Gujarat Carbon & Industries Ltd Directors Report.

TO THE MEMBERS OF

GUJARAT CARBON AND INDUSTRIES LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Gujarat Carbon and Industries Limited, which comprise of the Balance Sheet as at March 31, 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.

Management’s Responsibility for the Financial Statements

The Company’s 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 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 also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 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.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our 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 obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s 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 Company’s 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 control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s 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.

Basis of Qualification

1. The accounts have been prepared on a going concern basis. However, there is no alternative proposal to promote any other activity.

2. Interest has not been provided on certain inter-corporate deposits.

3. Non-charging of interest on inter-corporate deposit granted - amount not determined.

The impact on Loss for the year, Reserve & Surplus in respect of 2 and 3 above is not ascertainable.

Qualified Opinion

Subject to above basis of qualification paragraph, in our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 31st March 2106.

b) in the case of statement of Profit & Loss, of the Loss for the year ended on that date.

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

a) As required by the Companies (Auditor’s Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" 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 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 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) 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 the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect of 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’’.

g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements –Refer Note 14(f) 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. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For Ramanlal G Shah & Co.
Chartered Accountants
Firm Registration No 108517W
(SANDEEP R.SUTARIA)
Place: Ahmedabad Partner
Date: May 26, 2016 Membership No.10228

"Annexure A" to the Independent Auditors’ Report

Referred to in paragraph 1 under the heading ‘Report on Other Legal & Regulatory Requirement of our report of even date to the financial statements of the Company for the year ended March 31, 2016:

1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets; (b) The Fixed Assets have been physically verified by the management at the end of the year. No discrepancies have been noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the company.

2) The Company does not have inventories during the year.

3) The Company has not granted during the year any loans, secured or unsecured to companies, firms Limited Liability Partnerships or other parties covered in the Register maintained under section 189 of the Act. However regarding Loan of Rs.1.38 Lacs granted to a group company (related party) in earlier year, there is no stipulation as to re-payment of the Loan and rate of interest. Till date, the company has neither received nor provided for interest thereon. As informed, the management is following up with the company. In view of above we are of the opinion, the said Loan is prejudicial to the interest of the Company.

4) According to the information and explanations given to us, during the year thereare no transactions in respect of loans investment, guarantees and security under Section 185 and 186 of the Act .

5) The Company has not accepted any deposits from the public.

6) The maintenance of Cost Records has not been specified by the Central Government under sub-section (1) of Section 148 of the Act.

7) (a) According to information and explanation given to us and on the basis of our examination of the books of account, and records, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax, Sales tax Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and any other statutory dues with the appropriate authorities except Rs.55,760/- property tax due to Vadodara Municipal Corporation for a period of more than six months from the date they became Payable.

(b) According to the information and explanations given to us, there are no dues of sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited as on 31st March, 2016 on account of any dispute. Details of dues of Income tax which have not been deposited on account if dispute as on 31st March, 2016 are as under:

Name of the Statute Nature of dues Amount under dispute Period to which it relates Forum where the dispute is pending
(Rs. In lacs)
Income tax Act, 1961 Income tax 19.79 A.Y. 2002-2003 Reverted to AO by Hon. ITAT, Ahmedabad for review
Income tax Act, 1961 Income tax 24.98 A.Y. 2003-2004 Hon. High Court of Gujarat
Income tax Act 1961 Income tax 9.31 A.Y.2004-05 Hon. ITAT Ahmedabad

8) In our opinion and according to the information and explanations given to us, the Company has not taken loan or borrowing from financial institution, bank, Government. The company has not issued debentures.

9) As per the information and explanations given to us, the company has not raised moneys by way of initial public offer or further public offer including debt instruments and term loan during the year.

10) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.

11) According to information and explanations given to us, the company has not paid provided managerial remuneration during the year.

12) In our opinion and according to the information and explanations given to us, there are no related parties’ transactions u/s.177 and 188 of the Act.

13) Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

14) Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him.

15) In our opinion, the company is not required to be registered under section 45 IA of he Reserve Bank of India Act, 1934.

For Ramanlal G Shah & Co.
Chartered Accountants
Firm Registration No 108517W
(SANDEEP R.SUTARIA)
Place: Ahmedabad Partner
Date: May 26, 2016 Membership No.10228