We have audited the accompanying financial statements of Bombay Rayon
Fashions Limited, which comprise the Balance Sheet as at March 31,
2014, and the Statement of Profit and Loss and Cash Flow Statement for
the year then ended, and a summary of significant accounting policies
and other explanatory information.
Management''s 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 sub-section (3C) of section 211
of the Companies Act, 1956 (the act) read with the general circular
15/2013 dated 13th September 2013 of the ministry of corporate affairs
in respect of section 133 of the Companies Act, 2013. 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.
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 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, but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. 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 audit opinion.
Report on Other Legal and Regulatory Requirements
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.
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
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
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
d. In our opinion, the Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3c) of section 211 of The Companies Act, 1956 read
with the general circular 15/2013 dated 13th September 2013 of the
ministry of corporate affairs in respect of section 133 o f the
Companies Act, 2013.
e. On the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
Attention is invited to Note No. 27 regarding an amount of v 258.36
crores written off as valuation difference post an extensive exercise
of review of inventories undertaken by the management to put it at
present realizable values as an extra-ordinary item.
Attention is invited to Note No 28 regarding accounting for loss as
foreign exchange fluctuation amounting to v 90.92 crores on outstanding
foreign exchange working capital limits due to exchange rate difference
as an extra –ordinary item.
In our opinion and to the best of our information and according to the
explanations given to us, 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
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014
(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 the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure to the Auditor''s Report of Even Date
(Referred to in paragraph 1 thereof)
1. In respect of fixed assets:
a) The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
b) The fixed assets have been physically verified by the management at
reasonable intervals during the year. We are informed that no material
discrepancies were noticed by the management on such verification.
c) Based on our scrutiny of the records of the company and the
information & explanation received by us, we report that there were
sale of fixed assets during the year but the fixed assets disposed off
did not constitute a substantial part of the fixed assets of the
2. In respect of inventories
a) As explained to us physical verification of inventories has been
conducted during the year by the management at reasonable intervals.
b) In our opinion, the procedures of physical verification of
inventories followed by the management are reasonable and adequate in
relation to the size of the company and 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 its
inventories. During the year an extensive exercise of review of
inventories undertaken to put it at present realizable values and v
258.36 crores was written off as valuation difference under
3. In respect of loans, unsecured, granted and taken.
a) The Company has granted interest free advances to four subsidiary
companies covered in the register maintained u/s 301 of the Companies
Act, 1956, the maximum amount outstanding at any time during the year
is v 547.28 Crores and the year balance is v 542.67 Crores.
b) In our opinion and according to the information and explanations
given to us, other terms and conditions are not prima facie prejudicial
to the interest of the Company.
c) In respect of the said advances amounting to v 210 Crores is
repayable within the period of one year and remaining over a period of
5 to 7 years.
d) In respect of the said loan, there are no overdue amounts.
e) During the year the company has taken loan from one party covered in
the register maintained u/s 301 of the Companies Act, 1956. The maximum
amount outstanding at any time during the year and year end balance is
v 89.19 Crores.
f) The Company has taken interest free loan and the other term and
condition are prima facie not prejudicial to the interest of the
g) There is no overdrawn amount of loan taken.
4. 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
fixed assets. Further, on the basis of our examination of the books and
records of the company, carried out in accordance with the auditing
standards generally accepted in India and according to the information
and explanations given to us, we have neither come across nor have we
been informed of any continuing failure to correct weaknesses in the
aforesaid internal control system.
5. In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
a) In our opinion and according to the information and explanations
given to us the particulars of contracts or arrangements referred to in
section 301 of the Act have been entered into the register required to
be maintained under that section.
b) In our opinion and according to the information and explanations
given to us, transactions made in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Act and exceeding the value of Rupees five lakhs in respect of any
party during the year, have been made at prices, which are prima facie
reasonable having regard to the prevailing market prices at the
6. According to the information and explanations given to us, the
Company has not accepted any deposits from public.
7. In our opinion the Company has an internal audit system
commensurate with its size and nature of its business.
8. As per the information and explanations provided to us, we are of
the opinion that in pursuant to prescribed rules by the central
government, the company has maintained cost records u/s. 209(1) (d) of
the Companies Act, 1956 however we have not done a detailed examination
of the same.
9. In respect of statutory dues:
a) Undisputed statutory dues including provident fund, employee state
insurance income tax, sales tax, service tax, custom duty, excise duty,
cess and other material statutory dues have not been regular deposited
with the appropriate authorities.
b) Accordingly to the information and explanation given undisputed
amounts payable in respect of TDS, TCS, Provident Fund, Employees State
Insurance, Service Tax and other statutory dues applicable to it which
were outstanding as at the last day of the financial year for a period
of more than six months from the date they became payable is as under:-
Sr. No. Name of Head Amount(v In crores )
1 Tax Deducted at Source 2.43
2 Provident Fund 7.94
3 Professional Tax 0.53
4 Employee State Insurance
5 Service Tax 1.14
6 Property tax 1.01
c) According to the records of the company, there are no disputed dues
of Income Tax, sales tax, customs duty, wealth tax, service tax and
excise duty / cess except as under:
Name of the Statute Amount (Rs. In Crores) Period for which it Forum where
Income Tax Act, 1961 0.10 A Y 2008-09 CIT (A)-41,
Income Tax Act, 1961 0.62 A Y 2009-10 ITAT Mumbai
Income Tax Act, 1961 3.15 A Y 2010-11 ITAT Mumbai
Income Tax Act, 1961 0.91 A Y 2010-11 CIT (A)-41,
10. The company has no accumulated losses at the end of the financial
year. The company has incurred cash loss of v 344.02 crores (after
considering Extra ordinary items of v 349.28 crores) in the current
financial. However, it has not incurred cash losses in the immediately
preceding financial year covered by our audit.
11. In our opinion and according to the information and explanations
given to us, there have been delay in repayment of dues to financial
institution and banks during the year, which have been subsequently
rescheduled by way of Corporate Debt Restructuring (CDR) Scheme, and
accordingly, the company could be said to have not defaulted in
repayment of principal and interest to CDR lenders as on the Balance
Sheet date as per terms of CDR Scheme.
12. According to the information and explanations given 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.
13. In our opinion, and to the best of our information and according
to the explanations provided by the management, we are of the opinion
that the company is neither a Chit Fund nor a nidhi/mutual benefit
society. Hence, in our opinion, the requirements of para 4 (xiii) of
the Order do not apply to the company.
14. As per records of the company and information and explanations
given to us by the management, company is not dealing or trading in
shares, securities, debentures and other investments.
15. 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.
16. According to the records of the Company, the Company has applied
the term loans for the purposes of which it was taken during the year.
17. According to the information and explanations given to us and, on
an overall examination of the balance sheet of the company, we report
that no funds raised on short-term basis has been used for long-term
investment by the company.
18. According to the records of the company and the information
provided by the management, the company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Act.
19. During the period covered by audit report the company has not
issued any debentures.
20. During the year the company has not raised any money by way of
21. Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the course of our
For V. K. BESWAL & ASSOCIATES
FIRM REGN NO 101083W
CA K.V. BESWAL
Place : Mumbai Membership Number: 131054
Dated : 5.06.2014 Firm Regn. No.: 101083W