| We have audited the accompanying financial statements of Birla TranAsia
Carpets Limited ("the Company"), which comprises the Balance Sheet as
at 31st March 2015, the Statement of Profit and Loss and Cash Flow
Statement for the year ended and a summary of significant accounting
policies and other explanatory information.
Managements Responsibility for the financial statements
The Company's Board of Directors is responsible for the matters 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 flow 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 the maintenance of
adequate accounting records in accordance with the provision of the Act
for safeguarding of the assets of the Company and for preventing and
detecting the 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 internal financial control, 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.
Auditors 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 there under.
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 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 true and fair view 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 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 Qualified Opinion
1. Attention is invited to Note 6 on Long Term Provisions. Accounting
Standard (AS) 15 - Employee Benefits (Revised 2005) requires the
provisioning of retirement benefits based on actuarial valuation of
retirement benefits and additional disclosures as required in terms of
AS-15. The management has made the provisions based on their own
estimates.
2. Note No. 5 and 7 of Notes to Financial Statements with regard to
non-provision of interest on Inter Corporate Loans, (amount
unascertained) and PICUP loans (amounting to Rs 2,67,34,127/- up to
31st March, 2013 and interest amount uncertain from 1st April 2013 to
31st March 2015) resulting into understatement of loss for the year.
Similarly non-accounting of interest liability resulting in to
understatement of current liabilities as on 31-03-2015 to the same
extent.
3. Sundry Debtors/Creditors, unsecured loan and advances have been
considered as good for recovery/payable by the management. Also are
subject to confirmation and reconciliation. A detailed analysis of
actual recoverability/payable which is overdue according to normal
operating cycle of the company should be quantified and necessary
provision need to be made. The non creation of provision for debts and
interest are resulted into under/over statement of balances and loss.
(Also Refer Notes on 5, 7, 8, 9, 11, 14, 16 and 28 to Financial
Statements).
4. No provision has been made for contingent liabilities as defined
under AS 29 are summarized in Note No. 25 to Notes to Financial
Statements.
Qualified Opinion
In our opinion and to the best of our knowledge and according to the
information and explanations given to us, except for the effects of the
matters described in paragraphs 1 to 4 of the Basis for Qualified
Opinion paragraph, the said 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 March 31, 2015,
b. In the case of 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:
Attention is invited to regarding the financial statements being
prepared on a going concern basis, notwithstanding the fact that the
Company's net worth is eroded. Net worth as at March 31, 2015 is
negative Rs.39,89,08,950. The company has referred to BIFR on
04/11/1991. Although the final order has not been passed by the BIFR
and it is pending since long. The latest communication was dated
21/11/2013. These facts cast a significant doubt on the ability of the
Company to continue as a going concern as rescheduling of debt, Loans,
other liabilities and resuming normal operations. Our opinion is not
modified in this respect.
Report on other legal and regulatory requirements
1. As required by the Companies (Audit Report) Order, 2015 ('the Order)
issued by the Central Government of India in terms of sub-section (11)
of section 143 of Act, we give in the Annexure a statement on the
matters specified in the paragraph 3 & 4 of the order, to the extent
applicable.
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
purpose of our audit.
b. In our opinion, proper books of accounts 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, Statement of Profit & Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account.
d. In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement dealt with by this report comply with the
accounting standards specified under section 133 of the Act; except for
the effects of matters described in the Basis for Qualified Opinion
paragraph
e. On the basis of written representations received from the
directors, we report that none of the directors is disqualified as on
31st March 2015, from being appointed as a director in terms of section
164(2) Act.
f. With respect to the other matters included in the Auditor's Report
and to our best of our information and according to the explanations
given to us -
i. As mentioned in the Basis for Qualified Opinion paragraph, The
Company has disclosed the pending litigations on its financial position
in its financial statements as contingent liability. However, no
provision has been made for contingent liabilities as defined under AS
29 are summarized in Note No. 25 to Notes to Financial Statements
pertaining to disputed liabilities.
ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long term contracts including derivative contracts except for
pending litigation as mentioned in Point (i) above.
iii. There was no liability towards amount required to be transferred,
to the Investor Education and Protection Fund by the Company
Annexure to Audit Report
The Annexure referred to in our Independent Auditors' Report to the
members of the Company on the financial statements for the year ended
31st March, 2015, we report that:
i. FIXED ASSETS
a) The company is maintaining proper records showing full particulars
including quantitative details and situation of fixed assets;
b) As explained to us, the assets have been physically verified by the
management in accordance with a phased program of verification of its
fixed assets adopted by the Company which, in our opinion, is
reasonable, considering the size and the nature of its business. No
material discrepancies have been noticed on such physical verification;
ii. INVENTORY
a) As explained to us, inventories were physically verified during the
year by the management at reasonable intervals;
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management were generally 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 explanations
given to us and records produced before us, the company is maintaining
proper records of its inventories and no material discrepancy has been
observed by the management during the course of verification;
iii. LOANS AND ADVANCES GRANTED
The Company has not granted any Loans, Secured or Unsecured to
Companies, Firms or other parties covered under register maintained
under section 189 of the Act. Accordingly this clause is not applicable
to the Company
iv. INTERNAL CONTROL SYSTEM
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 nature of its business, for the purchase of
inventory and fixed assets and for the sale of goods and services.
However, in our opinion the company does not have an Internal Audit
System commensurate with the size & nature of the business resulting in
non compliance of Sec 138 of the Act.
v. ACCEPTANCE OF DEPOSITS
In our opinion and according to information and explanations given to
us, the company has not accepted any deposits from public during the
year. Hence the provisions of section 73 to 76 of the Companies Act,
2013 and the Companies (Acceptance of Deposits) Rules, 1975 are not
applicable to the company.
vi. COST RECORDS
The Central Government has not prescribed maintenance of cost records
under section 148 of the Companies Act, 2013 for any of the products of
the Company;
vii. STATUTORY DUES
a) According to the information and explanations given to us following
are the undisputed amounts of
Provident Fund, Excise Duty and Sales tax etc. payable as on 31st
March, 2015 and due for a period of
more than six months from the date they become payable and provided for
in the books of accounts:
Period for
Name of the Statute Nature of the Amount which the
dues (Rs.)* amount Due
relates
Excise 13,32,900 2003-04
Duty 2004-05
Central Excise Act, Interest 7,06,000 2003-04
1944 Interest 7,70,000 2004-05
Interest 4,56,718 2005-06
Interest 2,08,293 2006-07
Sales Tax Sales Tax 14,67,631 2004-05
Act,1975
Fringe Benefit Tax FBT 53,005 2006-07
FBT 1,31,438 2008-09
The Income Tax Act, TDS u/s 194J 1,59,932 2014-15
1961 TDS u/s 192 61,700 2014-15
Name of the Statute Due date Date of payment
31.03.2005 Not Paid
Central Excise Act, Up to 31.03.04 Not Paid
1944 Up to 31.03.05 Not Paid
Up to 31.03.06 Not Paid
Up to 31.03.07 Not Paid
Sales Tax 31.03.2005 Not Paid
Act,1975
Fringe Benefit Tax 31.03.200 Not Paid
15.12.2008 Not Paid
The Income Tax Act, 30.04.2015 Not Paid
1961 30.04.2015 Not Paid
* Above amounts are subject to interest on overdue and penalty.
b) According to the information and explanations given to us and as per
our verification of records of the company, the following disputed
amounts of tax not provided for in the accounts of the company has not
been deposited with appropriate authority as at 31st March,
2015:
Name of the Nature of Amount (Rs.) Period to which
Statute the Dues the amount relates
28,75,017 1998-99
9,545 2001-02
75,196 2004-05
14,53,367 2005-06
UP Sales Tax Sales Tax 8,59396 2556-97
5,04,180 2007-08
12,890 2009-10
71,419 2010-11
90,903 2011-12
1,14,038 1985-86
68,956 1990-91
1,09,656 1993-94
1,73,753 1994-95
39,004 1995-96
1,18,144 1996-97
Delhi Sales Tax sales tax 87,794 1997-98
Act, 1975 16,02,224 1998-99
25,66,329 1999-00
7,38,160 2000-01
1,22,840 2001-02
12,536 2002-03
1,22,840 2003-04
1,28,158 2004-05
Name of the Nature of Amount (Rs.) Forum where dispute
Statute the Dues is pending
28,75,017 Joint Commissioner
of Trade tax
(Appeal), Uttar
Pradesh.
9,545 Deputy Commissioner,
Uttar Pradesh
75,196 -Do---
14,53,367 -Do---
UP Sales Tax Sales Tax 8,59396
5,04,180 -Do---
12,890 -Do---
71,419 -Do---
90,903 -Do---
Deputy Commissioner
of Sales tax
1,14,038 (Appeal), Delhi
68,956 -Do---
1,09,656 -Do---
1,73,753 -Do---
39,004 -Do---
1,18,144 -Do---
Delhi Sales Tax sales tax 87,794 -Do---
Act, 1975 16,02,224 -Do---
25,66,329 -Do---
7,38,160 -Do---
1,22,840 -Do---
12,536 -Do---
1,22,840 -Do---
1,28,158 -Do---
Central Excise Act, 1944
i) One appeal filed at Appellate Tribunal, New Delhi on 06/10/2009 for
Rs. 17,25,392/- with interest from the date of payment till the refund
being granted. It is still pending before the adjusting authority.
ii) Contempt Petition filed against Excise Department at Allahabad High
Court against our refund of Rs. 17,25,392/- against the order of
Supreme Court in our favor. Summons issued to concerned authority.
PROVIDENT FUND
In the matter of the proceedings under section 14-B & 7-Q of the
Employee's Provident Fund & Misc. Provisions Act, 1952 and imposed the
damages & interest for the period from 12/1997 to 11/2001 amounting Rs.
21,73,215/- and Rs. 7,43,883/- respectively for which Stay was taken
Before the Hon'ble Employee's Provident Fund Appellate Tribunal, New
Delhi. After several hearings the case was dismissed in favor of P.F.
Commissioner however the final order was kept under ambiance.
1) Notice for interest payment from 10.06.2007 to 31.12.2014 (7Q) for
M/ s. Gayatri Allied & Security Services of Panel Interest of Rs. 4,
08,964/- to be paid immediately. Hearing is in progress.
2) Pending deposit of P.F. for M/ s. Gayatri Allied & Security Services
from October 13 to December 14 Rs.2,68,553/- to be Paid.
INCOME TAX
Income Tax Act. Demand 4,867,100/- 1997-98
Income Tax Act. Demand 200,887/- 2001-02
Income Tax Act. Demand 171,201/- 2005-06
Income Tax Act. Demand 10,533,346/- 2007-08
Income Tax Act. Joint Commissioner of Income Tax, New Delhi.
Income Tax Act. Deputy Commissioner of Income Tax, New Delhi.
Income Tax Act. Assistant Commissioner of Income Tax, New Delhi.
Income Tax Act. Deputy Commissioner of Income Tax, New Delhi.
1) A demand of Rs. One Crore five Lacs raised by Income Tax department
(for AY 2008-2009) and approached to BIFR for recovery last hearing was
on 21.11.2013 case pending with BIFR. Documents submitted by BTCL and
case was remanded and referred to Ward for their comments.
2) Case for scrutiny AY - 2012 - 13 required documents submitted to
department some documents to be received from Mumbai Office. Next date
of hearing is on 17/12/2014. Required details submitted on 19.02.2015
final Hearing was conducted on 24/02/2015. The final ruling is awaited.
E.S.I.C
Particular Amount
Employees State Insurance Corporation Dues 23,51,993/-
Speaking Order no. K/INSP/II/67 - 7713 - 11 dated 20.04.11 in the form
of C - 18 for the period from May 2006 to March 2011 in the tune of
Rs. 23,51,993/- Appeal submitted to Joint Director Sub- Reginal Office
Noida. Recd Notice from department dated 17.02.15 regarding per person
hearing on 24.02.2015.
Trade Tax
Particular Year Amount
Appeal pending before Jt. commissioner of 2000-01 43,29,922
Trade Tax, Uttarakhand 2000-01 43,29,922
viii. ACCUMULATED LOSSES
The accumulated losses/Reserves of the company are more than fifty
percent of its Equity Capital amounting to Rs. 42,72,59,240/-. The
company has incurred cash losses during the financial year covered by
our audit and in the immediately preceding financial year. Company has
referred to BIFR on 04/11/1991. The final order is yet to be passed.
ix. DUES TO FINANCIAL INSTITUTIONS, BANKS AND DEBENTURE HOLDERS
The Company had procured loan from The Pradeshiya Industrial and
Investment Corporation of U.P. Ltd. (PICUP) which is having a Balance
Outstanding as on year end of Rs. 1,47,00,125 towards principal which
is overdue. Also, the interest payable thereon has not been accounted
which is resulting in understatement of liability.
x. GUARANTEES GIVEN
As per the information and explanation given to us and records produced
before us, Company has not given any guarantee for loans taken by
others from Bank or Financial Institution and accordingly, this clause
is not applicable to the Company;
xi. TERM LOANS
The Company has not taken any term loan during the year.
xii. FRAUD NOTICED
During the course of our examination of the books and records of the
Company, carried out in accordance with generally accepted auditing
practices in India, and according to the information and explanations
given to us, we have neither come across any instances of fraud on or
by the Company, noticed or reported during the year, nor have we been
informed of such case by management.
For LKM & Co.
Firm Registration Number - 126823W
Chartered Accountants
Laxmikant Malpani (Proprietor) Place: Mumbai
Membership Number - 106989 Date: 29th May, 2015 |