To the Members of M/s Gangotri Textiles Limited

REPORT ON THE FINANCIAL STATEMENTS

1. We have audited the accompanying financial statements of M/s Gangotri Textiles Limited (the Company), which comprise the Balance Sheet as at March 31,2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information,

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act’) with respect to 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 principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014.. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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

3. Our responsibility is to express an opinion on these financial statements based on our audit

4. We have taken in to account the provisions of the Act and the Rules made there under including the accounting standards and matters which are required to be included in the audit report.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the institute of Chartered Accountants of India. Those Standards and pronouncements 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion

1. In our opinion, there prevails material uncertainty related to events /conditions which individually / collectively cast significant doubts on going concern assumption.

2. The Debtors and Loans & Advances are subject to confirmation. As at advance of Rs.423 lakhs continues to be doubtful of recovery, the same has been provided for in the accounts of the company during year ended 31.03.2014. However, repeated reminders are being received from lenders for the recovery of the same.

3. The interest provisions for all loans from Banks have been worked based on the then prevailing CDR Package and not on the original sandion/revised floating rates. Consequent to the company’s non compliance with GDR package and reverting back to the original sanction, the differentials Interest that ought to have been provided for In the accounts is estimated at Rs 103.00 Crores (from 01.07.2008 to 31.03.2015) cumulatively for the above periods. The estimated loss due to the above is understated to the extent of Rs. 18 crores for the year ended 31.3.2015.

4. On examination of the books of accounts and the information and explanations given to us, the Internal control system continue to be not commensurate considering the nature of company’s business.

5. The Company has bean adopting the method of Accounting for also NETTING of balance when transactions are made with the same party. For the year ended 31.03.2015 the company has NETTED the debit and credit balances of the same party. Hence, Debtors and Creditors have got reduced by Rs. 37.59 Crores each as on 31.03.2015.

6. The State Bank of India vide its letter dated the 24.04.15 has declared company as willful defaulters and has given an opportunity to the company to submit Its representation.

7. The balances shown under Secured Loans and Balances with bank, confirmation of balance Is yet to be given by the Bankers. Hence, the balances reflected under these two heads are as per the books of account of the company.

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 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:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2015;

(ii) in the case of the statement of profit and loss, of the loss for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Other Matters

The Ministry of Corporate Affairs had on 1st April 2014, vide its General Circular No.07/2014, Dissemination of Information with Regards to the Provisions of the Companies Act, 2013, as Notified Till date vis a vis corresponding Provisions of the Companies Act, 1956, identified such sections of the Companies Act, 1956 that would cease/continue to have effect from 1st April 2014. Accordingly, in terms of the aforesaid Circular, our reporting in respect of Section 227 (3)(f) of the Companies Act, 1956, and clauses (iii), (v)(a) and (b), (vi), (viii), (xiv), (xviii) of the Companies (Auditor’s Report} Order, 2003 (dealing with Sections 49,58A, 58AA, 209(1 ){d) and 301 of the Companies Act, 1956} is only for the period beginning from 1.4.2004 till 3151 March 2015 since as per the aforementioned MCA Circular these Sections have ceased to have effect from 1sr April 2014.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2015 issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (hereinafter referred to as the ‘Order’) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that:

a. we have sought and obtained all the information and explanations which to the best of our knowledge 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 the Company so far as it appears from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.

e. on the basis of written representations received from the directors as on 31 March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015, from being appointed as a director in terms of section 164 (2) Act..

f. With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanation given to us.

i. The Company has disclosed the impact of pending litigations as at March 31,2015 on its financial position in its financial statements.

ii. The Company has made provision as at March 31,2015 as required under the applicable law or accounting standards for material foreseeable losses, if any, on long term contracts including derivative contracts.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2015.

For THAKKER & SANG HAN I
Firm Registration No:QQ4351S
Coimbatore Chartered Accountants
28-5-2015 Aswin.C
Partner
Membership No:22204

Annexure to the Auditors’ Report

Referred to in paragraph 9 of the Independent Auditors Report of even date to the members of M/s Gangotri Textiles Limited on the financial statements as of and for the year ended 31 March 2015.

I) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

II) (a) As explained to us, inventories of the company at all its location have been physically verified at reasonable intervals by the management during the year.

(b) In our opinion, the Procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business

(c) The Company is maintaining proper records of inventory and material discrepancies, noticed on physical verification have been properly dealt with in the books of account.

III) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the registered maintained under section 189 of the Companies Act, 2013.

IV) On examination of the books of accounts and the information and explanation given to us, the internal control systems pontinous to be not commensurate considering the nature of its business.

(V) The company has not accepted any deposit from the public during the year.

(VI) We have broadly reviewed the regards maintained by the company pursuant the Rules made by the Central Government for the maintenance of the cost records under 148(1) of the Companies Act. We are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view of determining whether they are accurate or complete.

(VII) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales-tax, Wealth tax, Service tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Employees’ State Insurance, Customs duty and Excise duty except the following.

Particulars 31.03.2015 (in Rs.Lakhs) 31.03.2014 (in Rs.Lakhs)

 

Name of the Statute Year Nature of Dues Amount In Lakhs Forum where dispute Is pending Provided In the books of accounts Amount In Lakhs
TamilNadu Additional Sales Tax Act, 1970 1996-97 Additional Sales Tax 20.07 Supreme Court of India Yes 20.07
CST Acts 2002-03 TNGST, Surcharge AST, Penalty 1.82 STAT Coimbatore No 1.82
TNGST, CST Acts 2003-04 TNGST, Surcharge AST, Penalty 13.54 STAT Coimbatore No 13.54
Income Tax Act, 1961 2004-05 Interest U/S 234B/234C 5.85 ITAT Chennai No 5.85

(b) According to the records of the Company, there are no Statutory dues, which have not been deposited in account of any disputes.

c) There has been no delay in transfering unpaid divident amount, required to be trasnsfer to the Investor’s Education and Protection Fund by the Company.

(viii) The units of the company has acumuiated losses at the end of financial year. The company has incurred cash losses during the financial year and also the during the immediately preceding financial year

(ix) The company has defaulted in repayment of interest and principal to bank and financial institutions.

(x) During the year the company has not given any guarantee for loan taken from others rom bank or financial institution

(xi) The company has not optained any term loan during this year.

(xii) To the best of our knowledge and belief and according to the information explanation given to us, no fraud or by the company was noticed or reported during the year.

For THAKKER & SANG HAN I
Firm Registration No:0Q4351S
Coimbatore Chartered Accountants
28-5-2015 Aswin. C
Partner
Membership No:222Q4