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Kitex Garments
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« Mar 13
Auditor's Report (Kitex Garments) Year End : Mar '14
We have audited the accompanying financial statements of Kitex Garments
 Limited (the Company), 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 notified under 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.
 
 Auditor''s Responsibility
 
 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 Company''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.
 
 Opinion
 
 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
 India:
 
 (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 the Profit and Loss Account, of the profit 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.
 
 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 Companies Act, 1956 and
 sub-section (11) of Section 143 of the Companies Act, 2013, we give in
 the Annexure a statement on the matters specified in paragraphs 4 and 5
 of the Order.
 
 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 purpose 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 this Report are in agreement with the books of
 account and records;
 
 d.  in our opinion, the Balance Sheet, Statement of Profit and Loss and
 Cash Flow Statement comply with the Accounting Standards notified under
 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;
 
 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 and sub-section (2) of Section
 164 of the Companies Act, 2013.
 
 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.
 
 Annexure to Auditors'' Report
 
 Referred to in Paragraph 1 of Report on Other Legal and Regulatory
 Requirements of our Report of even date (i)
 
 (a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 (b) As explained to us, all the fixed assets have been physically
 verified by the management in a phased periodical manner, which in our
 opinion is reasonable, having regard to the size of the Company and
 nature of its assets.  According to the information and explanations
 given to us, no material discrepancies were noticed on such physical
 verification.
 
 (c) During the year, the Company has not disposed off a substantial
 part of its fixed assets, which affect the going concern status of the
 Company.
 
 (ii)
 
 (a) The inventories have been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) In our opinion, the Company has maintained proper records of
 inventories. As explained to us, no material discrepancies were noticed
 on physical verification of inventories as compared to the book
 records.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to/from Companies, firms or other parties covered in the
 Register maintained under Section 301 of the Companies Act, 1956 and
 Section 189 of the Companies Act, 2013.
 
 (iv) 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 the nature of its business with regard
 to purchase of inventory and fixed assets and also with regard to the
 sale of goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control system.
 
 (v)
 
 (a) In our opinion and according to the information and explanations
 given to us, we are of the opinion that the transactions made in
 pursuance of contracts or arrangements, that need to be entered in the
 Register maintained under Section 301 of the Companies Act, 1956 and
 Section 189 of the Companies Act, 2013, have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the Register maintained under Section 301 of
 the Companies Act, 1956 and Section 189 of the Companies Act, 2013, and
 exceeding the value of Rs. 5 Lakhs in respect of any party during the
 year have been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 during the year. Therefore, the provisions of clause 4 (vi) of the
 Companies (Auditor''s Report) Order, 2003, are not applicable to the
 Company.
 
 (vii) Internal Audit functions are carried out by the Internal Audit
 Department of the Company and the same is reviewed by the Audit
 Committee. In our opinion, the same can be considered as adequate.
 
 (viii) According to the information and explanations given to us, the
 Central Government has prescribed maintenance of cost records under
 Section 209(1) (d) of the Companies Act, 1956 and Section 128 read with
 Section 2(13) of the Companies Act, 2013, in respect of manufacturing
 activities of the Company. We have broadly reviewed the accounts and
 records of the Company in this connection and are of the opinion, that
 prima facie, the prescribed accounts and records have been made and
 maintained. We have not, however, carried out a detailed examination of
 the same.
 
 (ix)
 
 (a) The Company is generally regular in depositing with the appropriate
 authorities undisputed 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 any other material statutory dues applicable to the
 Company.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of the aforesaid dues were in
 arrears, as at 31.03.2014 for a period of more than six months from the
 date they became payable.
 
 (b) According to the information and explanations given to us, the
 following dues demanded by the relevant authority have not been
 deposited on account of pending disputes:
 
 Name of 
 Statute     Nature of Dues   Amount
                             (Rs.)            Period to     Forum where
                                              which it      Dispute is
                                              Relates       Pending
 
 Customs 
 Act         Customs Duty     Rs.2,20,61,171 
                              with simple 
                              interest of     FY 1997-98    Honorable
                                                            Supreme
                              10% on Rs.
                              99,31,229 as 
                              per Settlement                Court of 
                                                            India
                              Commission
                              Order (out of 
                              which Rs.
                              2,20,61,171/- 
                              has been paid)
 
 Income 
 Tax         Act Income tax   Rs.6,29,406/-   AY 2003-04    Honorable
                                                            High
                                              & 2004-05     Court of
                                                            Kerala
 
 Income Tax 
 Act         Income tax       Rs.21,29,567/-  AY 2005-06    Commissioner
                                                            of Income 
                                                            Tax (Appeals)
 
 Income Tax 
 Act         Income tax       Rs.8,68,593/-   AY 2006-07    Commissioner
                                                            of Income 
                                                            Tax (Appeals)
 
 Income Tax 
 Act         Fringe Benefit   Rs.9,07,553/-   AY 2006-07    Commissioner
                                                            of 
             tax                                            Income Tax
                                                           (Appeals)
 
 Income Tax 
 Act         Income tax       Rs.58,87,640/-  AY 2009-10    Commissioner
                                                            of Income 
                                                            Tax (Appeals)
 
 Income Tax 
 Act         Income tax       Rs.48,72,980/-  AY 2011-12    Commissioner
                                                            of Income 
                                                            Tax (Appeals)
 
 Provident 
 Fund        Provident Fund   Rs.1,31,86,
                              588/- (Out of
                              which           FY 2001-02    Honorable 
                                                            High
 Act                          Rs.52,74,636/-
                              has been 
                              deposited)      to 2005-06    Court of 
                                                            Kerala
 
 Provident 
 Fund        Provident Fund   Rs.20,44,752/-  For the       Regional
                                                            Provident
 Act                                          Period Fund   Commissioner,
                                              April 2012 to Kochi 
                                              August 2012
 
 Employees 
 State       Employee State   Rs.2,03,687/-
                             (Out of which    FY 1996-1997  The Director
                                                            ESI
 Insurance
 Act         Insurance        Rs.1,25,000/- 
                              has been
                              deposited)      and 1997-98   Regional
                                                            Office,
                                                            Ernakulam
 
 Employees 
 State       Employee State   Rs.5,61,692/-
                             (Out of which    FY 1998 -99   Honorable
                                                            High
 Insurance 
 Act         Insurance        Rs.2,15,791/-
                              has been
                              deposited)      to 2001-02    Court of 
                                                            Kerala
 
 Employees 
 State       Employee State   Rs.26,01,275/- 
                             (Out of which 
                              the             FY 2008-09    Honorable
                                                            ESI Court,
 Insurance 
 Act         Insurance        company has
                              Deposited
                              Rs.3,00,000/-)                Alapuzha
 
 Employees 
 State       Employee State   Rs.2,79,558/- 
                              and related 
                              Interest of     FY 2008-09    Honorable
                                                            ESI Court,
 Insurance 
 Act         Insurance        Rs.9,466/- 
                             (Out of which 
                              the company                   Alapuzha
                              has 
                              Deposited 
                              Rs.50,000/-)
 
 Employees 
 State       Employee State   Rs.8,63,348/ 
                             (Out of which
                              the             FY 2008-09    Honorable 
                                                            ESI Court,
 Insurance 
 Act         Insurance        company has 
                              Deposited 
                              Rs.1,00,000/-)                Alapuzha
 
 Kerala      One Time         Rs.3,08,945/-   1997          Honorable
                                                            High
 Municipa
 lity Act,   Building Tax                                   Court of
                                                            Kerala
 1994 read 
 with 
 Kerala 
 Building 
 Rules, 1999
 
 (x) In our opinion, the Company does not have accumulated losses at the
 end of the financial year. The Company has not incurred cash losses
 during the financial year covered by the audit and in the immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and according to the information and
 explanations given to us, the Company has not defaulted in repayment of
 dues to a financial institution, bank or debenture holders. There were
 no debenture holders at any time during the year.
 
 (xii) Based on our examination of documents and records and according
 to the information and explanations given by the Management, 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/mutual
 benefit fund/society. Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003, are not applicable to the
 Company.
 
 (xiv) In our opinion, the Company is not dealing or trading in shares,
 securities, debentures and other investments.  The investment made in
 equity shares is held in its own name.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) In our opinion, the term loans have been applied for the purposes
 for which they were raised.
 
 (xvii) According to the information and explanations given to us, and
 on an overall examination of the Balance Sheet of the Company, we are
 of the opinion that no funds raised on short term basis have been used
 for long term investment.
 
 (xviii) According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and Companies covered in the Register maintained under Section 301 of
 the Companies Act, 1956 and Section 189 of the Companies Act, 2013.
 
 (xix) The Company has not issued any debenture during the year.
 Accordingly, the provisions of clause 4(xix) of the Companies
 (Auditor''s Report) Order, 2003, are not applicable to the Company.
 
 (xx) The Company has not raised money by public issues during the year
 and hence the question of disclosure and verification of the end use of
 such money does not arise.
 
 (xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company during the year was noticed or reported, nor have we been
 informed of such case by the management.
 
                                              For KOLATH & CO
 
                                        Chartered Accountants
 
                           Firm''s Registration Number 008926S
 
                                                           Sd/-
 
                                      CA .Liju.V.Rajan Kolath
 
 Ernakulam                                            Partner
 
 03.04.2014                              Membership No.209309
Source : Dion Global Solutions Limited
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