Mar 31, 2010
1. We have audited the attached Balance Sheet of Jhagadia Copper Limited, as at 31st March, 2010, the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both 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 have 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 mis-statement. 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 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, as amended by the Companies (Auditor''s Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of subÂsection (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. (a) The financial statements of the Company is prepared on a going concern basis, despite the following-
i. The Company has substantially eroded its net worth due to incurrence of cash losses for several quarters, ii. The only manufacturing plant of the Company is not in operation since September, 2009. in. The Company is facing severe financial crunch and is unable to discharge its current liabilities in time. Further, it has defaulted to its lenders and debenture holders
(b) Provision has not been made for likely impairment loss on fixed assets.. We are unable to ascertain provision required for such impairment loss due to non-availability of future cash flows, We are informed that only after restructuring of the company the future cash flaws can be worked out.
We are unable to ascertain the impact of the above on the financial statements of the Company due to non- availability of the required information.
5. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
a) Subject to Para 4 above, 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) Subject to Para 4 above, 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 Profit & Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of accounts;
d) Subject to Para 4 above, in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
e) From one of the Directors, certificate confirming adherence to section 274
f) In our opinion and to the best of our information and according to the explanations given to us, subject to Para 4 above, the said accounts give the information required by the Companies Act, 1956, in the manner so required and subject to para 4 above, give a true and fair view in conformity with the accounting principles generally accepted in India :-
(i) In the case of Balance Sheet, of the state of affairs of the Company as at 31s1 March 2010;
(ii) In the case of the Profit & Loss Account, of the Loss for the year ended on that date; and
(iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date
Annexure to the Auditor''s report to the Members of Jkagudia Copper Limited (Referred to in paragraph 3 of our report of even date)
(l) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative details and the situation of its fixed assets.
(b) According to information and explanations given to us, the fixed assets were physically verified by the management in accordance with the programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material.
(c) During the year, disposal of fixed assets is not substantial.
(ii) (a) The Company has conducted physical verification of inventory at reasonable intervals during the year.
(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account.
(iii) (a) During the year, Company has not granted any loans to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
(b) During the year, Company has not taken any loans 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 provided to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets, and for sale of goods and services.
(v) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that there are no contracts that need to be entered in the register maintained under Section 301 of the Act
(vi) The Company has not accepted any deposits from the public.
(vii) The Company has an internal audit system which, in our opinion, is commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(l)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. No cost audit was carried out during the year,
(ix) (a) The Company was generally regular in depositing undisputed statutory dues in respect of Provident Fund, Income tax, Sales tax (VAT), Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanation given to us, there is no arrears outstanding of such items for more than six months as at the balance sheet date
(b) As per the records of the Company, and information and explanation provided.
(xi) As at the balance sheet date, following amounts due to the financial institutions, banks and debenture holders have not been paid by the Company:
a) Interest amounting to Rs, 17,206.99 Lacs for the period l" April, 2007 to 31" March. 2010 on loans.
b) Interest amounting to Rs 971.2Rs. Lacs and principal amounting to Rs 42140 Lacs towards term loan to one of the financial institution for the period from 1" April, 2005 to 31" March, 2010.
c) Interest amounting to Rs.459,70 Lacs and principal amounting to Rs.5036.16 Lacs for the period from April, 2007 to March,2010 in respect of short term facdities provided by banks.
d) Interest amounting to Rs. 59.88 Lacs and principal amounting to Rs. 937.57 Lacs for the periodfrom December, 2009 to March, 2010 in respect of devolved Bank Guarantee.
e) Interest amounting to Rs. 722.32 Lacs and principal amounting to Rs, 1681,97 Lacs for the periodfrom April, 2007 to March, 2010 in respect of buyer''s credit,
f) Interest amounting to Rs. 5,664.96 Lacs on Optionally Fully Convertible Debentures for the periodfrom April, 2007 to 31" March, 2010
g) Principal amounting to Rs. 723.08 Lacs in respect of Optionally Fully Convertible Debentures due during the period I" April, 2009 to 31" March, 2010.
h) Interest amounting to Rs.508.42 Lacs for the period from Sh June, 1999 to 7th June, 2001 to the holders of 17.5% Fully Convertible Debenture.
(xii) Based on our examination and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit/nidhi/mutual benefit fund/society; hence clause (xiii) of the Order is not applicable.
(xiv) The Company has no dealing or trading in shares, securities, debentures and other investment during the year.
(xv) On the basis of the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.
(xvi) In our opinion and according to the information and explanations given to us, the term loan have been generally utilized for the purpose for which it was obtained.
(xvii) On the basis of our examination of the books of accounts and the information and explanation given to us, in our opinion, during the year the short term loans have not been utilized for long term investments.
(xviii) As explained to us, the preference shares issued during the year are not in the nature of preferential allotment of shares.
(xix) In respect of outstanding debentures as on the Balance Sheet date security has been created.
(xx) The company has not raised any money by public issues during the year.
(xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit,
For N.M. RAIJI & CO.
Chartered Accountants Firm Reg. No. :I08296W
J. M. GANDHI
Place: Mumbai Membership No: 37924
Date : 29th September 2010