1) We have audited the Balance Sheet of VIKASH METAL & POWER LIMITED as
on 30th June, 201 2 and also the Profit & Loss Account and the Cash
Flow Statement for the period from 01.04.2011 to 30.06.2012, annexed
thereto. These financial statements are the responsibility of the
Company''s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2) We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An Audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion but restricted to the following:-
Since in the referred period, a major incident took place at the work
site of the company. A robbery took place at the works site and major
parts of plants has been reported lost and looted thus putting the
question on the going concern concept of the company and moreover the
company operation was suspended from October, 2011.
The management of the company has explained to us that in the said
robbery, many important papers were found missing and the company is
trying to recreate all the missing papers.
Further, the management has explained that during the said period the
company has loss to tune of Rs.16,064.84 Lacs which has eroded the
company capital and the net worth becomes negative and still the
liabilities on the company are huge. The company is indebted to
bankers; statutory liabilities are also here and not being paid up from
more than six months and outstanding liabilities to many trade payables
which is again a point of concern.
3) As required by the Companies (Auditor''s Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 and on the
basis of such checks as we considered appropriate, and according to the
information and explanations given to us, we enclose in the Annexure a
statement on the matters specified in paragraph 4and 5 of the said
Order to the extent applicable to the Company.
4) Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
a) The management could not provide us all the information and
documents due to papers destroyed in robbery as explained by the
b) Limitation of Scope, In our opinion, proper books of account, are
maintained as required by law, and kept by the Company so far as
appears from our examination of those books kept at the company''s
office, but we are unable to form any opinion on factory accounts as we
were not in a position to examine the books kept at factory due to its
destruction during robbery.
c) The management has not ascertained the impairment loss, if any,
required to be provided for in accordance with the requirement of
mandatory Accounting standard-28 Impairment of Assets issued by The
Institute of Chartered Accountants of India. In view of it involving
judgment of the management, we are unable, to quantify the same;
d) As explained by the management, no actuary valuation for gratuity
has been made by the actuarial as no employees was there as on 30th
e) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of accounts
f) In our opinion, the Balance Sheet, Profit & Loss Account 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;
g) On the basis of the written representations received from the
directors and taken on record by the Board of Directors, none of the
directors of the Company is disqualified as on 30th June, 2012 from
being appointed as a director in terms of clause (g) of sub-section (1)
of Section 274 of the Companies Act, 1956;
h) In our opinion and to the best of our information and according to
the explanation given to us, the said statement of accounts, read with
the Accounting Policies & Notes thereon, give the information required
by the Companies Act, 1956 in the manner so required and give a true
and fair view in conformity with the accounting principle generally
accepted in India:
1) in the case of the Balance Sheet, of the state of affairs as on 30th
2) in the case of the Profit and Loss Account, of the Company for the
period from 01.04.2011 to 30.06.2012, and
3) in the case of the Cash Flow Statement, of the cash flows of the
Company for the period from 01.04.2011 to 30.06.2012.
Annexure to the Auditors'' Report
(Referred to in Paragraph 3 of our Report of even date to the members
of Vikash Metal & Power Limited on the financial statements for the
period ended 30th June, 2012).
i. (a) As explained by management, the Company use to maintained
proper records to show full particulars, including quantitative details
and situation of its fixed assets. However, this register has been
maintained at factory which is missing after robbery and could not
present to us for verification.
(b) We are informed that fixed assets of significant value have been
physically verified by the management at reasonable intervals, in a
phased programme and no material discrepancies have been noticed in
respect of the assets verified.
(c) As explained by management, substantial part of the fixed assets
has been lost during the period covered under audit due to robbery
occurred on 12th April, 2012 amounting to Rs. 6,401.23 Lacs which has
adversely affects the continuity of going concern assumption.
ii. (a) As explained to us, inventories have been physically verified
by the management during the given audit period at reasonable
(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 the nature of its business.
(c) There is loss of inventories due to robbery occurred on 12th April,
2012 amounting to Rs. 2,628.05 Lacs, further as on balance sheet date
inventories figure stood Nil.
iii. (a) According to the information and explanation given to us, the
company has not granted any loans, secured or unsecured, to companies,
firms and other parties cover in the register maintained under Section
301 of the Companies Act, 1956.Accordingly, paragraph 4(iii)(b),(c) and
(d) of the order are not applicable.
(e) The Company has taken interest free unsecured loans from three
parties covered in the register maintained under Section 301 of the
Companies Act, 1956. The maximum amount involved during the period and
the year-end balance of such loans are Rs. 30,464.96 Lacs (previous
year Rs. 25,239.31) and Rs. 29,590.56 Lacs (previous year Rs.
(f) The terms and conditions of loans taken as aforesaid are prima
facie not prejudicial to the interest of the Company.
(g) In respect of aforesaid loans taken by the Company, there are no
stipulations as to repayment thereof.
iv. In our opinion and according to the information and explanations
given to us, there were adequate internal control procedures
commensurate with the size of the Company and nature of its business,
for the purchase of inventories and fixed assets and for the sale of
the goods. Since the operation was suspended from October, 2011
onwards, company has not given much attention towards internal control.
v. (a) To the best of our knowledge and belief and according to the
information and explanations given to us, we are of the opinion that
the particulars of the contracts or arrangements that need to be
entered in the register maintained under Section 301 of the Companies
Act, 1956, have been so entered.
(b) In our opinion, the transactions made in pursuance of such
contracts or arrangements and exceeding the value of five lakh rupees
in respect of any party during the period have been made at prices
which are reasonable having regard to prevailing market prices at the
vi. According to the information and explanation given to us, the
Company has not accepted any deposit during the period from the public
within the meaning of the provisions of the Sections 58A and 58AA of
the Companies Act, 1956 and the rules framed there under.
vii. During the period of our audit, the Company has no internal audit
system commensurate with the size and nature of its business.
viii. We could not review the books of account and records maintained
by the Company pursuant to the Order made by the Central Government for
maintenance of cost records under Section 209(1) (d) of Companies Act,
1956 as due to destruction of records as explained to us by the
ix. (a) According to the books and records examined by us, the Company
could not pay undisputed statutory dues Service Tax, Custom Duty, Sales
Tax, Provident Fund, Professional Tax, Excise Duty and Cess.
(b) According to the information and explanation given to us there are
undisputed outstanding statutory dues as at 30th June, 2012 for a
period of more than six months from the date they became payable are
as: VAT - Rs. 2,73,28,607, Excise Duty- Rs. 7,31,34,041, Income Tax-
Rs. 3,42,65,477, Professional Tax - Rs. 3.430, Tax Deducted at source
- Rs 8,14,821 and Provident Fund- Rs 4,37,816.
(c) According to the records of the company and the information and
explanations given to us and upon our enquiries in this regard, details
of statutory dues which have not been deposited on account of any
dispute are stated in Notes 27 to the accounts.
x. The Company has accumulated losses of Rs. 7,888.92 Lacs at the end
of the audit period ended after adjusting with all the free reserves
which the company has at the start of the financial year. It incurred
cash losses of Rs.10,499.98 Lacs in the financial year under report as
the company is more than 5 years old company and more than 50% of the
capital is eroded. The company falls under the sick unit category and
subsequent reporting from now onwards has to be made by the company.
xi. Based on our audit procedures and as per the information and
explanations given to us, the Company has failed to repay of its loans
and interest thereon to the banks and to the financial institutions
from October, 2011. The term loan installments and interest due as on
30th June, 2012 for Rs. 2068 Lacs (previous year Rs. 1087.30 Lacs) has
not been paid.
xii. As explained 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.
xiii. Clause (xiii) of the Order is not applicable, as the Company is
not a Chit Fund company or Nidhi/Mutual benefit Fund / Society.
xiv. The Company has maintained proper records of the transactions in
respect of investment made during the audit period and timely entries
have been made therein. All investments are held by the Company in its
xv. 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.
xvi. The Company has not raised any new term loan during the period.
There was term loans outstanding at the beginning of the year were
applied for the purpose for which they were taken.
xvii. In our opinion and according to the information and explanations
given to us, the funds raised on short-term basis have not been used
for long-term investment.
xviii. The Company has not made fresh allotment of shares during the
period to parties and Companies covered in the Register maintained
under Section 301 of the Companies Act, 1956.
xix. No debentures have been issued by the Company and hence the
question of creating security or charge in respect thereof does not
xx. The Company has raised money by way of issue of GDR amounting to
Rs. 3,607.20 Lacs during the audit period but the same has not been
utilized and kept in the EURAM Bank overseas as the purpose for which
it was raised has not been taken up yet by 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
FOR RAKESH SINGH & CO.
(Firm Registration No. 326072E)
CA. Rakesh Singh
Place: Kolkata Partner
Date: 27.11.2012 MRN 067493