1. We have audited the accompanying financial statements of Essel
Propack Limited (the Company), which comprise the Balance Sheet
as at 31 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
2. 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 Section 211(3C) of the
Companies Act, 1956 (the Act). 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.
3. 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 misstatements.
4. 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 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 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 statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
6. In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon, 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:
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March, 2013;
(b) In the case of the Statement of Profit and Loss, of the Profit 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.
Report on Other Legal and Regulatory Requirements
7. As required by the Companies (Auditor's Report) Order, 2003
(the Order) issued by the Central Government of India in terms of
Section 227(4A) of the Act, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.
8. As required by Section 227(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
(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
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
Section 211(3C) of the Act; and
(e) On the basis of written representations received from the directors
as at 31 March, 2013 and taken on record by the Board of Directors,
none of the directors is disqualified as at 31 March, 2013, from being
appointed as a director in terms of Section 274 (1) (g) of the Act.
Annexure referred to in Paragraph 7 under the heading of Report on
Other Legal and Regulatory Requirements of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of its fixed
(b) The fixed assets have been physically verified by the management
during the year as per the phased program designed to cover all the
fixed assets over a period, which in our opinion is reasonable having
regard to the size of the Company and nature of its assets.
Discrepancies noticed on such verification, which are not material,
have been properly dealt with in the books of accounts.
(c) In our opinion, the Company has not disposed off a substantial part
of its fixed assets during the year and the going concern status of the
Company is not affected.
(ii) (a) As explained to us, the inventories have been physically
verified by the management during the year except stocks lying with
third parties in respect of whom confirmations have been obtained. In
our opinion, the frequency of such verification is 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) As explained to us, the Company is maintaining proper records of
inventories and discrepancies noticed on physical verification of
inventories as compared to the book records, which are not material,
have been properly dealt with in the books of account.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
(b) According to the information and explanations given to us, the
Company has taken unsecured loan from a Company covered in the register
maintained under Section 301 of the Act. The maximum amount involved
during the year is Rs. 50,000,000 and there is no amount outstanding at
(c) The rate of interest and other terms and conditions of such loan
taken are prima-facie not prejudicial to the interests of the Company.
(d) The Company is regular in repayment of the loan taken and interest
thereon, considering the terms of the loan.
(iv) 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 with regard
to purchase of inventory, fixed assets and sale of goods and services.
During the course of our audit, we have not observed any continuing
failure to correct major weaknesses in the internal control systems in
respect of the aforesaid areas.
(v) In respect of the contracts or arrangements referred to in Section
301 of the Act:
(a) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements that need to be entered in the register maintained under
Section 301 of the Act have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts /
arrangements entered in the Register maintained under Section 301 of
the Act and exceeding the value of Rs.5,00,000 in respect of each party
during the year have been made at prices which appear reasonable as per
information available with the Company.
(vi) The Company has not accepted any deposits from the public during
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the cost accounting records maintained
by the Company pursuant to the Companies (Cost Accounting Records)
Rules, 2011 prescribed by the Central Government under Section 209 (1)
(d) of the Act and are of the opinion that prima facie the prescribed
records have been maintained. However, we are neither required to carry
out nor have carried out detailed examination of such cost accounting
records with a view to determine whether they are accurate or complete.
(ix) According to the records of the Company, examined by us and
information and explanations given to us:
(a) Undisputed Statutory dues including provident fund, investor
education and protection fund, employees state insurance, income tax,
sales tax / value added tax, wealth tax, service tax, custom duty,
excise duty, cess and others as applicable have generally been
deposited regularly with the appropriate authorities except delay in
few cases. There are no undisputed amounts payable in respect of
aforesaid dues outstanding as at 31 March 2013 for a period of more
than six months from the date they became payable.
(b) The disputed dues of sales tax/value added tax, service tax, excise
duty, income tax and cess which have not been deposited are as under:
Name of the Nature of Amount in (Rs.
Statute the Dues
Central Excise duty 122,597,968
Excise Act, 1944
Service tax 148,537
Maharashtra Value 36,134,596
Value Added added tax
Tax Act, 2002
Central Sales Central 731,067
Tax Act, 1956 sales tax
Bombay Cess 3,879,750
Income Tax Income 10,667,022
Act, 1961 tax-Penalty
Name of the
Statue Period to which the
amount relate Forum where dispute is pending
Act, 1944 FY 1993-1994 to FY
2000-2001 Supreme Court
FY 1997-1998 to FY
2000-2001 and FY Tribunal CESTAT
2002-2003 to FY
FY 2000-2001 to FY
2003-2004 and FY Commissioner of Central Excise
2005-2006 to FY
FY 2005-2006 Bombay High Court
FY 2005-2006 to FY
2007-2008 Tribunal CESTAT
FY 2006-2007 to
FY 2009-10 Deputy / Assistant Commissioner
of Service Tax
Tax Act, 2002 FY 2005-2006 Deputy Commissioner of Sales
Tax Act, 1956 FY 2002-2003 Maharashtra Sales Tax Tribunal
FY 2002-2003 to
FY 2004-2005 Commissioner of VAT-Dadra and
FY 2005-2006 and
FY 2008- Deputy Commissioner of Sales
2009 Tax (Appeals)
FY 2001-2002, FY
2003-2004 and FY 2004- Joint Commissioner of Sales Tax
FY 2006-2007 and
FY 2007-2008 Assistant Commissioner of
Act, 1959 FY 2002-2003 to
FY 2007-2008 Bombay High Court
Act, 1961 FY 2006-2007 Commissioner of Income Tax
(x) The Company does not have accumulated losses at the end of the
financial year and has not incurred cash losses during the current
financial year or in the immediately preceding financial year.
(xi) According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of dues to banks and financial institutionss. The Company
has not issued any debentures during the year.
(xii) The Company has not granted any loans and advances 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
(xiv) The Company is not dealing or trading in securities, debentures
and other investments.
(xv) In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
guarantees for loans taken by subsidiaries from banks are prima facie
not prejudicial to the interests of the Company.
(xvi) In our opinion and according to the information and explanations
given to us, the term loans raised during the year have been applied
for the purposes for which they were raised.
(xvii) According to the information and explanations given to us, and
on an overall examination of the Balance Sheet of the Company and
related information as made available to us, we report that short-term
funds have not been used for long-term investments.
(xviii) The Company has not made any preferential allotment of shares
to companies or parties covered in the register maintained under
Section 301 of the Act.
(xix) The Company has not issued any secured debentures during the
(xx) The Company has not raised any money by way of public issue during
(xxi) Based on the audit procedures performed and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year.
For MGB & Co.
Firm Registration Number 101169W
Membership Number 107832
Mumbai, 29 May 2013