INDEPENDENT AUDITORS REPORT
TO THE MEMBERS OF STP LIMITED
A) Report on the financial statements
We have audited the accompanying financial statements of STP Limited, which comprise
the balance sheet as at 31st March 2014, and the statement of the 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.
B) Managements 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, financial performance and cash flows of the
Company in accordance with the Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956 ("the Act") read with the General
Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect
of section 133 of the Companies Act, 2013. 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.
C) 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
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
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.
D) Basis for Qualified Opinion
Attention is invited to following Notes:
(a) Note No. 2.4 regarding pending receipt of claims amount for the reasons stated in
the said note and we are unable to form an opinion of the same, in the opinion of the
management these are good and realizable.
(b) Note No. 2.3 regarding non provision (impact unascertained) against
overdue/disputed trade receivables and loans & advances considered good by the
management as stated in the said note and our inability to comment thereon.
We further report that overall impact of items mentioned in para (D) above or otherwise
could not be determined; hence figures of loss for the year, reserves and respective
assets and liabilities are without considering effect thereof.
E) 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 under the head "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:
a. In the case of the balance sheet, of the state of the affairs of the company as at
31st March 2014,
b. In case of the statement of the profit and loss, of the loss for the year ended on
that date, and
c. In case of the cash flow statement, of the cash flows for the year ended on that
date.
F) Emphasis of Matter
Without qualifying attention is invited to following Notes:
(a) Note No. 2.6, 2.2, 2.1(A)(1) & 2.1(A)(II) regarding pending
confirmation/reconciliation of balances of certain trade receivables, Loans &
Advances, Trade Payables and management estimation for Contingent Liabilities (note no.
2.2 & 2.1 as stated above) considered based on management estimation as stated in the
said notes.
(b) Note no. 2.8 regarding management opinion in realisation of Deferred Tax assets of
Rs.663.48 Lacs as stated in the said note.
G) Report on other legal and the regulatory requirements:
1. As required by the Companies (Auditors Report) Order, 2003("the Order")
issued by the Central Government of India in terms of sub-section (4A) of section 227 of
the Act, we give the Annexure a statement on the, manners specified in the 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 appears from our examination of those books;
c. The Balance Sheet, Profit & Loss Statement and Cash Flow Statement referred to
in this report are in agreement with the books of account;
d. In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement dealt with by this report comply with the accounting standards referred to in
Section 211(3C) of the Companies Act, 1956 read with the General Circular 15/2013 dated
13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013;
e. On the basis of the written representations received from the Directors and taken on
records by the Board of Directors, we report that none of the directors of the Company is
disqualified as on 31st March 2014 from being appointed as a Director of the Company in
terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
ForLODHA&CO.
Chartered Accountants
Firm Registration Number: 301051E
NKLodha
Partner
Membership No: 85155
Place: New Delhi
Date: 03.09.2014
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 1 of our Report of even date to the Members of STP Limited
for the year ended 31st March, 2014)
(i) (a) The company has maintained fixed assets records showing full particulars
including quantitative details and
situation of its fixed assets.
(b) As per information & explanations given to us, certain fixed assets have been
physically verified by the management as per the programme designed to cover all assets
over a period of three years which in our opinion is reasonable having regard to the size
of the company and nature of its business. No material discrepancies were noticed on such
physical verification.
(c) As per records and information and explanations given to us, fixed assets disposed
off during the year were not substantial.
(ii) (a) The inventory (other than material in transit and lying with third parties)
has been physically verified 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 inventory followed by the management are reasonable
and adequate in relation to the size of the company and the nature of its business.
(c) As per the information and explanations given to us and on the basis of the records
of inventory, we are of the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed on such verification between the physically verified
inventory and the book records were not material.
(iii) (a) The Company has not granted any loans, secured/ unsecured to companies, firms
or other parties covered in
the register maintained under section 301 of the Companies Act, 1956. Accordingly, the
provisions of clause 4 (iii) (b) to (d) of the Order are not applicable to the Company.
(e) The Company has taken unsecured demand loans from five parties covered in the
register maintained under section 301 of the Act. The maximum amount involved during the
year and the year end balance of such loans aggregate to Rs. 1555.56 lacs and Rs.531.37
lacs respectively.
(f) In our opinion and according to information and explanations given to us, the rate
of interest and other terms and conditions of such loans taken by the Company are not
prima facie prejudicial to the interest of the Company.
(g) In respect of aforesaid loans taken, the Company is regular in repayment of
principal amounts as stipulated and payment of interest, in view of payment time allowed,
is regular.
(iv) In our opinion and according to the information and explanations given to us,
having regard to the explanations that some of the items purchased/sold are of specialized
nature or where user department has shown specific preference, where, as explained,
suitable alternative sources do not exist for obtaining comparative quotations and rates
are determined considering the quality, volumes and nature of the items, there is 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 the sale of goods and services
(attention is drawn to note no. 2.5 & 2.6). Based on audit procedure performed and on
the basis of information and explanations provided by the management, during the course of
our audit we have not observed any continuing failure to correct major weaknesses in
internal control system.
(v) According to the information and explanations given to us and based upon audit
procedures performed, we are of the opinion that particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register required to be
maintained under that section; and transactions made in pursuance of such contracts or
arrangements (exceeding the value of Rs. 5 lacs in respect of each party during the
financial year), have been made at prices which are generally reasonable having regard to
the prevailing market prices at the relevant time.
(vi) According to the information and explanations given to us, the Company has not
accepted any deposits from public within the meaning of section 58A, 58AA and any other
relevant provisions of the Act and rules framed there under and directives issued by
Reserve Bank of India. We have been informed that no order has been passed by the Company
Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any
other Tribunal in this regard.
(vii) In our opinion the company has an internal audit system commensurate with the
size of the Company and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the Company pursuant
to the Rules made by the Central Government for the maintenance of cost records under
Section 209 (1) (d) of the Act in respect of the Companys products to which the said
rules are made applicable and are of the opinion that prima facie, the prescribed records
have been made and maintained. We have however not made a detailed examination of the said
records with a view to determine whether they are accurate or complete.
(ix) (a) According to the records of the company and information and explanations given
to us, the company is generally regular in depositing Provident fund, Employees State
Insurance (ESI), Investor Education and Protection Fund, Excise Duty, Wealth Tax, Custom
Duty, Sales Tax, Income Tax, Service Tax, Cess and other material statutory dues with the
appropriate authorities to the extent applicable and there are no undisputed statutory
dues payable for a period of more than six months from the date they became payable as at
31.03.2014 except professional tax ofRs.1000/- (since been paid in April, 2014).
(b) According to the records of the company and information and explanations given to
us, there are no dues in respect of Income Tax, Customs Duty, Wealth tax, Service Tax, and
Cess that have not been deposited with appropriate authorities on account of any dispute
and the dues in respect of Sales Tax and Excise Duty that have not been deposited with
appropriate authorities on account of dispute and the forum where the dispute is pending
are given below:
| Name of the Statute |
Nature of Dispute |
Amount (Rs in lacs) |
Period to which the amount relates |
Forum where dispute is pending |
| Sales Tax Act |
Sales Tax |
269.23 |
1995-96 to 2000-01 and 2008-09 to 2010-11 |
Appellate Authorities |
|
|
40.14 |
1992-94,1993-94,2000-01, 2002-03 |
Honble Madras High court |
| Central Excise Act |
Excise Duty |
1.09 |
1992-94 |
CESTAT, West Zonal Bench |
This is to be read with Note No. 2.1 and 2.7.
(x) We report that the Companys accumulated losses at the end of financial year are
not more than 50% of its net worth and it has incurred cash losses in current financial
year and also incurred cash losses in the immediately preceding financial year.
(xi) Based on our audit procedures and on the information and explanations given by the
management, we are of the opinion that the Company has not defaulted in repayment of its
dues to banks. Further, there are no dues with respect to debenture holders and Financial
Institutions.
(xii) 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.
(xiii) According to the information and explanations given to us, the Company is not a
chit fund or a nidhi/mutual benefit fund/society, therefore Clause 4(xiii) of the Order is
not applicable.
(xiv) In our opinion and according to the information and explanations given to us, the
company is not dealing or trading in shares, securities, debentures and other investments.
(xv) In our opinion and according to the information and explanations given to us, the
company has not given any guarantees for loans taken by others from banks and financial
institutions.
(xvi) According to the information and explanations given to us, the term loan were prima
facie applied for the purpose for which loan were obtained.
(xvii) On the basis of information and explanations given to us and on an overall
examination of the financial statements of the Company, no funds raised on short-term
basis have been used for long-term investment during the year.
(xviii) According to the information and explanations given to us, the Company has not
made any preferential allotment of shares to any parties and companies covered in the
register maintained under Section 301 of the Act during the year. [Read with Note
No.2.16(b)]
(xix) The company has no outstanding debenture, hence clause 4 (xix) of the order is
not applicable.
(xx) On the basis of information made available to us, the company has not raised any
money by public issue during the year.
(xxi) During the course of our examination of the books and records of the company
carried out in accordance with the auditing standards generally accepted in India, we have
neither come across any instance of material fraud on or by the company, noticed nor
reported during the year nor we have been informed of any such case by the management.
For LODHA&CO.
Chartered Accountants
Firm Registration Number: 301051E
NKLodha
Partner
Membership No: 85155
Place: New Delhi
Date: 03.09.2014
+91-9892691696
