Report on the Financial Statements
We have audited the accompanying financial statements of SEJAL GLASS
LIMITED, (the company), which comprises the Balance Sheet as at 31st
March 2015, the Statement of Profit and Loss and the 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 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 the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting the 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 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.
Auditor''s Responsibility
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 there under.
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 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 financial control relevant to the Company''s
preparation of the financial statements that give true and fair view 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 Company''s Directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is suffi cient and
appropriate to provide a basis for our qualified audit opinion on the
financial statements.
Basis for Qualified Opinion
- The Company has not obtained in many cases balance confirmations in
respect of Trade Receivables, Trade Payables, Loans and Advances given
and taken and Inter Corporate Deposits given and taken (excluding Group
companies);
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, and subject to note no. 26(8) to the
financial statements, referred in Basis of Qualified Opinion, 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,
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2015;
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 Matters
We draw attention to the following matters in the Notes to the
financial statements:
a) In the absence of convincing evidence assuring future taxable
income, the company has not made provision for Deferred Tax Asset;
Our opinion is not qualified in respect of the above matter.
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 Act, we give in the Annexure a
statement on the matters specified in the paragraph 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) Except for the effects of matter described in the Basis for
Qualified opinion paragraph, 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 books.
c) The Balance Sheet, the Statement of Profit and Loss, and Cash Flow
Statement 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 written representations received from the directors
as on 31 March, 2015, taken on record by the Board of Directors, none
of the directors is disqualified as on 31 March, 2015, from being
appointed as a director in terms of Section 164(2) of the Act.
f) The Company has made provision for foreseeable losses, if any that
may arise due to matters referred in qualified opinion.
g) With respect to the other matters to be included in the Auditors''
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,
i) The Company has disclosed the impact of pending litigations on its
financial position in its financial statements Refer to 26(2) to the
financial statements
ii) The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any on
long term contracts including derivative contracts.
iii) There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Independent Auditors'' Report
The Annexure referred to in our Independent Auditors'' Report to the
members of the Company on the financial statements for the year ended
31 March 2015, we report that:
1. In respect of Fixed Assets:
a) The Company has generally maintained proper records showing full
particulars including quantitative details and situation of its fixed
assets. The fixed assets register needs to be updated to reconcile with
the General Ledger.
b) As explained to us, the assets have been physically verified by the
Management during the year. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification.
c) During the year, the Company sold two floors of its Building which
did not form substantial part of its fixed assets. This sale has not
affected the going concern status of the Company.
2. In respect of Inventories:
a) As informed to us, the inventory has been physically verified by the
Management during the year. In our opinion, the frequency of
verification is reasonable.
b) In our opinion, the procedure of physical verification of
inventories followed by the Management is reasonable and adequate in
relation to the size of the Company and the nature of its business.
c) The Company has maintained proper records of inventory. No material
discrepancies have been noticed on verification of inventories as
compared to book records.
d) Proper procedure however should be in place to assess the non-moving
and obsolete items in the inventory. The Inventory includes old and non
moving items; a contingency provision for the same has been made in the
books of account of the company.
3. a) The company has granted unsecured loans to companies, firms and
other parties covered in the register maintained under section 189 of
the Companies Act, 2013. Interest charged on these loans is capitalised
to the principal loan amount.
b) In the absence of specific stipulation as to the terms of repayment,
the loans are repayable on demand. Accordingly, paragraph (iii)(b) of
the Order is not applicable to the Company in respect of repayment of
the principal amount.
4. In our opinion and according to the information and explanations
given to us, the internal control procedures with regard to the
purchase of inventory and sale of goods, collection from customers,
inventory management, cash management, credit notes monitoring need to
be strengthened, to be commensurate with the size of the Company and
the nature of its business. In our opinion, measures should be taken to
improve upon these weaknesses.
5. In our opinion, and according to the information and explanations
given to us, the Company has not complied with the provisions of
section 73 to 76 of the Companies Act, 2013 with regard to the Deposits
accepted from public. According to the information and explanations
given to us, no order has been passed by the Company Law Board or
National Company Law Tribunal or Reserve Bank of India or any Court or
any other Tribunal, on the Company. The Company has continuously
defaulted in payment of interest.
- The Balance in Fixed Deposit account is not reconciled.
- The Company has also failed to repay matured fixed deposits amounting
to Rs. 9.52 crores as at 31st March, 2015.
- The requirement of keeping not less than 15% of the amount of
deposits maturing during the financial year as well as in the following
year in a scheduled bank in a separate bank account titled Deposit
Repayment Reserve Account has not been complied with.
- The Company has not filed the return of Deposits for the past three
years including the year under audit.
6. According to the information and explanations given to us and to
the best of our knowledge and belief, consequent upon notification of
the Companies (Cost Accounting Records) Rules, 2011, the Central
Government has prescribed audit of the cost records maintained by the
Company under Section 148(1) of the Act for the products of the
Company.
7. According to the information and explanations given to us and on
the basis of our examination of the records of the Company, the Company
has generally defaulted in timely payment of undisputed statutory dues
including Provident Fund, Employees'' State insurance income tax, sales
tax, value added tax and Excise Duty, Cess, service tax, wealth tax and
other material statutory dues as applicable to it. There have been
delays in payment of following statutory liabilities. The outstanding
balance in these accounts as at 31st March, 2015 is as follows:-
- Provident Fund - Rs.36.44 Lacs.
- Income Tax i.e. Tax Deducted at source (TDS) Rs. 221.40Lacs.
- Central Sales Tax Rs.189.96 Lacs.
- Maharashtra VAT Rs. 217.69 Lacs.
- Service Tax Rs.28.86 Lacs
- ESIC Rs. 1.31 Lacs
- Profession Tax Rs. 1.04 Lacs
- Excise Duty - Rs.65.05 Lacs
In our opinion and according to information and explanations given to
us, no undisputed amounts payable in respect of Income Tax, Wealth Tax,
Sales Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, and
Cess were in arrears as at 31st March 2015 for the period of more than
six months from the date they became payable, except Income Tax
Deducted at Source (TDS) - Rs. 145 Lacs, Central Sales tax Rs. 175.97
Lacs and Maharashtra VAT 70.08 Lacs; Service Tax Rs.27.08 Lacs, ESIC
Rs 0.36 Lacs, Provident Fund Rs.21.79 Lacs, Excise duty Rs 74.13 and
Profession Tax Rs .26 Lacs.
b) According to the information and the explanations given to us, there
are no dues outstanding of Sales Tax, Customs Duty, Wealth Tax, Excise
Duty or cess applicable to it, which have not been deposited on account
of any dispute. However, according to the information and explanations
given to us, the following dues of Income tax, Sales Tax, Excise Duty
have not been deposited by the Company on account of dispute:-
Name of the Statute Nature of dues Amount (Rs.) Period to which
it relates
Income Tax Act Penalty 3696564/- A.Y.2006-07
Income Tax Act Penalty 4900913/- A.Y.2007-08
Income Tax Act Income Tax 3686271/- A.Y.2007-08
Income Tax Act Penalty 4087154/- A.Y.2008-09
Income Tax Act Income Tax 5936154/- A.Y.2008-09
Central Board of Excise Excise Duty 4500000/-
and Customs
Central Board of Excise Service Tax 2882970 F.Y.2007-08
and Customs
Central Board of Excise Service Tax 9982702 F.Y.2008-09
and Customs
Central Sales Tax Act Central Sales Tax 112789 F.Y.2009-10
Central Sales Tax Act Penalty 657768 F.Y.2006-07
Maharashtra Value Penalty 53212 F.Y.2009-10
Added Tax Act
Maharashtra Value MVAT 4102858 F.Y.2008-09
Added Tax Act
Maharashtra Value Penalty 2519127 F.Y.2008-09
Added Tax Act
Maharashtra Value MVAT 15428608 F.Y.2007-08
Added Tax Act
Maharashtra Value Penalty 8339788 F.Y.2007-08
Added Tax Act
Maharashtra Value Penalty 744317 F.Y.2006-07
Added Tax Act
Name of the Statute Forum where dispute is pending
Income Tax Act ITAT
Income Tax Act ITAT
Income Tax Act CIT (A)
Income Tax Act CIT (A)
Income Tax Act ITAT
Central Board of Excise and
Customs CESTAT
Central Board of Excise and
Customs CESTAT
Central Board of Excise and
Customs CESTAT
Central Sales Tax Act Maharashtra State Sales Tax Tribunal
Central Sales Tax Act Maharashtra State Sales Tax Tribunal
Maharashtra Value Added Tax Act Maharashtra State Sales Tax Tribunal
Maharashtra Value Added Tax Act Maharashtra State Sales Tax Tribunal
Maharashtra Value Added Tax Act Maharashtra State Sales Tax Tribunal
Maharashtra Value Added Tax Act Maharashtra State Sales Tax Tribunal
Maharashtra Value Added Tax Act Maharashtra State Sales Tax Tribunal
Maharashtra Value Added Tax Act Maharashtra State Sales Tax Tribunal
8. The Company has accumulated losses at the end of the financial year
and it has also incurred cash losses in the financial year under report
as well as during the immediately preceding financial year. The
accumulated losses at the end of the financial year under audit are not
less than 50% of its net worth.
9. The Company has defaulted in payment of loans taken from banks.
Also, the company''s loan accounts have been classified as Non-
performing Assets by the lending bankers. The banks have issued
Securitization Notice to the Company for recovery of its advances. The
amount of default has been Rs.14.93 Crores for over a year.
As regards borrowing from financial institutions, the definite terms of
repayment of interest and principal have not been defined by the
financial institutions.
10. As per information and the explanations given to us, the Company
has not given any guarantee for loans taken by others from banks or
financial institutions.
11. The company has not availed any Term Loans as at the balance sheet
date.
12. According to the information and the explanations given to us, no
fraud on or by the Company has been noticed or reported during the
year. However, we are unable to determine / verify as to whether any
such reporting has been done, during the year.
For S S PURANIK & ASSOCIATES
Chartered Accountants
FRN 127731W
Shripad S Puranik
Mumbai Partner
30th May, 2015 M.Ship no. 030670
