We have audited the accompanying financial statements of Eastern Silk
Industries Limited which comprise the Balance Sheet as at 31st March,
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 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 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
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 of the assets of the
Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgements 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 disclosures in the financial statements. The
procedures selected depend on the auditor''s judgement, 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 entity''s internal control. An audit also
includes evaluating the appropriateness of accounting policies used
and the reasonableness of the accounting estimates made by the
management, as well as evaluating the overall presentation of the
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 loss and its cash flows for the year
ended on that date.
EMPHASIS OF MATTER
We draw attention to;
a) Note No. 33 (b) to the financial statements which states that the
company has not provided interest to lenders amounting to Rs. 6,557.70
b) Note No. 35 to the financial statements which states that the
company is a BIFR company pending registration as per the provisions
of the SICA Act 1985.
c) Note No. 36(a) to the financial statements which states that a
fresh provision of Rs. 3,697.22 Lacs has been made during the year for
bad & doubtful debts, thus aggregating to Rs. 12,665.10 Lacs as at 31st
March 2015 against a total Overdue Trade Receivables of Rs. 29,468.25
lacs, of which Rs. 16,803.15 Lacs is considered good for recovery by the
management. We are unable to express any opinion on correctness and/or
adequacy of the provision for bad & doubtful debts.
d) Note No. 37 to the financial statements regarding non recognition
of Net Deferred Tax Assets (DTA) of Rs. 429.77 lacs in the accounts. We
are unable to express any opinion regarding non-recognition of DTA and
about its adjustment against future profits of the company.
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 Companies Act, 2013, we give in
the Annexure, a statement on the matters specified in paragraphs 3 and
4 of the Order, to the extent applicable.
2. As required by section 143(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
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
c) The Balance sheet, Statement of Profit and Loss and Cash Flow
Statement, dealt with by this Report are in agreement with the books
d) In our opinion, the Balance sheet, Statement of Profit and Loss,
and Cash Flow Statement 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 representation received from the directors
as at 31st March, 2015 and taken on record by the Board of Directors,
none of the directors is disqualified as at 31st March, 2015, from
being appointed as a director in terms of Section 164 (2) of the Act.
f) In our opinion, the internal financial controls over financial
reporting of the Company and the operating effectiveness of such
controls are adequate.
g) 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:
* The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note No.27 to
the financial statements
* The Company has no long-term contracts including derivative
contracts hence no provision is required under the applicable law or
* There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF REPORT ON OTHER LEGAL AND
i) a. The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b. The management has physically verified certain fixed assets during
the year in accordance with a programme of verification, which, in our
opinion, provides for physical verification of the fixed assets at
reasonable intervals 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
c. In our opinion and according to explanations given to us, Fixed
Assets disposed off during the year were not substantial and as such
the disposal has not affected the going concern concept of the
ii) a. As explained to us, inventories have been physically verified
by the management at regular intervals during the year.
b. In our opinion and according to the information and explanations
given to us, 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 and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verification as compared to the book records.
iii) The company has not granted any loans, secured or unsecured to
companies firms or other parties covered in the register maintained
under section 189 of the Act and as such clauses (iii) (a) and (b) of
the order are not applicable to the company.
iv) 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 nature of its business
for the purchase of inventory, fixed assets and also for the sale of
goods and services. During the course of our audit, we have not
observed any major weakness in internal controls.
v) The Company has not accepted any deposits from the public and as
such clause (v) of the Order is not applicable.
vi) We have broadly reviewed the books of account maintained by the
company pursuant to the order made by the Central Government for the
maintenance of cost records under section 148(1) of the Act, and we
are of the opinion that prima facie the prescribed accounts and
records have been made and maintained. However, we have not made a
detailed examination of such accounts and records.
vii) According to the information and explanations given to us in
respect of the statutory dues:
a. The Company is generally regular in depositing undisputed statutory
dues including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income Tax, Wealth Tax, Sales Tax, Service
Tax, Customs Duty, Excise Duty, Cess and other applicable statutory
dues with the appropriate authorities during the year. According to
the information and explanations given to us, no undisputed amounts
payable in respect of the aforesaid dues were outstanding as at 31st
March, 2015 for a period of more than six months from the date they
b. According to the information and explanations given to us, details
of dues of Customs Duty/ Excise Duty/Income Tax & Sales Tax, Wealth
Tax, Service Tax and Cess which have not been deposited on account of
any dispute are as follows :
c. Required amount was transferred to investor education and
protection fund in accordance with the relevant provisions of the
Companies Act,2013 and rules made there under.
viii) The Company''s accumulated losses at the end of the financial
year under Audit has eroded more than 100% of the net worth. The
company has incurred Cash Losses during the financial year and in the
immediately preceding financial year.
ix) In our opinion and according to the information and explanation
given to us the company has defaulted in repayment of the following
amount to Banks & to Financial Institutions :
a) Term Loan Rs. 5,341.59 Lacs
b) Other Loans Rs. 38,472.59 Lacs
c) * Interest Rs. 8,951.87 Lacs
* Rs. 2,394.17 Lacs provided in Statement of Accounts and Rs. 6,557.70
Lacs not provided in the Statement of Accounts.
x) In our opinion and according to the information and explanation
given to us, no loans and advances have been granted by the Company on
the basis of security by way of pledge of shares, debentures and other
xi) The company has not obtained any fresh term loans during the year
under review. Accordingly, the provisions of clause (xi) of the Order
are not applicable to the company.
xii) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For B. K. SHROFF & CO.
Firm Registration No.: 302166E
Place : Kolkata PARTNER
Date : The 30th May, 2015 Membership No. : 060742