INDEPENDENT AUDITORS
TO THE MEMBERS OF
CLASSIC DIAMONDS (INDIA) LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of CLASSIC DIAMONDS (INDIA)
LIMITED ("the Company"), which comprise the Balance Sheet as at 31st
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 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 referred to in Section 211(3C)
of the Companies Act, 1956 ("the Act"). This responsibility includes the design,
implementation and maintenance of internal control relevant to the preparation and fair
presentation of the financial statements that 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 in accordance with the Standards on Auditing issued by the Institute of Chartered
Accountants of India.
However, because of the matters described in the Basis for Disclaimer of Opinion
paragraph below, we were not able to obtain sufficient appropriate audit evidence to
provide a basis for an audit opinion.
Basis for Disclaimer of Opinion
1. We could not observe the counting of physical inventories in the absence of
information available and restriction placed by the Management Accordingly, we were unable
to satisfy ourselves by alternative means concerning the inventory quantities held at 31st
March, 2013 and 31st March, 2014 which are stated in the Balance Sheet at Rs.44,11,593and
Rs.44,11,593 respectively.
2. In addition, we were unable to confirm or verify by alternative means balance of
accounts receivableRs.2,957,822,918 and balance of accounts payable Rs.244,505,890 and
corresponding translation gain or loss, if any on theses balance is not recorded for the
year ended 31st March, 2014 and same matters was reported in previous year.
3. We are also unable to confirm the bank balance (including working capital facility
and overdraft) and interest payable thereon since the accounts are freezed by the
consortium of banks and by income tax authorities and as a result facility has been ceased
to be operational and same matter was reported in previous year,.
4. The Company has been unable to renegotiate its borrowings from its bankers and also
incurred loss in current year and previous year. Without such financial support there is
substantial doubt that it will be able to continue as a going concern. Consequently,
adjustments may be required to the recorded asset amounts and classification of
liabilities. The financial statements (and notes thereto) do not disclose this fact.
As a result of these matters, we were unable to determine whether any adjustments might
have been found necessary in respect of recorded or unrecorded inventories, bank balance
(including overdraft facilities) and interest payable thereon and accounts
receivable/payable and the elements making up the Statement of Profit and Loss and the
Cash Flow Statement.
Disclaimer of Opinion
Because of the significance of the matters described in the Basis for Disclaimer of
Opinion paragraph above, we have not been able to obtain sufficient appropriate audit
evidence to provide a basis for an audit opinion. Accordingly, we do not express an
opinion on the aforesaid financial statements.
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) As described in the Basis for Disclaimer of Opinion paragraph above, we were unable
to obtain all the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit.
(b) Due to the possible effects of the matters described in the Basis for Disclaimer of
Opinion paragraph above, we are unable to state whether 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 except for fixed
assets register and other matter as referred in Basis for Disclaimer of Opinion
(d) Due to the possible effects of the matters described in the Basis for Disclaimer of
Opinion paragraph above, we are unable to state whether 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) We are unable to comment on compliance of Section 274(1)(g) of the Act since none
of the directors has submitted written representations with regards to being appointed as
a director in terms of Section 274(1)(g) of the Act and consequently the same not been
taken on record by the Board of Directors.
|
For JMR & Associates |
|
Chartered Accountants |
|
Firm Reg. No. 106912W |
| Place: Mumbai |
(CA. Nikesh Jain) |
| Date : 30th May, 2014 |
Partner |
|
Membership No: 114003 |
Annexure to Independent Auditors Report Referred to in paragraph under the heading of
"Report on Other Legal and Regulatory Requirements" of our Report of even date
i. In respect of its fixed assets:
a) The company has not maintained proper records showing full particulars including
quantitative details and situation of its fixed assets.
b) As explained to us, the fixed assets have not been physically verified by the
management during the year. Hence, we are unable to comment on discrepancies between book
record and physical assets.
c) In the absence of fixed assets register and physical verification report of fixed
assets we are unable to comment on disposal of fixed assets
ii. In respect of its inventories:
a) As explained to us, the inventories other than those lying with outside parties were
physically verified during the year by the management at reasonable intervals. However,
records of such physical verification were not made available to us for verification.
b) In our opinion and according to the information and explanations given to us, we are
unable to comment on the procedures of physical verification in the absence of appropriate
audit evidence.
c) In our opinion and on the basis of our examination of the records, in the absence of
appropriate audit evidence, we are unable to comment on discrepancy on physical
verification of stocks by the management if any.
iii. d) According to information and explanations given to us, 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 Act. As the Company has not granted any
loans, the clause 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the Order are not applicable.
e) According to the information and explanations given to us, the Company has not taken
any loans, secured or unsecured, to / from companies, firms or other parties listed in the
Register maintained under Section 301 of the Companies Act, 1956 except for interest free
loan from the Director and relative of director. The maximum amount involved during the
year was 2,49,409 and 89,313 respectively and year-end balance is 7,494 and Nil
respectively.
f) In our opinion and according to information and explanations given to us, in respect
of such interest free unsecured loans taken by the Company, the other terms and conditions
are prima facie, not prejudicial to the interest of the Company.
g) In respect of such loans taken by the Company, the principal amounts were repayable
on demand.
iv. In our opinion, and according to the information and explanations given to us,
there is an inadequate internal control system commensurate with the size of the Company
and there are no sale of goods and services during the year. There are no purchases of
inventory and fixed assets during the year.
v. 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 is in excess of Rs. 5 lakh in respect of any party,
having regard to the explanation that some of the items sold during the year where the
suitable alternative sources are not readily available for obtaining comparable
quotations. Hence, we are unable to comment on transactions have been made at prices which
are prima facie reasonable having regard to prevailing market prices at the relevant time.
vi. According to the information and explanations given to us, the Company has not
accepted any deposit from the public during the year. In respect of unclaimed deposits,
the Company has complied with the provisions of Sections 58A, 58AA or any other relevant
provisions of the Companies Act, 1956.
vii. According to the information and explanations given to us the Company does not
have internal audit system.
viii. The Central Government has not prescribed maintenance of cost records under
clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for trading
activities. Accordingly, this para is not applicable to the Company.
ix. According to the information and explanations given to us in respect of statutory
dues:
a) The Company has not deposited undisputed statutory dues, including Provident Fund,
Investor Education & Protection Fund, and Employees State Insurance, Income-tax,
Sales-tax, Wealth-tax, Custom Duty, Excise Duty, Cess and other material statutory dues
applicable to it with appropriate authorities.
b) There are undisputed amounts payable in respect of certain statutory dues for a
period of more than six months from the date they became payable as given below:
| Name of the statutory dues |
For the financial year |
Amount (Rs.) |
| Profession tax |
2012-13 |
43,200 |
| Employees contribution to ESIC |
Earlier years* |
31,779 |
| Employers contribution to ESIC |
Earlier years* |
58,825 |
| Income tax |
2010-11 |
39,596,893 |
| Wealth tax |
2010-11 |
14,000 |
| Property Tax |
2011-12 |
132,270 |
| Employees contribution to MLWF |
2011-12 |
14,191 |
| Value Added Tax |
2012-13 |
309,693 |
| Value Added Tax - Surat |
2011-12 |
117,107 |
| Value Added Tax - Maharashtra |
2005-06 |
59,377,769 |
| Value Added Tax - Maharashtra |
2008-09 |
12,466,008 |
| Value Added Tax - Maharashtra |
2013-14 |
82,193 |
| Value Added Tax - Maharashtra |
2012-13 |
93,572 |
| Value Added Tax - Maharashtra |
Earlier years* |
216,806 |
| Investor Education Protection Fund |
Earlier years* |
10,385 |
*year wise break up not available
c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty,
Excise Duty and Cess which have not been deposited as on 31March 2014 on account of
disputes are given below:
| Name of statute |
Nature of dues |
Forum where dispute is pending |
Period to which the amount relates |
Amount involved (Rs.) |
| Income tax act, 1961 |
Disallowances of expenses |
CIT (A) |
F.Y. 2007-08 |
53,75,640 |
| Income tax act, 1961 |
Disallowances of expenses and deductions |
CIT (A) |
F.Y. 2008-09 |
24,72,17,205 |
| Income tax act, 1961 |
Disallowances of expenses and deductions |
ITAT |
F.Y. 2009-10 |
2,05,61,740 |
xi. Accumulated losses of the Company at the end of the financial year are more than
hundred percent of its net worth. The Company has incurred cash losses during the current
financial year and in the immediately preceding financial year.
xii. In our opinion and according to the information and explanations given to us, the
company has defaulted in repayment of dues to banks amounting to Rs.3,00,64,46,069/- in
respect of loans repayable on demand. Also, the Company has failed to repay the overdraft
balance in Current Accounts with the banks amounting to Rs.13,83,08,413/-.The Company has
not defaulted in repayment of dues to financial institution. The Company has not issued
any debentures and hence, clause (xi) so far as it related to debenture holders does not
apply in the case of the Company.
xiii. In our opinion and according to the information and explanations given to us, the
Company has not granted any loans and advances on the basis of security by way of pledge
of shares, debentures and other securities.
xiv. In our opinion, and according to the information and explanations given to us, the
nature of activities of the Company does not attract any special statue applicable to chit
fund and nidhi / mutual benefit fund / societies. Accordingly, clause 4 (xiii) of the
Order is not applicable to the Company.
xv. In our opinion, the Company is not dealing in or trading in shares, securities,
debentures or other investments. Accordingly, the provisions of paragraph 4 (xiv) of the
Order are not applicable to the Company.
xvi. In our opinion and according to the information and explanations given to us, the
terms and conditions on which the Company has given corporate guarantees to banks or
financial institutions on behalf of associated concerns are prejudicial to the interests
of the Company.
xvii. In our opinion and according to the information and explanations given to us, the
Company has not raised any term loan during the current period consequently the para of
the order is not applicable.
xviii. In our opinion and according to the information and explanations given to us and
on an overall examination of the Balance Sheet, we are unable report on utilisation of
short term fund for long term purpose as referred in basis of disclaimer of opinion since
we do not have appropriate audit evidence for classification and recoverability of certain
amounts.
xix. The Company has not made any preferential allotment of shares to parties or
companies covered in the Register maintained under Section 301 of the Companies Act, 1956,
during the year.
xx. The Company has not issued any debentures. Accordingly, clause (xix) of paragraph 4
of the Order is not applicable in the case of the Company.
xxi. The Company has not raised any money by public issue during the year.
xxii. 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 JMR & Associates |
|
Chartered Accountants |
|
Firm Reg. No. 106912W |
|
(CA. Nikesh Jain) |
| Place: Mumbai |
Partner |
| Date: 30th May, 2014 |
Membership No: 114003 |
+91-9892691696
