Mar 31, 2018
Report on the Financial Statements
We have audited the accompanying financial statements of JCT Limited (the âCompanyâ),which comprise the Balance Sheet as at 31stMarch, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended by the Companies (Indian Accounting Standards) Rules, 2017 under Section 133 of the Companies Act, 2013.
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.
Auditorâs 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 thereunder.
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 auditorsâ 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 Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, 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 on the financial statements.
Basis of Qualified Opinion
The Company on completion of the compliance of the consent terms agreed to pay off the holders of Foreign Currency Convertible Bonds (FCCBs) their dues of US$ 19.19 million towards principal and redemption premium of US$ 15.00 million and defaulted interest of US$ 4.19 million in 10 installments commencing from 5th October, 2015 to 5th December, 2017.The Company could not pay the balance dues of Rs. 10,079.06 lakhs (including interest of Rs. 3,293.74 lakhs) on 5th December,2017, but subsequent to the Balance Sheet date, both the Company and Bondholders have agreed to settle the dues on certain mutually agreed terms subject to necessary approval from regulatory authorities and their banks. Further, interest of Rs. 3,488.60 lakhs as at 31st March, 2018 though crystallized and accrued on above, is being accounted for on payment basis instead of on accrual basis by the Company. As such, no provision for such interest aggregating Rs.3,488.60 lakhs has been made in the financial statements by the Company. This treatment is not in line with the Indian Accounting Standards and the provisions of the Companies Act, 2013 and the relevant rules thereunder. Had the interest been accounted for on accrual basis as stated above, the Total Comprehensive Losses would have been Rs.6,889.11 lakhs for the year as against reported Loss of Rs.3,400.51 lakhs, Other Equity would have been in negative by Rs.12,476.43 lakhs as against the reported negative Other Equity of Rs.8,987.83 lakhs, and Other Current Financial Liabilities would have been Rs. 17,494.36 lakhs as against reported Other Current Financial Liabilities of Rs.14,005.76 lakhs (Refer para 21.2 to the financial statements).
Qualified Opinion
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 Basis of Qualified Opinion Paragraph above, 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 including Ind AS, of the state of affairs of the Company as at 31st March, 2018, and its loss(including other comprehensive income), its changes in equity and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements:
Note No. 39.6: Accumulated losses have resulted in erosion of substantial networth of the Company. However, the financial statements have been prepared on going concern basis on the grounds as disclosed in the said note; Note No. 39.7:Non-confirmation/reconciliation of certain balances under trade receivables, advances, trade payables and other parties of the Company.
Our opinion is not modified in respect of the above matters.
Other Matter
The comparative financial information of the Company for the year ended 31st March, 2017 and the transition date opening Balance Sheet as at 1st April, 2016, included in these financial statements, are based on the previously issued statutory financials statements prepared in accordance with the Accounting Standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014, which were audited by previous auditors, on which they expressed the qualified opinion dated 30th May, 2017 and 30th May, 2016 for the years ended 31st March, 2017 and 31st March, 2016 respectively. These previous financial statements have been considered in the financial statements for the current year after adjustment for the differences in the accounting principles adopted by the Company on transition to the Ind AS as detailed in Note No. 39.12 to the financial statements.
Report on Other Legal and Regulatory Requirements
1. As required by âthe Companies (Auditorâs Report) Order, 2016â (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure-âAâ a statement on the matters specified in paragraph 3 and 4 of the Order.
2. 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. 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 (including Other Comprehensive Income), Statement of Changes in Equity and the 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 Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended by the Companies (Indian Accounting Standards) Rules, 2017 under Section 133 of the Companies Act, 2013;
e. the going concern matter described in subparagraph (i) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the company;
f. on the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;
g. with respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure-âBâ; and
h. With respect to the other matters to be included in the Auditorâs 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 Note 39.1 and 39.2 to the financial statements;
ii. The Company has not entered into any longterm contracts including derivative contracts.
iii. There has been no amount, required to be transferred, to the Investor Education and Protection Fund by the Company.
ANNEXURE âAâ TO THE INDEPENDENT AUDITORSâ REPORT
(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirementsâ section of the independent auditorsâ report of even date on the financial statements of JCT Limited for the year ended 31st March, 2018)
(i) In respect of its property, plant and equipments;
a. The Company has maintained proper records showing full particulars including quantitative details and situation of the property, plant and equipments.
b. As explained to us, the property, plant and equipments are physically verified by the management once in a period of three years, which in our opinion is reasonable, having regard to the size of the Company and nature of its property, plant and equipments. No material discrepancies were noticed on such physical verification.
c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties, as disclosed in Note 4 on property, plant and equipments to the financial statements, are held in the name of the Company.
(ii) As explained to us, inventories except those lying with third parties, have been physically verified by the management at regular intervals during the year. The discrepancies noticed on such physical verification as compared to book records were not material and have been appropriately dealt with in the books of accounts.
(iii) The Company had not granted unsecured loans to companies covered in the Register maintained under Section 189 of the Companies Act, 2013, hence this clause is not applicable.
(iv) In our opinion and according to the information and explanations given to us, the Company in respect of loans, investments, guarantees, and security has complied with the provisions of section 185 and 186 of the Act.
(v) The Company has not accepted any deposits from the public within the meanings of Sections 73 to 76 of the Act and the rules framed thereunder to the extent notified.
(vi) Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under sub-section (1) of Section 148 of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) In respect of statutory dues:
a. According to the information and explanations given to us and the records of the Company examined by us, in our opinion the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employeesâ State Insurance, Income Tax, Sales tax, Goods and Service Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues as applicable with the appropriate authorities though there has been a delay in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2018 for a period of more than six months from the date they became payable.
b. The disputed statutory dues aggregating to Rs. 4,937.15 lakhs, that have not been deposited on account of matters pending in appeals before appropriate authorities are as under:
Name of the Statute |
Nature of the dues |
Forum where dispute is pending |
Amount (Rs. in lakhs) |
Central Excise Act, 1944 |
Excise Duty |
Upto Commissioner level |
225.45 |
CESTAT |
919.51 |
||
Central Sales Tax, VAT Act of various states |
VAT/ Entry Tax |
Dy. Commissioner level |
1,867.61 |
Assistant Commissioner Level |
0.73 |
||
Tribunal |
1,737.80 |
||
Customs Duty Act, 1962 |
Customs Duty |
Commissioner of Customs |
186.05 |
TOTAL |
4,937.15 |
(viii) Based on the audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of loans and borrowings to banks. The dues of Rs. 10,079.06 lacs to Foreign Currency Convertible Bonds (FCCBs) holders, which had fallen due for repayment on 05.12.2017 were lying unpaid to that extent as on 31.03.2018. However subsequent to Balance sheet date, based on information and explanation given to us, the company and bond holders have entered into settlement subject to obtaining the necessary approvals.
(ix) The Company,during the year has not raised money by way of initial public offer or further public offer (including debt instruments) and term loans.
(x) In our opinion and according to the information and explanations given to us, no fraud by the Company or material fraud on the Company by its officers / employees has been noticed or reported during the course of our audit.
(xi) The managerial remuneration paid/provided is within the limit and in compliance of the provisions of section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company hence the requirement of this clause is not applicable.
(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable. The details of such transactions have been disclosed in the financial statements, as required by the Ind AS 24 - Related Party Disclosures.
(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with Directors or persons connected with them.
(xvi) As explained to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
ANNEXURE âBâ TO THE INDEPENDENT AUDITORSâ REPORT
(Referred to in paragraph 2(g) under ''Report on Other Legal and Regulatory Requirementsâ section of the independent auditorsâ report of even date on the financial statements of JCT Limited for the year ended 31st March, 2018))
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of JCT Limited (âthe Companyâ) as of March 31, 2018 in conjunction with our audit of the financial statements of the Company for the year ended on that date.
Managementâs Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the âGuidance Note on Audit of Internal Financial Controls Over Financial Reportingâ (the âGuidance Noteâ) issued by the Institute of Chartered Accountants of India (âICAIâ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing, issued by the Institute of Chartered Accountants of India and deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditorsâ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companyâs internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and Directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companyâs assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For NAVDEEP SINGH & CO.
Chartered Accountants
Firm Registration No.008400N
Navdeep Singh Choudhary
Partner
Membership No. 034979
Place : New Delhi
Date : 30thMay, 2018
Mar 31, 2015
We have audited the accompanying financial statements of JCT Limited
(the "Company"), which comprise the Balance Sheet as at 31st March,
2015, the Statement of Profit and Loss, the Cash Flow Statement for the
year then ended and a summary of the 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 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 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
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.
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
thereunder.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act and other applicable
authoritative pronouncements 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 auditors' 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 a true and fair view
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
whether the Company has in place an adequate internal financial
controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, 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 on the financial
statements.
Opinion
In our opinion, and to the best of our information and according to the
explanations given to us, 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, of the state of affairs of the Company as
at 31st March, 2015, and its profit and its 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:
i. Note No. 5.2 to the financial statements which describes the reasons
for non-provision of Rs. 2,258.73 lakhs towards yield protection on
the unpaid amount of Foreign Currency Convertible Bonds of Rs. 9,457.34
lakhs.
ii. Note No. 30.7 to the financial statements which describes the
reasons for preparing the financial statements on a going concern basis
although the accumulated losses have resulted in erosion of substantial
net worth of the Company and its current liabilities exceed its current
assets at the year-end.
iii. Note No. 30.8 to the financial statements which describes the
uncertainty related to the outcome of the appeal filed with the Courts
of Appeals at Malaya by the Company of a claim of Rs. 788.25 lakhs by
ex-employees of CNLT, Malaysia on account of advances and compensation
paid to the Company by CNLT, Malaysia.
iv. Note No. 30.10; to the financial statements regarding
non-confirmation / reconciliation of certain balances in trade
receivables, advances and trade payables of the Company. Our opinion
is not modified in respect of these matters.
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 Section 143 of the Act, and on the basis of such
checks of the books and records of the Company as we considered
appropriate and according to information and explanations given to us,
we give in the Annexure a statement on the matters specified in
paragraph 3 and 4 of the Order.
2. 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. 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 the 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. The going concern matter described in sub- paragraph (ii) under the
Emphasis of Matters paragraph above, in our opinion, may have an
adverse effect on the functioning of the Company.
f. On the basis of the written representations received from the
directors as on 31st March, 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2015
from being appointed as a director in terms of Section 164 (2) of the
Act.
g. With respect to the other matters to be included in the Auditor's
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 Note No. 5.2,
30.1 and 30.8 to the financial statements;
ii. The Company has not entered into any 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
(Referred to in paragraph 1 under 'Report on other Legal and Regulatory
Requirements' section of our Report of even date)
(i) In respect of its fixed assets;
a. The Company has maintained proper records showing full particulars
including quantitative details and situation of the fixed assets.
b. As explained to us, the fixed assets have been physically verified
by the management during the period 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.
(ii) In respect of its inventories;
a. As explained to us, inventories except those lying with third
parties have been physically verified by the management in accordance
with the perpetual inventory programme, at regular intervals during the
period. In our opinion, the frequency of verification is reasonable.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
size of the Company and nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed in
physical verification of inventory as compared to the book records.
(iii) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the Register maintained
under Section 189 of the Companies Act, 2013.
(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 for the purchase of inventory, fixed assets and for the sale
of goods. During the course of our audit, we have neither come across,
nor we have been informed of any continuing failure to correct major
weaknesses in internal control system.
(v) In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by the
Reserve Bank of India and the provisions of Section 73 to 76 and other
relevant provisions of the Companies Act, 2013 and the Rules framed
there under, with regard to the deposits accepted from the public
except some delays in clearance of cheques by the depositors in respect
of its deposits accepted before the commencement of Companies Act,
2013. As informed 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 in respect of the aforesaid
deposits.
(vi) We have broadly reviewed the books of account maintained by the
Company in respect of the Textile and Filament Units of the Company
where Order has been made by the Central Government for the maintenance
of cost records under Section 148(1) of the Companies Act, 2013 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 said records with a view to determine whether they
are accurate or complete.
(vii) In respect of statutory dues:
a. According to the information and explanations given to us and the
records of the Company examined by us, in our opinion the Company is
regular in depositing undisputed statutory dues including Provident
Fund, Employees' State Insurance, Income Tax, Sales tax, Wealth Tax,
Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other
material statutory dues as applicable with the appropriate authorities
though there has been a delay in few cases. According to the
information and explanations given to us, no undisputed amounts payable
in respect of the aforesaid dues were outstanding as at 31st March,
2015 for a period of more than six months from the date they became
payable.
b. The disputed statutory dues aggregating to Rs. 6,332.99 lakhs,
that have not been deposited on account of matters pending in appeal
before appropriate authorities are as under:
Sl. Name of the Nature of Forum where Amount
No. statute the dues dispute is pending (Rs. in
lakhs)
1. Central Excise Excise Upto 349.04
Act Duty Commissioner's
Level
CESTAT 1,230.58
Tribunal 3,233.25
2. Central Sales Sales Tax Tribunal 1,334.07
Tax and Sales
Tax Act of
various states
3. Customs Duty Customs Commissioner of 186.05
Act, 1962 Duty Customs
TOTAL: 6,332.99
c. The amount required to be transferred to Investor Education and
Protection Fund in accordance with the relevant provisions of the
Companies Act, 1956 and Rules made thereunder has been transferred to
such fund within prescribed time.
(viii) In our opinion, the accumulated losses of the Company as at 31st
March, 2015 are more than fifty percent of its net worth. The Company
has not incurred cash losses during the current financial year and in
the immediately preceding financial period.
(ix) Based on our audit procedures and according to the information and
explanations given to us, the Company has defaulted in repayment of US$
15.00 million equivalent to Rs. 9,457.34 lakhs to Foreign Currency
Convertible Bond (FCCBs) holders since 08.04.2011.
(x) The Company has given a guarantee for a loan taken by another body
corporate from a financial institution during the earlier year.
According to the information and explanations given to us, we are of
the opinion that the terms and conditions thereof are not prima-facie
prejudicial to the interest of the Company.
(xi) In our opinion and according to the information and explanations
given to us, the Company has not availed any term loan during the year.
(xii) In our opinion and according to the information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the year.
For S.P Chopra & CO.
Chartered Accountants
Firm Registration No.000346N
SANJIV GUPTA
Place:New Delhi Partner
Date : 19.05.2015 M. No. 83364
Mar 31, 2014
We have audited the accompanying financial statements of JCT Limited
(the "Company"), which comprise the Balance Sheet as at 31st March,
2014, the Statement of Profit & Loss and Cash Flow Statement for the
six months period then ended and a summary of the 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 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 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of the Companies Act, 2013
and in accordance with the accounting principles generally accepted in
India. 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 auditors'' 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 but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. 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.
Opinion
In our opinion, and to the best of our information and according to the
explanations given to us, the accompanying financial statements give
the information required by 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, 2014;
(b) in the case of the Statement of Profit & Loss, of the profit for
the period ended on that date; and
(c) in the case of Cash Flow Statement, of the cash flows for the
period ended on that date.
Emphasis of Matter
We draw attention to the following notes in the financial statements:
i. Note No. 5.2; Non provision of yield protection of Rs. 1,622.36
lakhs payable on unpaid amount of Foreign Currency Convertible Bonds
(FCCBs) for the reasons stated therein and likely impact of winding up
petition filed by the FCCB Trustee for non payment of dues of US$ 1 5.
00 million equivalent to Rs. 9,071.91 lakhs since 08.04.2011,'' capital
gain on settlement of US$ 12.93 million FCCBs liability of Rs. 5,082.50
lakhs has been directly credited to Reserves and Surplus as Capital
Reserve based on legal opinion obtained by the management instead of
taking to the Statement of Profit & Loss.
ii. Note No. 5.3(b); Delays including clearance of cheques to
depositors of Rs. 328.46 lakhs as at 31.03.2014 under Section 58A of
the Companies Act, 1956.
iii. Note No. 31.7; Accumulated losses have resulted in erosion of
substantial net worth of the Company. However, the financial
statements have been prepared on going concern basis on the grounds as
disclosed in the Note No. 31.7.
iv. Note No. 31.10; Non-confirmation/reconciliation of certain balances
in trade receivables, advances and trade payables of the Company.
Our opinion is not qualified in respect of these matters.
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 purposes 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. In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards notified under the Act read with the General
Circular No.15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs in respect of Setion 133 of the Companies Act, 2013.
e. On the basis of the written representations received from the
directors as on 31st March, 2014, and taken on record by the Board of
Directors, none of the director is disqualified as on 31st March, 2014,
from being appointed as a director in terms of clause (g) of Sub-
section (1) of Section 274 of the Act.
ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT
(REFERRED TO IN PARAGRAPH 1 UNDER REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS'' SECTION OF OUR REPORT OF EVEN DATE)
i) In respect of its fixed assets;
a. The Company has maintained proper records showing full particulars
including quantitative details and situation of the fixed assets.
b. As explained to us, the fixed assets have been physically verified
by the management during the period 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. Fixed assets disposed off during the period were not substantial,
and therefore, do not affect the going concern assumption.
ii) In respect of its inventories;
a. As explained to us, inventories except those lying with third
parties have been physically verified by the management in accordance
with the perpetual inventory programme, at regular intervals during the
period. In our opinion, the frequency of verification is reasonable.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
size of the Company and nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed in
physical verification of inventory as compared to the book records.
iii) The Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties covered in the
Register maintained under Section 301 of the Companies Act, 1956.
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 for the purchase of inventory, fixed assets and for the sale
of goods. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
v) In our opinion and according to the information and explanations
given to us, there are no contracts or arrangements that need to be
entered into a register maintained under Section 301 of the Companies
Act, 1956.
vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by the
Reserve Bank of India and the provisions of Section 58A, Section 58AA
and other relevant provisions of the Companies Act, 1956 and the Rules
framed there under, with regard to the deposits accepted from the
public except delays including clearance of cheques of Rs. 328.46 lakhs
as at 31st March, 2014 issued to depositors in respect of repayment of
deposits. As informed to us, no order has been passed by the
National Company Law Tribunal, Reserve Bank of India, any Court or any
other Tribunal on the Company in respect of the aforesaid deposits.
vii) In our opinion and according to the information and explanations
given to us, the internal audit system is commensurate with the size
and nature of the Company''s business.
viii) We have broadly reviewed the books of account maintained by the
Company in respect of the Textile and Filament Units of the Company
where Order has been made by the Central Government for the maintenance
of cost records under Section 209(1)(d) of the Companies Act, 1956 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 said records with a view to determine whether they
are accurate or complete.
ix) In respect of statutory dues:
a. According to the records of the Company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income Tax, Sales tax, Wealth Tax, Service
Tax, Customs Duty, Excise Duty, Cess and other statutory dues have been
generally regularly deposited with the appropriate authorities though
there has been a delay in few cases. According to the information and
explanations given to us, no undisputed amounts payable in respect of
the aforesaid dues were outstanding as at 31st March, 2014 for a period
of more than six months from the date they became payable.
b. The disputed statutory dues aggregating to Rs. 5,976.16 lakhs, that
have not been deposited on account of matters pending in appeal before
appropriate authorities are as under:
Sl. Name of Nature of Forum where Amount
No. the statute the dues dispute (Rs. in lakhs)
is pending
1. Central Excise Upto Commissioner''s
Excise Act Duty Level 445.81
CESTAT 1682.70
Tribunal 1979.19
2. Central Sales Upto AETC 447.33
Sales Tax Tax Tribunal 1183.98
and Sales Tax Supreme Court 51.10
Act of various
states
3. Customs Customs Commissioner of
Duty Duty Customs 186.05
Act, 1962
TOTAL: 5976.16
x) In our opinion, the accumulated losses of the Company as at 31st
March, 2014 are more than fifty percent of its net worth. However, the
Company has not incurred cash losses during the current financial
period and in the immediately preceding financial period.
xi) Based on our audit procedures and according to the information and
explanations given to us, the Company has defaulted in repayment of US$
15.00 mlliion equivalent to Rs. 9,071.91 lakhs to Foreign Currency
Convertible Bond (FCCBs) holders since 08.04.2011. During the period,
the Company has settled US$ 12.93 million FCCBs by issue of
11,59,54,059 equity shares of Rs. 2.50 each at par aggregating to Rs.
2,898.86 lakhs and capital gain on such settlement of Rs. 5,082.50
lakhs has been directly credited to Reserves & Surplus as Capital
Reserve based on legal opinion obtained by the management instead of
taking it to Statement of Profit & Loss and redemption premium of US$
2.57million equivalent to Rs. 1,641.52 lakhs has been written back and
added to share premium account.
xii) According to the information and explanations given to us and
based on the documents and records produced to us, Company has not
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities.
xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual
benefit fund/society.
xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments.
xv) The Company has given a guarantee for a loan taken by another body
corporate from a financial institution during the earlier year.
According to the information and explanations given to us, we are of
the opinion that the terms and conditions thereof are not prima-facie
prejudicial to the interest of the Company.
xvi) In our opinion and according to the information and explanations
given to us, the Company has not availed any term loan during the
period.
xvii) According to 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.
xviii) The Company has made preferential allotment of shares to some
parties and no shares are allotted to any company covered in the
Register maintained under Section 301 of the Companies Act, 1956.
During the period, the Company allotted 11,59,54,059 equity shares at
par @ Rs. 2.50 per share aggregating to Rs. 2,898.86 lakhs, to Foreign
Currency Convertible Bonds (FCCBs) holders in settlement of FCCBs
liability of US$ 12.93 million on preferential basis. Such allotment of
equity shares at par is not prejudicial to the interests of the
Company.
xix) The Company has not issued any debentures during the period hence
the issue of creation of charge or security does not arise.
xx) The Company has not raised any money by way of public issues during
the period.
xxi) In our opinion and according to the information and explanations
given to us, no material fraud on or by the Company has been noticed or
reported during the year.
For S.P Chopra & CO.
Chartered Accountants
Firm Registration No.000346N
SANJIV GUPTA
Place : New Delhi Partner
Date : 30th May, 2014 M. No. 83364
Sep 30, 2013
Report on the Financial Statements
1. We have audited the accompanying financial statements of JCT
Limited (the "Company"), which comprise the Balance Sheet as at 30th
September, 2013, the Statement of Profit and Loss and Cash Flow
Statement for the 18 months period then ended and a summary of the
significant accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
2. 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"). 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
3. 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.
4. An audit involves performing procedures to obtain audit evidence,
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors'' 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 consider 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.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion, and to the best of our information and according to
the explanations given to us, the accompanying financial statements
give the information required by 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 30th September, 2013;
(b) in the case of the Statement of Profit & Loss, of the loss for the
period ended on that date; and
(c) in the case of Cash Flow Statement, of the cash flows for the
period ended on that date.
Emphasis of Matter
7. We draw attention to the following notes in the financial
statements:
i. Note No. 5.2 (b) ; Non provision of yield protection of Rs. 2872.90
lakhs payable on unpaid amount of Foreign Currency Convertible Bonds
(FCCBs) for the reasons stated therein and likely impact of winding up
petition filed by the FCCB Trustee for non payment of dues of US$ 30.50
million equivalent to Rs.19302.79 lakhs since 08.04.2011.
ii. Note No. 5.3 (b); Non clearance/payment of cheques to depositors of
Rs. 382.38 lakhs in respect of repayment of deposits under Section 58A
of the Companies Act, 1956 and certain delays in repayments of deposits
during the period for which details are not readily ascertainable due
to large volume of deposits.
iii. Note No. 31.7 and 31.10; Continuing and accumulated losses have
resulted in entire erosion of net worth of the Compnay. However, the
financial statements have been prepared on going concern basis on the
grounds as disclosed in the Note 31.7. Further, as referred to in Note
31.10, steps are being taken by the management as envisaged under the
Sick Industrial Companies (Special Provisions) Act, 1985.
iv. Note No. 31.11; Non-confirmation/reconciliation of certain balances
in trade receivables, advances and trade payables of the Company.
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
8. 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.
9. 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 purposes 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. In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Sub-section (3C) of Section 211 of
the Act.
e. On the basis of the written representations received from the
directors as on 30th September, 2013, and taken on record by the Board
of Directors, none of the director is disqualified as on 30th
September, 2013, from being appointed as a director in terms of clause
(g) of Sub-section (1) of Section 274 of the Act.
i) In respect of its fixed assets;
a. The Company has maintained proper records showing full particulars
including quantitative details and situation of the fixed assets.
b. As explained to us, the fixed assets have been physically verified
by the management during the period 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. Fixed assets disposed off during the period were not substantial,
and therefore, do not affect the going concern assumption.
ii) In respect of its inventories;
a. As explained to us, inventories except those lying with third
parties, have been physically verified by the management in accordance
with the perpetual inventory programme, at regular intervals during the
period. In our opinion, the frequency of verification is reasonable.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
size of the Company and nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed in
physical verification of inventory as compared to the book records.
iii) The Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties covered in the
Register maintained under Section 301 of the Companies Act, 1956.
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 for the purchase of inventory, fixed assets and for the sale
of goods. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
system.
v) In our opinion and according to the information and explanations
given to us, there are no contracts or arrangements that need to be
entered into a register maintained under Section 301 of the Companies
Act, 1956.
vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by the
Reserve Bank of India and the provisions of Section 58A, Section 58AA
and other relevant provisions of the Companies Act, 1956 and the Rules
framed there under, with regard to the deposits accepted from the
public except non clearance/ payment of cheques of Rs. 382.38 lakhs at
30th September, 2013 issued to depositors in respect of repayment of
deposits and certain delays in repayments of deposits during the period
for which details are not readily ascertainable due to large volume of
deposits.
As informed to us, no order has been passed by the National Company Law
Tribunal, Reserve Bank of India, any Court or any other Tribunal on the
Company in respect of the aforesaid deposits.
vii) In our opinion and according to the information and explanations
given to us, the internal audit system is commensurate with the size
and nature of the Company''s business.
viii) We have broadly reviewed the books of account maintained by the
Company in respect of the Textile and Filament Units of the Company
where Order has been made by the Central Government for the maintenance
of cost records under Section 209(1)(d) of the Companies Act, 1956 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 said records with a view to determine whether they
are accurate or complete.
ix) In respect of statutory dues:
a. According to the records of the Company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income-Tax, Sales tax, Wealth Tax, Service
Tax, Customs Duty, Excise Duty, Cess and other statutory dues have been
generally regularly deposited with the appropriate authorities though
there has been a delay in few cases. According to the information and
explanations given to us, no undisputed amounts payable in respect of
the aforesaid dues were outstanding as at 30th September, 2013 for a
period of more than six months from the date they became payable.
x) In our opinion, the accumulated losses of the Company as at 30th
September, 2013 are more than fifty percent of its net worth. Further,
the Company has incurred cash loss during the current financial period
and also in the immediately preceding financial year.
xi) Based on our audit procedures and according to the information and
explanations given to us, the Company has defaulted in repayment of US$
30.50 million equivalent to Rs.19,302.79 lakhs to foreign currency bond
holders since 08.04.2011.
xii) According to the information and explanations given to us and
based on the documents and records produced to us, Company has not
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities.
xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual
benefit fund/society.
xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments.
xv) The Company has given a guarantee for a loan taken by another body
corporate from a financial institution during the earlier year.
According to the information and explanations given to us, we are of
the opinion that the terms and conditions thereof are not prima-facie
prejudicial to the interest of the Company.
xvi) In our opinion and according to the information and explanations
given to us, the Company has not availed any term loan during the
period.
xvii) According to 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.
xviii)The Company has made preferential allotment of shares to some
parties and to a company covered in the Register maintained under
Section 301 of the Companies Act, 1956. During the period, the Company
allotted 4,08,80,000 equity shares at par @ Rs. 2.50 per share
aggregating to Rs. 1,022 lakhs, to its promoter company, Provestment
Securities Private Limited and Rs. 4,08,80,000 equity shares at par @
Rs. 2.50 per share aggregating to Rs. 1,022 lakhs to the secured
lenders under the Corporate Debt Restructuring Scheme. Such allotment
of equity shares at par is not prejudicial to the interests of the
Company.
xix) The Company has not issued any debentures during the period hence
the issue of creation of charge or security does not arise.
xx) The Company has not raised any money by way of public issues during
the period.
xxi) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no significant
fraud on the Company has been noticed or reported during the period.
For S.P Chopra & CO.
Chartered Accountants
Firm Registration No.000346N
PAWAN K GUPTA
Place: New Delhi Partner
Date : 29.11.2013 Membership No.092529
Mar 31, 2012
1. We have audited the attached Balance Sheet of JCT Limited, as at
31st March, 2012, the Statement of Profit & Loss and the Cash Flow
Statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003
issued by the Central Government of India in terms of Section 227(4A)
of the Companies Act, 1956, we enclose in the Annexure hereto a
statement on the matters specified in paragraphs 4 and 5 of the said
Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, 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 purposes 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 & Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account;
(d) on the basis of the written representations received from the
directors of the Company and taken on record by the Board of Directors,
we report that none of the directors is disqualified as at 31st March,
2012 from being appointed as director of the Company in terms of
Section 274 (1) (g) of the Companies Act, 1956;
(e) In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement of the Company dealt with by this report comply
with the Accounting Standards referred to in Section 211 (3C) of the
Companies Act, 1956;
(f) Without qualifying our opinion, we draw attention to the following
notes in the financial statements:
i. Note No. 5.2 (b) ; Non provision of yield protection of Rs. 924.78
lakhs payable on unpaid amount of Foreign Currency Convertible Bonds
(FCCB) for the reasons stated therein and the uncertainty related to
the outcome of the lawsuit filed against the Company by the Trustee of
the FCCB holders.
ii. Note No. 31.7 : The Company has incurred substancial cash losses
in the current year as also in the previous years resulting in
substancial erosion of net worth of the company. However, the financial
statements have been prepared on going concern basis on the grounds as
stated therein.
iii. Note No. 31.12: Interest free unsecured security deposit of
Rs.1150 lakhs given to an associate company and consequences, if any,
as to the applicability of Section 295 and/or 372A of the Companies
Act, 1956 to this transaction.
(g) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
Significant Accounting Policies and notes thereon give the information
as required by the Companies Act, 1956 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 31st March, 2012;
(ii) in the case of the Statement of Profit & Loss, of the loss of the
Company for the year ended on that date; and
(iii) in the case of Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in paragraph 3 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 on the basis of available information.
b. As explained to us, the fixed assets have been physically verified
by the management during the year 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. Fixed assets disposed off during the year were not substantial, and
therefore, do not affect the going concern assumption.
ii) a. As explained to us, inventories except those lying with third
parties, have been physically verified by the management in accordance
with the perpetual inventory programme, at regular intervals during the
year. In our opinion, the frequency of verification is reasonable.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
size of the Company and nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed in
physical verification of inventory as compared to the book records.
iii) a. The Company during the year has granted an interest free
unsecured security deposit to an associate company covered in the
register maintained under Section 301 of the Companies Act, 1956
aggregating Rs.1150 lakhs. The balance as at 31st March, 2012 is
Rs.1150 lakhs. As explained to us, the security deposit was granted
consequent to non-fulfilment of a specific obligation as stipulated in
the agreement entered into with the associate company as detailed by
the management in Note No. 31.12, which has been fully repaid after the
year end. Prima facie, it does not appear to be prejudicial to the
interest of the Company. b. The Company has not taken any loan during
the year from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956.
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 for the purchase of inventory, fixed assets and for the sale
of goods. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal controls.
v) In our opinion and according to the information and explanations
given to us, the Company has entered the interest free unsecured
security deposit given to an associate company in the register
maintained under Section 301 of the Companies Act, 1956. Besides the
said transaction there is no other transaction which needs to be
entered in the said register. Further, the clause regarding
reasonability of the price is not applicable as it is the transaction
of placement of interest free security deposit.
vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by the
Reserve Bank of India and the provisions of Section 58A, Section 58AA
and other relevant provisions of the Companies Act, 1956 and the Rules
framed there under, with regard to the deposits accepted from the
public. As informed to us, no order has been passed by the National
Company Law Tribunal, Reserve Bank of India, any court or any other
Tribunal during the year.
vii) In our opinion and according to the information and explanations
given to us, the internal audit system is commensurate with the size
and nature of the Company's business.
viii) We have broadly reviewed the books of account maintained by the
Company in respect of the Textile and Filament Units of the Company
where Order has been made by the Central Government for the maintenance
of cost records under Section 209(1)(d) of the Companies Act, 1956 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 said records.
ix) In respect of statutory dues:
a. According to the records of the Company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Income- Tax, Sales tax, Wealth Tax,
Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues
have been generally regularly deposited with the appropriate
authorities though there has been a delay in few cases. According to
the information and explanations given to us, no undisputed amounts
payable in respect of the aforesaid dues were outstanding as at 31st
March, 2012 for a period of more than six months from the date they
became payable.
b. The disputed statutory dues aggregating to Rs. 3146.70 lakhs, that
have not been deposited on account of matters pending in appeal before
appropriate authorities are as under:
Sl. Name of the Nature of the Forum where dispute Amount
No statute dues is pending (Rs. in lakhs)
1 Central Excise Duty Upto Commissioner's
Excise Act level 118.00
CESTAT 2,306.25
High Court 20.95
2 Central Sales Sales Tax Upto AETC 3.55
Tax and Tribunal 377.76
Sales Tax Act Supreme Court 51.10
of Various
states
3 Customs Duty Customs Duty Commissioner of 186.05
Act, 1962 Customs
4 Income tax Income Tax CIT 0.55
Act, 1961 Supreme Court 82.49
Total 3146.70
x) In our opinion, the accumulated losses of the Company as at
31.03.2012 are more than fifty percent of its net worth. Further, the
Company has incurred cash losses during the financial year covered by
the audit and also in the immediately preceeding financial year.
xi) Based on our audit procedures and according to the information and
explanations given to us, the Company has defaulted in repayment of
term loan of Rs.857.49 lakhs to bankers and US$ 30.50 million
equivalent to Rs.15,718.72 lakhs to foreign currency bond holders since
08.04.2011. Further, there have been delays in repayment of dues to
banks amounting to Rs. 2,352.97 lakhs during the year with maximum of
105 days.
xii) According to the information and explanations given to us and
based on the documents and records produced to us, Company has not
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities.
xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society.
xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments.
xv) The Company has given a guarantee for a loan taken by another body
corporate from a financial institution during the earlier year.
According to the information and explanations given to us, we are of
the opinion that the terms and conditions thereof are not prima-facie
prejudicial to the interest of the Company.
xvi) In our opinion and according to the information and explanations
given to us, the Company has not availed any term loan during the year.
xvii) According to 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.
xviii)The Company has not made any preferential allotment of shares to
any parties or companies covered in the Register maintained under
Section 301 of the Companies Act, 1956.
xix) The Company has not issued any debentures during the year hence
the issue of creation of charge or security does not arise.
xx) The Company has not raised any money by way of public issues during
the year.
xxi) 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 that causes the financial statements to be materially
misstated.
For S. P. CHOPRA & CO.
Chartered Accountants.
(PAWAN K. GUPTA)
Partner
Place: New Delhi Membership No. 92529
Dated: 31st October, 2012 Firm Registration No. : 000346N
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