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Garodia Chemicals
BSE: 530161|ISIN: INE236P01010|SECTOR: Chemicals
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Mar 12
Auditor's Report (Garodia Chemicals) Year End : Mar '13
Report on the Financial Statements:
 
 1.  We have audited the accompanying financial statements of Garodia
 Chemicals 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 year then ended, and a summary of significant
 accounting policies and other explanatory information.
 
 Managements 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 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 th e
 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
 Companys 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 fo r our audit opinion.
 
 Basis for Qualified Opinion:
 
 6.1 Attention is drawn to Note No. 21 of Notes on Financial Statements
 which is reproduced : In view of heavy accumulated losses and
 suspension of the manufacturing activities, no provision has been made
 for the interest payable on different credit facilities granted by
 Central Bank of India as reflected in Note No. 5 of Notes on Accounts.
 The estimated amount of interest Rs. 3,69,54,833/- payable till 31st
 March 2013 (previous year Rs.3,07,82,601/-). The balances of loans and
 interest payable to Central Bank of India are subject to confirmation.
 
 The non-provision of interest of Rs. 3,69,54,883/- payable to Central
 Bank of India, th e loss for the year is understated by Rs. 3,69,54,833/-
 and similarly the liability is understated by Rs. 3,69,54,833/- .
 
 6.2 Attention is drawn to Note No. 22 of Notes on Financial Statements
 which is reproduced:
 
 In view of heavy accumulated losses and suspension of the manufacturing
 activities, no provision has been made for the interest payable on term
 loan facilities granted by IDBI and now taken over by Aaskha Holdings
 Pvt Ltd as reflected in Note No. 4 of Notes on Financial Statements.
 The estimated amount of interest payable till 31st March, 2013 works
 out to Rs. 12,62,27,136/- (previous year Rs.10,96,17,086/-). The company
 is pursuing the matter for waiver of interest. The balances of loans
 and interest payable are subject to confirmation.
 
 The non-provision of interest of Rs. 12,62,27,136/- payable to IDBI and
 now taken over by Aaskha Holdings Pvt Ltd, the loss for the year is
 understated by Rs. 12,62,27,136/- and similarly the liability is
 understated by Rs. 12,62,27,136/- .
 
 6.3 Attention is drawn to Note No. 23 of Notes on Financial Statements
 which is reproduced :
 
 The liabilities to Central Bank of India for the various credit
 facilities granted as shown in Note No. 5 of Notes on Financial
 Statements have been taken over by Phoenix Arc Pvt.  Ltd. as per the
 agreement entered into by and between Central Bank of India and Phoenix
 Arc Pvt. Ltd. Phoenix Arc Pvt. Ltd. has served notice to company for
 recovery of dues of Rs.715.50 Lacs. The Company has disputed the
 agreement and has obtained a stay of recovery from DRT. Phoenix Arc
 Pvt. Ltd. has taken the symbolic possession of mortgaged premises i.e.
 2nd charge on factory and 1st charge on 1000 sq. ft. of office premise.
 The matter is pending with DRT fo r final hearing and disposal.
 
 In view of the above, the impact on the financial statements cannot be
 quantified.
 
 6.4 Attention is drawn to Note No. 25 of Notes on Financial Statements
 which is reproduced :
 
 Financial statements have been prepared in accordance with th e
 fundamental accounting assumption that the company is a going concern.
 
 The above being intention of the management for continuation of the
 business and the technicalities involved therein, we are unable to
 express any opinion on the above.
 
 Opinion:
 
 7 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 para 6- 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:
 
 (a) in the case of th e Balance Sheet, of the state of affairs of the
 Company as at March 31, 2013;
 
 (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 fo r the
 year ended on that date.
 
 Report on Other Legal and Regulatory Requirements:
 
 8 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.
 
 9 As required by section 227(3) of th e Act, we report that:
 
 a.  we have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary fo r the purposes 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 th is Report are in agreement with the books of
 account;
 
 d.  except for the effects/possible effects of the matters described in
 para 6- 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 th e Act;
 
 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 Act
 nor has it issued any Rules under th e said section, prescribing the
 manner in which such cess is to be paid, no cess is due and payable by
 the Company.
 
 Reg. : Garodia Chemicals Limited
 
 Annexure to the Independent Auditors Report
 
 (Referred to in Paragraph 8 of Our Report of Even Date)
 
 (i) (a) The Company has not maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets. Attention is drawn to note no. 19 of the Notes on Financial
 Statements.
 
 (b) As per the information and explanations given to us, these fixed
 assets have not been physically verified by the management. In view of
 the same, we do not offer any comment on any material discrepancy which
 may be noticed on physical verification.
 
 (c) As per the information and explanations given to us, the Company
 has not disposed off substantial part of fixed assets during the year.
 
 (ii) (a)to(c) As per the information and explanations given to us, the
 company has made full provision for the diminution in the value of
 inventory. Hence no further comments are given in relation to the same.
 
 (iii) (a)to(d) The company has not granted loans to companies, firms or
 other parties covered in register maintained u/s.301 of the Companies
 Act, 1956. Hence, sub clauses (iii)(a), (iii)(b), (iii)(c) and (iii)(d)
 are not applicable to the company.
 
 (e) The company has taken unsecured loans from one company, two
 directors and two other parties covered in the register maintained u/s.
 301 of the Companies Act, 1956. The maximum amount involved during the
 year was Rs. 1,81,04,863/-. Such loans are interest free loans.
 
 (f) In our opinion th e terms and conditions on which loans have been
 taken are not prejudicial to th e interest of the company.
 
 (g) There is no stipulation for repayment of loans and hence, we do not
 offer further comments thereon.
 
 (iv) The Company has not made any transactions relating to purchase of
 inventories, fixed assets and sale of goods and services during the
 year under reference. Hence, clause 4(iv) of the order is not
 applicable to the company.
 
 (v) (a) According to the information and explanations given to us, the
 company has not entered in any contract and arrangement that need to be
 entered into the register maintained u/s.301 of the Companies Act, 1956
 during the year under reference.  Hence, clause 4(v)(a) of the order is
 not applicable to the company.
 
 (b) As per the information and explanations given to us, the company
 has not made any transactions in pursuance of contracts or arrangements
 entered in the register maintained u/s.301 of the Companies Act, 1956
 exceeding the value of Rs.5 lakhs in respect of any party during the
 year and hence the clause 4(v)(b) of the Order is not applicable to the
 company.
 
 (vi) The Company has not accepted any deposits from the public.
 Therefore, the clause 4(vi) of the Order is not applicable to th e
 company.
 
 (vii) As per the information and explanations given to us, the Company
 has suspended its manufacturing activities and in view of the same, th
 e company does not have Internal Audit system commensurate with the
 size and nature of its business.
 
 (viii) In view of the suspension of the manufacturing operations, the
 cost records and accounts prescribed by the Central govt. u/s.209(1)(d)
 of the Companies Act, 1956 have not been made and maintained by th e
 company.
 
 (ix)(a) In view of the suspension of the manufacturing operations fo r
 last number of years, according to the records of the Company, the
 Company is not liable to make any deposits of statutory dues including
 Provident Fund, Investor Education and Protection Fund, Employees
 State Insurance, Income-tax, Sales-tax, Wealth-tax, Service-tax,
 Customs Duty, Excise Duty, Cess and other statutory dues with
 appropriate authorities whichever is applicable.
 
 (b) According to the information and explanations given to us, there
 are no disputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees State Insurance, Income-tax,
 Sales-tax, Wealth-tax, Service-tax, Customs Duty, Excise Duty, Cess and
 other statutory dues which have remained outstanding as at 31st March,
 2013;
 
 (x) According to the information and explanations given to us, the
 accumulated losses as at 31st March, 2013 are exceeding the net worth
 of the company and it has incurred cash losses during the year under
 reference and in the immediately preceding financial year.
 
 (xi) As per the information and explanations given to us, the company
 has defaulted in repayment of dues to the financial institutions /
 banks. Attention is drawn to Note No. 21 & 22 of Notes on Financial
 Statements.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a Chit fund or a Nidhi
 benefit mutual fund / society.  Therefore, the clause 4(xiii) of the
 Order is not applicable to the company.
 
 (xiv) In our opinion, th e Company is not dealing in or trading in
 shares, securities, debentures & other investments. Accordingly, the
 clause 4(xiv) of the Order is not applicable to the company.
 
 (xv) As per the information and explanations given to us, the company
 has not given guarantees for loans taken by others from banks or
 financial institutions. Therefore, the clause 4(xv) of the Order is not
 applicable to the company.
 
 (xvi) As per the information and explanations given to us, the company
 has not raised any term loans during th e year. Hence, the clause
 4(xvi) of th e Order is not applicable to the company.
 
 (xvii) The company has not used funds raised on short term basis for
 long term investment.
 
 (xviii) According to the information and explanations given to us, the
 company has not made preference share allotment of shares to parties
 and companies covered in the register maintained u/s.301 of the Act.
 
 (xix) According to the information and explanations given to us, during
 the year under reference, the company h as not issued debentures.
 Hence, the clause 4(xix) of the Order is not applicable to the company.
 
 (xx) According to the information and explanations given to us, the
 company has not raised money by public issues during the year under
 reference. Hence, the clause 4(xx) of the Order is not applicable to
 the company.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the year
 under reference.
 
                                        For MILIND MEHTA & CO,
 
                                        CHARTERED ACCOUNTANTS,
 
                                       (Registration No. 129664W)
 
                                        Sd/- 
 
                                       (MILIND K. MEHTA)
 
                                        PROPRIETOR 
 
                                        MEMBERSHIP NO.47739
 
 PLACE OF SIGNATURE: MUMBAI.
 
 DATE: 29th May, 2013
Source : Dion Global Solutions Limited
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