INDEPENDENT AUDITOR
To The Members, SHREE ASHTAVINAYAK CINE VISION LIMITED
We have audited the accompanying financial statements of SHREE ASHTAVINAYAK CINE
VISION LIMITED as at 31st March 2013, which comprise of the Balance Sheet as at March
31, 2013, and the Statement of Profit and Loss, and Cash Flow Statement of the Company for
the year ended on that date annexed thereto, and a summary of significant accounting
policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give a
true and fair view of the financial position and financial performance in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies
Act, 1956. 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.
Auditor’s 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
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.
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 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 case of the Balance Sheet, of the state of affairs of the Company as at 31st
March 2013;
(ii) in case of Statement of Profit and Loss, of the loss of the Company for the year
ended on that date.
(iii) in case of cash flow statement, of cash flow of the Company for the year ended on
that date.
Emphasis of Matter
Attention is invited to Sub Note no. 6 of Note No. 31 of Annual Accounts as regards the
challenges that the Company is facing on financial front; and thus has not been able to
repay the loans, secured and unsecured, statutory dues, and other unsecured creditors. A
few parties have filed a suits against the Company for recovery of debts including winding
up of the Company. One of the main reasons for the financial challenges is moneys raised
by the Company through various sources are deployed in various projects of production and
distribution of films which have delayed owing to various reasons. The moneys advanced to
Indian and foreign subsidiaries of the Company are deployed by the said subsidiaries in
various production and distribution of films projects which are also delayed. The
management is hopeful to overcome the challenges that are in way. The management is of the
view that amounts realizable by the Company are larger than the liabilities of the
Company, and the present financial challenges are part of a temporary phase. Our opinion
is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central
Government of India in terms of sub-section (4A) of section 227 of the Companies Act 1956,
we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of
the said order.
As required by section 227(3) of the Act, we report that:
(a) we have obtained all the information and explanation except information as to
confimation of secured and unsecured creditors as described in sub-note no. 6 of Note No.
31 to the Annual Accounts, 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 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 Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement comply with the Accounting Standards referred to in subsection (3C) of section
211 of the Companies Act, 1956;
(e) on the basis of written representations received from the Directors, as on the date
of balance sheet, and taken on record by the board of directors, we report that none of
the directors is disqualified as on the said date from being appointed as a director in
terms of clause (g) of sub-section (1) of section 274 of the Companies Act 1956;
(f) since the Central Government has not issued any notification as to the rate at
which the cess is to be paid under section 441A of the Companies Act, 1956, nor has it
issued any Rules under the said section, prescribing the manner in which such cess is to
be paid, no cess is due and payable by the Company;
| FOR SHAH, SHAH & SHAH |
|
| CHARTERED ACCOUNTANTS |
|
| (Mehul Shah) |
|
| PARTNER |
|
| Mumbai |
May 30, 2013 |
| M. No. 049361 |
|
| FRN: 116457W |
|
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE
SHREE ASHTAVINAYAK CINE VISION LIMITED
(i) (a) The Company is maintaining proper records showing full particulars of,
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 our
opinion, this periodicity of physical verification is reasonable having regard to the size
of the Company and the nature of its assets. No material discrepancies were noticed on
such verification.
(c) The Company has not disposed substantial portion of its fixed assets during the
year; accordingly the going concern status of the Company is not affected.
(ii) As explained by the Management, the production of films requires various types,
qualities and quantities of materials, consumables and inputs in different denominations
generally pertaining to the specific films under production. Due to multiplicity and
complexity of items, many of which are used across various films under production at the
same time, it is not practicable to maintain the stock register, as the process of making
films is not amenable to it. All the purchases of films related consumable/ consumables
are treated as consumed. In view of this, the Company does not maintain inventory register
and also does not carry out physical verification of inventory. Hence information relating
to clause (ii) (a) and (b) of the order has not been given.
(iii) (a) As explained to us, the Company has granted unsecured loan(s), to Four
subsidiary companies (Three 100% Subsidiary in India and one overseas), of which loans to
four Indian subsidiaries are interest free. Aggregate amount involved as loans to all the
subsidiaries at the balance sheet date and maximum amount so involved of these loans are
as under:
| Name of the Company |
Amount at the year end |
Maximum Amount |
|
(Amount in Crore) |
(Amount in Crore) |
| Shree Ashtavinayak Cine Vision FZE (Foreign Subsidiary) |
567.78 |
595.38 |
| Shree Ashtavinayak Dream Pictures Limited |
0.01 |
0.01 |
| Shree Ashtavinayak Light Camera Action Limited |
23.84 |
23.84 |
| Shree Ashtavinayak Passion Movies Limited |
5.02 |
5.01 |
|
596.64 |
624.24 |
(b) As explained to us, the terms and conditions of unsecured loans granted by the
Company to above subsidiaries are not prima-facie prejudicial to interest of the Company.
The Management is of the view that all loans and advances granted to the subsidiaries are
good in nature; and in accounts of the respective subsidiaries, assets of such
subsidiaries, wherein the funds advanced by the Company are applied, have been considered
good in nature.
(c) As explained to us, the loans to Indian subsidiaries are demand loans; and hence
the sub-clause dealing with receipt of the principal amount and interest on regular basis
is not applicable. Loan to the foreign subsidiary and interest thereon is has fallen due
on the balance sheet date as the same was repayable along with interest after 60 months
from February 18, 2008, the date of loan agreement. The Company has reversed the interest
charged to its foreign subsidiary during the year as explained in sub-note no. 7 of Note
No. 31 of the accounts.
(d) Since the loans granted to Indian subsidiaries are in nature of demand loan(s), the
sub-clause dealing with overdue amount more than rupees one lakh is not applicable. As
regards loan to foreign subsidiary, the same has fallen due. The management has explained
that, it is taking necessary steps to recover the amount.
(e) The Company has taken interest free unsecured loans from two parties covered in the
register maintained under section 301 of the Act. The amount involved at end of the year
in aggregate was RS. 82.56 Crore, and the maximum amount involved in the transaction
during the year was RS. 82.56 Crore.
(f) Other terms and conditions of unsecured loans taken by the Company, are prima facie
not prejudicial to interest of the Company.
(g) The unsecured loans taken are repayable on demand. The Company has paid the loan
amount as and when demanded by the lender, thus, we are explained, there has been no
default on the part of the Company.
(iv) In our view, there is an adequate internal control system commensurate with the
size of the Company and nature of its business, for the purchase of inventory and fixed
assets, and for sale of goods and services, though, the Company does not maintain any
physical inventories or sales of goods owing to the nature of its business. In our view,
there has been no continuing failure to correct major weakness in internal control systems
of the Company.
(v) (a) According to the information and explanation given to us and on the basis of
representation received from the Management, the transactions that need to be entered into
register maintained under section 301 of the Companies Act, 1956 have been so entered.
(b) As explained to us, there are no transactions made in pursuance of such contracts
or arrangements made during the year, and accordingly, the clause as to entering the
transactions at prices which are reasonable having regard to the prevailing market prices
at the relevant time is not applicable.
(vi) In our opinion, the Company has complied with the provisions of section 58A and
section 58AA or any other provisions of the Companies Act, 1956 and the rules made there
under. We have been informed by the management that there has been no order passed by the
Company law Board or National Company Law Tribunal or Reserve Bank of India or any Court
or any other Tribunal on the Company with respect to compliance of the provisions of
section 58A or 58AA or any other provisions of the Companies Act 1956.
(vii) On the basis of internal audit reports broadly reviewed by us, we are of the
opinion that, the coverage of internal audit functions carried out by an Internal Auditor
of the Company is adequate and commensurate with the size of the Company and nature of its
business.
(viii) We have been informed by the management that, the Central Government has not
prescribed the method of maintenance of cost records u/s. 209 (1) (d) of the Companies
Act, 1956 to the industry to which the Company pertains.
(ix) (a) We have been informed by the management that, the Company not regular in
depositing the undisputed statutory dues with the appropriate authorities, and there have
been material arrears of outstanding dues as at the last day of this financial year for
more than six months from the date they became payable as under:
| PARTICULARS |
(Amount in Crore) |
| Tax deducted at source for Assessment Year 2012-13 |
3.19 |
| Tax deducted at source for Assessment Year 2013-14 |
1.56 |
| Income Tax for Assessment Year 2010-11 |
2.37 |
| Income Tax for Assessment Year 2012-13 |
4.83 |
| Wealth tax for Assessment Year 2012-13 |
0.05 |
| Service Tax for Financial Year 2012-13 |
0.07 |
The management has informed us that, the default with respect to income-tax for
Assessment Year 2010-11 was to be made good by making adjustment againt refund for
Assessment year 2011-12. However, this refund was adjusted against earlier Assessment
Years by the Income-tax Department. The Company has informed us that, it is taking
necessary action against this adjustment.
(b) According to the information and explanation given to us, there are no dues of
Income tax, Sales tax, Wealth Tax, and Service tax, Custom Duty, Excise Duty or Cess, as
applicable to it which have not been deposited on account of any dispute except the
following:
| PARTICULARS |
(Amount in Crore) |
Forum where the dispute is pending |
| Income Tax Assessed dues for Assessment Year 2010-11 |
13.94 |
CIT (A) |
(x) According to the information and explanation given to us, there are no accumulated
losses at end of the financial year in excess of fifty percent of net worth of the
Company. The Company has incurred cash losses during the year, but did not incur cash
losses in the immediately preceding financial year.
(xi) The Company has defaulted in repayment of dues to financial institutions and banks
for a period ranging from three months to fifteen months. As informed to us, the amount
involved in these loans on account of principal repayment and interest is Rs. 105.98
Crore.
(xii) As informed to us, the Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities; accordingly, there
is no necessity as to maintaining documents and records in this respect.
(xiii) The provisions of any special statute in respect of chit fund, nidhi, mutual
benefit funds or societies are not applicable to the Company.
(xiv) The Company has not dealt or traded in shares, securities, debentures and other
investments; hence maintenance of records for the same does not arise.
(xv) The management has informed us that, the Company has not given any guarantee for
loans taken by others from any bank or financial institutions.
(xvi) As per the explanation given by the management, the term loans were applied for
the purposes for which they were obtained. We are explained that, the Company is in to the
business of production and distribution of films, and the term loans are raised for
different projects of making films and are used inter changeably depending upon need of
the concerned project; however that, entire film production segment is treated as one
segment for the purpose of this clause. One of the working capital loans was partly
concerted into term loan of Rupees Six Crore by the bank without extending any funds under
capital restructuring plan. Hence, in our view, the same is treated as in compliance with
this clause.
(xvii) As explained to us by the management, there were no funds that were raised on a
short-term basis, which have been applied for long-term investment.
(xviii) The Company has not made any preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the Companies Act 1956.
(xix) The Company has not issued any debentures; hence no security or charges have been
created in respect of the same.
(xx) The Company has not made any public issues of shares during the year; hence
disclosure requirement as to end utilization of public issue money is not required
(xxi) As informed by the management, there has not been noticed or reported any fraud
on or by the Company during the year.
| FOR SHAH, SHAH & SHAH |
|
| CHARTERED ACCOUNTANTS |
|
| (Mehul Shah) |
|
| PARTNER |
|
| Firm Regd. No: |
116457W |
| Membership No.: |
049361 |
| Mumbai: |
May 30, 2013 |
+91-9892691696
