INDEPENDENT AUDITORS
To,
The Members of,
Duncans Industries Limited
1. Report on the Financial Statements
We have audited the accompanying financial statements of Duncans Industries Limited
("the Company"), which comprise the Balance Sheet as at September 30, 2014, the
Statement of Profit and Loss, the Cash Flow Statement, significant accounting policies and
other notes thereon for the year ended on that date.
2. 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.
3. 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 entitys 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 qualified audit opinion.
4. Basis for Qualified Opinion
(I) Attention is invited to the following notes to the financial statements:
a) Note 10 (a) (i) and 10(b)(i) regarding shortfall in value of loans and advances
given to certain companies;
b) Note 19(i) regarding non ascertainment of impact of wage revision pending
negotiations thereof;
c) Note 26 regarding non-provision of Rs. 811.67 lacs demanded by the appropriate
authorities as Salami on renewal of lease in certain circumstances;
d) Note 27 regarding payment of managerial remuneration amounting to Rs.719.30 lacs
(including Rs.196.68 lacs for the year) which is subject to approval of the Central
Government;
e) Note 28 regarding certain debit and credit balances including advances, trade
receivables, trade payables and other liabilities which are subject to confirmation and
reconciliation thereof;
(II) Impacts with respect to Para a) to e) above are presently not ascertainable and as
such cannot be commented upon by us.
5. Qualified Opinion
In our opinion and to the best of our information and according to the explanations
given to us, except for the possible effects of the matters 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:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th
September, 2014;
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on
that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on
that date.
6. Emphasis of Matter
Without qualifying our opinion on this matter, we draw attention to Note 24 (a) to the
financial statements which indicate that inspite of the Companys networth becoming
negative, the accounts have been prepared on going concern basis. The Companys ability to
continue as a going concern is dependent upon the outcome of the measures as per BIFR
scheme under implementation and other ameliorative steps and prospects thereof and as
such, we are unable to comment on the same.
7. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies
(Auditors Report) (Amendment) Order, 2004 (the Order) issued by the Central Government
of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
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, Statement of Profit and Loss and Cash Flow Statement dealt with
by this report are in agreement with the books of account;
d. Except for the possible effects of the matters described in Para 4(I)(b) above under
Basis for Qualified Opinion paragraph (Note 19(i) of the financial statements), in our
opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply
with the Accounting Standards referred to in Section 211 (3C) of 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; and
e. As per the legal opinion received and on the basis of written representations
received from the directors as on September 30, 2014, and taken on record by the Board of
Directors, none of the directors is disqualified as on September 30, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the
Act.
|
For Lodha & Co. |
|
Chartered Accountants |
|
Firm ICAI Registration No: 301051E |
|
R.P. Singh |
| Place: Kolkata |
Partner |
| Date: 18th November, 2014 |
Membership No. 52438 |
ANNEXURE TO THE AUDITORS REPORT REFERRED TO IN PARAGRAPH 6 THEREOF
i) a) The Company has maintained proper records to show full particulars including
quantitative details and situation of its fixed assets.
b) All the fixed assets have not been verified by the management during the year but
according to the information and explanations given to us, there is a regular programme of
verification which, in our opinion, is reasonable having regard to the size and the nature
of its assets. In respect of assets verified during the year, no material discrepancies
have been noticed.
c) In our opinion, during the year, the company has not disposed off substantial part
of its fixed assets.
ii) a) The inventory, as explained to us, has been physically verified during the year
by the management in a phased manner. Necessary confirmations with respect to year end
stock lying with third parties was not available. In respect of certain materials stored
in heaps such verification has been done on the basis of visual estimation/survey and/ or
volumetric measurement technique.
b) In our opinion, read together with Para (ii) (a) above, the procedure of physical
verification of inventory followed by the management are reasonable and adequate in
relation to the size of the Company and nature of its business.
c) In our opinion, the company has maintained proper records of its inventory and as
explained to us, the discrepancies observed on such verification between the physical
stock and the book records were not material.
iii) a) During the year, the Company has not granted any loan secured or unsecured to
any company, firm or other party covered in the Register maintained under Section 301 of
the Act. In respect of unsecured loan given in earlier years (Note 10(b) (i) to the
financial statements), recoverable from a company covered in the register maintained under
Section 301 of the Act, the aggregate maximum amount involved and the year end balance was
Rs.1685 lacs.
b) The aforesaid loan as stated in Note 10(b) (i) to the financial statements is
repayable to the Company by March, 2015 and is interest free and having regard to the
explanations given by the management of the same being strategic in nature, the terms and
conditions of the said loan is prima facie not prejudicial to the interest of the Company.
c) As stated above, the aforesaid loan is repayable to the Company by March, 2015.
During the year, the Company has not received any amount in this respect.
d) Having regard to Para (c) above, there is no overdue amount of loan and accordingly
clause 4 (iii) (d) is not applicable to the company.
e) The Company, during the year has not taken any loan secured or unsecured from
companies, firms or other parties covered in the register maintained under section 301 of
the Act. Accordingly, clause 4 (iii) (e) to (g) of the order are not applicable to the
company.
iv) In our opinion, and having regard to the nature and exigencies of business and the
practices followed and the explanation that certain items purchased are of a special
nature and therefore in certain cases alternative quotations are not available, there is
an adequate internal control procedure commensurate with the size of the Company and
nature of its business with regard to purchase of inventory, fixed assets and with regard
to sale of goods. During the course of our audit, we have not observed any continuing
failure to correct the major weaknesses in internal controls.
v) According to information and explanation given to us and as per the records of the
company, there is no transaction that needs to be entered, in the Register maintained
under Section 301 of the Act. Accordingly, the provisions of the clause 4 (v) (b) of the
said order is not applicable to the Company.
vi) The Company has not accepted any deposits from public during the year within the
meaning of the provisions of the section 58A, 58AA or any other relevant provision of the
Act and rules made thereunder. Deposits accepted in the earlier years have been repaid in
terms of the scheme sanctioned by Board for Industrial and Financial Reconstruction (BIFR)
and to the extent lying unclaimed has been kept deposited in a separate bank account.
vii) The Companys internal audit has been conducted by independent consultants as per
the phased programme of verification. Internal audit reports with respect to areas covered
till 31st March, 2014 were received and the same was in progress for the remaining period.
In our opinion the internal audit system in respect of the areas covered is commensurate
with the size and nature of the business of the Company.
viii) On the basis of records produced, we are of the opinion that prima facie the cost
records and accounts prescribed by the Central Government under Section 209(1) (d) of the
Act have been maintained. However, we have not carried out any detailed examination of
such records with a view to determine whether they are accurate or complete.
ix) a) According to the information and explanations given to us, undisputed dues with
respect to provident/pension fund (including interest thereon), tax deducted at source
(including interest thereon), service tax, works contract tax, professional tax, cess and
other statutory payables, as applicable, were not deposited regularly with appropriate
authorities. The details of material statutory dues outstanding for a period exceeding six
months as provided for in the accounts are given below:
| Statute |
Nature of Dues |
Amount (Rs. in Lacs) |
Period to which the amount relates to |
| The Income Tax Act, 1961 |
Tax Deducted at Source (including interest) Tax collected at source |
565.58 |
2011-14 |
|
|
5.35 |
2013-14 |
| West Bengal Rural Employment & Production Act, 1976 |
Cess on Green Leaf |
219.04 |
2001-06 and 2011-12 |
|
|
2041.89 |
2010-13 (including Rs. 1908.62 lacs in respect of which instalment
facility has been granted (Refer Note 25) |
| The Employees Provident Funds and Miscellaneous Provisions Act, 1952 |
Contribution to Provident and Pension Fund Interest on Provident and Pension Fund |
705.19 |
2004-14 |
|
Employees Contribution to Provident Fund |
88.73 |
2013-14 |
| West Bengal State Tax On Professions, Trades, Callings And Employments Act, 1979 |
Professional Tax |
0.39 |
2013-14 |
| West Bengal Value Added Tax Act, 2003 |
Works Contract Tax |
3.76 |
2010-14 |
| West Bengal Value Added Tax Act, 2003 |
Purchase Tax |
3.25 |
2004-14 |
| Service Tax |
Service tax |
3.43 |
2013-14 |
b) According to the information and explanations given to us, there are no dues of
Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty, Service Tax and Cess which
have not been deposited on account of any dispute except as given below:
| Statute |
Nature of Tax |
Forum where Dispute is Pending |
Amount (Rs. in Lacs) |
Period to which amount relates |
| The Income Tax Act, 1961 |
Income Tax |
High Court CIT (Appeals) |
47.32 |
1976-78 & 2005-07 |
|
|
|
41.51 |
|
| The Central Sales Tax Act, 1956 |
Central Sales Tax |
ACCT |
2.41 |
2004-05 |
| The West Bengal Sales Tax Act, 1994 |
Sales Tax |
ACCT |
12.16 |
1996-98, 2001-02, 2003-05 |
| The West Bengal Value Added Tax, 2003 |
VAT |
WBTT |
15.77 |
2007-08 |
|
|
WBCT |
8.84 |
2008-09 |
|
|
Additional Commissioner |
21.86 |
2010-12 |
x) The accumulated losses of the Company as at the end of the financial year are more
than 50 percent of its net worth. The Company has incurred cash losses during the
financial year and in the immediately preceding financial year covered by our audit.
xi) In our opinion and on the basis of information and explanations provided by the
management, except as given in Note 4(a) and (b) (iv) of the financial statements, the
Company has not defaulted in repayment of dues, if any, to financial institutions, banks
and debenture holders.
xii) The Company has not granted any loan and advances on the basis of security by way
of pledge of shares, debentures and other security.
xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefit
fund/society. Therefore, the provisions of the clause 4 (xiii) of the said order are not
applicable to the Company.
xiv) In our opinion, the Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provision of clause 4 (xiv) of the
Order is not applicable to the Company.
xv) The Company has not given any guarantee during the year for loan taken by others.
The guarantee of Rs. 830 lacs given in earlier years to group/associate companies
in respect of loans taken by them from bank, considering the long term involvement with
those companies when issued, was not prima facie prejudicial to the interest of the
Company.
xvi) As per the information and explanations given to us, no fresh term loan has been
taken during the year.
xvii) According to the information and explanation given to us, on an overall
examination of the Balance Sheet of the Company, we report that funds amounting to
Rs.15,572.98 lacs raised on short-term basis have been used for long term investment, i.e.
for fixed assets, funding the losses etc of the Company.
xviii) The Company has made preferential allotment of shares at par to companies
covered in the Register maintained under Section 301 of the Act during the year.
Considering the terms of rehabilitation sanctioned by BIFR, the price at which the shares
have been issued is not prejudicial to the interest of the Company.
xix) The Company has not issued any secured debentures during the year. Accordingly,
clause 4 (xix) of the order is not applicable to the company.
xx) The Company has not raised any money through a public issue during the year.
xxi) During the course of our examination of books and records of the Company carried
out in accordance with generally accepted auditing practices in India, we have neither
come across any instances of fraud on or by the Company, noticed and/or reported during
the year, nor have we been informed of any such case by the management.
|
For Lodha & Co. |
|
Chartered Accountants |
|
Firm ICAI Registration No: 301051E |
|
R.P. Singh |
| Place: Kolkata |
Partner |
| Date: 18th November, 2014 |
Membership No. 52438 |
+91-9892691696
