To the Members of VANASTHALI TEXTILE INDUSTRIES LIMITED,
1. We have audited the attached Balance Sheet of Vanasthali Textile Industries Ltd asat 31st March 2012, the Statement of Profit and Loss and also the Cash Flow Statement forthe period ended on that date, annexed thereto. These financial statements are theresponsibility of the Company's Management. Our responsibility is to express an opinion onthese financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally acceptedin India. These standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by Management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies Auditor's Report Order, 2003 (Amendment Order 2004)issued by the Central Government in terms of sub-section (4A) of Section 227 of theCompanies Act 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that:
(i) We have obtained all the information and explanations, which to the best of ourknowledge and belief, were necessary for the purposes of our audit;
(ii) 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;
(iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealtwith by this report are in agreement with the books of account;
(iv) As per written representation received, none of the directors is disqualified ason 31st March 2012, from being appointed as a director in terms of section 274(1) (g) ofCompanies Act, 1956.
(v) In our opinion, the Balance Sheet, Statement of Profit and Loss and the cash flowstatement dealt with by this report comply with the Accounting Standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956 subject to:
a) the non provision of leave encashment as required by revised AS-15 on employeebenefits.
b. ) Refer note no. 23.5 of Notes to Accounts wherein the company has filed itsreference with BIFR arid
in expectancy of reliefs and concessions in the form of financial restructuring of loanliabilities and interest waivers, the management is of the view that company's financialposition will improve, the accounts have been prepared on going concern basis & noadjustments are required to the carrying amount of fixed assets on account of impairmentas required by AS-28.
c. ) Refer note no. 23.7 recognition of subsidiary under TUF for Rs 124.65lacs for theyear & accumulated
balances of Rs 316.44lacs, in spite of default in payment of interest to banks.
(vi) In our opinion and to the best of our information and according to theexplanations given to us, the said financial statements subject to note no 23.3 of notesto accounts regarding non confirmation of
balances with suppliers, customers other creditors, recoverable advances and loanfacility from IDBI & balance with HDFC banks have been taken as per books, and aresubject to confirmation/reconciliation, note no 23.6 regarding inventory valuation whichis being taken solely on the basis of report of HARDICON LTD. & note no 23.8 regardingwithhold, set off & adjustment of 1577.79 lacs from assets & correspondingliabilities as per terms of Share Purchase Agreement (SPA) and read together with notes toaccounts give the information required by the Companies Act 1956
In the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India :-
(a) In the case of Balance Sheet, of the state of affairs of the Company as at 31stMarch 2012;
(b) In the case of Statement of Profit and Loss, of the losses for the period endedon that date;
(c) In the case of the Cash Flow Statement of the cash flows for the year ended on thatdate. -
For Jain Raj Associates
New Delhi, September 3rd, 2012
Referred to in paragraph 3 of our report of even date.
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) Physical verification of fixed assets was carried out during the year by themanagement in accordance with the companies' policy of verifying the assets once in threeyears. In our opinion the frequency of verification is at reasonable intervals. Nomaterial discrepancies were noticed between the records and physical verification.
(c) During the period, the Company has not disposed off any substantial part of FixedAssets and hence, does not affect the going concern assumption to that extent.
(ii) (a) The inventory of finished goods, semi finished, raw materials, stores andspare parts have been
physically verified during the period by the Management except finished & semifinished goods for which provision for devaluation has been made in the books of accounts.
(b) The procedures of physical verification of inventories followed by the Managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) On the basis of our examination of the records of inventory and the report onInventory valuation conducted by M/s HARDICON Ltd., there was material discrepanciesnoticed in valuation & realiseability thereof. Necessary Provision has been made inthe Profit & Loss Accounts (Refer note no. 23.6.)
(iii) (a) According to the information and explanation given to us, the Company has notgranted any loans
secured or unsecured to companies/parties covered in the registered maintained undersection 301 of the Companies Act'1956.
(b) Clause 'b' is not applicable.
(c) Clause 'c' is not applicable.
(d) Clause'd' is not applicable.
(e) According to the information and explanation given to us, the Company has takenunsecured loan of Rs 564.16 Lacs (on account of supply of plant & machinery) fromcompanies/parties covered in the register maintained under Section 301 of the CompaniesAct, 1956.
(f) As informed to us no interest is payable on the above stated loan, hence it is notprime facie prejudicial to the interest of the company.
(g) As informed to us the lender has not demanded the repayment of this loan which maybe part of Capital Subscription from Promoters during financial restructuring.
(iv) As per the information and explanations given to us, certain contracts of job work& sale of goods are of specialized nature for which comparable prices are notavailable. Read with above in our opinion, there is an adequate internal control procedurecommensurate with the size of the Company and the nature of its business for the purchaseof inventory and fixed assets and for sale of goods. Further, on the basis of ourexamination of the books of records of the company, carried out in accordance with thegenerally accepted auditing practices in India, we have neither come across nor have webeen informed of major weaknesses in the aforesaid internal control procedures.
(v) (a) According to the information and explanations given to us, we are of theopinion that during the period,
the transactions that were required to be entered into the register maintained undersection 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations given to us,having regards to the comments in (v)(a) above, the transactions made in pursuance ofcontracts or arrangements entered in the register maintained under section 301 of theCompanies Act, 1956 and exceeding the value of the five lakh rupees entered into duringthe Financial Year, because of specialized nature of items involved & absence of anycomparable prices, we are unable to comment, whether the transactions were made atprevailing market prices at the relevant time.
(vi) As per information and explanation given to us, the Company has not accepted anydeposits during the year from public to which the provisions of Section 58A, 58AA of theCompanies Act, 1956 and Rules framed there under apply.
(vii) The company has an internal audit system which needs to be strengthened.
(viii) As per the information and explanations given to us, cost records prescribed bythe Central Government under section 209(1) (d) of the Companies Act, 1956 are beingmaintained. However, we have not carried our detailed verification of these records.
(ix) In respect of Statutory Dues
(a) As per the books and records examined by us and information & explanationsgiven to us, the company has not been regular in depositing Provident Fund, Income-Tax,Sales-Tax, and other statutory dues, wherever applicable, with the appropriate authoritiesduring the period.
Details of Undisputed Statutory dues are given below:- Vanasthali
|PARTICULARS ||AMOUNT |
| ||(In Rs) |
|Employees Contribution in PF ||3,90,283 |
|TDS ||3,23,881 |
|Employees Contribution in ESI ||51207 |
|Central Sales Tax ||44,247 |
|Service Tax Payable on Freight ||23.320 |
|Service Tax Payable on Commission ||9,999 |
|TCS Payable ||8,735 |
|TOTAL ||8,51,672 |
Detail of the dues of Sales Tax/ Income Tax/ Service Tax/ Excise duty/ cess/ Customwhich has not been deposited or account of dispute are given below:
|Name of the Statue pending ||Forum where case is ||Nature of Dues ||Period of Dispute ||Amount (Rs.) |
|Central Excise Act, 1944 ||Supreme Court ||Excise Duty ||2008-09 ||95,042,002 |
|Central Excise Act, 1944 ||Supreme Court ||Excise Duty ||2008-09 ||9,702,603 |
|Central Excise Act, 1944 ||High Court ||Excise Duty ||2008-09 ||386,843 |
|Central Excise Act, 1944 ||High Court ||Excise Duty ||2008-09 ||490,222 |
VANASTHALI TEXTILE INDUSTRIES LIMITED
|Central Excise Act, 1944 ||High Court ||Excise Duty ||2008-09 ||486,856 |
|Central Excise Act, 1944 ||High Court ||Excise Duty ||2008-09 ||473,071 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||2008-09 ||757,610 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||2008-09 ||333,018 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||1998-99 ||118,635 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||1998-99 ||107,312 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||1998-99 ||63,474 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||1998-99 ||81,780 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||1999-2000 ||131,880 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||2005-06 ||592,000 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||2006-07 ||2,829,218 |
|Central Excise Act, 1944 ||CESTAT ||Excise Duty ||2008-09 ||36,432 |
| || || ||111,632,956 || |
|Service Tax || || || || |
|Finance Act 1994 (Chapter V) ||CESTAT ||Service Tax ||2007-08 ||229,732 |
|Finance Act 1994 (Chapter V) ||CESTAT ||Service Tax ||2005-06, 2006-07 ||412,073 Finance Act |
|1994 (Chapter V) ||CESTAT ||Service Tax ||2006-07 ||444,050 Finance Act |
|1994 (Chapter V) ||CESTAT ||Service Tax ||2007-08 ||193,825 Finance Act |
|1994 (Chapter V) ||CESTAT ||Service Tax ||2006-07 ||109,606 Finance Act |
|1994 (Chapter V) ||CESTAT ||Service Tax ||2007-08 ||498,561 Finance Act |
|1994 (Chapter V) ||Commissioner Appeal ||Service Tax ||2006-07 ||675,175 |
| ||Jaipur || || || |
|Finance Act 1994 (Chapter V) ||Commissioner Appeal ||Service Tax ||2007-08 ||718,684 |
| ||Jaipur || || || |
|Finance Act 1994 (Chapter V) ||Commissioner Appeal ||Service Tax ||2007-08 ||6,402,836 |
|Finance Act 1994 (Chapter V) ||Jaipur AC Alwar ||Service Tax ||2007-08 ||366,745 |
| || || || ||10,051,287 |
|Income Tax || || || || |
|Income Tax 1961 ||High Court, Delhi ||Income Tax ||2005-06 ||25,10,000 |
|Income Tax 1961 ||Appeal to CIT(A) ||Income Tax ||2007-08 ||2,31,92,319 Income |
|Tax 1961 ||Appeal to CIT(A) ||Income Tax ||2008-09 ||2,73,33,723 |
| || || || ||5,30,36,042 ' |
(x) The Company's accumulated losses at the end of the financial year exceed 50% of NetWorth. Further the company has incurred cash losses during this financial year andimmediately preceding financial year.
(xi) In our opinion and according to the information and explanations given to us, thecompany has defaulted in the repayment of dues to Financial Institutions or Banks furtherthe company is on default from last three years and the amount of default isRs.82,27,64,226/-.
|Name of Borrower ||Amount(INR) ||Default Date |
|Term Loan || || |
|Federal Bank ||7,12,47,295 ||31-03-2011 |
|Oriental Bank of Commerce ||13,31,10,808 ||31-03-2011 |
|Syndicate Bank ||91,01,863 ||31-03-2011 |
|IDBI ||24,99,01,847 ||31-03-2011 |
|Working Capital || || |
|Crystallized Bills ||6,74,86,852 ||31-03-2011 |
|Federal Bank ||4,06,95,298 ||31-03-2011 |
|ABIB ||8,40,46,011 ||31-03-2011 |
|Oriental Bank of Commerce ||9,14,26,989 ||31-03-2011 |
|SBBJ ||1,84,36,895 ||31-03-2011 |
|Bank Overdraft || || |
|Oritental Bank of Commerce & Others ||5,73,10,368 ||31-03-2011 |
(xii) According to the information and explanations given to us, the Company has notgranted any loans or advances on the basis of security by way of pledge of shares,debentures or other securities.
(xiii) The provisions of special statute applicable to Chit Fund, Nidhi or MutualBenefit Fund/ Society are not applicable to the Company.
(xiv) According to the information and explanations given to us, and according therecords as produced, in our opinion, the company has maintained proper records oftransactions and contracts relating to dealing and trading in shares and timely entrieshave been made therein. Further the investments wherever made have been held in the nameof the company only.
(xv) According to the information and explanations given to us, the Company has notgiven any guarantees for loans taken by others from banks or financial institutions.
(xvi) We are informed that company has not obtained any term loan during the year.According to the information and explanations given to us and on an overall examination ofBalance Sheet of the Company, we report that no funds raised on Short-Term basis have beenused for Long-Term investment.
(xvii) The company has not made any preferential allotment of shares during the year.
(xviii) The company has not made issued any debentures during the year.
(xix) There were no public issues during the year.
(xx) The company has not made issued any debentures during the year.
During the course of our examination of the books and records of the company carriedout in accordance with the generally accepted auditing practices in India, we have neithercome across any instance of fraud on or by the company, noticed and reported during theyear, nor have we been informed of such case by the management.
For Jain Raj Associates FirmNo007535N
CA. RK. Jain
New Delhi, Dated: 3rd September, 2012