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वरुण इंडस्ट्रीज

बीएसई: 532917  |  NSE: VARUN  |  ISIN: INE032G01012  |  Steel - Medium & Small

खोजें वरुण इंडस्ट्रीज कनेक्शन Mar 12
लेखा परीक्षकों की रिपोर्ट वर्षांत : Mar '13
Report on the Financial Statements
 
 We have audited the accompanying financial statements of Varun
 Industries Limited (''The Company), which comprise the Balance Sheet as
 at March 31, 2013, and the Statement of Profit and Loss and Gash 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 and cash flows of the Company in accordance with
 The Accounting Principles generally accepted in India, including the
 accounting Standards referred to in sub-section (3C) of section 211 of
 the Companies Act, 1956 (''The Act). 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
 
 i) a) The company''s proposal for Corporate Debts Restructure (CDR) has
 been approved by CDR Empowered Group vides letter dated December
 28,2012 and confirming minutes letter dated January 23,2013. Master
 Restructuring Agreement was executed on March 29, 2013 upon certain
 terms & conditions to be complied with by the company before the CDR
 proposal becomes effective. The company is under process to comply the
 conditions mentioned in letter of Approval given by CDR Cell and Master
 Restructuring Agreement signed with consortium of banks. The company
 has restructured its short term borrowings to Working Capital term Loan
 and Funded Interest Term Loan according to Letter of Approval of CDR
 Cell. Before the CDR scheme becoming effective, company has provided
 interest on such loans as per Master restructuring agreement instead of
 contracted rate (original sanction letter) of interest. Due to this,
 there is short provision of ^51.33 Cro/e towards bank interest. To this
 effect, the reported loss and liability towards banks have been
 understated. Attention is drawn to note no. 5.1 & note no. 6.2 of notes
 to accounts.
 
 b) The company has signed the Master Restructure Agreement on March
 29,2013 with CDR lenders to avail further funds by company after CDR
 Scheme being effective, would exceed the borrowing powers of Board of
 Directors conferred in terms of resolution pursuant to section 293 (1)
 (d) of the Companies Act, 1956. The company would require prior
 approval of shareholders in general meeting for the same.
 
 ii) The Company has entered into settlement deed dated April 15, 2012
 with two overseas debtors agreeing to allow the discount oft160.60
 crore and to defer the balance export realization oft 1460.97 crore for
 five years (including one year for moratorium period). The discount was
 accounted for in the accounts of the previous year and the realization
 of such dues has been deferred for five years. As per explanation and
 information given by the management, the necessary permission for
 deferment of such realization will be sought after CDR scheme becomes
 finally effective, therefore the impact of same is not ascertainable as
 company may be directed by the concerned authorities to compound the
 irregularity.
 
 iii) The balances of debtors, creditors, loans and advances, Deposits,
 other receivables and payables are being subject to confirmation and
 reconciliation as books of accounts not verified with confirmations of
 third party to whom we have sent letters to confirm the closing
 balance. This opinion is based on i) Some of request letters for
 conforming closing balance, have been returned with note of company
 closed/shifted/address not matching ii) there are variance in the
 balances confirmed by the parties iii) reply from parties not received.
 
 The consequent resulting in balances for necessary adjustments, either
 of a revenue nature or otherwise if any, upon which we are unable to
 comment at this stage, will be made in the period they are finally
 settled / reconcile with the parties as informed by the management.
 
 iv) The contingent liabilities are not ascertainable regarding i)
 ongoing cases in various Courts / Tribunal, resulting an additional
 liability may arise at the time of decision of such judicial
 authorities, ii) Penalties for non-payment of Statutory Dues, non
 filing of Statutory Returns and Reports as the same will be decided by
 the concern authorities at their discretion and time.
 
 Qualified Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, except for possible effects of the matter
 described in the Basis for Qualified Opinion Paragraph 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 31,2013;
 
 b) in the case of 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.
 
 Matter of Emphasis
 
 Without qualifying our opinion in respect of following matters, we draw
 attention to:
 
 a) Note no. 1.2 on significant accounting policies regarding going
 concern assumption. The financial statements of the company have been
 prepared on a going concern assumption basis, notwithstanding the fact
 that its net worth is substantially eroded due to accumulated losses.
 The appropriateness of the said basis is interalia dependent on the
 company''s ability to recover trade receivables/infuse funds for meeting
 its obligations.
 
 b) Note no. 19 of notes forming parts of accounts, regarding Interest
 income of Rs.132.41 Crore, from overseas debtors have been recognized to
 revenue, whose export realization have been deferred as mentioned in
 para ii of Basis of qualified opinion in this report.
 
 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, Statement of Profit and Loss, and Cash Flow
 Statement dealt with by this Report are in agreement with the books of
 account;
 
 d) except for the effects of the matter described in the Basis for
 Qualified Opinion paragraph, 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;
 
 e) on the basis of written representations received from the directors
 as on March 31, 2013, and taken on record by the Board of Directors,
 none of the directors is disqualified as on March 31, 2013, from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 section 274 of the Companies Act, 1956.
 
 The Annexure referred to in paragraph 1 of our Report of even date to
 the members of Varun Industries Limited on the accounts of the company
 for the year ended March 31,2013.
 
 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.  (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) As explained to us, fixed assets have been physically verified by
 the management in a phased periodical manner which in our opinion is
 reasonable, having regard to the size of the company and nature of its
 assets. No material discrepancies were noticed on such physical
 verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, certain fixed assets have been disposed off during the
 year and which are not substantial/major parts of the fixed assets,
 therefore it has no effect on going concern status of the company.
 
 2.  (a) As explained to us, inventories have been physically verified
 during the year by the management. In our opinion, the frequency of
 verification is reasonable.
 
 (b) In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventories
 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 and on the basis of our examination of the records,
 the Company is generally maintaining proper records of its inventories.
 No material discrepancy was noticed on physical verification of stocks
 by the management as compared to book records.
 
 3.  (a) According to the information and explanations given to us and
 on the basis of our examination of the books of account,
 
 the Company has granted loans of ^4,26,43,941/- to its subsidiary
 companies listed in the register maintained under Section 301 of the
 Companies Act, 1956. The maximum amount outstanding during the year was
 Rs.4,26,93,941/- and year end balance of such loans was Rs.4,26,93,941/-.
 
 (b) As per the explanation given by the management, no interest has
 been charged to subsidiary companies as the said loans were given
 interest free loans and terms and conditions on which loans have been
 granted to the companies listed in register maintained under section
 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the
 interest of the company, as the money have been advanced to subsidiary
 companies for further advancement of business of group companies.
 
 (c) According to the information and explanations given to us and on
 the basis of our examination of the books of account, the Company has
 taken loans of Rs.20,66,71,296/- from directors listed in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 (d) As per the explanation given by the management, no interest has
 been paid to such directors as the said loans were interest free loans
 and terms and conditions on which loans have been taken by company are
 not, prima facie, prejudicial to the interest of the company. The loans
 are repayable on demand as explained by the management.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is generally an adequate internal control procedure
 commensurate with the size of the company and the nature of its
 business, for the purchase of inventories & fixed assets and payment
 for expenses & for sale of goods. During the course of our audit, no
 major instance of continuing failure to correct any weaknesses in the
 internal controls has been noticed.
 
 5.  Based on the audit procedures applied by us and according to the
 information and explanations provided by the management, there are no
 contracts or arrangements referred to in section 301 of the Act that
 needs to be entered in the register required to be maintained under
 said section.
 
 6.  In our opinion and according to the information and explanation
 given to us, the Company has not accepted any deposits from the public
 and therefore the provisions of section 58 A and 58 AA of the Companies
 Act, 1956 & Rules made there under are not applicable to the Company.
 
 7.  As per information & explanations given by the management, and in
 our opinion the Company has an internal audit system commensurate with,
 its size and the nature of its business.
 
 8.  We have broadly reviewed the books of accounts and records
 maintained by the Company pursuant to the Rules made by the Central
 Government for the maintenance of cost records under the provisions of
 Section 209(1 )(d) of the Companies Act, 1956 in respect of steel
 products and other products, 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 records with a
 view to determining whether they are accurate or complete. As per
 information and explanation given by the management, the cost auditor
 has been appointed by the company. To the best of our knowledge and
 according to the information and explanations given to us, the Central
 Government has not prescribed the maintenance of cost records for any
 other product of the Company.
 
 9. As explained to us, the company did not have any dues on account
 of Investor Education and Protection fund.
 
 10.The accumulated losses of the company at the end of the financial
 year are more than fifty percent of its net worth. The company has
 incurred cash losses of Rs.69.30 crore (after considering the effect of
 the qualification) during the financial year and Rs.138.61 crore in the
 immediately preceding financial year.
 
 11.  (a) Based on our audit procedure and on the basis of information
 and explanations given by the management, we are of the opinion that
 the Company has defaulted in repayment of Principal dues of Rs.12.70
 crore and Interest of Rs.5.35 crore of various banks and financial
 institution for the period of 30 days to 330 days.
 
 (b) The loans of Rs.14.00 crore from IFCI Venture Capital Fund Ltd.
 (IFCI) have been settled in books of accounts by transferring balance
 to Mr. Kiran N. Mehta (CMD) on account of invocation of shares by IFCI
 at market price at the time of invocation. As explanation and
 information given by management, the matter is under judicial process
 of Hon. DRT and Courts. Therefore, overdue towards principal and
 interest could not be determined due to dispute and it depends on the
 judgment of the concern authority.
 
 12.  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 securities.
 
 13.  The Company is not a chit fund or a nidhi/mutual benefit
 fund/society. Therefore, the provision of this clause of the Companies
 (Auditor''s Report) Order, 2003 (as amended) is not applicable to the
 Company.
 
 14.  Based on the records examined by us and according to information
 and explanations given to us, the Company has not dealt in to trading
 in Shares, Mutual funds & other Investments. Further investments
 specified are held in their own name.
 
 15.  According to the information and explanations given to us, the
 terms and conditions on which the company has given guarantees for
 loans taken by others from banks are not prejudicial to the interest of
 the company.
 
 16.  Based on our audit procedures and on the information given by the
 management, we report that the company has not raised any term loans
 during the year except restructuring of working capital facilities in
 to Working capital Term Loan of Rs.1352.30 crore and Funded Interest Term
 Loan of Rs.115.13 crore under CDR Scheme.
 
 17.  Based on the information and explanations given to us and on an
 overall examination of the Balance Sheet of the Company as at March 31,
 2013 funds raised on short term basis have, prima facie, not been used
 during the year for long term investment.
 
 18.  Based on the audit procedures performed and the information and
 explanations given to us by the management, we report that the Company
 has received the sum of Rs.15,54,75,000/- towards allotment of equity
 shares on preferential basis to parties or companies covered in the
 register maintained under section 301 of the Act as one of the critical
 condition mentioned under Letter of Approval as approved by CDR cell.
 The allotment is pending at the end of the year.
 
 19.  The Company has no outstanding debentures during the period under
 audit.
 
 20.  The Company has not raised any money by public issue during the
 year.
 
 21.  In our opinion and according to the information and explanations
 given to us, no fraud on or by the Company has been noticed or reported
 during the year.
 
                                  For CHUNNILAL & COMPANY
 
                                  Chartered Accountants
 
                                  Firm Registration No.101947W
 
                                  Sd/-
 
                                  CA. Chunnilal Choudhary
 
                                  Partner
 
                                  Membership No.: 037784
 
 Place : Mumbai.  
 
 Dated : May 30, 2013
स्रोत: रेलीगरे टेचनोवा

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