The Members,
Gandhidham Spinning and Manufacturing Co. Ltd.,
Adipur - Kutch
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Gandhidham Spinning &
Manufacturing Co. Ltd. ("the Company"), which comprise the Balance Sheet as at
31st March, 2016, the Statement of Profit and Loss, Cash Flow Statement for the year then
ended, and a summary of significant accounting policies and other explanatory information.
MANAGEMENTS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Management and Board of Directors of the Company are 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 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 are 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
Our responsibility is to express an opinion on these financial statements based on our
audit. While conducting the audit, we have taken into account the provisions of the Act,
the accounting and auditing standards and matters which are required to be included in the
audit report under the provisions of the Act and the Rules made thereunder. We conducted
our audit in accordance with the Standards on Auditing specified under Section 143(10) of
the Act. 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 ODtain auon evidence aoout tne amounts
ano 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 financial control relevant to the Companys preparation of the
financial statements that give a true and fair view 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 the Companys Management and Board of Directors, 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 on the financial statements.
OPINION
The Manufacturing operations of the company have been stopped with effect from
25.07.1986 with a view to prevent further losses. The accounts of the Company for the year
ended 31st March 2016 have been prepared on the "GOING CONCERN" basis, which is
dependent upon the availability of continuing finance and the Companys future
performance.
In this connection, attention is drawn to Board report.
In our opinion and to the best of our information and according to the explanations
given to us, the financial statements subject to note no. 18(a) about the non-redemption
of 200000, 9.5% Redeemable Cumulative Preference Shares of Rs.10 each due for redemption
on 31.12.1990 (see note No. 18(a) of the notes to the accounts) and note no. 19(a) and
19(b) about amount of Rs. 26,32,586.00 (net) due from M/s. Sabnani Export Pvt. Ltd. &
Asha Fabrics Rs.8,71,940.00 since had these been provided the loss would have been
increased by Rs.35,04,526.00 and debtors would have been reduced by an equal amount and
total Loss would have been Rs. 3,17,94,149.97 instead of Rs. 2,82,89,628.97 (see note No.
19(a) and 19(b) of the notes to the accounts) read together with notes appearing in
schedule of * significant accounting policies and notes to accounts 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
March 31,
2016; and
(b) in the case of the Profit and Loss Account, of the loss for the year ended on that
date;
(c) in the case of the Cash flow statement, of the cash flows of the company.for the
year ended on that date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditors Report) Order, 2016 ("the Order")
issued by the Central Government of India in terms of sub-section (11 )of section 143 of
the Companies Act 2013, we give in the Annexure-A a statement on the matters specified in
paragraphs 3 and 4 of the Order.
a. We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary forthe purpose of ouraudit;
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 aforesaid financial statements comply with the applicable
Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014;
e. On the basis of the written representations received from the directors as on 31st
March, 2016, and taken on record by the Board of Director, non of the directors is
disqualified as on 31st March, 2016 from being appointed as director in terms
of Section 164 (2) of the Act;
f. With respect to the adequacy of the internal financial controls over financial
reporting of the Company and the operating effectiveness of such controls, refer to our
separate report in Annexure-B; and
g. In our opinion, and to the best of our information and according to explanations
given to us, We Report as under with respect to the matters to be included in the
Auditors Report in accordance with Rule 11 for the Companies (Audit and Auditors) Rules,
2014:
i. The Company has disclosed the impact of pending litigation on its financial position
in its financial Statements as of March 31,2016.
ii. The Company did not have any long-term contracts including derivative contracts; as
such the question of commenting on any material foreseeable losses thereon does not arise.
iii. There has not been an occasion in case of the Company during the year under report
to 59 transfer any sums to the Investor Education and Protection Fund; as such the
question of delay in transferring such sums does not arise.
|
For Khimji Kunverji & Co. (Gandhidham) |
|
Chartered Accbuntants |
|
(Registration No: 105147W) |
|
(Padamshi L. Shah) |
| Place: Gandhidham - Kutch |
Partner |
| Date: 26lh August, 2016 |
Membership No. 5136 |
"Annexure-A" to the Independent Auditors Report
On the basis of such checks as we considered appropriate and according to the
information
and explanations given to us during the course of our audit, we report that: -
(i) (a) The Company has maintained proper records showing full particulars including
quantitative details and situation of its fixed assets.
(b) The fixed assets have not been physically verified by management during the year.
We are unable to express our opinion about the discrepancies, if any compared to the book
records.
(c) The title deeds of immovable properties are not produced before us for
verification, hence we cannot comment on the same
(ii) In our opinion and according to the information & explanations given to us, as
there is no inventory as on Balance sheet date, the provisions of clause 3(ii) of the
Companies (Auditors Report) Order 2016 not applicable to the company.
(iii) The company has not granted any loans, secured or unsecured, to companies, firms,
Limited Liability Partnerships or other parties covered in the register maintained under
section 189 of The Companies Act, 2013. Accordingly, the provisions of clause 3 (iii)(a),
(b) and (iii)(c) of the Companies (Auditors Report) Order 2016 are not applicable to the
company.
(iv) In our opinion and according to the information and explanations given to us, the
Company has complied with the provisions of section 185 and 186 of the act, with respect
to the loans, investments, guarantees, and securities made.
(v) The Company has not accepted deposits during the year and does not have any
unclaimed deposits as at March 31,2016 and therefore, the provisions of the clause 3 (v)
of the Order are not applicable to the Company.
(vi) Reporting under clause 3(vi) of the Order is not applicable as the Companys
business are not covered by the Companies (Cost Records and Audit) Rules, 2014.
(vii) According to the information and explanations given to us and based on the
records of the company examined by us:
(c) The company has generally been regular in depositing undisputed statutory dues
including Provident Fund, Employees State Insurance, Income tax, Service Tax, Excise
Duty, Customs Duty, Sales Tax & Value added tax, Cess and other material statutory
dues, as applicable with the appropriate authorities during theyear.
(d) There were no undisputed amounts payable in respect of Provident Fund, Employees
State Insurance, Income tax, Service Tax, Excise Duty, Customs Duty, Sales Tax & Value
added tax, Cess and other material statutory dues in arrears as at March 31, 2016 for a
period of more than six months from the from the date they became payable.
(e) The dues in respect of Income tax, Service Tax, Excise Duty, Customs Duty, Sales
Tax & Value added tax, Cess and other material statutory dues that have not been
deposited with the appropriate authorities on account of dispute and the forum where the
disputes are pending are given below:
| No. |
Name of the Status |
Nature of the Dues |
Amount |
Forum where dispute is pending |
| 1. |
Sales Tax Act, 1969 |
Sales Tax |
2,26,830 |
Sales Tax Commissioner (Appeals) |
| 2. |
Income Tax Act, 1961 |
Income Tax |
5,93,490 |
CIT Appels, Rajkot |
(viii) The Company does not have any loans or borrowings from any financial
institution, banks, government or debenture holders during the year. Accordingly,
paragraph 3(viii) of the Order is not applicable.
(ix) The company has not raised money by way of initial public offer or further public
offer (including debt instruments) and term loans. Accordingly the provisions of clause
3(ix) of the Companies (Auditors Report) Order, 2016 is not applicable to the company.
(x) According to the information and explanations given to us, no material fraud by the
Company or on the Company by its officers or employees has been noticed or reported during
the course of ouraudit. •
(xi) In our opinion and according to the information and explanations given to us,
managerial remuneration has not been paid or provided during the year. Accordingly the
provisions of clause 3(xi) of the Companies (Auditors Report) Order, 2016 is not
applicable to the company.
(xii) In our opinion and according to the information and explanations given to us, the
Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not
applicable.
(xiii) In our opinion and according to the information and explanations given to us,
the company is in compliance with section 177 & section 188 of Companies Act, 2013
where applicable, for all the transaction with the related parties and the details of
related party transactions have been disclosed in the Financial Statements etc., as
required by the applicable accounting standards.
(xiv) In our opinion and according to the information and explanations given to us, the
company has not made any preferential allotment or private placement of shares or fully or
partly convertible debentures during the year under review. Accordingly the provisions of
clause 3(xiv) of the Companies (Auditors Report) Order, 2016 is not applicable to the
company.
(xv) In our opinion and according to the information and explanations given to us the
company
has not entered into any non-cash transactions with directors or persons connected with
him as per the provisions of section 192 of Companies Act, 2013. Hence, the provisions of
clause 3(xv) of the Companies (Auditors Report) Order, 2016 is not applicable to the
company. ^
(xvi) The Company is not required to be registered under section 45-IAof the Reserve
Bank of India Act. 1934.
|
For Khimji Kunverji & Co. (Gandhidham) |
| Place: Gandhidham - Kutch |
Chartered Accountants |
| Date: 26th August, 2016 |
(Registration No: 105147W) |
| (Padamshi L. Shah) |
|
| Partner |
|
| Membership No. 5136 |
|
"Annexure - B" to the Independent Auditors Report
(Referred to in paragraph 2(f) under Report on Other Legal and Regulatory
Requirements section of our report of even date)
REPORT ON THE INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING UNDER CLAUSE (I) OF
SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 (THE ACT’)
We have audited the internal financial controls over financial reporting of Gandhidham
Spinning & Manufacturing Co. Ltd. ("the Company") as of March 31,2016 in
conjunction with our audit of the standalone financial statements of the Company for the
year ended and as on that date.
MANAGEMENTS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
The Companys management is responsible for establishing and .maintaining internal
financial controls based on the internal control over financial reporting criteria
established by the Company considering the essential components of internal control stated
in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting
issued by the Institute of Chartered Accountants of India (the Guidance Note). These
responsibilities include the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to Companys policies, the safeguarding of
its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial
information, as required undertheAct.
AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on the Companys internal financial
controls over financial reporting based on our audit. We conducted our audit in accordance
with the Standards on Auditing prescribed under Section 143(10) of the Act and the
Guidance Note, to the extent applicable to an audit of internal financial controls. Those
Standards and the Guidance Note require that we comply with the ethical requirements and
plan and perform the . audit to obtain reasonable assurance about whether adequate
internal financial controls over financial reporting was established and maintained and if
such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of
the internal financial controls system over financial reporting and their operating
effectiveness. Our audit of internal financial controls over financial reporting included
obtaining an understanding of internal financial controls over financial reporting,
assessing .the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. The procedures
selected depend on the auditors judgment, including the assessment of the risks of
material misstatement of the standalone financial statements, whether due to fraud or
error.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Companys internal financial controls system
over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
A companys internal financial control over financial reporting is a process designed
to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal financial control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorisations of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorised acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financial
reporting, including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls over financial
reporting to future periods are subject to the risk that the internal financial controls
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
OPINION
In our opinion, to the best of our information and according to the explanations given
to us, the Company has, in all material respects, an adequate internal financial controls
system over financial reporting and such internal financial controls over financial
reporting were operating effectively as at March 31,2016, based on the internal control
over financial reporting criteria established by the Company considering the essential
components of internal control stated in the Guidance Note.
|
For Khimji Kunverji & Co. (Gandhidham) |
|
Chartered Accountants |
|
(Registration No: 105147W) |
|
(Padamshi L. Shah) |
| Place: Gandhidham - Kutch |
Partner |
| Date: 26th August, 2016 |
Membership No. 5136 |
+91-9892691696
