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Auditor Report of Jagjanani Textiles Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Jagjanani Textiles Limited which comprise of the Balance Sheet as at March 31, 2014, and the Statement of Profit & Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act,1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair 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.

Opinion

1. In our opinion and to the best of our information and according to the explanations given to us, 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 Organization as at March 31, 2014;

B. In the case of the Statement of Profit and Loss Account, of the profit for the year ended on that date; and In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order,2003 ("the order") issued by the Central Government of India in terms of Section 227(4A) 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; In our opinion, proper books of accounts as required by law have been kept by the organization so far as appears from our examination of those books.

B .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.

C. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in section 211(3C) of the Act;

D. On the basis of the written representations received from the directors as on March 31, 2014, taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2014, from being appointed as a director in terms of Section 274(1)(g) of the Act.

Annexure to Independent Auditors'' Report Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date:

1. The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets. All the fixed assets have been physically verified during the year by the Management. Further, we are informed that no material discrepancies were noted during such verification. None of the fixed assets of the Company have been revalued during the year.

2. Inventory:-

a) The Company has maintained records pertaining to finished goods, stores, spares, raw material, purchases, sale of goods, by-products, scrap and book debts.

b) Inventories have been physically verified by the management during the year and in our opinion the frequency of verification is reasonable to the extent clarified to us.

c) 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.

d) The discrepancies noticed on physical verification of stocks as compared to book records which were not material, have been properly dealt with in the books of accounts.

e) In our opinion the valuation of stock is fair and proper and in accordance with generally accepted accounting principles.

3. The Company has not taken any loan from companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 and / or Companies under the same management as defined under sub-section (1B) of section 370 of the Companies Act, 1956. The Company has not granted any loan to companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 and / or Companies under the same management as defined under sub-section (1B) of section 370 of the Companies Act, 1956. According to the information and explanation given to us, no loans and advances in the nature of loans have been given to the parties including the employees.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business with regards to purchases of stores, raw material including components, plant and machinery, equipment and other assets and for the sale of goods.

5. We are informed that there are no transactions with any party for the purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 during the year under review.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Accordingly the clause 4(vi) of the order is not applicable.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the company in respect of products where, pursuant to the Companies (Cost Accounting Records) Rules,2011 made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1) (d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained and are being made up. We have not, however, made a detailed examination of records with a view to determining whether they are accurate or complete.

9. The Company has been regular paying dues under the E.S.I. Act with the appropriate authorities. According to the books and records examined by us and the information and explanation given to us, no undisputed amount payable in respect of income tax, wealth tax, sales tax, VAT, custom duty, service tax, excise duty cess & other material statutory dues applicable to it were in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable. However, '' 15,71,772/-pertaining to TDS remained unpaid for a period of more than six months from the date they became payable.

10. The Company has accumulated losses of Rs. 1856.12 Lacs as at 31st March, 2014. The company has earned profit of Rs. 451.27 Lacs in the financial year 2013-14 under report and has not incurred any cash loss in the immediately preceding financial year 2012-13.

11. The Company has settled loan accounts of UCO Bank, by Assignment of Debt to an Asset Reconstruction Company

12. 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. Accordingly, clause 4(xii) of the order is not applicable.

13. In our opinion, the Company is not a chit fund or a Nidhi /mutual benefit fund/society. Accordingly, clause 4(xiii) of the order is not applicable.

14. In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the order is not applicable.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, clause 4(xv) of the order is not applicable.

16. On the basis of information and explanation given to us term loan raised during the year has been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of balance sheet of the company, we report that no funds raised on short term basis have been used for long term investment by the Company or vice versa.

18. During the year the company has not made any preferential allotment of share. Accordingly, clause 4 (xviii) of the order is not applicable.

19. The Company has not issued any debenture so far. Accordingly, clause 4(xix) of the order is not applicable.

20. The Company has not raised any money through public issue during the year. Accordingly, clause 4(xx) of the order is not applicable.

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year that causes the financial statements to be materially misstated.

For G. Dutta & Co. Chartered Accountants F.R. No.: 002136C (Gopal Dutta) Partner M.No. 071312 Jaipur 04-09-2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Jagjanani Textiles Limited which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit & Loss 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 of the organization in accordance with the Accounting Standards. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the Financial Statements that is 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 organization''s preparation and fair presentation ofthe Financial statements in orderto design audit durestiiatar eappropiiatemlhe Circurnstances.

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 financial statements give the information 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 Balance Sheet, ofthe state of affairs ofthe Organization as at March 31,2013;

(b) in the case of Profit and Loss Account, ofthe profit/ loss for the year ended on that date;

(c) In the case of Cash Flow Statement, ofthe cash flows for the year ended on that date.

Referred in paragraph (3) of our report of even date:

1. The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets. All the fixed assets have been physically verified during the year by the Management. Further, we are informed that no material discrepancies were noted during such verification. None of the fixed assets of the Company have been revalued during the year.

2. Inventory:-

a) The Company has maintained records pertaining to finished goods, stores, spares, raw material, purchases, sale of goods, by-products, scrap and book debts.

b) Inventories have been physically veri fied by the management during the year and in our opinion the frequency of verification is reasonab! to the extent clarified to us.

c) 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.

d) The discrepancies noticed on physical verification of stocks as compared to book records which were not material, have been properly dealt with in the books of accounts.

e) In our opinion the valuation of stock is fair and proper and in accordance with generally accepted accounting principles.

3. The Company has not taken any loan from companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 and / or Companies under the same management as defined under sub-section (IB) of section 370 of the Companies Act, 1956. The Company has not granted any loan to companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 and / or Companies under the same management as defined under sub-section (IB) of section 370 of the Companies Act, 1956. According to the information and explanation given to us, no loans and advances in the nature of loans have been given to the parties including the employees.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regards to purchases of stores, raw material including components, plant and machinery, equipment and other assets and for the sale of goods.

5. We are informed that there are no transactions with any party for the purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 during the year under review.

6. The Company has not accepted any deposits from the public during the year. Accordingly the clause 4(vi) of the order is not applicable.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1) (d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained and are being made up. We have not, however, made a detailed examination records with a view to determining whether they are accurate or complete.

9. The Company has been regular paying dues under the E.S.I. Act with the appropriate authorities. According to the books and records examined by us and the information and explanation given to us, no undisputed amount payable in respect of income tax, wealth tax, sales tax, VAT, custom duty, service tax, excise duty cess & other material statutory dues applicable to it were in arrears as at 31 st March, 2013 for a period of more than six months from the date they become payable. However, Rs. 7,17,167/-pertaining to TDS remained unpaid for a period of more than six months from the date they became payable.

10. The Company has Rs. 2307.39 Lacs accumulated losses as at 31st March, 2013. The company has earned profit ofRs. 208.17 Lacs in the financial year 2012-13 under report and cash loss ofRs. 874.75 Lacs in the immediately preceding financial year 2011 -12.

11. The Company has settled loan accounts of IDBI Bank and Bank of Baroda, by Assignment of Debt to an Asset Reconstruction Company. Now only UCO Bank account is pending in settlement. UCO Bank has filed suit for recovery with Debt Recovery Tribunal, Jaipur.

12. 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. Accordingly, clause 4(xii) of the order is not applicable.

13. In our opinion, the Company is not a chit fund or a Nidhi/mutual benefit fund/society. Accordingly, clause 4(xiii) of the order is not applicable.

14. In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xi v) of the order is not applicable.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly, clause 4(xv) of the order is not applicable.

16. On the basis of information and explanation given to us term loan raised during the year has been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of balance sheet of the company, we report that no funds raised on short term basis have used for long term investment by the Company or vice versa.

18. During the year the company has not made any preferential allotment of share. Accordingly, clause 4 (xviii) of the order is not applicable.

19. The Company has not issued any debenture so far. Accordingly, clause 4(xix) of the order is not applicable.

20. The Company has not raised any money through public issue during the year. Accordingly, clause 4{xx) of the order is not applicable.

21. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported during the year that causes the financial statements to be materially misstated.

For G.Dutta & Co.

Firm Regn. No. - 002136C

Chartered Accountants

Sd/-

(Gopal Dutta)

Partner

Place: Jaipur M.No. 071312

Date: 25.08.2013


Mar 31, 2012

We have audited the attached Balance Sheet of Jagjanani Textiles Limited as at 31st March 2012 and the Profit & Loss Account & Cash Flow Statement for the year ended on that date annexed thereto and report that:

1. 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 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 test basis, evidence supporting the amounts and disclosures in the financial statements presentation. An audit also includes assessing the accounting principles used and signification estimates made by management, as well as evaluating the overall financial statements. We believe that our audit provided a reasonable basis for our opinion.

3. As required by the Companies(Auditor''s Report) Order, 2003 as amended by the Companies(Auditor''s Report)Order, (Amendement) 2004 issued by the Government of India in terms of Section 227(4A) of the Companies Act,1956, we annex hereto a statement on the matters specified in the paragraphs 4 &5 ofthe said Order.

4. Further to our comments referred to in paragraph(3) above we report that:

a) We have obtained all the information and explanation, which to the best of our knowledge and belief where necessary for the purpose of our audit.

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination ofthese books.

c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of accounts.

d) In our opinion the Balance Sheet and the Profit and Loss Account dealt with by this report are in compliance with the accounting standards referred to in Section 211(3C) of the Companies Act,1956 and are in agreement with the books of account.

e) On the basis of written representations received from the directors as on 31st march 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31st,2012 from being appointed as director in terms of clause(g) of sub-section(1) of section 274 of Companies Act,1956.

f) In our opinion and to the best of our information and according to the explanation given to us, the accounts read with the notes thereon, give the information required by the Companies Act,1956, in the manner so required and give a true and fair view:

i) In the case ofthe Balance Sheet, ofthe state of affairs of the Company as at 31st March,2012.

ii) In the case of Profit and Loss Account, ofthe Loss for the year ended on that date.

iii) In the case of Cash Flow Statement, of cash flow for the year ended on that date.

Referred in paragraph (3) of our report of even date:

1. The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets. All the fixed assets have been physically verified during the year by the Management. Further, we are informed that no material discrepancies were noted during such verification.

None of the fixed assets of the Company have been revalued during the year.

2. Inventory:-

a. The Company has maintained records pertaining to finished goods, stores, spares, raw material, purchases, sale of goods, by-products, scrap and book debts.

b. Inventories have been physically verified by the management during the year and in our opinion the frequency of verification is reasonable to the extent clarified to us.

c. 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.

d. The discrepancies noticed on the physical verification of stocks as compared to book records which were not material, have been properly dealt with in the books of accounts.

e. In our opinion the valuation of stock is fair and proper and in accordance with generally accepted accounting principles.

3. The Company has not taken any loan from companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 and / or Companies under the same management as defined under sub-section (1B) of section 370 of the Companies Act, 1956. The Company has not granted any loan to companies, firms and other parties listed in the register maintained under section 301 of the Companies Act, 1956 and / or Companies under the same management as defined under sub-section (1B) of section 370 of the Companies Act, 1956. According to the information and explanation given to us, no loans and advances in the nature of loans have been given to the parties including the employees.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size ofthe company and the nature of its business with regards to purchases of stores, raw material including components, plant and machinery, equipment and other assets and for the sale of goods.

5. We are informed that there are no transactions with any party for the purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 ofthe Companies Act,1956 during the year under review.

6. The Company has not accepted any deposits from the public during the year. Accordingly the clause 4(vi) ofthe order is not applicable.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1)(d) of the Companies Act, 1956. We are of the opinion that prima face the prescribed accounts and records have been maintained and are being made up. We have not, however, made a detailed examination records with a view to determining whether they are accurate or complete.

9. The Company has been regular paying dues under the E.S.I. Act with the appropriate authorities. However Rs. 147847/- under the Employees Provident Fund Act unpaid amounts are there. According to the books and records examined by us and the information and explanation given to us, no undisputed amount payable in respect of income tax, wealth tax, sales tax, VAT, custom duty, service tax, excise duty cess &other material statutory dues applicable to it were in arrears as at 31st March, 2012 for a period of more than six months from the date they become payable. However, Rs. 994004/-pertaining to TDS remained unpaid for a period of more than six months from the date they became payable.

10. The Company has Rs. 3536.10 Lacs accumulated losses as at 31st March 2012. The company has incurred cash loss of 874.75 Lacs in the financial year 2011-12 under report and 875.20 Lacs in the immediately preceding financial year 2010-11.

11. The Company has defaulted in repayment of dues to the Banks and the Banks have not accepted the request for rescheduling the repayment under the Corporate Restructuring Scheme. Banks have initiated action against the Company under the SARFAESI Act, 2002 for recovery oftheir dues.

12. 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. Accordingly the clause 4(xii) of the order is not applicable.

13. In our opinion, the Company is not a chit fund or a Nidhi/mutual benefit fund/society. Accordingly the clause 4(xiii) ofthe order is not applicable.

14. In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly the clause 4(xiv) ofthe order is not applicable.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly the clause 4(xv) of the order is not applicable.

16. On the basis of information and explanation given to us no term loan raised during the year have been applied for the purpose for which they were raised.

17. 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 used for long term investment by the Company or vice versa.

18. During the year the company has not made any preferential allotment of share. Accordingly the clause 4 (xviii) ofthe order is not applicable.

19. The Company has not issued any debenture so far. Accordingly the clause 4(xix) of the order is not applicable.

20. The Company has not raised any money through public issue during the year. Accordingly the clause 4(xx) ofthe order is not applicable.

21. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported during the year that causes the financial statements to be materially misstated.

For G.Dutta & Co.

Firm Regin. No.- 002136C

Chartered Accountants

Sd/-

(Gopal Dutta)

Sr. Partner

Place: Jaipur M.No. 071312

Date: 28.09.2012


Mar 31, 2010

We have audited the attached Balance Sheet of Jagjanani Textiles Limited as at 3 Is March, 2010, the Profit & Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto and report that:

1. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2, We conducted our audit in accordance with 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 test basis, evidence supporting the amounts and disclosures in the financial statement presentation. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provided a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) Order, (Amendment) 2004 issued by the Government of India in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

4. Further to our comments 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 purpose of our audit;

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of these books;

c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

a") In our opinion the Balance Sheet and the Profit and Loss Account dealt with by this report are in compliance with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956 and are in agreement with the books of account.

e) On the basis of written representations received from the directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31M March, 2010 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 ofthe Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

i) In case ofthe Balance Sheet, ofthe state of affairs ofthe Company as at 31 st March, 2010. ii) In the case ofthe Profit and Loss Account, ofthe Loss for the year ended on that date. iii) In the case of Cash Flow Statement, ofthe cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph (3) of our report of even date:

1 The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets. All the fixed assets have been physically verified during the year by the Management and the frequency of such verification was reasonable. Further, we are informed that no material discrepancies were noted during such verification. No fixed asset was disposed off during the year.

2. None of the fixed assets of the Company have been re-valued during the year.

3. (a) The Company has maintained records pertaining to finished goods, stores, spares, raw materials, purchases, sale of goods, by- products, scrap and book debts.

(b) Inventories have been physically verified by the management during the year and in our opinion the frequency of verification is reasonable.

(c) 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.

(d) The discrepancies noticed on physical verification of stocks as compared to book records which were not material, have been properly dealt with in the books of account.

4. In our opinion the valuation of stocks is fair and proper and in accordance with generally accepted accounting principles.

5. The Company has not taken any loan from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 and/or companies under the same management as defined under sub-section (IB) of Section 370 of the Companies Act, 1956.

6. The Company has not granted any loan to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 and/ or companies under the same management as defined under sub-section (1B) of Section 370 of the Companies Act, 1956.

7. According to the information and explanations given to us, no loans and advances in the nature of loans have been given to parties including the employees.

8. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials including components, plant and machinery, equipment and other assets and for the sale of goods.

9. We are informed that there are no transactions with any party for the purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 during the year under review.

10- The Company has not accepted any deposits from the public during the year. Accordingly the clause 4 (vi) of the order is not applicable.

11. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

12. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1) (d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained and are being made up. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

13. The Company has been regularly paying dues under the E.S.I. Act with the appropriate authorities. However, some dues underthe Employees Provident Fund Act remain unpaid.

14. According to the books and records examined by us and the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, service tax, excise duty cess & other material statutory dues applicable to it were in arrears as at 31 st March, 2010 for a period of more than six months from the date they became payable.

15. The Company has Rs. 465.31 lacs accumulated losses as at 31st March, 2010. The company has incurred cash loss of Rs. 1274.94 lacs in the financial year 2009-10 under report and Rs. 112.88 lacs in the immediately preceding financial year 2008-09.

16. The Company has defaulted in repayment of dues to Banks during the year. It has been explained to us ~ that the Company has approached banks for rescheduling the repayment of loans under Corporate Debt Restructuring Scheme. The proposal is awaiting approval.

17. According to the information and explanations given to us and based on the documents and records produced 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. Accordingly the clause 4(xii) of the order is not applicable.

18. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund / society. Accordingly the clause 4(xiii) of the order is not applicable.

19. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly the clause 4(xiv) of the order is not applicable.

20. According to information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Accordingly the clause 4(xv) of the order is not applicable.

21. On the basis of information and explanation given to us, term loan raised during the year have been applied for the purposes for which they were raised.

22. According to information and explanation 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 by the Company or vice versa.

23. During the year, the Company has not made any preferential allotment of shares. Accordingly clause 4(xviii) of the order is not applicable.

24. The Company has not issued any debentures so far. Accordingly clause 4(xix) of the order is not applicable.

25. The Company has not raised any money through public issue during the year. Accordingly clause 4(xx) of the order is not applicable.

26. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year that causes the financial statements to be materially misstated.



For G.Dutta & Co

Chartered Accountants

(GOPAL DUTTA)

Sr. Partner

Membership No. 71312

Place: Jaipur

Date: 27.08.2010





 
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