We have audited the accompanying financial statements of STERLING
POWERGENSYS LIMITED (the Company), which comprise the Balance Sheet
as at March 31st, 2015, 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
The Company''s Board of Directors are 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, financial performance and cash flows of
the Company in accordance with the Accounting Standards referred to in
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 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 controls, 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 there under.
We have 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 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 financial control. 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
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion. Basis for
1) Company is subject to interest liability on unpaid statutory dues
and on other dues, the same has neither been paid or provided or
2) In respect of accounting of Gratuity for the employees, no provision
has been made in Accounts for the same which is in contradiction to AS
15 - Employee Benefits issued by The Institute of Chartered Accountants
3) In respect of deduction and contribution to Provident Fund for the
employees, Company has not complied with the requirement of The
Employees'' Provident Funds and Miscellaneous Provisions Act, 1952.
4) Loans and advances to and from suppliers, others, sundry debtors and
creditors are unconfirmed/unreconciled.
5) We are unable to quantify the effect of the above facts for want of
relevant information and the effect thereof on the financials for the
year ended 31st March, 2015.
In our opinion and to the best of our information and according to the
explanations given to us except for the effects of the matter described
in the ''Basis for Qualified Opinion'' paragraph above, 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, of the state of
affairs of the Company as at 31 March 2015 and its loss and its 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, 2015 (the
Order) issued by the Central Government of India in terms of
sub-section (11) of section143 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 3 and 4 of the Order,
to the extent applicable.
2. As required by section143(3) of the Act, we report that:
a) We have sought and except for matters described in Basis for
Qualified Opinion paragraph, obtained all the information and
explanations which to the best of our knowledge and belief were
necessary for the purpose of our audit;
b) Except for the effects of the matter described in the basis for
qualified opinion paragraph above, 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 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 the matter described in the Basis for
Qualified Opinion paragraph above, 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) The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
f) On the basis of written representations received from the directors
as on March 31, 2015 and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2015, from being
appointed as a director in terms of section 164 (2) of the Act.
g) The qualification relating to non-provision of interest liability on
statutory dues and non-confirmation of loans and advances, sundry
debtors, creditors etc., non-compliance of AS-15 on Employee benefits
and The Employees'' Provident Funds and Miscellaneous Provisions Act,
1952 are stated in the Basis for Qualified Opinion paragraph above.
3. In our opinion and to the best of our information and according to
the explanations given to us, we report as under with respect to other
matters to be included in the Auditor''s Report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules, 2014:
i) The Company has disclosed the amount of pending litigations on its
financial position in Note-26 to the Financial Statements which is in
the nature of contingent liability being not required to be provided in
ii) The Company does not anticipate any material foreseeable losses, on
long- term contracts.
iii) There were no amounts which were required to be transferred to the
Investor Education and Protection Fund.
ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of its fixed
(b) All the fixed assets, have been physically verified by the
management during the year and no discrepancies were noticed on such
(ii) (a) In our opinion, physical verification of inventory lying with
the company has been conducted at reasonable intervals by the
(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) In our opinion, the Company has maintained proper records of
inventory. As explained to us, no discrepancies were noticed on
physical verification as compared to the book records.
(iii) The Company has not granted any loan, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 189 of the Companies Act, 2013 and hence, the provisions
of clauses iii (a) and (b) of paragraph 3 of the Companies (Auditor''s
Report) Order, 2015 are not applicable to the Company.
(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) The Company has not accepted any deposits from the public within
the meaning of Sections 73 to 76 of the Act and the rules framed
thereunder to the extent notified.
(vi) The Central Government of India has not prescribed the maintenance
of cost records under subsection (1) of Section 148 of the Act for any
of the activities of the Company.
(vii) According to the records of the Company, examined by us and
information and explanations given to us:
(a) The company is generally irregular in payment of undisputed
statutory dues including provident fund, income tax, sales tax, wealth
tax, service tax, duty of customs, duty of excise, value added tax,
cess and others as applicable with the appropriate authorities. The
undisputed amounts payable in respect of aforesaid dues outstanding as
at 31 March 2015 for a period of more than six months from the date
they became payable are as follows:
Year Lease CST Gujarat VAT Tax Deducted
Tax at Source
2014-15 - 7 7 1,71,543
2013-14 - - - -
2012-13 - - - -
2011-12 - - 27,06,353 -
2004-05 - 1,45,486 - -
1998-99 19,812 - - -
1997-98 39,624 - - 99,196
1996-97 - - - 1,72,111
Total 59,436 1,45,486 27,06,353 4,42,850
Service Tax Professon Provident Works
Tax Fund Contract
2014-15 37,294 12,225 2 12
2013-14 11,28,799 - - -
2012-13 - - 28,089 -
2011-12 - - - -
2004-05 - - - -
1998-99 - - - -
1997-98 - - - -
1996-97 - - - -
Total 11,66,093 12,225 28,089 12
The above details do not include the amount due for payment, quantum of
which is not ascertained, under sales tax deferral scheme as shown
under Other Long Term Liabilities amounting to Rs. 2,44,46,488/-
(b) According to the records of the Company, the dues of Sales tax
which are not deposited on account of any dispute are as under:
Name of the Nature of the Dues Amount (Rs.)
Bombay Sales Interest and Penalty
Tax Act, 1959 on BST 21,79,193
Central Sales Tax Interest and Penalty
Act, 1956 on CST 21,83,693
Name of the Period to which Forum where
Statute the amount dispute is
Bombay Sales Deputy Commissioner of
Tax Act, 1959 1995-2003 Sales Tax (Appeals)
Central Sales Tax Deputy Commissioner of
Act, 1956 1995-2003 Sales Tax (Appeals)
(c) According to the information and explanations given to us, there
were no amounts which were required to be transferred to the investor
education and protection fund in accordance with the relevant provision
of the Act and rules there under.
(viii) The company has accumulated losses as on 31st March 2015, which
is more than 50% of its net- worth. Further, it has incurred cash loss
during the financial year but not in the immediately preceding financial
(ix) The Company has not defaulted in repayment of dues to banks during
the year under audit.
(x) The company has not given guarantee in respect of loans taken by
others. Accordingly the provisions of clause iii (x) of paragraph 3 of
the Companies (Auditor''s Report) Order, 2015 are not applicable.
(xi) In our opinion, the term loans have been used for the purpose for
which the same were obtained.
(xii) 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 GMJ & Co.
Firm''s Reg. No. 103429W
CA Atul Jain
M. No. 037097
Date: 9th May, 2015