Independent Auditors Report
To The Members of S. Kumars Nationwide Limited
Report on the Financial Statements
We have audited the accompanying Financial Statements of S. Kumars Nationwide Limited
(‘the Company’) which comprise the Balance Sheet as at 31st March,
2013 and the Statement of Profit and then ended and a summary of Significant Accounting
Policies and other explanatory information.
Management 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 Subsection (3C) of the
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 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 conducted our audit in accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India (ICAI). Those Standards require that we comply
with the 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 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 auditors
consider internal control relevant to the Company’s 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 for Qualified
1. The outstanding balances of trade receivables, trade payables, loans & advances
and capital advances are subject to confirmation and reconciliation. The consequential
adjustments, if any, arising out of these are not quantifiable.
2. Inventories lying with third parties and fixed assets have not been physically
verified completely and up to date position of records of fixed assets have not been
compiled. The consequential impairment/write down, if any, is not quantifiable {Refer Note
33 (b)}.
Qualified Opinion
In our opinion and to the best of information and according to the explanations given
to us, except for the effects of the matter described in the Basis for Qualified , the
Financial Statements give the information required by the Act in Opinionparagraph 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, 2013;
(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 Cash Flow Statement, of the cash flows for the year ended on that
date.
Emphasis of Matter:
We draw attention to –
1. Note 35 of the Financial Statements with regard to the Company facing mismatch in
its cash flows and in case the required operations of the Company may get impacted,
thereby affecting financial the assumption of ‘going concern’.
2. Note 31 of the Financial Statements with regard to invocation of Shares in Reid
& Taylor (India) Limited (unlisted Indian subsidiary of the Company) pledged by the
Company with IL&FS and thereby adjusting its dues amounting to Rs. 11,691.51 Lacs. The
Company has not accounted for the effect of such invocation and it continues to show the
loan liability and the investments at cost of such pledged shares.
Our opinion is not qualified in respect of the above matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2003, (as amended),
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 under the provisions of 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 effects of the matter described in the Basis for Qualified , in our
opinion, the Balance comply with the Accounting Standards referred to in Sheet, Statement
of Profit Sub-section (3C) of Section 211 of the Companies Act, 1956;
e. Pursuant to Circular No. 8/2002 dated March 22, 2002 issued by the Department of
Company Affairs, Ministry of Law, Justice & Company Affairs, Government of India,
directors nominated by the Public Financial Institutions / Banks/ Central & State
Government are not liable to be disqualified for appointment as directors under the
provisions of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956. In
respect of other directors, on the basis of the written representations received from the
directors, as on 31st March, 2013 and taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2013 from
being appointed as a director in terms of clause (g) of Sub-section (1) of Section 274 of
the Companies Act, 1956;
For Haribhakti & Co
Chartered Accountants
Firm Registration No. 103523W
RAKESH RATHI
Partner
Membership No.45228
Place : Mumbai
Date : 16th July, 2013
ANNEXURE TO INDEPENDENT AUDITORS’ REPORT
[Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory
Requirements’ in the Independent Auditors’ Report of even date to the members of
S. Kumars Nationwide Limited (‘the Company’) on the Financial Statements
for the year ended 31st March, 2013].
(i)(a) The Company is in the process of maintaining proper records of its fixed assets
so as to show specific identification of the said assets, including fixed assets
capitalized after its quantitative details and situation in respect of 31st
March, 2011.
(b) As per documents produced before us, the Company has a regular programme of
verification of fixed assets wherein all fixed assets are verified once in a period of
three years, which in our opinion, is reasonable having regard the size of the Company and
the nature of its assets. As informed, no material discrepancies were noticed on such
verification.
(c) In our opinion and according to the information and explanations given to us, a
substantial part of fixed assets has not been disposed off by the Company during the year.
(ii) (a) As per documents produced before us, the inventories has been physically
verified by the Management during the year. In respect of inventories lying with third
parties, these have substantially been confirmed by them along with certification of
physical verification of such inventories from an independent Chartered Accountant firm.
opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of inventories as referred to in (a) above
followed by the Management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) The Company is maintaining proper records of inventories and no material
discrepancies were noticed on physical verification carried out as mentioned in para (a)
above during the year.
(iii) (a) The Company has granted loan to a party covered in the register maintained
under Section 301 of the Companies Act, 1956. The maximum amount involved during the year
and the year end balance of loan granted to such party was Rs. 41.25 lacs.
(b) In our opinion and according to the information and explanations given to us, the
terms and conditions for such interest free loan are not, prima facie, prejudicial to the
interest of the Company.
(c) The said loans are repayable on demand.
(d) There is no overdue amount of loan granted to the Company listed in the register
maintained under Section 301 of the Companies Act, 1956.
(e) The Company had taken loans (interest-bearing as well as interest-free) from a
Company covered in the register maintained under Section 301 of the Companies Act, 1956.
The maximum amount involved during the year was Rs. 23,250 lacs and the year end
balance of loans taken from such Company was Rs. 23,250 lacs, of which an amount of Rs.
4,000 lacs is interest free.
(f) In our opinion and according to the information and explanations given to us, the
rate of interest, wherever applicable and other terms and conditions for such loans are
not, prima facie, prejudicial to the interest of the Company.
(g) The Company has not repaid the principal amount as stipulated and also not been
regular in the payment of interest to the Company.
(iv) In our opinion and according to the information and explanations given to us, the
internal control system prevailing in the Company needs to be strengthened so as to make
it commensurate with the size of the Company and the nature of its business with regard to
purchase of inventory, fixed assets and with regard to the sale of goods and services.
During the course of audit, we have not observed continuing failure to correct any major
weaknesses in internal control system of the Company.
(v) (a) According to the information and explanations given to us, we are of the
opinion that the particulars of contracts or arrangements referred to in Section 301 of
the Companies Act, 1956 that need to be entered into the register maintained under Section
301 have been so entered.
(b) In our opinion and according to the information and explanations given to us, the
transactions made in pursuance of such contracts or arrangements exceeding value of Rs.
five lacs have been entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations given to us, the
Company has not complied with the provisions of Section 58A or any other relevant
provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,
1975 with regard to the deposits accepted from the public.
(vii) The Company has an internal audit system, which in our opinion, requires to be
strengthened to make it commensurate with the size and nature of its business.
(viii) We have not been made available the books of account maintained by the Company
in respect of products where, pursuant to the Rules made by the Central Government of
India, the maintenance of cost records has been prescribed under clause (d) of sub-Section
(1) of Section 209 of the Act and hence, we are unable to comment upon whether prescribed
records have been made and maintained.
(ix) (a) Undisputed statutory dues including provident fund, investor education and
protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax,
service tax, customs duty, excise duty, cess have not been regularly deposited with the
appropriate authorities and there have been serious delays in many cases.
(b) According to the information and explanations given to us, undisputed dues in
respect of provident fund, investor education and protection fund, employees’ state
insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess
and other statutory dues which were outstanding, at the year end for a period of more than
six months from the date they became payable are as follows:
| Name of the Statute |
Nature of the Dues |
Amount (Rs. in lacs) |
| Income Tax Act, 1961 |
Income Tax |
7,332.25 |
| Income Tax Act, 1961 |
Tax Deducted at Source |
1,170.55 |
| Provident Fund Act, 1952 |
Provident Fund |
121.40 |
| Employees’ State Insurance Act, 1948 |
ESIC |
30.28 |
| Madhya Pradesh Land Revenue Act, 1959 |
Property Tax |
70.23 |
| Value Added Tax Act, 2005 |
Value Added Tax |
17.12 |
| Entry Tax Act, 1976 |
Entry Tax |
4.26 |
| Central Sales Tax Act, 1956 |
Central Sales Tax |
3.60 |
| Income Tax Act, 1961 |
Tax Collected at Source |
0.03 |
c) According to the records of the Company, the dues outstanding of income-tax,
sales-tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been
paid on account of disputes, are as follows:
| Name of the Statute |
Nature of the Dues |
Amount |
Period to which the amount relates |
Forum where dispute is pending |
|
|
(Rs. in lacs) |
|
|
| Income Tax Act, 1961 |
Income Tax |
29.75 |
FY 2008-09 |
Commissioner of Income Tax (Appeals) |
| Income Tax Act, 1961 |
Tax Deducted at Source |
514.31 |
FY 2006-07 to 2008-09 |
Commissioner of Income Tax (Appeals) |
(x) In our opinion, the accumulated losses of the Company are not more than fifty
percent of its net worth. Further, the Company has not incurred cash losses during the
financial year covered by our audit and the immediately preceding financialyear.
(xi) In our opinion and according to the information and explanations given to us, the
Company has defaulted in repayment of dues to banks, financial institutions and debenture
holder as mentioned below: Defaults in payment of Interest and Principal:
| Period of Default |
Amount of Interest (Rs. in lacs) |
Amount of Principal ( Rs. in lacs) |
| 0 – 3 Months |
4,191.09 |
18,625.11 |
|
(Including interest of Rs. 2,317.54 lacs on borrowings recalled by lenders) |
(Including borrowings of lacs recalled by lenders) Rs. 16,861.16 |
| 3 6 Months |
9,413.80 |
33,509.97 |
|
(Including borrowings of Rs. 9,385.63 lacs recalled by lenders) |
(Including borrowings of lacs recalled by lenders) Rs. 33,071.05 |
| 6 12 Months |
11,094.87 |
4,947.82 |
The above defaults do not include repayments which have been rescheduled by one of the
lender as explained in Note 38.
(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 loans & advances 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 (xiii) of paragraph 4 of the Companies
(Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph
4 of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable.
(xv) In our opinion and according to the information and explanations given to us, the
terms and conditions of the guarantees given by the Company during the year, for loans
taken by others from banks or financial institutions, are not to the interest of the
Company.
(xvi) During the year, the Company has not obtained any term loans.
(xvii) According to the information and explanations given to us and on an overall
examination of the Balance Sheet of the Company, we report that the Company has used funds
raised on short term basis amounting to Rs. 3,937.22 lacs for long term investment.
(xviii)According to the information and explanation given to us, the Company has not
made any preferential allotment of shares to parties and companies covered in the register
maintained under Section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, no debentures have
been issued by the Company during the year.
(xx) The Company has not raised money by way of public issue during the year.
(xxi) During the course of our examination of the books and records of the Company,
carried out in accordance with the generally accepted auditing practices in India, and
according to the information and explanations given to us, we have neither come across any
instance of fraud on or by the Company, noticed or reported during the year, nor have we
been informed of such case by the Management.
For Haribhakti & Co
Chartered Accountants
Firm Registration No. 103523W
RAKESH RATHI
Partner
Membership No.45228
Place : Mumbai
Date : 16th July, 2013
+91-9892691696
