 |
|6. ||Dividend Distribution Tax ||17.68 |
|7. ||Tax Deducted at Source ||17.23 |
|8. ||Tax Collection at Source ||2.19 |
|9. ||Investor Education and Protection Fund ||12.08 |
(b) There are no disputed dues which are not paid on account of Income Tax Sales TaxService Tax Custom Duty Wealth Tax Excise Duty and Cess.
10. The Company has accumulated losses at the end of the financial year it hasexceeded fifty percent of its net worth. The company has incurred cash loss during thefinancial year covered by our audit but not in the immediately preceding financial year.
11. In our opinion and according to information and explanations given to us thecompany has defaulted in repayment of its dues to financial institutions and banks in caseof working capital facilities and term loans. In case of term loans the instalments aredue from April 2012 to March 2014 of Rs 6842.29 Lacs (Rs 3699.43 Lacs towards Principaland Rs 3142.86 Lacs towards interest).
12. According to the information and explanations given to us the Company has notgranted loans and advances on the basis of security by way of pledge of shares debenturesand other securities.
13. The Company not being a chit fund Nidhi or mutual benefit society. Therequirements of clause (xiii) of Paragraph 4 of the order are not applicable to theCompany.
14. The Company is not dealing or trading in Shares securities debentures and otherInvestments. Accordingly the provisions of clause (xiv) of paragraph 4 of the order arenot applicable.
15. According to the information and explanations given to us the Company has notgiven any guarantees for loan taken by others from banks or financial institutions.
16. To the best of our knowledge and belief and according to the information andexplanation given to us the term loans availed by the company were prima facie applied bythe company during the year for the purposes for which the loans were obtained.
17. According to the information and explanations given to us and on an overallexamination of the Balance Sheet of the Company we are of the opinion that there are nofunds raised on short-term basis that have been used for long-term purposes by theCompany.
18. The Company has not made any preferential allotment of shares during the year toparties and companies covered in the register maintained u/s 301 of the Companies Act1956.
19. The Company has not issued any debentures during the year.
20. The Company has not raised any money by public issue during the year.
21 According to the information and explanations given to us we report that nomaterial fraud on or by the Company has been noticed or reported during the year.
| ||For Suri & Co. |
| ||Chartered Accountants |
| ||Firm Regn. No: 004283S |
| ||M. Sivaram |
|Place : Coimbatore ||(Partner) |
|Date : 28.06.2014 ||Membership No. :211916 |