Gangotri Iron and Steel Company Ltd Auditors Report.
TO THE MEMBERS OF
GANGOTRI IRON & STEEL COMPANY LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of GANGOTRI IRON & STEEL COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at March 31. 2014, the Statement of Profit and Loss, Cash Flow Statement for the year then ended, a summary of significant accounting policies and other explanatory information.
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"). 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.
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. 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.
Basis of Qualified
a) As mentioned in note no. 23 of financial statements, the Company has not provided for the liability towards Gratuity as the necessary actuarial valuation has not been carried out as required under Accounting Standard (AS-15).
b) As mentioned in note no. 30(d) of financial statements, the company has not providea for the liability for income-tax and interest thereon in respect of assessment years 2003-2004 to 2009-2010 amounting to Rs. 77.67.947 and Rs. 43.55.613 respectively. Had the liabilities been provided, the loss for the year would have been higher by Rs. 184.108.40.2060 and the balance of Surplus would have been lower by that amount. Consequently, the long term loans and advances would have been lower by that amount.
c) As mentioned in note no. 31 of financial statements, we are unable to form an opinion about the recoverability of a cumulative claims of Rs.10.49.12.524 as at 31s March. 2014 in respect of subsidy/incentive on VAT as per Industrial Incentive Scheme. 2006 by the Department of industries. Bihar, which includes Rs.220.127.116.115 claimed during the year ended 31s March. 2014 of which only Rs 18.104.22.1689 has been received by the company for the financial year 2013-14 and Rs. 81.87.907 has been received for the financial year 2012-13.
d) As mentioned in note no. 34 of the financial statements, the company has not paid the installments of electricity charges and interest thereon for the months of September 2013 to March 2014 amounting to Rs. 4,86,15,840 The company has also not provided for an estimated interest on electricity charges of Rs. 41 85.675 for the months of October 2013 to March 2014. Had the liabilities been provided, the loss for the year would have been higher by Rs 41.85.675 and the balance of Surplus would have been lower by that amount. Consequently, the Other Current Liabilities would have been higher by that amount.
e) As mentioned in note no. 35 , some advance from customers and security deposit from customers are subject to confirmation / reconciliation and the consequential adjustment thereof has not been determined.
f) As mentioned in note no. 36, there may be incidence of bad debts for which no provision has been made by the Company. In absence of identification of such bad debts, the amount of provision is indeterminate.
In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matters described in the Basis of Qualified Opinion paragraph as mentioned above and read together with the other notes, 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, 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.
Report on Other Legal and 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 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) we have obtained all the information and explanations 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) except for the matter described in the paragraph (a), (b), (c) and (d) of Basis for Qualified Opinion paragraph, 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 March 31, 2014, and taken on record by the Board of Directors none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956
For ARSK & ASSOCIATES
Firm Registration No 315082E
CA Ravindra Khandelwal Partner
Membership No 054615
Date: 03 SEP 2013
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT
Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of GANGOTRI IRON AND STEEL COMPANY LIMITED on the financial statements of the company for the year ended March 31. 2014.
On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that
1 a) The company is in the process of updating the fixed assets register
b) The fixed assets have not been physically verified by the management during the year
c) Since there is no disposal of substantial part of fixed assets during the year, paragraph 4(i)(c) of the Companies (Auditors Report) Order. 2003 is not applicable
2 a) The management has conducted the physical verification of inventory at reasonable intervals during the year. As informed, no material discrepancies were noticed on such physical verification
b) In our opinion, the procedures 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) The Company has maintained proper record of its inventories and no discrepancies were noticed on physical verification
3 a) According to the information and explanation given to us the company has not granted unsecured loans to a companies covered in the register maintained under section 301 of the Companies Act. 1956 and hence clause nos. 4(iii)(b), 4(iii)(c) and 4(iii)(d) are not applicable.
b) According to the information and explanation given to us & in our opinion the company has taken interest free loans from two companies covered in the register maintained under section 301 of the Companies Act. 1956. The maximum amount outstanding during the year was Rs 11.71 crores and the year end balance of loans taken by the company was Rs 10 38 crores
c) In our opinion and according to the information given to us, as the loans taken are interest free, the clause 4(iii) (f) of the Companies (Auditors Report) Order, 2003 is not applicable However other terms and conditions on which loans have been taken are not, in our opinion, prima facie, prejudicial to the interest of the company.
d) Since the loans are in the nature of demand loan same are repayable as and when the lenders calls back the loans
4 In our opinion and according to the information and explanation given to us. there is an adequate internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system
5 a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance Section 301 of Act, have been so entered in the register maintained as per requirement of that Section.
b) In our opinion and according to the information and explanations given to us, each of these transactions have been made in pursuance of such contracts or arrangements at prices whicn are reasonable having regard to the prevailing market prices at the relevant time.
6 The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under
7. The company did not have any formal internal audit system during the year under review.
8 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 Companies Act. 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.
9. a) According to the information and explanations given to us and the books and records examined by us. the company is generally regular in depositing with the appropriate authorities the undisputed statutory dues relating to custom duty, service tax. excise duty, cess and other material statutory dues as applicable to it except for delays in the case of Provident Fund, ESI and Income Tax(Tax Deducted at Source).
Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956. we are not in position to comment upon the regularity or otherwise of the Company in depositing the same
b) According to the information and explanations given to us and the books and records examined by us, there are no undisputed amount payable, in respect of income tax, sales tax, wealth tax, service tax. custom duty, excise duty, cess outstanding as at 31s March, 2014 for a period exceeding 6 months from the date they become payable except the followings.
|Nature of Statute||Nature of Dues||Amount (Rs)||Period to which the amount related||Due Date||Date of Payment|
|State||State||1,18,392||April 13 to||N.A||Unpaid|
|Insurance Act, 1948||Insurance||September 13|
|Provident Fund Act , 1952||Fund||2,28,732||2011-2012||N.A.||Unpaid|
|2,57,002||April 13 to September 13||N A||Unpaid|
|Bihar Entry Tax||Bihar Entry Tax||49.01,921||2011-2012||N.A.||Unpaid as the companys claim for VAT Subsidy is pending for approval|
|Bihar Value Added Tax Act. 2005||Value Added Tax||44,13.099||2012 April 13 to September 13||N.A.||Unpaid as the companys claim for VAT Subsidy is pending for approval|
|Income Tax Act, 1961||Tax Deducted at Source||5,17,541||2012-13 April 13 to September 13||N.A||Unpaid|
c) As at 31s March 2013 according to the records of the Company, the following are the particulars of the disputed dues on account of Excise duty:
|Nature of Statute||Nature of Dues||Amount (Rs)||Period to which the amount related||Forum where dispute is pending|
|Central Excise Act, 1944||Excise Duty||14.43.471||1998-2001||High Court, Patna|
10 The Company has incurred cash losses in the financial year ending 31st March. 2014 and also has accumulated losses as on that date In our opinion, the accumulated losses as at the end of the financial year are not less than 50% of the net worth of the company after taking into account quantified qualifications in the audit report
11 The company has defaulted in repayment of dues to banks from 31st December, 2013 and has been declared as non-performing assets by the bank The outstanding overdue payment in respect of term loans is Rs. 6,93.00 000/- and interest accrued and due Rs. 57,188.161 80/-
12 The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
13 The provisions of special nature applicable to chit fund/nidhi/mutual benefit fund/societies are not applicable to the Company.
14 In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. Accordingly provisions of clause (xiv) of the paragraph 4 of the Companies (Auditors Report) Order. 2003 are not applicable to the Company
15 In our opinion, and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions during the year.
16 In our opinion and according to the information and explanation given to us, the Company has applied the term loans for the purpose for which the loans have been obtained.
17 On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investments
18 According to the information and explanations given to us, the company has not mace preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.
19. The Company has not issued any Debenture
20. The Company has not raised any money by way of public issue during the year.
21 According to the information and explanations given by the management to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.
For ARSK & ASSOCIATES
Firm Registration No. 315082E
CA Ravindra Khandelwal
Membership No 054615
Date: 03 SEP 2013