ut ltd Auditors report

INDEPENDENT AUDITORS

TO THE MEMBERS OF

UT LIMITED

Report on the Financial Statements

We were engaged to audit the accompanying financial statements of UT LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March , 2013, the Statement of Profit and Loss and the Cash Flow Statement for the six months then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s 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") 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 in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India.

However, because of the significance of the matters described in Paragraphs 1 and in view of the matter described in Paragraph 2 of the Basis for Disclaimer of Opinion 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. (i) Attention is invited to Note 3 of the financial statements regarding preparation of the financial statements of the Company on a going concern basis notwithstanding the fact that the Company has been incurring cash losses, its net worth has been fully eroded as on the Balance Sheet date and its current liabilities far exceed the current assets as on that date. Further, banks and financial institution have declared the Company as a Non Performing Asset, taken possession of certain immoveable properties, referred it to the Debt Recovery Tribunal and filed multiple suits for recovery of dues. Moreover, the Company was unable to honour the Settlement Scheme given by the Sales Tax Authorities for payment of Sales Tax arrears.

(ii) As indicated in Note 4 of the financial statements, the Company’s Hosur unit is under suspension of work since 24 July 2012; as a result the physical verification of fixed assets (period end book value of Rs 1,31,25 thousands) and inventories (period end book value of Rs.1,49,11 thousands) was not carried out by the management. Material discrepancies, if any, between physical verification and book records of fixed assets and inventories is thus, not ascertainable at this stage.

(iii) Subsequent to 31 March 2013, the Company had to close down its Budge Budge factory on a number of occasions due to various reasons adversely affecting production and sales. Moreover, as indicated in paragraph (ii) above, we were unable to witness physical verification of inventories at the Hosur factory. As a result, we are unable to comment on the existence or realisability of the value of inventories as at 31 March, 2013 and, consequently, on the extent of write down that may be required.

The situations described above indicate that there are multiple material uncertainties for the Company to continue as a going concern and, consequently, the ability of the Company to realise its assets and discharge its liabilities in the normal course of its business. In the absence of sufficient audit evidence to support the preparation of the financial statements on a going concern basis we are unable to form an opinion in the matter.

2. The Company has not provided interest on loan from a body corporate for the six months period ended 31 March, 2013. Interest not provided by the Company on such loan (based on the loan agreement) amounts to Rs.20,58 thousands and interest charged in previous year amounting to Rs.18,10 thousands has been written back and shown under ‘Liabilities no longer required written back’ in Note 22 of the financial statements. Had the Company provided the interest on loan as per the agreement, Finance Cost would have been Rs.5,13,21 thousands as against the reported figure of Rs.4,92,63 thousands, Other Income would have been Rs.32,81 thousands as against the reported figure of Rs.50,91 thousands, Loss before tax would have been Rs.13,17,01 thousands as against the reported figure of Rs.12,78,33 thousands, Loss after tax would have been Rs. 13,04,18 thousands as against the reported figure of Rs. 12,65,50 thousands and Reserve and surplus would have been negative Rs.70,05,52 thousands as against the reported figure of negative Rs.69,66,84 thousands. We have not been provided with any documentary audit evidence to support the non-provision and write back of the interest on the said loan.

3. We draw attention to Note 34.1 of the financial statements regarding Central Government’s approval, which is still awaited, for the appointment and remuneration of the Whole Time Director. Remuneration paid/ payable for the six months ended 31 March, 2013 amounts to Rs.1,61 thousands.

Disclaimer of Opinion

Because of the significance of the matters described in Paragraph 1 and in view of the matter described in Paragraph 2 of the Basis for Disclaimer of Opinion 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 (Auditor’s 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 paragraphs 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 paragraphs 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.

(d) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraphs 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) On the basis of the written representations received from the directors as on 31 March, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act.

	For DELOITTE HASKINS & SELLS
	Chartered Accountants
	(Firm Registration No.302009E)
	A. Bhattacharya
	Partner
	(Membership No. 054110)
Kolkata, July 22, 2013

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

(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 Company’s business/activities/result clauses (vi), (xii), (xiii), (xiv), (xv), (xviii), (xix) and (xx) are not applicable to the Company.

(ii) In respect of its fixed assets (excluding the fixed assets having period end book value of Rs 1,31,25 thousands at the Company’s Hosur Unit, which is under suspension of work since 24th July 2012 (as indicated in Note 4 of the Financial Statements), and on which we are, therefore, unable to comment):

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

(b) The fixed assets were physically verified during the period by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. Pursuant to such programme and 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 period, 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. However, attention is invited to our comments on the matters described in paragraph 1 under ‘Basis for Disclaimer of Opinion’ of the Independent Auditors’ Report.

(iii) In respect of its inventories (excluding inventories having a period end book value of Rs.1,49,11 thousands pertaining to the Company’s Hosur Unit which is under suspension for wok as stated in (ii) above, and on which we are , therefore, unable to comment):

(a) As explained to us, the inventories, were physically verified during the period by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation 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 listed in the Register maintained under Section 301 of the Companies Act, 1956.

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 aggregating Rs. 23,50 thousands from two parties during the year. At the period-end, the outstanding balance of such loans taken aggregated Rs. 2,25,73 thousands and the maximum amount involved during the year was Rs. 2,25,73 thousands (number of parties - three).

(b) The rate of interest (where applicable) and other terms and conditions of such loans are, in our opinion, prima facie, not prejudicial to the interests of the Company.

(c) The payments of principal amounts and interest (where applicable) in respect of such loans are regular/as per stipulations.

(v) In our opinion and according to the information and explanations given to us, 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.

(vi) 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 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 lakhs in respect of any party, the transactions have been made at prices which are, prima facie, reasonable having regard to the prevailing market prices at the relevant time.

(vii) In our opinion, the internal audit functions carried out during the period by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has not been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities, and there have been serious delays (see (b) below) in several cases in respect of Provident Fund, Employees’ State Insurance, Sales Tax, Service Tax, Entry Tax, and Municipal Taxes.

(b) The undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2013 for a period of more than six months from the date they became payable are as follows:

Name of statute	Nature of dues	Amount (Rs. in ’000)	Period	Due Date	Date of payment
Central Sales Tax Act, 1956	Sales Tax	28,57	2008-09	Various dates upto 31-03-09	Not paid
		2,41	2011-12	Various dates upto 31-03-12	Not paid
		55,03	2012-13	Various dates upto 31-03-13	Not paid
Mahestala Municipality Corporation	Municipal Taxes	93	2003-04	31-01-05	Not paid
		2,26	2004-05	31-01-06	Not paid
		2,04	2005-06	31-01-07	Not paid
		2,26	2006-07	31-01-08	Not paid
		2,26	2007-08	31-01-09	Not paid
		2,26	2008-09	31-01-10	Not paid
		2,26	2009-10	31-01-11	Not paid
		2,26	2010-11	31-01-12	Not paid
		2,26	2011-12	31-01-13	Not paid
Finance Act, 1994	Service Tax	22,80	2011-12	Various dates upto 31-03-12	Not paid
		13,23	2012-13	Various dates upto 31-03-13	Not paid
Employees Provident Fund Act, 1952	Provident Fund	8,08	2012-13	Various dates upto 30-09-12	Not paid
Employees State Insurance Act, 1948	Employees’ State Insurance	70	2012-13	Various dates upto 30-09-12	Not paid
West Bengal Tax on Entry of Goods into Local Areas Act, 2012 *	Entry Tax	675	2012-13	Various dates upto 30-09-12	Not paid

* The above has been held unconstitutional by the Calcutta High Court on 24th June 2013 in the case of Tata Steel Limited and Others Vs The State of West Bengal.

(c) Details of dues of Sales Tax/VAT and Excise Duty which have not been deposited as on 31 March, 2013 on account of disputes are given below:

Name of the Statute	Nature of Dues	Period	Amount (Rs. in ’000)	Forum where Dispute is pending
The West Bengal Sales Tax Act, 1994	Sales Tax – VAT	2007-08	1,56,91	Senior Joint Commissioner of Sales Tax , WB
The West Bengal Sales Tax Act, 1994	Sales Tax – VAT	2008-09	1,19,64	Sr Joint Commissioner, WB
The West Bengal Sales Tax Act, 1994	Sales Tax – VAT	2009-10	81,18	Sr Joint Commissioner, WB
The Central Sales Tax 1956	Sales Tax – CST	2006-07	26,50	Additional Commissioner of Sales Tax, WB
The Central Sales Tax 1956	Sales Tax – CST		31,29	Sr Joint Commissioner, CST
The Central Sales Tax 1956	Sales Tax – CST	2009-10	1,75,46	Additional Commissioner of Sales
The TN General sales Tax Act 1959	Sales Tax	1994-95	28,99	Tamil Nadu Sales Tax Appellate Tribunal, Chennai
The TN General sales Tax Act 1959	Sales Tax	1998-99	6,18	Tamil Nadu Sales Tax Appellate Tribunal, Chennai
The TN General sales Tax Act 1959	Sales Tax	2000-01	2,89	Tamil Nadu Sales Tax Appellate Tribunal, Chennai
Central Excise Act, 1944	Excise Duty	1994 to 1997	28,98	Apellate Tribunal - CESTAT, Kolkata
Central Excise Act, 1944	Excise Duty	January 2005 - December 2007	8,74	Customs,Excise and Service Tax Appellate Tribunal
Central Excise Act, 1944	Excise Duty	January 2008 - September 2008	1.47	Commissioner (Appeals)

(x) The accumulated losses of the Company at the end of the financial period are not less than fifty per cent of its net worth and the Company has incurred cash losses during the financial period covered by our audit and the immediately preceding financial year. Attention is also invited to our comments on the matters described in paragraph 1 under ‘Basis for Disclaimer of Opinion’ of the Independent Auditors’ Report.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in the repayment of dues to banks and a financial institution. As indicated in Note 3 to the financial statements, certain Banks (namely Allahabad Bank, Bank of India and Axis Bank) and a Financial Institution (SICOM) have initiated legal proceedings against the Company for non-payment of dues. The Company has also initiated legal proceedings against the said Banks and Financial Institution. The details of such default as on 31 March, 2013 is as given below:

Bank/Financial Institution	Amount of Default	Period of default (in days) upto the period end	Bank/Financial Institution	Amount of Default	Period of default (in days) upto the period end
	(Rs. in ’000)			(Rs.in ’000)
ALLAHABAD BANK-CASH CREDIT	18,81,89	609	INTEREST ACCRUED & DUE	1,00	701
				1,23	670
				1,21	640
				1,27	609
INTEREST ACCRUED & DUE	6,19,14	1 to 609		22,82	1 to 609
ALLAHABAD BANK-FUNDED INTEREST TERM LOAN	50	821	ALLAHABAD BANK-WORKING CAPITAL TERM LOAN	9,50	821
	4,25	731		49,50	731
	4,25	640		49,50	640
	94,57	609		11,00,49	609

 

Bank/Financial Institution	Amount of Default	Period of default (in days) upto the period end
	(Rs. in ’000)
INTEREST ACCRUED & DUE	11,34	821
	14,38	731
	14,16	640
	14,78	640
	2,66,63	1 to 609
ALLAHABAD BANK-TERM LOAN	6,50	821
	6,75	731
	6,75	640
	94,92	609
INTEREST ACCRUED & DUE	1,38	640
	1,42	609
	30,50	1 to 609
BANK OF INDIA-CASH CREDIT	3,87,56	587
INTEREST ACCRUED & DUE	1,38,33	1 to 587
BANK OF INDIA - FUNDED INTEREST TERM LOAN	2	1005
	1,49	913
	1,49	821
	1,49	731
	1,50	640
	43,97	588
INTEREST ACCRUED & DUE	37	882
	51	852
	55	821
	57	790
	51	762
	57	731
	57	701
	61	670
	59	640
	62	609
	62	578
	10,05	1 to 588
BANK OF INDIA-WORKING CAPITAL TERM LOAN	10,83	913
	10,83	821
	10,83	731
	10,75	640
	2,31,01	1 to 588
INTEREST ACCRUED & DUE	79	882
	2,94	852
	2,97	821
	3,17	790
	2,87	762
	3,17	731
	3,19	701

 

Bank/Financial Institution	Amount of Default	Period of default (in days) upto the period end
	(Rs. in ’000)
	3,40	670
	3,30	640
	3,45	609
	3,47	578
	56,45	1 to 588
BANK OF INDIA-TERM LOAN	7,85	913
	7,85	821
	7,85	731
	7,75	640
	1,67,27	588
INTEREST ACCRUED & DUE	2,03	913
	1,98	882
	2,08	852
	2,10	821
	2,23	790
	2,02	762
	2,23	731
	2,24	701
	2,39	670
	2,33	640
	2,43	609
	2,45	578
	37,41	1 to 588
AXIS BANK – CASH CREDIT	9,02,85	584
INTEREST ACCRUED & DUE	3,21,25	1 to 584
AXIS BANK – TERM LOAN	22,50	913
	22,50	821
	22,50	731
	22,50	640
	3,59,64	584
INTEREST ACCRUED & DUE	4,30	943
	4,20	913
	4,50	882
	4,40	852
	4,74	821
	4,83	790
	4,30	762
	5,06	731
	4,99	701
	5,32	670
	5,17	640
	5,46	609
	5,54	578
	81,11	1 to 584
SICOM LIMITED–TERM LOAN	46,00	1421
	60,00	1415
	74,00	1367
	18,61	1333

 

Bank/Financial Institution	Amount of Default	Period of default (in days) upto the period end
	(Rs. in ’000)
	91,36	1324
INTEREST ACCRUED & DUE	1,54,18	1 to 1324
ICICI BANK – TERM LOAN	2,12	23
	2,12	23

 

Bank/Financial Institution	Amount of Default	Period of default (in days) upto the period end
	(Rs. in ’000)
	2,12	26
	2,12	23
	2,12	22
	2,12	21

(xii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes 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, we report that funds raised on short-term basis to the extent of Rs.51,12,47 thousands have been used for long term business purpose. Attention is also invited to our comments on the matters described in paragraph 1 under ‘Basis for Disclaimer of Opinion’ of the independent Auditors’ Report.

(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
	Chartered Accountants
	(Firm Registration No.302009E)
	A. Bhattacharya
	Partner
Kolkata, July 22, 2013	(Membership No. 054110)