1. We have audited the accompanying financial statements of Essel
Propack Limited (the Company), which comprise the Balance Sheet as at
31 March 2014, 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) read with the General Circular 15/2013
dated 13 September 2013 of the Ministry of Corporate Affairs in respect
of Section 133 of the Companies Act, 2013 and other accounting
principles generally accepted in India. 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, 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 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 2014;
(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.
7. Emphasis of Matter
We draw attention to Note 27(a) of the financial statements, relating
to performance bonus provided for the Managing Director for the
financial year 2013- 14, which is in excess of limits prescribed u/s
198 of the Companies Act, 1956 by Rs. 6,999,857 and hence is subject to
approval of the Central Government.
Our Opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
8. 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.
9. 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 read with the General Circular 15/2013 dated
13 September 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act, 2013; and
(e) On the basis of written representations received from the directors
as at 31 March 2014 and
taken on record by the Board of Directors, none of the directors is
disqualified as at 31 March 2014, from being appointed as a director in
terms of Section 274(l)(g) of the Act.
Annexure referred to in Paragraph 8 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) The Company has granted unsecured loan to a Company covered
in the register maintained u/s 301 of the Act. The maximum amount
outstanding during the year and the year-end balance of such loan is Rs.
960,666,940. The rate of interest charged and other terms and
conditions of the loan are prima facie, not prejudicial to the
interests of the Company. The loan is repayable on demand. The
interest on the Loan Rs. 257,994,235 is overdue and the Company has taken
reasonable steps for recovery.
(b) The Company has not taken any loan, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
(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 or
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 the 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 2014 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 Period to which the Forum where
duty 122,597,968 FY 1993-1994
to FY 2000-2001 Supreme Court
Excise Act, 13,876,239 FY 1997-1998
to FY 2005-2006 Tribunal
1944 5,789,956 FY 2004-2005
to FY 2007-2008, Commissioner
and FY 2012-2013
5,000 FY 2010-2011 Deputy/Joint/
tax 148,537 FY 2005-2006 Bombay High
2,395,180 FY 2005-2006
to FY 2009-2010 Tribunal
shtra Value 5,374,953 FY 2005-2006 Maharashtra
Added added tax
Sales Central 13,176,758 FY 2002-2003
to FY 2005-06 Maharashtra
1956 sales tax 22,808,521 FY 2002-2003
to FY 2004-2005 Commissioner
6,315,391 FY 2002-2003
and FY 2008-2009 Deputy
of Sales Tax
11,215,659 FY 2001-2002,
FY 2003-2004 and Joint
of Sales Tax
2,336,728 FY 2007-2008 and
FY 2009-2010 Assistant
Bombay Cess 3,879,750 FY 2002-2003
to FY 2007-2008 Bombay High
tax 5,717,563 FY 2009-2010 Commissioner
1961 Income 11,599,113 FY 2006-2007
(x) The Company does not have accumulated Losses at the end of the
financial year and has not incurred any 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 explanation given to us, the Company has not defaulted
in repayment of dues to banks and financial institutions during the
year. 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 2014