GEI Industrial Systems Ltd Auditors Report.
To The Members of,
GEI Industrial Systems Limited
Report on the Financial Statements
We have audited the accompanying financial statements of GEI Industrial Systems Limited ("the Company"), which comprise the Balance Sheet as Et March 31, 2015, the Statement of Profit and Loss and 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 Companys Board of Directors is 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 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 2015.
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 the design, implementation and maintenance of adequate internal financial control that were 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.
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, as specified under Section 143(10) of the Act. 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. 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 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 but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. 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 on the standalone financial statements.
We report that:
1. Balances of Trade Receivables, Trade Payables, Advance to Suppliers and Bank accounts have been un-reconciled and unconfirmed.
2. Liability on account of interest on borrowings from financial institutions/ ICDs where suits were filed by the lenders or the account is classified as NPA by them, has not been provided in the accounts. It has been estimated by the management and disclosed as contingent liability of Rs. 11,06,96,963/- in Note No.26 of the financial statements.
3. Reconciliation of Intra-head and intra-group accounts and resultant adjustments are pending which may have impact on intra-head balances and financial position disclosed in the financial statements.
Subject to our remarks 1 to 3 above and subject to other qualifications in the report mentioned in Para (1) under "Report on Other Legal and Regulatory Requirements" below, in our opinion and to the best of our information and according to the explanations given to us, 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, of the state of affairs of the Company as at March 31, 2015, its loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to Note No. 8.1 to the financial statements regarding the financial effect of any diminution in value of non-moving inventories. In the opinion of the company, the realization will be materialized with the revival of the projects, hence no provision for any loss thereof is made in the accounts.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors report) Order, 2015 ("the Order") issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by section 143 (3) of the Act, we report that:
(a) We have sought and 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 it 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 Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of section 164 (2) of the Act;
(f) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2015, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has not disclosed the additional financial impact, if any, of pending litigations in its financial statements-Refer Notes 4.2 and 4.4 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. As per the information and explanations given to us there were Rs. 4,15,294/- which were required to be transferred to the Investor Education and Protection Fund by the Company.
|For A.K. Khabya & Co.|
|Firm Reg. No. 001994C|
|Piace : Bhopai||Ca. M.N.G. PiLLAI|
|Date : 14th June, 2015||Partner|
Annexure as referred to in paragraph 1 under the heading "Report on other Regulatory requirements" of our report of even date of GEI Industrial Systems Limited on the Accounts for the year ended on 31st March, 2015
(i) (a) The company has not maintained up to date records showing full particulars including quantitative details and situation of fixed assets.
(b) We have not been provided with evidence of physical verification of assets by the management as per a program of verification in a periodical manner, hence unable to comment whether any discrepancies were noticed on such verification.
(c) In our opinion, the company has not disposed off substantial part of fixed assets during the year and the going concern status of the company is not affected.
(ii) (a) We have not been provided with evidence of physical verification of inventories by the management, hence unable to comment whether any discrepancies were noticed on such verification.
(b) In view of our remark in sub-para (a) above, we are unable to comment whether the procedures of physical verification of inventories, if any, followed by the management during the year, are reasonable and adequate in relation to the size of the company and the nature of its business.
(c) The company has maintained records of inventories on computerized environment. Inventory of work in progress, obsolete material and project have been determined, certified by the management and incorporated in the accounts accordingly and not verified by us for want of proper records.
(iii) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence provisions of Clause (iii) of Paragraph 3 are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, there is no adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have come across major weakness in internal controls.
(v) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the purview of sections 73 to 76 of the Companies Act, 2013 and the rules framed there under.
(vi) We have not been provided with the cost records as specified by the Central Government under sub-section 148 of the Companies Act, hence we are Enable to comment whether such records are maintained.
(vii) (a) According to the records of the company, undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues except those mentioned below have been generally deposited with the appropriate authority. According to the information and explanations given to us, undisputed amounts payable in respect of aforesaid dues were in arrears, as at 31st March, 2015 for a period of more than six months from the date they became payable as under: -
|Nature of Liability||Amount (Rs..)|
|on various heads)|
*subject to adjustment for input credit
(b) According to the information and explanations given to us, the following are the particulars of statutory dues as at 31st March, 2015 not deposited on account of a dispute pending:
|Name of the Statute||Nature of Dues||Amount (Rs.)||Period to which amount relates F.Y.||Forum where the dispute is pending|
|Sales Tax Law||Central Sales Tax||Rs. 1747280||2006-2007||Board of Revenue, Bhopal|
|Sales Tax Law||Central Sales Tax||Rs..839541||2007-2008||Board of Revenue, Bhopal|
|Sales Tax Law||Central Sales Tax||Rs..4135024||2008-09||Board of Revenue, Bhopal|
|Sales Tax Law||Central Sales Tax||Rs. 166859||2009-10||Board of Revenue, Bhopal|
|Income Tax Act||Income Tax Demand||Rs. 3576166||2006-07||Commissioner of Income Tax|
(c) According to the information and the explanations given to us an amount of Rs.4,15,294/- is required to be transferred to Investor Education and Protection Fund, for which necessary instruction was given to the banker. However, no confirmation of such transfer is available with the company.
(viii) The accumulated losses at the end of the financial year are less than fifty percent of its net worth and the company has incurred cash losses during the financial year and in the immediately preceding financial year.
(ix) In our opinion and according to the information and explanations given to us, the company has defaulted in repayment of dues to financial institution or bank as under:-
|Name of the FI/ Bank||Period of Defult||Amount of Default X|
|1.||The HSBC LTD||>365 days||Rs. 37165626/-|
|2.||Citi Bank LTD||>365 days||Rs. 276460387/-|
|3.||MadhyaPradesh Finance Corp.LTD||>365 days||Rs. 2546389/-|
(x) In terms of the information and explanations given to us, the company has given corporate guarantee for loans taken by subsidiary company from banks or financial institutions. In our opinion, the terms and conditions on which the company has given such guarantees are not prejudicial to the interest of the company.
(xi) The Company has not raised any fresh term-loans during the year.
(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given to us by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.
|For A.K. Khabya & Co.|
|Firm Reg. No. 001994C|
|Place : Bhopal||CA. M.N.G. PILLAI|
|Date : 14th June, 2015||Partner M. No.74051|