Polar Industries Ltd Share Price Auditors Report
POLAR INDUSTRIES LIMITED
ANNUAL REPORT 2011-2012
AUDITORS REPORT
TO THE SHAREHOLDERS
We have audited the attached Balance Sheet of POLAR INDUSTRIES LTD., as at
31st March, 2012 and also the Profit and Loss account and the Cash Flow
Statement for the year ended on that date annexed thereto. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating,
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 (as amended)
issued by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report that:
i. 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;
ii. In our opinion, proper books of account as required by law, subject to
notes given in paragraph (vi) below, have been kept by the Company so far
as appears from our examination of those books. The reports on the account
of branches audited by other auditor have been forwarded to us and have
been appropriately dealt by us in preparing our report.
iii. The Balance Sheet, Profit and Loss account and Cash Flow statement
dealt with by this report are in agreement with the books of account and
with the returns from the sale depots.
iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report comply with the Accounting
Standards referred to in sub-section (3C) of section 211 of the Companies
Act, 1956 subject to notes given in paragraph (vi) below.
v. We report that two of the directors are disqualified as on 31st March
2012 from being appointed as directors in terms of clause (g) of Sub-
section (1) of Section 274 of the Companies Act, 1956..
vi.(a) Regarding corporate guarantees given in excess of limit approved by
the shareholders and considered the same as contingent liability by the
management and not provided for as referred in note no. 2 of Note No. 31.
(b)(i) Regarding debt acquired by ARCIL which is subject to compliance of
terms & Condition and recalling of loan and demanding of others payments as
referred in Note No.4 of note no 31 Pending negotiation with the ARCIL we
are unable to comment about impact on the liquidity position of the company
due to recalling of loan / demanding of others payments and consequent
impact on the ability of the company to continue business.
(ii) Regarding sale of residential property and provisional adjustment
thereof in accounts and Possession of another property by ARCIL as referred
in note no 4(e) of Note no 31 . We are unable to comment about impact on
secured loan, and on the profit for the year and on debit balance in the
profit and loss account at year end due to non availability of required
information
(c) Regarding valuation of finished goods stock for Rs. 86,40,825
pertaining to discontinued business segment and non provision of interest,
demurrages etc on the goods lying in custom bonded warehouse for which
amount was not ascertained as referred in note no 5 of Note No.31 . We are
unable to comment about the extent of realization on such stock and impact
thereof including non-provision referred above on profit for the year and
consequently impact on debit balance in the profit and loss account at year
end.
(d) Regarding preparation of accounts on going concern basis as referred in
Note No.6 of Note No. 31. The company has sold a substantial part of its
fixed assets in earlier year. According to the information and
explanations given to us, the company has so far not made any plan to
replace the substantial part of the fixed that have been sold. The company
has also negative net worth, substantial negative working capital,
inability to pay its debts repayments / creditors etc indicating that going
concern assumption may no longer be appropriate. Therefore, in our opinion,
there exists substantial doubt that the company will be able to continue as
a going concern for the foreseeable future. Consequently, adjustment may
be required to the recorded amount of assets and classification of
liabilities. The financial statement (and notes thereto) do not disclose
this fact.
(e) Regarding pending recovery of advances / dues aggregating Rs
2,23,09,160 from various parties and ex- employees as referred Note No 7 of
Note No. 31 . We are and unable to comment about the extent of realization
of such advances / dues due to uncertainty involved.
(f) Regarding refusal of insurance claim for Rs. 6, 76,27,254 by the
insurance company but considered good by the company as referred Note No
12 of Note No. 31. We are unable to comment about the realizability of the
claim pending decision of the National Consumer Forum.
(g) Regarding remuneration paid in earlier year to an Ex-Executive Director
for which Company intent to file application with Central Government for
waiver of excess remuneration paid as referred in Note No. 16 of Note
No.31.
(h) Regarding non-provision and non-ascertainment of penalties on various
outstanding statutory dues as referred in note no 17 of Note No. 31. We are
unable to comment about the impact on the profit for the year and debit
balance in profit and loss account at year end due to non ascertainment of
amount.
(i) Regarding mortgage of one of the property having original book value of
Rs 2,47,26,244 in favor of a corporative bank as a collateral security for
obtaining loan by a body corporate as referred note no 13 of Note No.31 for
which share holder approval not obtained by the company. Due to non
availability of the latest audited balance sheet of the body corporate, we
are not in a position to comments whether above security given is
prejudicial to the interest of the Company.
(j) Regarding the after sale services expenses aggregating to Rs 137,85,470
related to prior period reimbursement to a marketing Company for which
necessary details/documents were not available till date hence we are
unable to comments on such expenses.
vii. In our opinion and to the best of our information and according to the
explanations given to us and considering our observations in vi above, the
said accounts read together with notes thereon, do not give the information
required by the Companies Act, 1956, in the manner so required and not 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, 2012.
b) In the case of the Profit and Loss account, of the profit of the Company
for the year ended on that date and
c) In the case of Cash Flow Statement, of the cash flows of the Company for
the year ended on that date.
For SINGHI & CO.
Chartered Accountants
Firm Regn. No.302049E
B.K. SIPANI
Place: Kolkata Partner
Date : 14th August, 2012 Membership No. 88926
Annexure referred to in paragraph 3 of our report of even date Re: Polar
Industries Limited
(i)a. The Company has maintained proper records showing full particulars,
including quantitative details and situation of its fixed assets.
b. According to the information and explanation given to us, fixed assets
of significant value have been physically verified by the management during
the year in accordance with a phased programme of verification adopted by
the company. In our opinion, the frequency of verification is reasonable
having regard to the size of the company and the nature of its fixed
assets. The discrepancies noticed on such verification were not material
and have been properly dealt with in the books of account.
c. In our opinion and according to information and explanations given to
us, the Company has disposed off substantial part of its fixed assets
during the previous year. The company has so far not made any plan to
replace the fixed assets that have been sold, Therefore there are
substantial doubt about the companys ability to continue as a going
concern in the foreseeable future.
(ii)a. As explained to us, inventories (except stock lying with third
parties) were physically verified by the management during the year at
reasonable intervals.
b. In our opinion and according to the information and explanations given
to us, the procedures of physical verification of inventory followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
c. In our opinion and according to the information and explanation given to
us, the Company is maintaining proper records of inventory and no material
discrepancies were noticed on physical verification.
(iii) a. According to the information and explanations given to us, the
Company has not taken any loan during the year from any party covered in
the register maintained under Section 301 of the Companies Act, 1956.
However, the company has taken unsecured interest free credit on current
account aggregating Rs 3,85,500 and debit aggregating Rs. Nil on current
account during the year from two bodies corporate listed in the register
maintained under section 301 of the Companies Act, 1956. Maximum balance
during the year was Rs 60,32,894 (Net) as payable and year end balance was
Rs. 60,32,894 as payable. However, there is no stipulation as to interest
on these transactions.
b. According to the information and explanations given to us, the company
has not granted any loans during the year to any parties covered in the
register maintained under section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations given
to us, there is adequate internal control system commensurate with the size
of the Company and the nature of its business, for the purchase of
inventory and fixed assets and for the sale of goods and services. During
the course of our audit, no major weakness has been noticed in internal
control system.
(v) a. In our opinion and according to the information and explanations
provided by the management, we are of the opinion that the particulars of
contract or arrangements that need to be entered into the register
maintained under section 301 of the Companies Act, 1956 have been so
entered.
b. In our opinion and according to the information and explanations given
to us, no transactions were made exceeding the value of five lakhs rupees
from any party during the year.
(vi) In our opinion and according to the information and explanations given
to us, the Company has complied with, the directives issued by the Reserve
Bank of India and provisions of Section 58A and 58AA of the Companies Act,
1956 and rules framed there under with regard to the deposits accepted from
the public except not filing of Return of Deposits. The order passed by
Company Law Board in earlier year has been complied with.
(vii) In our opinion, the Company has no internal audit system during the
year.
(viii) As information provided to us that no major manufacturing activities
were carried out during the year, hence the Company has not maintained cost
records under section 209(1)(d) of the Companies Act, 1956
(ix)a. According to the records of the Company, the Company was not regular
in depositing undisputed statutory dues including provident fund, investor
education and protection fund, employees state insurance, income-tax,
sales-tax, services tax, wealth tax, custom duty, excise duty, cess and
other statutory dues applicable to it with the appropriate authorities. The
undisputed outstanding statutory dues as at the year end for a period of
more than six months from the date they became payable were Fringe Benefit
Tax Rs 44,93,612, Sales Tax/ VAT Rs. 4,30,45,370, TDS Rs 46,44,237, TCS
Rs. 49,430 Provident Fund Rs 62,24,446, and service tax Rs 2172. The
company has applied for remission of custom duty Rs 1,58,10,965 on stock
lost on fire in earlier year. Pending remission of duty by custom
department, the company has not deposited the same. The company has not
provided and ascertained interest / penalties on outstanding statutory dues
except partial interest Rs.64,56,806 on outstanding sale tax / VAT, hence
same have not been included in above.
b. According to the records of the Company, there are no dues outstanding
of sales tax, income tax, service tax, custom tax, wealth tax, excise duty
and cess on account of any dispute, other than the following (to the extent
quantified by the assessing authorities):
Nature of Dues Amount Forum where disputes are pending
(Rs.)*
Central and State 1,05,07,748 Sales Tax Appellate Authorities
Sales Tax
148,56,050 Rajasthan High Court
7,32,86,106 Commissioner Appeal UP
76,95,597 Sales Tax Tribunal
Central Excise Duty 3,11,449 Central Excise Tribunal
3,44,60,124 Allahabad High Court
8,52,792 Commissioner of Excise
64,72,404 In the process of filling appeal
with CESTAT
*Net of payments made.
(x) The Company has accumulated losses at the end of the financial year
which are not less than fifty percentage of its net worth. However, it has
not incurred cash loss in the current and immediately preceding financial
year.
(xi) As per informations and explanations provided to us, the Company has
made provisional adjustment of reserve price of property as indicated in
note 4(e) of Note No. 31 against secured loans dues to ARCIL as on
31.03.2012, Pending final adjustment defaults in repayment of dues, if any
can not be ascertained. Further the Company has in default in repayment of
debenture Rs 1,51,61,000 due since December 2009 onwards.
(xii) According to the information and explanations given to us and based
on the documents and records produced to us, the Company has not granted
any loan and advance on the basis of security by way of pledge of shares,
debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society, therefore, the provisions of clause 4 of the
Companies (Auditors Report) Order, 2003 (as amended), are not applicable
to the Company.
(xiv) The Company does not deal or trade in shares, securities, debentures
and other securities except that it has investments of long-term nature in
shares and these are held in the name of the Company.
(xv) According to the information and explanations given to us, the Company
has given corporate guarantees aggregating Rs.1,37,61,99,219 (to the
extent of outstanding dues) at year end in favour of financial
institution/bank & others for loans taken by other bodies corporate/firms.
In our opinion, terms and conditions of such corporate guarantees is
prejudicial to the interest of the Company in view of the weak financial
position of the said companies/firms.
(xvi) To the best of our knowledge and belief and according to the
information and explanations given to us, company has not obtained any term
loan during the year.
(xvii) According to the information and explanation given to us, company
has not raised any fund during the year on short term basis
(xviii) According to the information and explanation given to us, the
company has not made any preferential allotment of shares to parties or
companies covered in register maintained under Section 301 of Companies
Act, 1956.
(xix) The Company has not raised any money through a public issue during
the year.
(xx) Based on our examination of the books and records of the Company,
carried out in accordance with the generally accepted auditing practice in
India and according to the information and explanations given to us, no
fraud on or by the Company, noticed or reported during the year.
For SINGHI & CO.
Chartered Accountants
Firm Regn. No.302049E
B.K. SIPANI
Place: Kolkata Partner
Date : 14th August, 2012 Membership No. 88926