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Birla Cotsyn India Ltd.

BSE: 533006 | NSE: BIRLACOT | Series: NA | ISIN: INE655I01024 | SECTOR: Textiles - Spinning - Synthetic Blended

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Birla Cotsyn India is not traded on NSE in the last 30 days

Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2008

Auditor's Report

We have audited the accompanying standalone financial statements of BIRLA COTSYN (INDIA) LIMITED (the Company) which comprise the Balance Sheet as at 31st M arch, 2015, 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 Standalone Financial Statements The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the Act) with respect to the preparation and presentation of these standalone 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 principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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 standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 the 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 financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, 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 qualified audit opinion on the standalone financial statements. Basis for Qualified Opinion 1. With reference to note no. 7(B)(b) regarding inter corporate deposits of Rs. 17,96,88,787/- taken from various parties as at 31st March, 2015 in the absence of third party confirmation, reconciliation, if any and other supportive audit evidence, we are unable to comment upon such balances. Further, few such parties have already filed winding up petition under section 271 and 272 of the Companies Act, 2013 (the Act) against the Company for non-payment of dues (Section 433 & 434 of the Companies Act, 1956). These matters are sub- judice and the impact, if any, of the outcome is unascertainable of this stage. 2. With reference to note no. 7(B)(c) regarding dues to related parties of Rs. 9,15,49,878/- and note no. 8(A)(a) trade payables of Rs. 22,69,36,818/- as at 31st March, 2015, in the absence of third party confirmation, reconciliation, if any and other supportive audit evidence, we are unable to comment upon such balances. 3. No provision has been made in the current year for interest payable of Rs.37,73,961/- on loans taken from related parties by the Company and no provision has been made for interest receivable of Rs.1,89,20,004/- on loans given to related parties by the Company. Consequently the loss for the year is higher by Rs.1,51,46,043/-, Other Current Liabilities (Note No 8) is understated by Rs.37,73,961/- and Other Non-Current Assets (Note 13) is understated by Rs.1,89,20,004/-. 4. With reference to Fixed Deposits accepted by the Company, the Company has defaulted in repayment of dues of Rs. 4,33,29,363/- as at 31st March, 2015. However, on Company''s petition / application under section 58A(9) of the Companies Act, 1956, the Hon''ble Company Law Board has passed an order dated 19th May, 2015 for rescheduling the repayment of the deposits for a specified period under section 58A(9) read with section 74(2) of the Companies Act, 2013. 5. With reference to note no 12(a) regarding capital advances of Rs.94,55,65,044/- as at 31st March, 2015 given to various parties, the Company has made a provision of Rs.94,32,23,851/-given to various equipment suppliers and other parties mainly towards implementing Weaving Project. The amount represents balances outstanding for more than five years in respect of projects of the Company which have not taken off. In the absence of third party confirmation, reconciliation, if any and other supportive audit evidence, we are unable to comment upon its recoverability in cash or kind, if any. 6. With reference to note no. 17(a) regarding loan of Rs.7,29,98,404/- given to one related party, which has incurred losses and also has negative net worth as at 31st March 2013, in the absence of latest audited accounts and detailed information of projected cash flows as at 31 March, 2015 or other supportive audit evidence, we are unable to comment upon its impairment, if any. With reference to note no.12(d) regarding loans given to other related parties of Rs.33,89,08,208/- as at 31st March, 2015, in the absence of third party confirmation, reconciliation if any and other supportive audit evidence, we are unable to comment upon such balances 7. With reference to note no. 10(D) regarding Plant & Machinery of Rs. Rs.37,35,48,883/- situated at one factory unit of the company has been generally operating at lower capacity. In the absence of future cash flow projection and information about the value in use, we are unable to comment upon its impairment provision, if any as per Accounting Standard 28 Impairment of Assets. Qualified Opinion In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above and read with points mentioned in Emphasis of Matter paragraph, the aforesaid 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, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date. Emphasis of Matter 1. We draw attention to the Note no. 3(e) in the financial Statements. The company has incurred net loss of Rs.1,64,41,10,595/- during the year ended 31st March, 2015 and as of that date, the Company''s accumulated losses aggregate to Rs.345,55,84,162/- resulting in complete erosion of its net worth. Further, as of that date, company''s current liabilities exceeded its current assets by Rs.3,91,88,56,757/- subject to the effects of matters described in the Basis for Qualified Opinion paragraph. These factors along with other matters as set forth in said note raise substantial doubt about the company''s ability to continue as a going concern in the foreseeable future. However, the company''s financial statement has been prepared on going concern basis as disclosed by management in said note. Our opinion is not qualified in respect of this matter. 2. We draw attention to Note no. 4A and 4B regarding notice issued by consortium of banks under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 for non-payment of principal and interest thereon after the due date by the company and therefore all loans accounts became Non Performing Assets effective from respective dates mentioned in such notice. We are informed that the company is contesting the action taken under section 13(4) of SARFAESI Act and therefore the matter is sub-judice. These factors along with other matters as set forth in said notice raise substantial doubt about the company''s ability to continue as a going concern in the foreseeable future. However, the company''s financial statements have been prepared on going concern basis as disclosed by management in said note. Our opinion is not qualified in respect of this matter. Other Matters The company had given loan to three related parties in earlier years and the amount outstanding as at 31st March, 2015 Rs.44,47,33,111/- (including interest till 31st March, 2015) which is not in compliance with the requirements of section 185 of the Companies Act, 2013. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor''s Report) Order, 2015(the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in Annexure a statement on the matters Specified in paragraphs 3 and 4 of the Order. 2. As required by Section 143(3) of the Act, we report that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except for the matter described in the Basis for Qualified Opinion Paragraph. (b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it 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 accounts. (d) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph, and read with points mentioned in Emphasis of Matter paragraph, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. (e) On the basis of written representations received from the directors as on 31st March, 2015 taken on the record by the Board of Directors, none of the director is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164(2) of the Act. (f) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: I. The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note 26 to the financial statements; II. The Company does not have any long term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses does not arise III. There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise. ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT 1 Fixed Assets: 1.1 The Company has maintained proper records showing full particulars including quantitative details and situation of fi xed assets. 1.2 The fi xed assets are physically verifi ed during the year by the Management in accordance with a regular program of verifi cation which, in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verifi cation by the management between the book and physical verifi cation records. 2 Inventories: 2.1 As per the information given to us, inventory has been physically verifi ed by the Management during the year. In our opinion, the frequency of verifi cation is reasonable. 2.2 In our opinion and according to the information and explanations given to us, the procedures of physical verifi cation of such inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business 2.3 In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory and no major discrepancies were noticed on physical verifi cation. 3 Loans borrowed or given: 3.1 According to information and explanations given to us the Company has granted loans to three bodies corporate covered in the register maintained under section 189 of the Companies Act, 2013. 3.2 In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, since there are no terms for repayment of interest we cannot comment upon the regularity of the same. The terms of arrangements do not stipulate any repayment schedule and the loans are repayable on demand. Accordingly, paragraph 3(iii)(b) of the Order is not applicable to the Company in respect of repayment of the principal amount. 3.3 There are no overdue amounts of more than rupees one lakh in respect of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Companies Act, 2013. 4 Internal Control System: 4.1 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 for the purchases of inventory and fi xed assets and for the sale of goods and services. 4.2 As regards purchase of fi xed assets and capitalization of work in progress, the Company needs to strengthen internal controls for keeping proper identifi cation of Assets. 5 Deposit from Public: 5.1 The Company has defaulted in repayment of dues of Rs. 4,33,29,363/- till 31st March, 2015. However, on Company''s petition / application under section 58A(9) of the Companies Act, 1956, the Hon''ble Company Law Board has passed an order dated 19th May, 2015 for rescheduling the repayment of the deposits for a specifi ed period under section 58A(9) read with section 74(2) of the Companies Act, 2013. 6 Maintenance of Cost Records: 6.1 We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended, prescribed by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. 7 Remittance of Statutory Dues: 7.1 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 have not been regularly deposited with the appropriate authorities and there has been signifi cant delay in the same. 7.2 According to the information and explanation given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, wealth tax, service tax, sales tax, custom duty, excise duty, cess and other undisputed statutory dues were outstanding at the end, for the period of more than six month from the date they became payable, except as stated below Name of the Nature of Dues Amount (Rs.) Period to which Statute the Amount relates Income Tax Dividend Distribution tax 1,93,32,677 2009-10 Income Tax TDS on Interest 20,68,460 2012-13 Income Tax TDS on FD Interest 2,76,279 2014-15 Name of the Statute Due Date Date of payment Income Tax 04-10-2010 Not paid Income Tax 01-04-2012 to Not Paid 31-12-2012 Income Tax 1-04-2014 to 30-09- Not Paid 2014 7.3 According to the information and explanations given to us and as per the records of the Company examined by us, there are no dues outstanding of sales tax, income tax, custom duty, wealth tax, service tax, excise duty and cess, which have not been deposited on account of any dispute. 7.4 The amounts required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time. 8 Accumulated Losses: 8.1 In our opinion, the accumulated losses of the company are more than Fifty percent of its net worth. The Company has not incurred any cash losses during the fi nancial year covered by our audit and in the immediately preceding fi nancial year. 9 Dues to Bank and Financial Institutions 9.1 In our opinion, and according to the information and explanation given to us, the Company has defaulted in repayment of dues to fi nancial institutions and banks for principal amount of Rs. 232,43,04,243/- and interest amounting of Rs. 106,35,40,174/- since May 2012. The Company has received notice issued by consortium of banks under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 for non- payment of principal and interest thereon after the due date by the Company and therefore all loans accounts became Non Performing Assets effective from respective dates mentioned in such notice. We are informed that the company is contesting the action taken under section 13(4) of SARFAESI Act and therefore the matter is sub-judice. 10 Guarantees given by the Division for Loans Taken by Others: 10.1 According to the information and explanations given to us and records produced, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions. 11 End Use of Term Loans raised: 11.1 The Company has not taken any term loans during the year under audit. Hence the question of application of term loans for the purposes for which they were obtained does not arise. 12 Frauds 12.1 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanation given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the period, nor have been informed of any such case by the management. For Samria & Co., Chartered Accountants Firm Reg. No.: 109043W (Adhar Samria) Place: Mumbai Partner Date : 29th May, 2015 M. No: 049174