INDEPENDENT AUDITO REPORT
TO MEMBERS OF CABTO INDIA LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of CABOT INDIA LIMITED
("the Company"), which comprise the Balance Sheet as at 31 March 2014, 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.
Managements Responsibility for the Financial Statements
The Companys 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 flows of the Company in accordance with the Accounting Standards notified under
the Companies Act, 1956 ("the Act") (which continue to be applicable in respect
of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th
September, 2013 of the Ministry of Corporate Affairs) 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
auditors 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 Companys 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 Companys 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 audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us, 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 31
March, 2014;
(b) in the case of the Statement of Profit and Loss, of the profit 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 25 (a) to the Financial Statements regarding the Companys
intention to continue to serve the market after discontinuance of its manufacturing
operations on 10 June, 2010 by continuing trading operations, providing a range of
services to the Cabot Group and the Holding Companys commitment to provide the necessary
level of financial and other support to the Company to continue operations. The Financial
Statements have accordingly been prepared on a going concern basis.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors 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) 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.
(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.
(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement comply with the Accounting Standards notified under the Act (which continue
to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General
Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).
(e) On the basis of the written representations received from the directors as on 31
March, 2014 taken on record by the Board of Directors, none of the directors is
disqualified as on 31 March, 2014 from being appointed as a director in terms of Section
274(1)(g) of the Act.
| For Deloitte Haskins & Sells LLP |
Chartered Accountants |
| (Firm Registration No. 117366W/W-100018) |
| Rakesh N. Sharma |
Partner |
| (Membership No.: 102042) |
| Place : Mumbai |
| Date : 10th September, 2014 |
ANNEXER TO THE AUDITORSREPORT
(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements
section of our report of even date)
(i) Having regard to the nature of the Companys business/activities/result during the
year, clauses (vi), (viii), (xii), (xiii), (xiv), (xv), (xviii), (xix) and (xx) of
paragraph 4 of the Order are not applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of its fixed assets.
(b) All the fixed assets were physically verified during the year by the Management.
According to the information and explanations given to us, no material discrepancies were
noticed on such verification.
(c) The fixed assets disposed off during the year, in our opinion, do not constitute a
substantial part of the fixed assets of the Company and such disposal has, in our opinion,
not affected the going concern status of the Company. Refer note 25(a) to the Financial
Statements.
(iii) In respect of its inventories:
(a) As explained to us, inventories were physically verified during the year by the
management at reasonable intervals.
(b) In our opinion and according to the information and explanations given to us, the
procedures of physical verification of inventories followed by the management were
reasonable and adequate in relation to the size of the Company and the nature of its
business.
(c) In our opinion and according to the information and explanations given to us, the
Company has maintained proper records of its inventories and no material discrepancies
were noticed on physical verification.
(iv) The Company has not granted any loans, secured or unsecured to companies, firms or
other parties covered in the register maintained under Section 301 of the Companies Act,
1956 ("the Act").
(v) In respect of loans, secured or unsecured, taken by the Company from companies,
firms or other parties covered in the Register maintained under Section 301 of the
Companies Act, 1956, according to the information and explanations given to us:
(a) The Company has taken loans from a party in earlier year. At the year end, the
amount outstanding was Rs. 58,59,65,000. The maximum balance outstanding during the year
was Rs. 58,59,65,000.
(b) The rate of interest and other terms and conditions of such loan are in our
opinion, prima facie, not prejudicial to the interests of the Company.
(c) The Company has been regular in payment of interest. In respect of principal amount
there has been delay in payment, which has been paid subsequently.
(vi) In our opinion and according to the information and explanations given to us, some
of the items purchased are of special nature and suitable alternative sources are not
readily available for obtaining comparable quotations, there is an adequate internal
control system commensurate with the size of the Company and the nature of its business
with regard to purchases of inventory and fixed assets and the sale of goods and services.
During the course of our audit, we have not observed any major weakness in such internal
control system.
(vii) In respect of contracts or arrangements entered in the Register maintained in
pursuance of Section 301 of the Companies Act, 1956 to the best of our knowledge and
belief and according to the information and explanations given to us:
(a) the particulars of contracts or arrangements referred to in Section 301 that needed
to be entered in the register maintained under the said Section have been so entered.
(b) Where each of such transaction (excluding Loans reported under paragraph (v) above)
is in excess of Rs. 5 lakhs in respect of any party, having regard to our comments in
paragraph (vi) above, the transactions have been made at prices which are prima facie reasonable
having regard to the prevailing market prices at the relevant time, other than certain
purchases which are of a special nature for which comparable quotations are not available
and in respect of which we are, therefore, unable to comment if the transactions have been
carried out at prices having regard to the prevailing market prices at the relevant time.
(viii) In our opinion, the internal audit function carried out during the year by a
firm of Chartered Accountants appointed by the Management has been commensurate with the
size of the Company and the nature of its business.
(ix) According to the information and explanations given to us in respect of statutory
dues:
(a) The Company has generally been regular in depositing undisputed statutory dues,
including Provident Fund, Income-tax, Sales tax, Customs Duty, Service Tax, Cess and other
material statutory dues applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund, Income-tax,
Sales tax, Customs Duty, Cess and other material statutory dues in arrears as at 31 March,
2014 for a period of more than six months from the date they became payable except in case
of service tax dues, details of which are as below.
| Name of the Statue |
Nature of Dues |
Amount (Rs.) |
Period to which amount relates |
Due Date |
Date of payment |
| Central Excise Law |
Service Tax |
2,37,170 |
F.Y. 2011-12 |
Various dates |
Subsequently paid on 26 June, 2014 by the Company under Service Tax Voluntary
Compliance Encouragement Scheme, 2013 |
| Central Excise Law |
Service Tax |
65,61,322 |
FY 2012-13 |
Various dates |
|
(c) Detail of due of Service Tax which have not been deposited as at 31 March, 2014 on
account of disputes are given below:
| Name of the Statue |
Nature of Dues |
Amount (Rs.) |
Period to which amount relates |
Forum where dispute is pending |
| Central Excise Law |
Service Tax |
1,29,97,489 |
F.Y. 2006-07 to F.Y. 2010-11 |
Commissioner (Adjudication) |
(x) The accumulated losses of the Company as at 31 March 2014 have exceeded fifty per
cent of its net worth. The Company has not incurred cash losses during the financial year
covered by our audit and also in the immediately preceding financial year.
(xi) According to the information and explanations given to us, the Company has not
defaulted in the repayment of dues to banks.
(xii) To the best of our knowledge and belief and according to the information and
explanations given to us, in our opinion, term loans availed were applied for the purpose
for which they were obtained.
(xiii) In our opinion and according to the information and explanations given to us,
and on an overall examination of the Balance Sheet of the Company, we report that funds
raised on short-term basis have, prima facie, not been used during the year for
long-term investment.
(xiv) To the best of our knowledge and according to the information and explanations
given to us, no fraud by the Company and no material fraud on the Company has been noticed
or reported during the year.
| For Deloitte Haskins & Sells LLP |
Chartered Accountants |
| (Firm Registration No. 117366W/W-100018) |
| Rakesh N. Sharma |
Partner |
| (Membership No.: 102042) |
| Place : Mumbai |
| Date : 10,h September, 2014 |
+91-9892691696
