GROSS Ltd., an unlisted company in Jamshedpur, is engaged in the business of spices. Total paid up capital of the company is 10 Crore. Details of…

GROSS Ltd., an unlisted company in Jamshedpur, is engaged in the business of spices. Total paid up capital of the company is 10 Crore. Details of annual turnover and profit of the company for the last 3 years are given below: Year ended Turnover ( in crore) Profit (loss)before tax (in crore) 31-03-2022 475.20 (Audited) 65.75 31-03-2023 278.35 (Audited) 01.32 31-03-2024 108.25 (provisional) (06.25) The company is using conventional method for preparing spices. This requires more human intervention and hence, cost of production is high as compared to innovative method used by other new companies. Though the company had significant growth in the past years, it has not done well over the last two financial years due to competition. A new competitor viz, Spice Herbs Ltd., had come in the market during the year 2022 and by the end of March, 2023, they captured around 75% of market share by offering the product at a reduced price. They use new machinery which allows minimizing manual steps and reducing cost of labour. In order to reduce cost of production and thereby re-capture the market, the management of GROSS Ltd. has planned to erect a new plant with an automatic machine. The estimated cost of plant & machinery is 75 lakh. The company approached IDN Bank Ltd. for a term loan of 70 lakh which would be repaid in 5 years. On 28-12-2023, the bank had sanctioned the loan; and disbursed 35 lakh till 31st March, 2024. GROSS Ltd. has appointed M/s Hook & Crook, Chartered Accountants, as auditors of the company at its AGM held on 15-08-2023 for a period of 5 years. As agreed, the audit team commenced their audit work for the year 2023-24 in February, 2024 and completed the work by the end of May, 2024. The audit team submitted following findings to the engagement partner: PX Ltd., one of the material suppliers, filed a case against the company on 10-08-2023 for a compensation of 2.5 crore.Company has made an estimate for allowance of debtors @8%.65% of the value of inventory was only covered in physical verification during the year 2023 due to fire.Company got a show cause notice from State Pollution Control Board for the contravention of the provisions of Hazardous and waste Management Rule.Three incidences of fraud noticed (Total - 1.25 crore)- fraud committed by the Purchase manager 90 Lakh, by Accounts manager 15 Lakh and by a cashier 20 Lakh. Based on the above facts, answer the following MCQs: