Report on the Financial Statements
We have audited the accompanying financial statements of Eastern Silk
Industries Limited which comprise the Balance Sheet as at 31st March,
2013, 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 referred to in sub-section (3C) of section 211
of the Companies Act, 1956 .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.
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 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. 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
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit 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
a) In the case of the Balance Sheet, of the state of affairs of the
company as at 31st March, 2013;
b) In the case of the Statement of Profit and Loss, of the loss 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.
EMPHASIS OF MATTER
We draw attention to ;
a) Note no. 36 to the financial statements which states that the losses
of the Company for the year and preceding years as per Books of
Accounts stand at Rs. 24,489.96 lacs (Previous year Rs. 14,954.05 lacs) as
on 31st March, 2013. After adjustment of the losses, the shareholders
funds stands at Rs. 12,897.98 lacs (Previous year Rs. 25,232.33 lacs). As
stated, the management has a strategic plan for the revival of the
Company and is hopeful in improving the financial health of the Company
in near future. Accordingly the Financial Statement for the year has
been drawn up by the management as per going concern assumption.
b) Note No. 37 to the financial statement which states that Sundry
Debtors of Rs. 24,804.33 lacs (Previous year Rs. 23,536.05 lacs) receivable
from overseas buyers towards sale consideration of goods exported,
against which the company has filed money suits in the Hon''ble High
Court Kolkata, which has been 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.
c) Note No. 39 to the financial statements regarding recognition of Net
Deferred Tax Assets (DTA) of Rs. 2,193.03 lacs (Previous year Rs. 2,379.95
lacs) in the accounts based on future profitability projection made by
the management. However, we are unable to express any opinion on the
projections and their consequential impact, if any, on the recognition
of such DTA
Report on Other Legal and Regulatory requirements
1. As required by the Companies (Auditor''s Report) Order, 2003. Issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the act, 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:
(i) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
(ii) 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
(iii) The Balance sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
(iv) In our opinion, the Balance sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3C) of section 211 of the Act;
(v) On the basis of written representation received from the directors
as at 31st March, 2013 and taken on record by the Board of Directors,
none of the directors is disqualified as at 31st March, 2013, from
being appointed as a director in terms of clause (g) of sub-section (1)
of section 274 of the Act.
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 Company.
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) As explained to us and according to the information furnished to
us, the Company has neither granted nor taken any loans, (except a sum
of Rs. 1,474 lacs-unsecured, interest free, from the promoters) secured
or unsecured, to / from companies, firms or other parties covered in
the register maintained under Section 301 of the Companies Act, 1956
and as such clause (iii) of the Order is not applicable.
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. During the course of our audit, we have not observed any major
weakness in internal controls.
v) In respect of transactions entered in the register maintained under
Sec. 301 of the Companies Act, 1956:
a. To the best of our knowledge and belief and according to the
information and explanations given to us, transactions that needed to
be entered into the register pursuant to Section 301 of the Companies
Act, 1956 have been so entered.
b. In our opinion and according to the information and explanations
given to us, the transactions in pursuance of contracts or arrangements
entered in the register maintained under Section 301 of the Companies
Act, 1956 and aggregating during the year to Rs. 5 lacs or more in
respect of any party have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
vi) The Company has not accepted any deposits from the public and as
such clause (vi) of the Order is not applicable.
vii) In our opinion, the Company has an adequate internal audit system
commensurate with the size and nature of its business and needs to be
viii) We have broadly reviewed the books of account and records
maintained by the Company relating to ''Textiles'' pursuant to Sec.
209(1)(d) of the Companies Act, 1956 and are of the opinion that prima
facie the prescribed accounts and records have been made and
maintained. We have, however, not made a detailed examination of these
ix) 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''s Education and Protection Fund, Employees'' State Insurance,
Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty, Cess and
any other 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, 2013 for a period of more than six months
from the date they became payable.
b. According to the information and explanations given to us, details
of dues of Customs Duty/ Excise Duty/Income Tax & Sales Tax which have
not been deposited on account of any dispute are as follows :
Name of the
Statute Name of the
(Rs. in lacs)
Act Excise Duty and
Employees State Employees State
Custom Duty Act Custom Duty 109.77
Customs Duty Act Custom Duty 148.50
Customs Duty Act Custom Duty 78.92
Customs Duty Act Custom Duty 28.70
Customs Duty Act Custom Duty 44.07
Income Tax Act Income Tax 2.31
Income Tax Act Income Tax 71.51
NAME Period to which Forum where
the amount dispute is pending
Custom Duty Act 2002-03 Deputy Commissioner,
Custom Duty Act 1995-96 & Asst. Director, ESIC
Custom Duty Act 2001-02 Hon''ble High Court of
Custom Duty Act 2005-06 Commissioner of Custom
Custom Duty Act 2003-04 CESTAT, Bangalore
Custom Duty Act 2003-04 Commissioner of Custom
Custom Duty Act 2002-03 Commissioner of Custom
Custom Duty Act 2004-05 I.T.A.T (Kolkata)
Custom Duty Act 2010-11 I.T.A.T (Kolkata)
x) The Company has accumulated losses at the end of financial year and
has also incurred cash losses during the financial year covered by our
audit .The company has also incurred cash losses in the previous
xi) In our opinion and according to the information & explanations
given to us, the Company has not defaulted in repayment of term loan
installment & Interest to Banks and/or to Financial Institutions.
xii) 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
xiii) The Company is not a Chit Fund or a Nidhi / Mutual Benefit
Fund/Society and as such reporting under clause (xiii) of the Order is
not applicable to the Company.
xiv) Based on our examination of the records and according to the
information and explanations given to us, Company is not dealing or
trading in shares, securities, debentures and other investments. We
also report that the Company has held the shares, securities,
debentures and other investments in its own name.
xv) According to the information and explanations given to us, the
Company has given a corporate guarantee to a bank for an Associate
Company for Rs. 650.00 Lacs for availing loan from bank by the said
Company, the terms of conditions of which are not prima facie
prejudicial to the interest of the Company.
xvi) The company has not obtained any fresh term loans during the year
under review. Accordingly, the provisions of clause (xvi) of the Order
are not applicable to the company.
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 prima facie funds raised on short-term basis have been
not used for long-term investments.
xviii) The Company has not made preferential allotment of shares during
the year to parties and companies covered in the Register maintained
under Section 301 of the Companies Act, 1956.
xix) The Company has not issued any debentures during the year.
xx) The Company has not raised any money by public issue during the
xxi) To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the company
was noticed or reported during the course of our audit.
For B. K. SHROFF & CO.
Firm Registration No.: 302166E
23A, Netaji Subhas Road, PARTNER
Kolkata Membership No. : 60742
The 29th May, 2013