We have audited the accompanying financial statements of SEJAL GLASS
LIMITED, (formerly known as Sezal Glass Limited) (the Company), which
comprise the Balance Sheet as at March 31, 2014, and 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
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 (the Act) read with General Circular
15/2013 dated 15th September, 2013 of Ministry of Corporate Affairs in
respect of Section 133 of the Companies Act, 2013. 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 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
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
BASIS FOR QUALIFIED OPINION
* The Company has not obtained balance confirmations in respect of
Sundry Debtors, Sundry Creditors, Loans and Advances given and Inter
Corporate Deposits (excluding Group companies).
* In the absence of convincing evidence assuring future taxable income,
the continuance of Deferred Tax Asset of Rs.22,42,01,433/-is virtually
In our opinion and to the best of our information and according to the
explanations given to us, and subject to note no. 26(9) to the
financial statements and Non Provision against Deferred Tax Asset
referred in Basis of Opinion, 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 India:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
ii. in the case of the Statement of Profit and Loss, of the Loss for
the year ended on that date; and
iii. 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
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) 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:
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) 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, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
d) Except for the effects of matter described in the Basis for
Qualified opinion paragraph, 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 Companies Act, 1956, read with General Circular 15/2013 dated 15th
September, 2013 of Ministry of Corporate Affairs in respect of Section
133 of the Companies Act, 2013; on the basis of written representations
received from the Directors as on March 31, 2014, and taken on record
by the Board of Directors, none of the Directors is disqualified as on
March 31, 2014, from being appointed as a Director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
Annexure to the Auditors'' Report
The Annexure referred to in paragraph 1 of the Our Report of even date
to the members of SEJAL GLASS LIMITED on the accounts of the company
for the year ended 31st March, 2014.
On the basis of such checks as we considered appropriate and according
to the information and explanation given to us during the course of our
audit, 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
c) During the year, the Company sold part 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 amounting to Rs.3.12Crores-. No provision for the same has
been made in the books of account of the company.
3. IN RESPECT OF LOANS TAKEN OR GRANTED:
a) Company has granted unsecured loans amounting to Rs.526.52 Lacs in
addition to the Rs.2671.90 Lacs as at the beginning of the year, to
Companies, firms or other parties listed in the Register under section
301 of the Companies Act, 1956. Out of these, loans amounting to
Rs.172.63 Lacs have been received back and the balance outstanding as
at the end of the year was Rs.3025.79 Lacs. Maximum balance in these
accounts during the year was Rs. 3025.79 Lacs.
b) The Company had taken loans amounting to Rs.NIL during the year in
addition to the loans taken and outstanding as at the beginning of the
year, from Companies, firms or other parties listed in the Register
under section 301 of the Companies Act, 1956 amounting to Rs.NIL .
c) In our opinion, the rates of interest wherever paid or charged, to
the parties covered in the Register under section 301 of the Companies
Act, 1956, were not prejudicial to the Interests of the Company.
d) In our opinion, since no specific stipulations as to the terms of
repayment were agreed upon, this clause does not apply.
4. In our opinion and according to the information and explanations
given to us, and as reported by the Internal Auditors of the Company
and as per note no. 26.9 to the audited accounts, the internal control
procedures with regard to the purchases of inventory, 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,
particularly in respect of trading sales activity carried out by the
retail division which requires regular adherence to internal control
procedure. In our opinion, measures should be taken to improve upon
5. (a) According to the information and explanations given to us, we
are of the opinion that the transactions need to be entered in the
register maintained under 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 made in pursuance of contracts or
arrangements that should have been entered in the Register maintained
under section 301 of the Companies Act, 1956 and exceeding the value of
rupees five Lacs in respect of any party during the year, have been
made at prices which are reasonable having regard to the prevailing
market prices at the relevant time.
* In our opinion and according to the information and explanations
given to us, the Company has not complied with the provisions of
section 58A & 58AA of the Companies Act, 1956 and the Companies
(Acceptance of Deposits) Rules, 1975 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 Company has also failed to repay matured fixed deposits amounting
to Rs.1.88 Crores as at 31st March, 2014. However, out of this, a sum
of Rs.36.20 Lacs has since been paid.
* Intimation of non payment of matured deposits in respect of small
depositors has not been given to the Company Law Board. * The
requirement of maintaining Liquid Assets against deposits maturing by
31st March, 2014 has not been complied with.
* The company has not filed the return of Deposits for the financial
6. In our opinion, the Company has an internal audit system
commensurate with the size and the nature of its business.
7. 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 209(1) (d) of the Companies Act, 1956 for the products of
8. a) The company has generally defaulted in timely payment of
undisputed statutory dues including Provident Fund, Investor Education
& Protection fund, Employees'' State insurance and Customs Duty, Excise
Duty, Cess, 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, 2014 is as follows:-
* Provident Fund - Rs. 33.12Lacs (Rs.0.55 lacs since paid).
* Income Tax i.e. Tax Deducted at source (TDS) Rs. 164.16Lacs.
* Central Sales Tax - Rs.151.02 Lacs.
* Maharashtra VAT - Rs. 61.46 Lacs.
* Service Tax - Rs.25.78 Lacs * ESIC - Rs. 0.68 Lacs (Rs.0.13 lacs
since paid) * Profession Tax - Rs. 0.55 Lacs (Rs.0.14 lacs since paid)
* Excise Duty - Rs.69.67 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, Customs Duty, Excise
Duty, and Cess were in arrears as at 31st March 2014 for the period of
more than six months from the date they became payable, except Income
Tax Deducted at Source (TDS) - Rs. 120.44 Lacs, Central Sales tax -
Rs.132.23 Lacs and Maharashtra VAT 46.39 Lacs; Service Tax - Rs.22.74
Lacs, ESIC Rs.0.01 Lacs, Provident Fund Rs.21.58 Lacs.
b) According to the information and the explanations given to us, there
are no dues outstanding of Sales Tax, Custom 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 have not been deposited
by the Company on account of dispute:-
Name of the Nature of Amount Period to which Forum where
Statute dues (Rs.) it relates dispute is
Income Tax Act Penalty 3696564/- A.Y. 2006-07 CIT (A)
Income Tax Act Penalty 4900913/- A.Y. 2007-08 CIT (A)
Income Tax Act Penalty 4087154/- A.Y. 2008-09 CIT (A)
9. 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. The Company has not suffered cash losses during the immediately
preceding financial year.
10. There have been delays in repayment of quarterly Installments of
Term Loans (Principle) taken from the bank for the processing division
of the company.
Also, the company''s loan accounts have been classified as
Non-performing Assets by the lending bankers. All the banks have issued
Securitization Notice to the Company for recovery of its advances. We
are informed that the company has initiated appropriate action in these
11. There are no borrowings from Financial Institutions. Company has
not issued debentures during the year.
12. In our opinion and according to the information and explanations
given to us, the company has not granted loans and advances on the
basis of security by way of pledge of shares, debentures and other
13. In our opinion, the Provisions of any special statute as specified
under clause (xiii) of paragraph 4 of the Order are not applicable to
14. In our opinion, the Company is not dealing in or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause (xiv) of paragraph 4 of the Order are not
applicable to the Company.
15. In our opinion and according to the information and explanations
given to us, the Company has not given any Guarantees for loans taken
by another company from Banks and hence the provisions of this clause
do not apply.
16. In our opinion, the term loans have been applied for the purpose
for which these were raised.
17. According to the information and explanations given to us, and on
an overall examination of the Balance Sheet of the Company, we report
that the Company has not utilised its working capital funds for
acquiring Long Term assets. No long term funds have been used to
finance short term assets.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares during the
year, to the parties covered in the register maintained under section
301 of the Companies Act, 1956, being the core promoters and promoter
19. The company has not issued any debentures during the year and hence
the provisions of clause (xix) of paragraph 4 of the Order are not
applicable to the company.
20. During the year covered by our Audit, the Company has not raised
any money by way of a public issue.
21. 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
SHRIPAD S PURANIK
M.Ship No. 030670
Date: May 30, 2014