We have audited the accompanying financial statements of Raj Rayon
Industries Limited (the Company), which comprise the Balance Sheet as
at 31st March 2015, the Statement of Profit and Loss for the year then
ended and a summary of the significant accounting policies and other
Management''s Responsibility for the Financial Statements
The Company''s Board of Director 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 and financial performance 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 judgments and estimates that
are reasonable and prudent; and design, implementation and maintenance
of adequate internal financial control, 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 the 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 the internal financial control
relevant to the Company''s preparation of the financial statements that
give a true and fair view in order to design and 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 control system over financial reporting and the operating
effectiveness of such controls. An audit also include 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, its Loss for the year ended on that date, and cash
flow statement for year ended on that date.
Emphasis of Matter
We draw attention to Note 2 of the accompanying financial statements in
respect of contingency related to compensation payable in lieu of bank
sacrifice, the outcome of which is materially uncertain and cannot be
determined currently. Our opinion is not qualified in respect of this
Report on Other Legal and Regulatory Requirements
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.
As required by Section 143(3) of the 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
purposes 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
(c) The Balance Sheet and Statement of Profit and Loss dealt with by
this Report are in agreement with the books of account.
(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 31st March, 2015 taken on record by the Board of
Directors, none of the directors are disqualified as on 31st March,
2015 from being appointed as a director in terms of section 164 (2) of
(f) The Company has adequate internal financial control and in our
opinion the same is operating effectively.
(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 explanation given to us :
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements.
ii. The Company did not have any long term contracts including
derivative contracts for which there were any material foreseeable
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
ANNEXURE REFERRED TO THE INDEPENDENT AUDITORS'' REPORT
(Referred to in paragraph 1 under the heading of ''Report on Other Legal
and Regulatory Requirements'' section of our report of even date)
(i) a. In our opinion,the Company has maintained proper records showing
full particulars, including quantitative details and situation of its
b. As explained to us, the fixed assets have been physically verified
by the management according to a programme of verification which in our
opinion is reasonable having regard to the size of the Company and the
nature of its assets. No material discrepancies with respect to book
records were noticed on such verification.
(ii) a. As explained to us, physical verification of inventory has been
conducted by the management at reasonable intervals. In our opinion
frequency of verification is reasonable;
b. In our opinion, 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.
c. On the basis of our examination of the records of inventory, we are
of the opinion that the Company is maintaining proper records of
inventory. Discrepancies noticed on verification of inventory as
compared to book records were not material and these have been properly
dealt with in books of accounts.
(iii) The Company has not granted any Unsecured Loan to Companies as
covered in the register maintained under section 189 of the Companies
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory and fixed assets and for sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weakness in the internal control
(v) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit within the
meaning of section 73 to 76 of the Companies Act, 2013, and the rules
framed there under.
(vi) We have broadly reviewed the cost records maintained by the
Company in respect of products, pursuant to the rules made by the
Central Government, the maintenance of Cost records have been
prescribed under section 148 (1) of the Companies Act, 2013 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 the cost records with a view to determine whether they
are accurate or complete.
(vii) a. According to the records of the Company and the information
and explanations given to us, the company is regular in depositing with
appropriate authorities undisputed statutory dues including Provident
Fund, Employee''s State Insurance, Income Tax, Sales Tax, Wealth Tax,
Service Tax, Custom Duty, Excise duty, Value Added Tax, Cess and other
statutory dues to the extent applicable to it. There are no undisputed
statutory dues as referred to above as at 31st March, 2015 outstanding
for a period of more than six months from the date they become payable.
b. The disputed statutory dues that have not been deposited on account
of matters pending before the appropriate authority are as under -
Name of Nature of the Amount Rs. in Lacs
the Statute Dues (Excluding penalties
and interest, if any)
Central Excise Duty 23.89
Textile Cess 0.35
Income Tax Income Tax 25.47
Gujarat Tax Entry tax 558.83
on Entry of
Name of the Period to Forum where dispute is pending
Statute which the
1999-2000 Additional Directorate of Anti
1999-2000 The Company is in the process of
2003-2004 Appellate Tribunal of Central
2003-2004 The Company has filed reply to
& show Cause Notice received from
2004-2005 Superintendent of Central Excise.
2003-2004 The Company has filed the Appeal
in the Customs, Excise & Service
Tax Appellate Tribunal, Ahmedabad.
2005-2006 The Company has filed the reply to
& Show cause notice received from
2006-2007 the Commissioner of Central
Excise & Custom, Vapi.
2006-2007 The Company has filed the reply to
& Show cause notice received from
2007-2008 the office of the Commissioner of
Central Excise & Custom, Vapi.
2007-2008 The Company has filed the reply to
Show cause notice received from
the Commissioner of Central Excise
& Custom, Vapi.
2009-2010 The Company has filed Appeal &
Stay application with Custom
Excise & Service Tax Appellate
Textile Cess 1997-1998 Textile Cess Appellate Tribunal.
Income Tax 2004-2005* Application for giving effect to
Act the order of CIT (A) is pending
before the Assessing Officer. The
Appeal was decided in favour of
Gujarat Tax 01.04.2012 The Company has filed reply to the
on Entry of to Show Cause Notice issued by the
Specified 31.01.2014 Commercial Tax Officer,Ahmedabad.
# Payment made under protest
* Assessment year
c) The amount required to be transferred to Investor Education and
Protection Fund in accordance with the relevant provisions of The
Companies Act, 1956 (1 of 1956) and rules made there under has been
transferred to such fund with in time
(viii) The accumulated losses of the Company at the end of the
financial year are more than fifty per cent of its net worth. The
Company has accumulated losses at the end of the financial year in the
statement of Profit & Loss. It has incurred cash losses in the current
financial year covered by the Audit and also incurred in immediately
preceding financial year.
(ix) Based on our audit procedures and accordingly to the information
and explanation given by the management, we are of the opinion that the
company has generally not defaulted in repayment of dues to bank /
financial institution except delay in making payment towards interest
(x) According to the information and explanations given to us the
company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xi) In our opinion and as per the information and explanations given
to us, the term loans have been applied for the purpose for which they
(xii) Based on the audit procedure performed and information and
explanations given to us by the management, we report that no fraud on
or by the Company has been noticed or reported during the course of our
For K. M. Garg & Co.
(FRN - 120712W)
(CA. K K Garg)
Place: Mumbai Partner
Date: 30th May, 2015 M No. 033940