Vikash Metal & Power Ltd Auditor Reports

To

The Members of

Vikash Metal & Power Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of Vikash Metal & Power Limited, ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the period from July 01, 2013 to March 31, 2013, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. 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 principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of 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 are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

3. 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.

4. 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 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.

5. 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 Opinion

All the operations of the Company are suspended since October’ 2011 and there were no commercial production or transactions carried out during the period under audit. The Company could not put the robbery affected plant and machineries for repair or replacement. Numerous important documents relating to the operations of the Company went missing during robbery on April 12, 2012, and it was stated to us that the Company is still under process to recreate the missing documents.

At the end of the current period and losses the Company’s capital and the net worth stands negative to the tune of Rs. 5,360.62 lacs. There are significant liabilities of the Company towards its bankers, statutory dues outstanding for more than one year to be paid to Government and trade creditors. The management has not provided for provisions on interest and penalty on the said statutory dues. The Company has been referred to Board for Industrial and Financial Reconstruction (BIFR reference no 59/2012 dated 26.10.2012) and the Company is expecting support from BIFR authorities in terms of relief from payment of interest and penalty on statutory dues as referred above. These circumstances and along with other matters as set forth in above paragraphs, putting question on the Company’s going concern.

The management is yet to ascertain the impairment loss, required to be provided for in accordance with the requirement of mandatory Accounting standard-28 "Impairment of Assets" issued by The Institute of Chartered Accountants of India. In view of it involving judgment of the management, we are unable, to quantify the same.

Actuarial valuation for gratuity has not been done by the Company as no employees is likely to continue for long period as the operation is suspended and will take time to regularize the operation.

We are unable to form any opinion on factory accounts as we were not in a position to examine the books kept at factory due to non availability of the same. However there was no commercial transaction happened during the audit period.

Qualified Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, 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 Statement of Profit and Loss, of the loss for the period from July 01, 2013 to March 31, 2013; and

iii) in the case of the Cash Flow Statement, of the cash flows for the period from July 01, 2013 to March 31, 2013.

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor’s 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.

8. 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. Except for the effects of the matter described in the Basis for qualified opinion, 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 matters described in the Basis of Qualified Opinion paragraph, in our opinion, the financial statements comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; and

e. on the basis of written representations received from the directors, as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is 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 Act.

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 V R SAARP & Co
	Chartered Accountants
	Firm Registration No.: 327260E
Place: Kolkata	Rakesh Singh
Date: 27th August, 2013	Partner
	Membership No.: 067493

Annexure to the Independent Auditors Report

of even date to the members of Vikash Metal & Power Limited. on the accounts of the company for the period ended 31st March, 2013.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

i. (a) As explained by management, the Company use to maintained proper records to show full particulars, including quantitative details and situation of its fixed assets. However, this register has been maintained at factory which was missing after the reported incident of robbery and could not recreate. Hence we could not verify.

(b) No fixed assets verification was done by the management during the audit period.

(c) There was no addition, disposal or sale of fixed assets during the audit period. However, substantial part of the fixed assets has been lost due to robbery on 12th April, 2012 amounting to Rs. 6,401.23 Lacs.

ii. (a) During the audit period there was no movement in inventories and inventories stands at nil value.

(b) There was no physical verification of inventories during the period as there was no inventory.

(c) As on balance sheet date inventories figure stood Nil.

iii. (a) According to the information and explanation given to us, the company has not granted any loans, secured or unsecured, to companies, firms and other parties cover in the register maintained under Section 301 of the Companies Act, 1956.Accordingly, paragraph 4(iii)(b),(c) and (d) of the order are not applicable.

(e) The Company has taken interest free unsecured loans from parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the period and the year-end balance of such loans are Rs. 29,652.94 Lacs (previous year Rs. 30,464.96 Lacs) and Rs. 29,652.94 Lacs (previous year Rs. 29,590.56 Lacs) respectively.

(f) The terms and conditions of loans taken as aforesaid are prima facie not prejudicial to the interest of the Company.

(g) In respect of aforesaid loans taken by the Company, there are no stipulations as to repayment thereof.

iv. As the operation is suspended from October, 2011 onwards, company has not given much attention towards internal control.

v. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of the 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, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five lakh rupees in respect of any party during the period have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi. According to the information and explanation given to us, the Company has not accepted any deposit during the period from the public within the meaning of the provisions of the Sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under.

vii. During the period of our audit, the Company has no internal audit system.

viii. We could not review the books of account and records maintained by the Company pursuant to the Order made by the Central Government for maintenance of cost records under Section 209(1) (d) of Companies Act, 1956 as due to destruction of records as explained to us by the management.

ix. (a) According to the books and records examined by us, the Company could not pay undisputed statutory dues Service Tax, Custom Duty, Sales Tax, Provident Fund, Professional Tax, Excise Duty and Cess.

(b) The Interest & Penalty on Statutory Dues is not accounted by the company and booked in the financial statements on the grounds that the company has referred the company in BIFR and they will ask concession and relief for the waiver of interest and penalty from the statutory departments and hence not booked in the financial statement and thus Interest and penalty on Statutory Dues can be created at Unascertainable Contingent Liabilities of the company. There are undisputed outstanding statutory dues as at 31th March, 2013 for a period of more than one year from the date they became payable are as: VAT – Rs. 2,73,28,607, Excise Duty-Rs. 7,31,34,041, Income Tax- Rs. 3,42,65,477, Professional Tax – Rs. 3.430, Tax Deducted at source – Rs 11,19,485, Provident Fund- Rs 4,37,816.

(c) According to the records of the company and the information and explanations given to us and upon our enquiries in this regard, details of statutory dues which have not been deposited on account of any dispute are stated in Notes 28 to the accounts.

x. The Company has accumulated losses of Rs. 12,479.83 Lacs (Previous year Rs. 7,888.92 lacs) at the end of the audit period ended after adjusting with all the free reserves which the company has at the start of the financial year. It incurred cash losses of Rs. 205.79 Lacs (Previous year Rs.10,499.98 Lacs) during the audit period under report. The company falls under the sick unit category and accordingly it has applied for BIFR, the same was admitted under the reference no. 59/2012 dated 26-10-2012).

xi. Based on our audit procedures and as per the information and explanations given to us, the Company has failed to repay of its loans and interest thereon to the banks and to the financial institutions from October, 2011. The entire Loan amount is been called by the financial institution and become payable.

xii. As explained to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

xiii. Clause (xiii) of the Order is not applicable, as the Company is not a Chit Fund company or Nidhi/Mutual benefit Fund/ Society.

xiv. There was no investment made by the company during the audit period.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has not raised any new term loan during the period. There was term loans outstanding at the beginning of the year were applied for the purpose for which they were taken.

xvii. In our opinion and according to the information and explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

xviii. The Company has not made fresh allotment of shares during the period to parties and Companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. No debentures have been issued by the Company and hence the question of creating security or charge in respect thereof does not arise.

xx. The company has not raised any money during the audit period.

xxi. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.

	For V R SAARP & Co
	Chartered Accountants
	Firm Registration No.: 327260E
Place: Kolkata	Rakesh Singh
Date: 27th August, 2013	Partner
	Membership No.: 067493