We have audited the accompanying financial statements of CARNATION
INDUSTRIES LIMITED (''the company''), which comprise the balance sheet as
at 31 March 2015, the statement of profit and loss and the cash low
statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the 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 financial statements that
give a true and fair view of the financial position, financial
performance and cash lows 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
also 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.
Our responsibility is to express an opinion on these 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
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 audit opinion on the financial
In our opinion and to the best of our information and according to the
explanations given to us, 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 profit/loss and its cash lows for the year
ended on that date.
Emphasis of Matters
We draw attention to the following matter in the Notes to the financial
(i) Note 16(a) to the financial statements which describes the overdue
receivables from a related party.
Our opinion is not modified in respect of this matter.
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
subsection (11) of section 143 of the Act, we give in the Annexure a
statement on the matters specified in the paragraph 3 and 4 of the
Order, to the extent applicable.
2. As required by Section 143 (3) of 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
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 it appears from our examination of those
(c) The balance sheet, the statement of profit and loss and the cash
low statement dealt with by this Report are in agreement with the books
(d) In our opinion, the aforesaid 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 the written representations received from the
directors as on 31 March 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2015
from being appointed as a director in terms of section 164(2) of the
(f) With respect to the other matters to be included in the Auditors''
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 28(ii) to
the financial statements;
ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long-term contracts including derivative contracts- Refer Note
28(xv) to the financial statements;
iii. There has been no delay transferring amounts, required to be
transferred, to the Investor Education and protection Fund by the
Annexure to the Independent Auditors'' Report
The Annexure referred to in our Independent Auditors Report to the
members of the company on the financial statements for the year ended 31
March 2015, we report that:
1. The company is maintaining proper records showing full particulars,
including quantitative details and situation of fixed assets. As
informed to us all fixed assets (except lying with outside parties)
have been physically verified by the management at reasonable intervals
and no material discrepancies were noticed on such verification.
2. The management has conducted physical verification of inventory at
the end of the year (except stock lying with outside parties). The
procedures of physical verification of inventory followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business. The company is maintaining
proper records of inventory and no material discrepancies were noticed
on such physical verification.
3. The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 189 of the Companies Act 2013.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business, for the purchase of inventory and fixed assets and for the
sale of goods. Further, on the basis of our examination of the books
and records of the Company, carried out in accordance with the
generally accepted auditing practices in India, we have neither come
across nor have we been informed of any instance of a continuing
failure to correct major weakness in the aforesaid internal control
5. The Company has not accepted any deposits from the public.
6. The Central Government has prescribed the maintenance of cost
records under section 148(1) of the Companies Act, 2013 for the
products of the company. We have broadly reviewed such records
maintained by the company and are of the opinion that prima facie, the
prescribed records have been made and maintained. We have however not
made a detailed examination of the said records with a view to
determine whether they are accurate or complete.
7. According to the records of the Company, the Company is generally
regular in depositing undisputed statutory dues including Provident
Fund, Employees'' State Insurance, Income Tax, Sales-Tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and Other
Statutory Dues applicable to it with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
Tax, Service Tax, Custom Duty, Excise Duty and Value Added Tax were
outstanding at the year end for a period of more than six months from
the date they became payable.
Further according to the records of the Company, there are no dues
outstanding of Sales Tax, Income Tax, Custom Duties, Wealth Tax,
Service Tax, Excise Duty, Value Added Tax, Cess on Account of any
dispute other than the following:
Name of the Nature of Dues Amount Forum Where
Status (Rs.) Dispute
West Bengal Value Value 100.13 lacs Before the West
Added Tax Act, Added Tax for Bengal Commercial
2003 the Financial Taxes Applellate
Year 2007-2008 & Revisional
Cental Excise Duty and Penalty 136.56 lacs Before the
Act, 1944 Commissioner
(Appeal - I & II)
of Central Excise.
According to the information and explanations given to us the amounts
which were required to be transferred to the investor education and
protection fund in accordance with the relevant provisions of the
Companies Act, 1956 (1 of 1956) and rules there under has been
transferred to such fund within time.
8. The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses in the financial year
and in the immediately preceding financial year.
9. Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that the
company has not defaulted in repayment of dues to bank.
10. In our opinion and according to the information and the
explanations given to us, the company has not given any guarantee for
loans taken by others from banks or financial institutions.
11. The term loans were applied for the purpose for which the loans
12. According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the course of our audit.
For JAIN & BAGARIA
B. K. Agarwal
27/8A, Waterloo Street (Partner)
Kolkata - 700 069 Membership No.065361
Dated : 26th May, 2015 FRN : 310045E