We have audited the accompanying financial statements of DECOLIGHT
CERAMICS LIMITED (''the Company), which comprise the Balance Sheet as
at March 31, 2014, and 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.
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
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements read together with
and subject to the notes thereon, 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,
to the extent applicable;
Subject to unutilized fund of equity preferential issue privately
placed lying in Inter-Corporate Deposits to the tune of Rs. 27.57/- crore
is pending for renewal / receipt from the respective parties. Refer
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2014;
b) In the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date; and
c) In the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Emphasis of Matter
We draw attention to Notes 28 (11 to 15) with respect to the fact that
the company has prepared its financial statements by applying the going
concern assumption, notwithstanding of the facts as mentioned in such
Our report is not qualified in this regard.
Report on Other Legal and Regulatory Requirements
1. 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 paragraph 4 and 5 of the said
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 purposes of our
b) in our opinion, proper books of account as required by law have been
kept by the Company, so far as it 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
account, as submitted to us;
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 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 of the Companies Act, 2013; and
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 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;
Annexure To The Auditor''s Report
(Referred to in paragraph 1 of our Report of even date on the Statement
of Accounts of DECOLIGHT CERAMICS LIMITED, for the year ended on 31st
i. FIXED ASSETS:
a. In our opinion, the company has generally 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 fixed assets have been physically verified
by the management during the year in a phased periodical manner, which
in our opinion is reasonable, having regard to size of the company and
nature of its assets. No material discrepancies with respect to book
records were noticed on such verification.
c. As per information & explanation produced for our verification, the
company has not disposed of substantial part of fixed assets during the
year and the going concern status of the company is not affected.
However, in our opinion there is substantial uncertainty about the
going concern status of the company looking to the matters referred in
Note 28 (10 to 15).
a. As explained to us, physical verification of inventory has been
conducted by the management at reasonable intervals. In our opinion,
the frequency of verification is reasonable in relation to its size and
nature of business.
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 are reasonable and adequate in relation its
size and nature of business.
c. In our opinion, the company is generally maintaining proper records
of inventory in relation to its size and nature of business. As
explained to us, there were no material discrepancies noticed on
physical verification of inventory as compared to the book records.
a. According to the information and explanations given to us and on
the basis of our examination of the books of account, the company has
not granted any loans, secured or unsecured to companies, firms or
other parties covered in the register maintained under Section 301 of
the Companies Act, 1956, during the year under review. Consequently,
the provisions of clauses (iii) (b), (c) and (d) of the order are not
applicable to the company.
b. According to the information and explanations given to us and on
the basis of our examination of the books of account, the company has
taken unsecured loans aggregating to Rs. 118.20 lacs from three directors
of the company, being parties covered in the register maintained under
section 301 of the Companies Act, 1956. The total maximum amount
involved during the year from all three parties together was Rs. 350.92
lacs and the total year end balance of loans taken from three directors
was Rs. 334.17 lacs.
c. According to information and explanation given to us and in our
opinion the rate of interest and other terms and conditions, wherever
stipulated were not prima facie prejudicial to the interest of the
d. According to the information and explanations given to us said
loans were repayable on demand and the repayment was within dates
iv. INTERNAL CONTROL
In our opinion and according to the information and explanations given
to us, there is an adequate internal control system commensurate with
the size of the company and nature of its business for the purchase of
inventory, fixed assets and for the sale of goods and services. During
the course of our audit, no major weakness has been noticed in the
internal control system in these areas.
v. TRANSACTIONS IN PURSUANCE OF SECTION 301:
a. According to 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 Act, if any 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, transactions made in pursuance of such contracts or
arrangements, if any, have been made at prices which are reasonable
having regard to the prevailing market prices available at the relevant
As explained to us, the company has not accepted any deposits from the
public within meaning of Section 58A and 58AA of the Companies Act,
1956, during the year under review.
vii. INTERNAL AUDIT:
In our opinion and according to information and explanations given to
us, no internal audit carried out during the year under review, looking
to the small volume of business operations carried out by the company
during the year and critical financial position of the company.
viii. COST RECORDS:
We have broadly reviewed the cost records maintained by the Company
pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the central government under section 209(1)(d) of the
Companies Act, 1956 and are of the opinion, that prima facie, the
prescribed cost records have been made and maintained. However, we have
not made a detailed examination of the records with a view to
determining whether they are accurate or complete.
ix. STATUTORY DUES:
a. According to the records of the company and on the basis of
information and explanation explained to us, undisputed statutory dues
including provident fund, investor education and protection fund,
employee''s state insurance, income-tax, sales-tax, wealth tax, service
tax, custom duty, excise duty, cess to the extent applicable and any
other statutory dues applicable to it, were being generally deposited
delayed / not deposited with the appropriate authorities. Further
according to information and explanation given to us, undisputed
statutory dues accounted and applicable to the company as per the
opinion of the management, outstanding as at 31st March, 2014 for a
period of more than 6 months from the date they become payable are
Value Added Tax & Central Sales Tax of Rs. 166.58 lacs, TDS of Rs. 0.43
lacs, Provident Fund Rs. 1.54 lacs, Service Tax Rs. 0.21 lacs and
Professional tax of Rs. 2.32 lacs.
b. According to the information and explanation available to us,
details of dues of Excise Duty, VAT and Cess which have not been
deposited on account of any dispute with appellate authority, are given
Sr. Name of Nature of dues Amount
No. the Statue under dispute
rs in Lacs
1. The Central Excise duty including 4.65
Excise Act interest and penalty
1944 * as applicable
2. The GVAT Central Sales Tax 146.90
Name of the Statute Period to Forum where
which dispute is pending
The Central Excise Act 1944 *2004-05 Tribunal
The GVAT Act, 2003 2009-10 Commissioner
The excise department had issued certain show cause notices amounting
to tax liability of Rs. 493.96 lacs, which are pending at adjudication
level and amount paid under protest for the same amounting to Rs. 408.79
* However the company has paid under protest Rs. 2.60 lacs for the above.
x. CASH LOSSES AND ACCUMULATED LOSSES:
The company has accumulated losses of Rs. 3222.67 lacs at the end of the
year under review. The company has incurred cash loss in the year under
review to the tune of Rs. 3045.16 lacs and it has incurred cash loss of Rs.
1120.07 lacs in the immediately preceding financial year.
xi. DUES TO FINANCIAL INSTITUTION, BANKS OR DEBENTURE HOLDER:
Based on our audit procedures and as per information and explanation
given to us by the management of the company, we are of the opinion
that company has defaulted in repayment of dues to banks during the
year under review. The short term borrowings from the banks by the
company have been classified as Non Performing Assets (NPA) w.e.f. 28th
October, 2013. Details of default at year end are as follows:
Period of Default Amount (? In lacs)
Less than 30 days 0.18
30 to 90 days 0.18
More than 90 days (Excluding uncharged
interest of ? 202.57 lacs) 3344.86
xii. LOANS & ADVANCES ON PLEDGE OF SHARES DEBENTURES & OTHER
In our opinion and according to information and explanation 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
xiii. CHIT FUND/ NIDHI / MUTUAL BENEFIT FUND / SOCIETY:
The company is not a chit fund or a nidhi / mutual benefit fund /
society. Therefore, clause xiii of the Companies (Auditor''s Report)
Order, 2003 (as amended) is not applicable to the company.
xiv. TRADING IN SHARES, SECURITIES, DEBENTURES & OTHER INVESTMENTS:
According to information and explanations given to us, the company is
not dealing or trading in shares, securities, debentures and other
xv. GUARANTEE FOR LOANS TAKEN BY OTHERS:
According to the information and explanations given to us, the company
has not given any guarantee for loans taken by others from any bank or
Based on our audit procedures and according to information and
explanations given to us, the company has obtained vehicle loan during
the year under review and same has be applied for the purpose it was
xvii. SHORT TERM FUNDS USED FOR LONG TERM INVESTMENTS:
According to the information and explanations given to us, and on
overall examination of the year end balance sheet of the company, we
are of the opinion that prima facie, no funds raised on short-term
basis have been used for long-term investments.
xviii. PREFERENTIAL ALLOTMENT OF SHARES:
Based on the audit procedures performed and according to the
information and explanations given to us, during the year under review,
the company has not made any preferential allotment of shares to
parties or companies covered in the register maintained under Section
301 of the Companies Act, 1956.
The company has no outstanding debenture during the year under review.
xx. PUBLIC ISSUE:
The company has not raised any money through a public issue during the
year under review.
Based upon the audit procedures performed for the purpose of reporting
the true and fair view of the financial statements and as per the
information and explanation given to us by the management, we report
that no significant fraud on or by the company has been noticed or
reported during the course of our audit.
For SVK & ASSOCIATES
Firm No. – 118564W
Shilpang V. Karia
Partner Place: Morbi
M. No. – 102114 Date: 30th May, 2014