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Shree Ganesh Forgings | Auditor's Report > Castings & Forgings > Auditor's Report from Shree Ganesh Forgings - BSE: 532643, NSE: SGFL
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Shree Ganesh Forgings

BSE: 532643|NSE: SGFL|ISIN: INE883G01018|SECTOR: Castings & Forgings
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Mar 13
Auditor's Report (Shree Ganesh Forgings) Year End : Mar '14
We have audited the accompanying financial statements of SHREE GANESH
 FORGINGS 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 information.
 
 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 in accordance with the Accounting Standards
 referred to in sub-section (3C) of section 211 of the Companies Act,
 1956 (the Act) read with the general circular 15/2013 dated September
 13, 2013 of the 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.
 
 Auditor''s Responsibility
 
 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 statements.
 
 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 defaulted in payment of statutory dues, such as Sales
 tax, Property Tax, NMMC Cess, and for P.T. the company has not filled
 any return during the year. The Company has also defaulted in repayment
 of loans and interest on loans borrowed from banks.
 
 Despite accumulated losses and consequent total erosion of equity and
 inadequate liquidity, accounts have been complied as on going concern
 basis.
 
 Qualified opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, except for the possible effects of the matter
 described in the Basis for Qualified Opinion paragraph, the impact
 whereof is unascertainable, 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:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31,2014;
 
 (b) In the case of the Statement of Profit and Loss, of the loss for
 the year ended on that date.
 
 (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
 
 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
 audit;
 
 (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 those
 books .;
 
 (c) the Balance Sheet and Statement of Profit and Loss and cash flow
 dealt with by this report are in agreement with the books of account.
 
 (d) in our opinion, the Balance Sheet and Statement of Profit and Loss
 comply with the Accounting Standards referred to in subsection (3C) of
 section 211 of the Companies Act, 1956;
 
 (e) 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
 
 (Referred to in Paragraph 1 (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 fixed
 assets.
 
 (b) The fixed assets were physically verified at the close of the year
 and no discrepancies were noticed.
 
 (ii) According to the information and explanations given to us,
 
 (a) Inventories have been physically verified by management at regular
 intervals. However the verification exercises have not been observed by
 us.
 
 (b) The procedure of physical verification of inventories followed by
 the management is reasonable and adequate in relation to the size of
 the company and nature of business.
 
 (c) In our opinion, the company has maintained adequate records of its
 inventories and.
 
 (d) No material discrepancies were noticed on physical verification.
 
 (iii) (a) According to the information and explanations given to us,
 the company has granted interest free loans to related parties of Rs.
 3,70,98,457 which is a non - compliance of Section 295 of the Companies
 Act, 1956 as the necessary prior approval from Central Government has
 not been obtained. The maximum Outstanding during the year and year-end
 balance of such loan are as follows:
 
                       Maximum amount        Year-end
 Name of the Party      outstanding           balance
                      during the year
 
 Namha metal Ltd.        1,41,88,311      3,51,36,543
 
 Akshatt                 2,00,02,501         1,50,189
 Warehousing
 Corporation
 
 Anita Sekhri               2,49,048         7,04,118
 
 Deepak Sekhri             46,05,220        10,99,607
 
 Namha Sekhri                  8,000            8,000
 
 (b) Since there are no stipulated terms of repayment of interest and
 principle, hence we are not able to comment on the regularity of
 receipt of the same.
 
 (c) According to the information and explanations given to us, in case
 where overdue amount is more than rupees one lakh, reasonable steps
 have been taken by the company for the recovery of principal.
 
 (d) The Company has taken interest free loans of Rs.  1,21,199/-
 secured or unsecured, from related parties. The maximum outstanding
 during the year and the year-end balance of such loans are as
 follows:q1
 
 Name of the Party           Maximum         Year-end
                             amount           balance
                           outstanding
                         during the year
 
 Akshatt Sekhri               34,456           16,776
 
 Deepak Sekhri HU            1,04,423        1,04,423
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business with regard to purchase of fixed assets etc. There is no sale
 of services during the year. During the course of our audit, we have
 not observed any major weaknesses in internal controls.  However, in
 our opinion the company should strengthen its controls with regard to
 storage and maintenance of inventory records.
 
 (v) Based on the audit procedure applied by us and according to the
 information and explanations provided by the management, we are of the
 opinion that the transactions that need to be entered into the register
 maintained u/s 301 have been so entered. In our opinion and according
 to the information and explanations given to us, the transactions made
 in the registers maintained under section 301 and exceeding the value
 of five lakhs rupees in respect of any party during the year have been
 made at prices which are reasonable having regard to prevailing market
 prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the company has not accepted any deposits from the public
 therefore the provisions of clause 4 (vi) of the Order are not
 applicable to the company.
 
 (vii) In our opinion, the company has internal audit system
 commensurate with the size and nature of its business.
 
 (viii) The Central Government has not prescribed the maintenance of
 cost records under section 209 (1) (d) of the Companies Act, 1956
 having regard to the nature of the business of the company. As
 explained to us, the specified records have been maintained to the
 extent applicable, We have, however not made detailed examination of
 the records, with a view to determine whether they are accurate.
 
 (ix) In respect of Statutory Dues:
 
 (a) According to the information given to us, there were certain dues
 in respect of Income Tax & Cess are outstanding as at March 31st,2014
 for a period of more than six months from the date they become payable
 due to financial constraints faced by the company. Details are as
 follows:
 
 NMMC Cess                        1,050,184
 
 Sales Tax                        45,15,673
 
 Property Tax                     91,45,565
 
 P.T                                 57,996
 
 CST                               1,56,580
 
 The disputed statutory dues relating to sales Tax and misc. aggregating
 to Rs. 270.68 lakhs that have not been deposited are as under: for
 which the company has made an appeal to the higher authority.
 
 Assessment Year                 Amount (Rs.)
 
    2000-01                          9,450.00
 
    2001-02                        350,003.00
 
    2002-03                      3,043,843.00
 
    2003-04                      2,216,678.00
 
    2004-05                      1,331,956.00
 
    2005-06                      1,331,956.00
 
    2006-07                     21,115,850.00
 
 (x) As on 31.03.2010 the company had accumulated losses of Rs.
 357,639,510/- which completely eroded company''s net worth. The company
 was registered as sick company Under the provisions of Sick Industrial
 and Companies (special provisions) Act, 1985 with the board for
 Industrial and Financial Reconstruction (BIFR) on 3rd August, 2010.  As
 on 31st March, 2014 the Company''s net worth remains eroded by its
 accumulated losses of Rs. 767,70,5343/-.  During the financial year
 2013-14 the company had incurred cash losses of Rs. 23,099,193/- and
 Rs.176,506,322/- for the immediately preceding previous year i.e. F.Y.
 2012-13.
 
 (xi) According to the information and explanations given to us, the
 company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities, as such
 the provisions of clause 4(xi) of the Order are not applicable.
 
 (xii) The company is not a chit fund or a nidhi / mutual benefit
 fund/society. Therefore, the provisions of clause 4 (xii) of the order
 are not applicable.
 
 (xiii) According to the information and explanations given to us, the
 Company is not dealing in or trading in shares, securities, debentures
 and other investments, as such the provisions of clause 4 (xiii) of the
 order are not applicable.
 
 (xiv) As per the information and explanations given to us, the company
 has not given any guarantee for loans taken by others from banks or
 financial institutions, as such the provisions of clause 4 (xiv) of the
 order are not applicable.
 
 (xv) According to the information and explanations given to us, no term
 loan was taken during the year. Accordingly provisions of clause 4 (xv)
 of the order are not applicable.
 
 (xvi) Based on the information and explanations given to us and on an
 overall examination of the balance sheet of the company, we report that
 no funds raised on short-term basis have been used for long-term
 investment. .
 
 (xvii) According to the information and explanations given to us,
 during the year the company has not made any preferential allotment of
 shares to parties covered in the register maintained under section 301
 of the Companies Act, 1956. Accordingly, provisions of clause 4(xvii)
 of the Order are not applicable.
 
 (xviii) According to the information and explanations given to us, the
 company has not issued debentures during the year.  Therefore, the
 provisions of clause 4(xviii) of the Order are not applicable.
 
 (xix) According to the information and explanations given to us, the
 company has not raised money by way of public issue during the year.
 Therefore, the provisions of clause 4(xix) of the Order are not
 applicable.
 
                                                  For BATLIBOI & PUROHIT
                                                   Chartered Accountants
                                                    Firm Reg.No. 101048W
 
 Place : Mumbai                                          (R.D. Hangekar)
 Date :                                                          Partner
                                                    Membership No: 30615
Source : Dion Global Solutions Limited
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