The Members of AQUA LOGISTICS LIMITED
1. Report on the Financial Statements
We have audited the accompanying financial statements of Aqua Logistics Limited ("the Company"), which comprise the Balance sheet as at 31st March 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
2. Management’s Responsibility for the Financial Statements
The 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. 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.
3. 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. 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 auditor’s judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers 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 financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis for qualified opinion
4. We draw attention to Point (r) forming part of Note 1 to the financial statements regarding the accounting policy followed for treatment of advertisement expenditure as Deferred Revenue Expenditure, which is not in accordance with AS-26 on Intangible Assets issued by the ICAI. Consequently, the profit for the year has been understated by Rs 99.93 lakhs.
5. Parties’ Account Balances are subject to confirmation and reconciliation and the consequential effects of the same on the profits, assets and liabilities of the company are not determinable.
6. Provision for interest on loan accounts with banks and financial institutions where there has been a default has been made based on contracted rates of interest without providing for penal interest, liquidated damages and other charges (if any) and the same has not been quantified.
7. We draw attention to Note – 23 of notes to financial statements on the non completion of transfer formalities for change in ownership to the company for the mines acquired outside India.
In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in Para4,5,6 and 7 of the basis for qualified opinion paragraph and the cumulative and consequential effects of the same on the financial statements of the Company which are not determinable, 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:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;
(ii) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
9. Emphasis of Matter
We state that no actuarial valuation was made for the gratuity liability for the year ended 31.3.2013 and according to the information and explanations given to us and based on the estimated gratuity liability due to present employees, the existing provision carried in the books is adequate to cover the liabilities as at 31st March 2013. Our opinion is not qualified in respect of this matter.
10. 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 effects of the matter described in the 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; and
e) On the basis of written representations received from the directors as at March 31,2013, and taken on record by the Board of Directors, none of the directors are prima facie disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the company.
|For ANIL NAIR & ASSOCIATES|
|(Registration No. 000175S)|
|Date: 30th May 2013||Partner|
|Membership No - 023022|
Annexure to the Auditors’ Report
The Annexure referred to in our report to the members of Aqua Logistics Limited ("the Company") for the year ended March 31, 2013. We report that:
1) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.
b) As explained to us, the management during the year has physically verified all the fixed assets in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such verification.
c) As per the information and explanations given to us, during the year, the Company has not disposed off any substantial part of the fixed assets that would affect the going concern status of the company.
2) The Company does not have any tangible inventory and accordingly the provisions of clause 4 (ii) of the order are not applicable.
3) According to the information and explanations given to us the Company has not taken any loans secured or unsecured from parties listed in the Register U/s.301 of the Companies Act, 1956 except short term advances not in the nature of loans arising out of disposal of collateral belonging to the Director by a financial institution.
b. The company has not granted any loans secured or unsecured to companies, firms or other parties listed in the Register maintained U/s.301 of the Companies Act, 1956 during the year under review except advances in the ordinary course of the business and not in the nature of loans.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of fixed assets, for receiving of services and for rendering of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.
5) In respect of contracts or arrangements referred to in Section 301 of Companies Act,1956
a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in 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, there is no contract or agreement that needs to be entered in the register required to be maintained under section 301 of the Act.
Accordingly sub clause (b) of clause 4(v) of CARO is not applicable
6) The company has not accepted any deposits from public and hence directives issued by the Reserve Bank of India and the provisions of the sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable for the year under audit.
7) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
8) In our opinion and according the information and explanations given to us the Central Government has not prescribed the maintenance of cost records by the company under section 209(1) (d) of the Companies Act, 1956.
9) In respect of statutory dues:
a) Based on the records of the company examined by us, the company has generally been regular in depositing undisputed taxes like Service Tax and all other applicable statutory dues other than Income Tax Deducted at Source and Provident Fund where there has been a delay in depositing the same with the appropriate authorities and the following amounts were outstanding for a period exceeding six months as on 31st March 2013 from the date to became payable.
|Name of the statute||Nature of the dues||Amount Rs. (in. lakhs)||Period to which the amount relates||Date of payment|
|Income Tax Act||Tax deducted at source||107.31||FY 2011-2012 & FY 2013-2014||Not paid|
|Provident Fund Act||Provident fund contribution||3.43||FY 2013-2014||Not paid|
b) According to the information and explanations given to us, the following sums have not been deposited on account of dispute.
|Name of the statute||Nature of the dues||Amount Rs. (in. lakhs)||Period to which the amount relates||Forum where the dispute is pending|
|Income Tax Act||Income Tax||158.88||Assessment Year 2009-2010||Income Tax Appellate Tribunal|
|Income Tax Act||Income Tax||274.54||Assessment Year 2010–2011||Commissioner of Income Tax (Appeals)|
10) The company does not have any accumulated losses as at 31st March, 2013 and even though the Company has incurred cash losses during the financial year covered by our audit and had posted profits in the immediately preceding financial year.
11) Based on the information and explanation given to us the company has defaulted in the repayment of the following sums in respect of loans availed from banks and financial institutions. The default occurred on various dates and was not cleared till 31st March 2013 aggregate to Rs. 3271.95 lacs. The over dues relate to the financial year 2011-2012 and 2012 – 2013.
12) In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.
13) In our opinion and to the best of our information and according to the explanations provided by the management, the Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund / Society. Therefore the provisions of Clause 4(xiii) of the Companies (Auditors Report) Order 2003 (as amended) do not apply to the Company.
14) As per the records of the Company examined by us and the information and explanations given to us by the management, the company is not dealing or trading in shares, securities, debentures and other investments, therefore in our opinion Clause 4(xiv) of the Companies (Auditors Report) Order 2003 is not applicable to the company.
15) According to the information and explanations given to us, the company has extended guarantees for loans taken by a company under the same management from a Bank of India. We are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interests of the company.
16) According to the information and explanations given to us and in our opinion, the company has not taken any term loans during the year.
17) According to the information and explanations given to us and an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on a short term basis have not been used for long term investments.
18) 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 during the year.
19) During the period covered by our audit report the company has not issued any debentures.
20) According to the information and explanations given to us company has not raised money from the public.
21) Based upon the audit, procedures performed and information and explanation given by the management, we report that no fraud on or by the company has been noticed or reported during the year.
|For ANIL NAIR & ASSOCIATES|
|(Registration No. 000175S)|
|Date: 30th May 2013||Membership No - 023022|