INDEPENDENT AUDITORS
TO THE MEMBERS OF
ASIAN ELECTRONICS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of ASIAN ELECTRONICS LIMITED
("the Company"), which comprise the Balance Sheet as at 31st March, 2013, the
Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a
summary of the significant accounting policies and other explanatory information, in which
are incorporated the unaudited Returns for the year ended on that date of PAL Technology
Division, LMD Division and SMR Division.
Management’s Responsibility for the Financial Statements
The Management is responsible for the preparation of these financial statements that
give a true and fair view of the financial position, financial performance and cash with
the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956
("the Act") and in accordance with the accounting principles generally accepted
in India. This responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation of the financial statements
that give a true and fair view and are free from material misstatement, whether due to
fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
the disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the Company’s preparation and fair
presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control. An audit also includes evaluating
the appropriateness of the accounting policies used and the reasonableness of the
accounting estimates made by the Management, as well as evaluating the overall
presentation of the financial statements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our qualified audit opinion
Basis for Qualified Opinion
Attention is invited to the following:
i. Note No. 30 regarding transfer of related loans and debentures of ESCO and Project
Division aggregating to Rs. 14,279.61 Lacs to two wholly owned subsidiaries. The Lenders
have refused to give their approval and have informed the company not to proceed with
hiving off of the Assets and not to transfer the Loans / Debentures to the two
subsidiaries. Although the Loans / Debentures aggregating to Rs. 14,279.61 Lacs granted by
Banks/Financial Institutions to the Company are not reflected in the Books of Account, the
Company continues to be liable to the lenders for the Loans / Debentures transferred to
the subsidiary companies. Also, the Company has not provided interest on the above Loans /
Debentures for the year under review. On the basis of information available to us, we are
unable to form an opinion in this matter and unable to opine on the fall in the value of
Investments in the subsidiary companies amounting to Rs 6303.49 Lacs shown under
Investment Suspense in Note No. 10.
ii. Note Nos. 31 to 33 regarding Stock Options granted to Directors and Employees.
Since the Company has not ascertained the fair value of the Options granted, impact of the
same on the Proforma Loss, Proforma basic earnings per share and Proforma diluted earnings
per share is not ascertainable. Also the Company has not complied with the Securities and
Exchange Board Of ofthe Companyinaccordance India (Employee Stock Option Scheme And
Employee Stock Purchase Scheme) Guidelines, 1999.
iii. Note No. 35, wherein as explained, LIC NOMURA Mutual Fund and SBI Factors Limited
had filed petitions in The Bombay High Court for winding up of the company for non-payment
of their dues. In case of the dues to SBI Factors Limited, the dues were supposed to be
paid in the financial year 2012-13, where there is a delay and the company is likely to
pay in the coming months. The other lenders are being addressed under One Time Settlement.
Upon settlement of the matters amicably with the lenders including LIC Nomura Mutual Fund,
the consent terms will be filed. Also Bank of India has served upon the Company a Notice
under Section 13(2) of the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Act, 2002 for repayment of dues. The said notice has been set
aside by DRT and is now being challenged in appeal by the Bank. Other Banks have also
asked the Company for repayment of their dues and also issued SARFAESI notices.
iv. Note No. 37, wherein consequent to review made by the management the following are
the observations:
a. Diminution in the value of Investments in certain companies of Rs. 4,507.47 Lacs not
reflected in the Financial Statements which is not in accordance with Accounting Standard
- 13 "Accounting for Investments" referred to in Section 211(3C) of the Act .
b. Loans aggregating to Rs 22,399.68 Lacs have been recalled by the banks, due to
default in repayment of the principal and interest amounts. Interest aggregating to Rs.
2,835.95 Lacs approx, has not been provided on these loans for the year ended 31.03.2013
and consequently loss for the year has been understated to the same extent. Also no
interest has been provided on account of delays in payment of various statutory dues like
Tax Deducted at Source, Service Tax, ESIC, Customs Duty, Sales Tax, Provident Fund etc.
amount whereof is not ascertainable. Of the above, balances aggregating to Rs. 7,657.83
Lacs have not been confirmed / reconciled. The Company has approached the Banks for One
Time Settlement of the Dues. Consequently the aggregate liability due to these Banks is
not ascertainable.
c. Trade Receivables considered good includes Rs. 9,979.50 Lacs of old
Outstanding’s which may be doubtful of recovery.
d. Old Debit Balances of Rs. 5,901.13 Lacs included in Loans and Advances and old
unreconciled debits in certain Bank Accounts which may not be recoverable / realizable.
e. Interest amounting to Rs. 63.55 Lacs approx, has not been provided on Public
Deposits for the year including on Deposits which have matured and are claimed but have
not been paid as on 31st March 2013 amounting to Rs. 258.62 Lacs and consequently loss for
the year has been understated to the same extent.
Consequently, although the above related items of assets have been shown as Considered
Good, no provision has been made for the same.
v. Managerial remuneration of Rs 17.99 Lacs paid during the year to the Executive
Director is subject to the approval of the Central Government.
vi. Note No. 40 wherein Management has stated that Impairment of the Company’s
assets and impact thereof on the loss for the year has not been ascertained. Also certain
Fixed Assets are no longer under the control of the Company for the reasons stated in Note
No. 35. Hence we are unable to ascertain as to whether there is any impairment in line
with Accounting Standard - 28 "Impairment of Assets" referred to in Section
211(3C) of the Act.
In view of the above, we are unable to express an opinion on the recoverability /
realizability of the above mentioned items, the impact of the same on the Loss for the
year as well as the future viability of the Company as a ‘going concern’.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations
given to us, except for the effects of the matter described in the Basis for Qualified
Opinion paragraph, the aforesaid financial statements give the information required by the
Act in the manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st
March, 2013;
(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the
year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the
year ended on that date.
Emphasis of Matter:
We draw attention to Note Numbers 38 and 41 regarding Unsecured Interest Free Loans
received from certain parties aggregating to Rs. 131.50 Lacs and Balances of Trade
Receivables, Loans and Advances and Trade Payables which are subject to the effects of
which are at present unascertainable.
Attention is also drawn to Note No. 39 regarding non availability of Sales Invoices
along with relevant corresponding documents for a part of the year as the same are in the
custody of the Government Authorities.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2003 ("the
Order") issued by the Central Government in terms of Section 227(4A) of the Act, we
give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the
Order.
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 our
knowledge and belief were necessary for the purposes of our audit.
(b) Except for the effects of the matter described in the Basis for Qualified Opinion
paragraph, in our opinion proper books of account as required by law have been kept by the
Company so far as it appears from our examination of those books and proper returns
adequate for the purposes of our audit have been received from the branches not visited by
us, except for the financial statements of PAL Technology Division, LMD Division and SMR
Division which have not been audited by branch auditors. Therefore, we are unable to
express an opinion on the same.
(c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement
dealt with by this Report are in agreement with the books of account and with the returns
received from the branches not visited by us.
(d) Except for the effects of the matter described in the Basis for Qualified Opinion
paragraph, in our opinion, the Balance Sheet, the Statement of Profit and Loss and the
Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of
the Act.
(e) As the Company has failed to repay its Public Deposits and interest thereon on the
due dates, and such failure has continued for a period of over one year, all the directors
are disqualified as on March 31, 2013 from being appointed as directors in any other
public company, under clause (g) of sub-section (1) of Section 274 of the Companies Act,
1956. Refer Note No. 37(ii)(a).
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For SORAB S. ENGINEER & CO. |
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Chartered Accountants and reconciliations, Firm Registration No. 110417W |
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CA N.D. Anklesaria |
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(Partner) |
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(Membership No. 10250) |
| Place : Mumbai. |
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| Date : 30th May, 2013 |
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+91-9892691696
