Home  »  Company  »  Maha Rashtra Ape  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Maha Rashtra Apex Corporation Ltd.

Mar 31, 2015

1 We have audited the accompanying financial statements of MAHA RASHTRA APEX CORPORATION LIMITED ("the Company"), which comprise the Balance Sheet as at March 31,2015, the Statement of Profit and 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

2. The management and Board of Directors of the Company are 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 Companies (Accounts) Rules, 2014. This responsibility 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; design, implementation and maintenance of adequate internal financial controls, that are 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

3. 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

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 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 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 accounting policies used and the reasonableness of the accounting estimates made by the Company's management and Board of Directors, 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

Basis for qualified Opinion:

By an order dated 13 June 2002, RBI has cancelled the certificate of registration granted to the company to act as Non-Banking Financial Company.

Accrued interest on deposits and bonds were provided up to 31.03.2002 only in accordance with the scheme of restructure of the debts as sanctioned by the Honorable High Court of Karnataka.

All the installment of repayments of deposits/bonds as per the scheme of High Court of Karnataka are due for payment on 15th September 2009 and 15th June 2009.The company stopped repayment of deposits/bonds on maturity dates till the sanction of restructure by the Honorable High Court of Karnataka on 8th October 2004.Now the company has started repayment of deposits/bonds under the sanctioned scheme and shortfall in repayment amounted to Rs. 5554.72Lakhs.

Provision has not been made in the accounts as required under RBI prudential Norms since 2000.The effect of non-provision is overstatement of assets by Rs. 2729.53 Lakhs, and Understatement of loss by Rs. 2729.53 Lakhs, including Excess provision for diminution in the value of investments Rs. 65.75 lakhs.

In terms of direction issued by RBI

i. The company has not obtained Credit Rating.

ii. The Capital adequacy is negative.

iii. There has been delay in submission of statement to RBI

iv. In view of negative net worth all lending and investments are in excess of credit concentration limit stipulated by Reserve Bank of India.

v. The company has encased all the approved securities and utilized for repayment of deposits/bonds Emphasis on Matters:

Your kind attention is drawn to the following matters:

i. Note 3.6 on Notes to accounts, the company is incurring losses since 2001 and its funds are blocked in non performing assets. The assets of the company is completely eroded and net worth of the company is negative. The company has prepared its financial statement of accounts on a going concern basis as the management is of the view that it will be able to recover the dues from the borrowers/debtors and monitor the deficit in operation but we are unable to comment on the ultimate reliability of company's assets. These conditions indicate the existence of material uncertainty that may cast significant doubt about the companies ability to continue as a going concern.

ii. Provision has not been made in the accounts as required under RBI prudential Norms since 2000. The effect of non-provision is overstatement of assets by Rs. 2729.53lakhs, and Understatement of loss by Rs. 2729.53 lakhs, including Excess provision for diminution in the value of investments Rs. 65.75 lakhs.

iii. No provision for Income tax liability against the order of the AO u/s 143(3) amounting to Rs. 264.82 Lakhs in respect of following assessment years.

i. A.Y 1998 - 99 Rs. 52.44 Lakhs against disallowance of depreciation on leased asset and not giving credit for Tax

ii. A.Y 1999 - 2000 Rs. 85.80 Lakhs against disallowance of depreciation on Leased assets and Bad debts.

iii. A.Y 2000 - 01 Rs. 126.58 Lakhs against disallowance of depreciation on Leased assets and Bad debts.

These appeals are pending before CIT (A) for disposal.

iv. Disputed sales tax amounting to Rs. 17.54 lakhs in Andhra Pradesh pending for disposal Sales Tax Appellate Tribunal.

iv. Note No 3.12 of Notes on account Un Encashed cheques amounting to Rs. 460.38 Lakhs being un encashed DD/Multi city cheques issued for repayment of deposits/Bonds in terms of the scheme which is included under other current liabilities.

Qualified Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, except for the effect/possible effect of the matters included in para under emphasis on matters reported above and the Basis for Qualified Opinion Paragraph, to this report referred to in 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, its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7 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 section143 of the Act, we give in the Annexure a statement on the matters Specified in paragraphs 3 and 4 of the Order to the extent applicable.

8 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 purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, except the matters in para on emphasis matter reported above, and basis for qualified may have adverse effect on the functioning on the company,aforesaid financial statements comply with the applicable Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014

e. on the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of Section 164(2) of the Act.

f. The company has not carried out Internal audit as per section 138 of companies act

g. In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:

(i) The Company has disclosed the impact of pending litigations which would impact its financial position - refer to Note No 3.14 Notes to accounts.

(ii) The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise.

(iii) As the entire deposit liability is covered under the scheme of arrangement transfer of matured deposit remaining unpaid for a period of exceeding 7 years to Investor Education and Protection Fund,the question of delay in transferring such sums does not arise

(iv) An amount of Rs. 12,29,088/- provided in the accounts towards delayed payment of interest under section 194 A of IT Act 1961, on repayment of deposits / bonds is liable for disallowance under 40 (a) (ia).

(v) The Company has not complied with appointment of internal auditor as required section 138 of the Companies Act 2013.

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF COMPANY FOR THE YEAR ENDED 31ST MARCH, 2015.

The Annexure referred to in our Independent Auditors' Report to the members of the Company on the financial statements for the year ended 31st March 2015, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets ;

(b) i. Fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification; ii. Assets on lease have not been physically verified by the Management as most of the assets are under legal proceedings. Material discrepancies noticed on such verification have been properly dealt with in the books of account.

(ii) The nature of business of the Company does not require it to have any inventory. Hence, the requirement of clause (ii) of paragraph 3 of the said Order is not applicable to the Company

(iii) The company has not granted any loans, during the year secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act.

In respect of loans granted in earlier years the repayment of loans is not regular but the company has taken proper steps for recovery.

(iv) Generally there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, no major weakness has no been noticed or reported.

(v) The Company has not accepted any deposits from the public covered under Section 73 to 76 of the Companies Act, 2013.

(vi) As informed to us, the Central Government has not prescribed maintenance of cost records under sub section (1) of Section 148 of the Act.

vii) (a) Based on the records of the company examined by us, the company is regular in depositing the undisputed statutory dues, including Provident Fund, , Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues, as applicable,with the appropriate authorities in India ;

(b) According to the information and explanations given to us and based on the records of the company examined by us, there are no dues of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty and Excise Duty which have not been deposited on account of any disputes. Disputed income tax liability amounting to Rs. 264.82 lakhs for the Assessment years 1998-99 to 2000-01 are pending before CIT(A) for disposal. This demand has raised on account of disallowance of depreciation on leased assets and bad debts. The said demand is adjusted against refund due to the company. Disputed sales tax amounting to Rs. 17.54 lakhs in Andhra Pradesh pending for disposal Sales Tax Appellate Tribunal.

(c) As the entire deposit liability is covered under the scheme of arrangement transfer of matured deposit remaining unpaid for a period of exceeding 7 years to Investor Education and Protection Fund, the question of delay in transferring such sums does not arise

viii) As at 31st March, 2015, the Company has accumulated loss and the net wealth of the company is completely eroded. The company incurred cash losses in such financial year and in the immediately preceding financial year.

(ix) According to the records of the company examined by us and as per the information and explanations given to us, the company has not availed of any loans from any financial institution or banks and has not issued debentures. And interest accrued thereon up to 31.03.2002, the company is in the process repayment as per the scheme of compromise and arrangement sanctioned by the Honorable High Court of Karnataka dated 8th October 2004.

(x) The Company has not given any guarantee for loan taken by others from a bank or financial institution during the year.

(xi) In our opinion, and according to the information and explanations given to us, the company has not raised any term loans during the year.

(xii) During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in India, we have neither come across any instance of fraud on or by the Company noticed or reported during the course of our audit nor have we been informed of any such instance by the Management.

For RAO & SWAMI Chartered Accountants (Firm's Registration No.003105S)

Place : Bengaluru (P V Shenoy) Date : 27/05/2015 (Partner) (Membership No. 020205)




Mar 31, 2014

We have audited the accompanying financial statements of MAHA RASHTRA APEX CORPORATION LIMITED which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and 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 sub-section (3C) of section 211 of the Companies Act, 1956 read with general Circular 15/2013 dated 13th September of the Ministry of Corporate affairs, in respect of section 143 of companies act 2013. 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.

Auditors'' 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, but not for the purpose of expressing an opinion on the effectiveness on the entity''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.

Basis for Qualified Opinion

A) In terms of direction issued by RBI, we state that:

i) The Company has not obtained Credit Rating

ii) The Capital Adequacy Ratio is negative.

iii) There has been some delay in submission of Statements to RBI.

iv) In view of the negative net worth, all lending''s and investments are in excess of Credit Concentration Limit stipulated by the Reserve Bank of India.

v) The company has en-cashed all the approved securities and utilized for repayment of deposits.

B) Though the net-worth of the Company is negative, it has prepared the accounts on "going concern" basis on the presumption that deficit in operations will be effectively monitored (refer Note No.3.6.).

C) By its order dated 13th June, 2002, RBI has cancelled the Certificate of Registration granted to the Company to act as Non-Banking Financial Company

D) Accrued interest on deposits and bonds were provided upto 31.3.2002 only as per the Scheme of Restructure of the debts of the Company as sanctioned by the Hon''ble High Court of Karnataka (refer Note 3.1(a)).

E) The company has stopped repayment of deposits/bonds on maturity dates, till the sanction of Scheme of Restructure by the Hon''ble High Court of Karnataka on 8th October, 2004. Now the company has started repayment under the sanctioned Scheme and the short fall in repayment amounted to Rs. 6732.43 lakhs (refer Note No 3.1 and 3.2).All the instalments of repayment of deposits/bonds are as per scheme sanctioned by High Court of Karnataka due for payment on 15th September 2009 and 15th June 2009 (refer Note No3.1 (e) and Note No 3.1(f)).

F) Though the management is of the view that it will be able to monitor effectively the deficit in operation, we are unable to comment on the ultimate reliability of company''s assets.

G) a. Provision has not been made as required under RBI Prudential Norms since 1.4.2000. Had this been provided for, the net assets would have been less and the accumulated loss would have been more by the provision required Rs. 2816.90 Lakhs. (inclusive of Short provision for diminution in the value of investments Rs. 1,92,862/-) (Refer Note No. 3.7).

H) Two current accounts with scheduled Bank shows a overdrawn balance of Rs. 2,69,39,173/- (Cr) under Short term Borrowings from Banks grouped under Current Liabilities. The company has submitted a reconciliation statement. But we are unable to comment on the accuracy of the same (Refer Note No 3.16.)

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 matters described in the Basis for Qualified Opinion paragraph the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Act read with general circular 15/2013 dated 13th September 2013 issued by the ministry of corporate affairs inrespect of Section 133 of the companies act 2013.; except Note No. 3.14 and 3.15 creation of Deferred Tax Asset and regarding creation of Capital Redemption Reserve for redemption of 14% Cumulative Preference Shares, and.

e) on the basis of written representations received from the directors as on March 31, 2014, and 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 clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Based on the written communication received from the company, it had complied with the provisions of section185 of the Companies act 2013.

g) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of MAHA RASHTRA APEX CORPORATION LIMITED on the accounts of the company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

1. The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(a) As explained to us, fixed assets have been physically verified by the management once in a year; no material discrepancies were noticed on such verification.

(b) We are informed that assets on lease are not physically verified as most of the lease accounts are under legal proceedings and the value of these assets are not significant.

2. The Company has informed us that stock on hire could not be physically verified as most of the hire purchase accounts are irregular and legal proceeding are in progress for recovery of dues.

3. a) As per the explanations furnished by the Management, during the year the Company has not granted any loans, secured or unsecured to Companies, Firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

b) We are informed that certain Companies to which loans were granted earlier are now having common directors with the lending company on account of change of directors subsequently. In the opinion of the management, section 297 and 299 are not applicable to these companies as per sub-section (6) of section 299 of the Companies Act, 1956.

c) Though the Company is persuading the borrowers to repay the loans, we are of the opinion that more efforts are required to be put for the recovery of these loans.

d) As per the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of assets. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. We are informed by the Management that Register required to be maintained u/s 301 is properly maintained and during the year Company has not entered into any transactions which are required to be entered in the Register maintained under section 301, as Section 297 and 299 are not applicable to transactions between two companies covered under sub-section 6 of section 299 of the Companies Act, 1956. Though the company had stopped repayment of deposits/debentures matured after 15th April, 2002, in view of the Scheme of Restructure filed before the Hon''ble High Court of Karnataka, it has started the repayment of deposits/bonds as under the Scheme sanctioned by the Hon''ble High Court of Karnataka as referred in Note No.3.1. and 3.2. All the instalment of repayment of Bonds/Deposits as per scheme sanctioned by High Court of Karnataka due for payment on 15th September and 15th June 2009 (refer Note No3.1 and 3.2). The case filed by depositors before National Consumer Forum, New Delhi is pending. We are informed by the management that there are no orders by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any other Court or Tribunal.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. We are informed that the Company has discontinued the Internal Audit system on account of discontinuance of its regular business from 15th April, 2002.

8. The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956.

9. a. According to the information and explanations given to us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax, Wealth Tax, Service Tax and other statutory dues applicable to it and there are no arrears of outstanding statutory dues for a period of more than six months from the date they became payable.

b. According to the records of the Company, disputed Income-Tax has been adjusted from the refund due and the Sales-Tax dues which has not been deposited on account of dispute are given below:

(Rs. in lakhs)

Name of Nature of Forum where the Statute Period Arrears dispute is pending Amount

Andhra Pradesh Sales Tax Sales Tax Appellate Sales Tax Act 95-96 96-97 Tribunal 17.54

10. The net worth of the Company is completely eroded. The Company has incurred cash loss of Rs. 119.44 lakhs during the year (previous year the company has incurred cash loss. of Rs. 56.08 lakhs).

11. As per the information given by the company, there are no defaults in repayment of dues to financial institutions or banks. In respect of matured debentures and interest accrued there on upto 31.3.2002, company is in the process of payment to debenture-holders as per the Scheme of Compromise and Arrangement sanctioned by the Hon''ble High Court of Karnataka on 8th October, 2004 (refer Note No. 3.1 and 3.2).

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. The Company is not dealing or trading in shares, securities and other investments. The shares, debentures and other securities held by the Company as long term investments are held in its own name except to the extent of exemption granted under section 49 of the Companies Act, 1956.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. During the year the Company has not taken term loans from banks or financial institutions and there are no outstanding loans as on 31st March, 2014.

17. During the year the Company has not raised any short term funds. The Company is in the process of repaying the overdue long term funds, (all are raised before 31.3.2002) as per the Scheme of Arrangement sanctioned by the High Court of Karnataka (Refer Note No.3.2).

18. The Company has not made any allotment of shares during the year.

19. As per the information and explanations given to us the Company has created charge in respect of debentures issued. As per the Scheme of Restructure sanctioned by the High Court, the unpaid deposits also are secured by charge on company''s financial assets (Refer Note No.3.1).

20. The Company has not raised any money by public issue during the year.

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For RAO &SWAMI, Chartered Accountants FRN: 003105S

P V Shenoy Place: Udupi (Partner) Date: May 30, 2014 Membership No. : 020205


Mar 31, 2010

We have audited the attac hed Balance Sheet of MAHARASHTRA APEX CORPORATION LIMITED as at 31st March, 2010 and the annexed Profit & Loss Account for the year ended on that date. These financial statements are the responsibility of he Companys Management Our respon sibility is toex press an opinionon these financial statements based on our audit.

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 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 presentation of the financial statements. We believe that our audit provides are as onable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order 2004 issued by the Central Government in terms of Section 227 (4A)of the Companies Act, 1956, we give in theannexure a statement on the matters specified in Paragraphs 4 and 5 of the said order; to the extent applicable to the Company.

2. Furtherto ourcomments in the Annexure referred to in Paragraph (1) 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) Inouropinion.properbooks ofaccountas required bylaw have been kept by the Company sofaras appears from examination ofthose books

c) TheBalanceSheetandProfit&LossAccountreferredto in this report are in agreement with the books of account.

d) On the basis of the written represent ations received from the Directors as on31st March,2010 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2010from being appointed as Directors of this Company in terms of Clause(g) of Sub-section(1)of Section 274 of the Companies Act,1956.

e) In ouropinion,the Balance Sheet and Profit & Loss Account, dealtwithby this report, have been prepared in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, except Note Nos. B(17) and B(16) of Schedule M regarding creation of Capital Redemption Reserve for redemption of 14% Cumulative Preference Shares, and creation of Deferred Tax Asset.

f) In terms of direction issued by RBI.we state that:

i)The Company has not obtained Credit Rating

ii) The Capital Adequacy Ratio is negative.

Hi) There has been some delay in submission of Statements to RBI.

iv) In view of the negative networth, all lendings and investments are in excess of Credit Concentration Limit stipulated bythe Reserve BankerIndia.

v) Thecompanyhasencashed all the approved securities and utilized for repayment of deposits.

g) Though thenetworth ofthe Company is negative, it has prepared the accounts on "going concern" basis on the presumption that dentin operations will be effectively monitored (refer Note No.B(3) of Schedule-M).

h) By its order dated 13th June, 2002, RBI has cancelled the Certificate of Registration granted to the Company toad as Non- Banking Financial Company.

i) Accrued intereston deposits andbondswere provided upto 31.3.2002only asper theSchemeof Restructure of the debts of theCompany as sancLed by the Honble High Court of Lnataka (refer NLB(1)(a) of Schedule-M).

j) The company has stopped repayment ofdeposits/bonds on maturity dates, till the sanction of Scheme of Restructure by the Honble High Court of Karnataka on 8th October, 2004. Now the company has started repayment under the sanctioned Scheme and the short fall in repayment amounted to Rs.135.91 crores (refer Note Nos.B(1) and 2) of Schedule-M). The fmal instalments of repayment of deposits/bonds are as per scheme sanctioned by High Court of Karnataka due for payment on 15th September 2009 and 15th June 2009 (refer Note no 1(e) and Note (m)-TrLtment of change in Account toHardship Payment of Bonds/Deposits (refer Note No.B(4) of scheduleM.

k) Though the management is of the view that it will be able to monitor effectively the deficit in operation, we are unable to commentonthe the ultimate readability of companys assets.

I) Provision has not been made as required under RBI Prudential Norms since 1.4.2000. Had this been provided for, the net assetswouldhave been less and the accumulated loss would have been more by the provision required (Refer Note No. B(6) ofSchedule-M).

m) Subject to the comments made in Para (e), (f), (g), (h), (i), (j), (k) and (I) above, 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 notes thereon give the information required by the CompaniesAct, 1956 in the mannerso required and give a true and fair view:

(i) in the case of the Balance Sheet, of the state of affairs of the Company a sat 31 st March,2010 and,

(ii) in the case of the Profit & Loss Account, of the" Profit" for the year ended on that date. iii) in the case of Cash Flow statement,ofthe Cash Flow for the year ended on that date.

ANNEXURE TO AUDITORSREPORT Referred to in Paragraph 1 of our report of even date:

i). The Company has maintained proper records showing full particulars including quantitative details and situation offxed assets. We are informed that these fixed assets have been physically verified by the Management once in a year and no serious discrepancies have been noticed on such verifcation. Weare informed that assets on lease are not physically verified a most ofthe lease accounts are underlegal proceedingsandthevalueoftheseassetsarenotsignificant.

ii). The Company has informed usthat stockon hire could not be physically verified as mostofthehirepurchaseaccountsare irregular and legal proceeding are in progress for recovery of dues.

iii) a) As per the explanations furnished by the Management,during the year the Company has not granted any loans, secured or unsecured toCompanies, Firmsor other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

b)We are informed that certain Companies to which loans were granted earlier are now having common directors with the lending company on account of change of directors subsequently. In the opinion of the management, section 297 and 299 are not applicable to these companies as persub-section(6)ofsection299oftheCompaniesAct,1956.

c) Though the Company is persuading the borrowers to repay the loans, we are of the opinion that more efforts are required to be put forthe recovery of these loans.

d) As per the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, frms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

iv). In our opinion and according to information and explanations given to us, there is adequate internal control procedure commensurate with the size ofthe Company and the nature of its business for the purchase and sale of assets. During the course of Audit, no majorweakness has been noticed in the internal controls.

v). We are informed by the Management that Register required to be maintained u/s 301 is properly maintained and during the year Company has not entered into any transactions which are required to be entered in the Register maintained under section 301, as Section 297 and 299 are notapplicable to transactions between two companies covered under sub-section 6 ofsection 299 ofthe CompaniesAct, 1956.

vi). Though the company had stopped repayment of deposits/debentures matured after 15th April, 2002, in view ofthe Scheme of Restructure fled beforethe Honbk High Court of Karnataka, it has started the repayment of deposits/bondsas under the Scheme sanctioned by the Honble High Court of Karnataka as referred in Note No. B(1) and B(2) of Schedule-M The final instalment of repayment of Bonds/Deposits as per scheme sanctioned byHighCourtofKamataka duefor payment on 15th September and 15th June2009(referNoteB(1)B(2)ofschedules. The case filed by depositor before National Consumer Forum, New Delhi, criminal cases fled atJMFC.Yellapur and JMFC, Davangere also are pending. We are informed by the management that there are no orders by Company Law Board or National Company Law Tribunal or Reserve BankoflndiaoranyotherCourtorTribunal.

vii) We are informed that the Company has discontinued the lntemal

Audit system on account of discontinuance of its regular business from 15th April, 2002.

viii) The Central Government has not prescribed the maintenance of costre cord sunder Section 209(1) (d) of the Companies Act, 1956.

ix) a) According to the information and explanations given to us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund Employees State Insurance, Income-Tax, Wealth Tax, Service Tax and other statutory dues applirabletoit andttiere arenoar^arsofoutstandingstatutory duesfora periodofmorethansixmonthslroiTithedatBtheybecamepayable.

b) According to the records ofthe Company, disputed Income-Tax has been adjusted from the refund due and the Sales-Tax dueswhich has not been deposited on account of dispute are given below:

(Rs. in lakhs)

Name ofthe Statute Nature of Period Arrears Forum where dispute is pending Amount

Andhra Pradesh Sales TaxAct Sales Tax 95-96 & 96-97 Sales Tax Appellate Tribunal 17.54

x). The net worth of the Companyis completely eroded. The Company has not incurred cash loss during the year (previous year incurred cash lossofRs. 226 lakhs).

xi) As per the information given by the company, there are no defaults in repayment of dues to financial institutions or banks. In respect of matured debenture sandinte restaccrued^ of Compromise and Arrangement sanctioned bytheHonble HighCourt of Kamataka on 8th October, 2004 (referNoteNo.B( 1) of Schedule-M).

xii) In our opinion, the Company has maintained adequate records where the Company has granted loans and advances on the basis of security by way of pledge of shares debentures and other securities.

xiii) As the Company is not a Chit Fund, Clause 4(xiii) of the Companies (Auditors Report) Order 2003 as amended by the Companies (Auditors Report) (Amendment) Order 2004 is not applicable to the Company.

xiv) The Company is not dealing or trading in shares, securities and other investments. The shares, debentures and other securities held by the Company as long term investments are held in its own name except to the extent of exemption granted under section 49 ofthe CompaniesAct, 1956in respectofSubsidiary, RivieraSteels Pvt.Ltd.

xv) As per 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) During the year the Company hasnot taken term loans from banks or financial institutions and there are no outstanding loansason31st March 2010

xvii) During the year the Company has not raised any short term funds. The Company is in the process of repaying the overdue long term funds, (all are raised before 31.3.2002) as perthe Scheme of Arngements anctioned byt he High Court of Kamataka (Refer Note No.B(2)).

xviii) The Company has not made any allotment of shares during the year.

xix) As per the information and explanations given to us the Company has created charge in respect of debentures issued .As per the Scheme of Restructure sanctioned by the High Court, the unpaid deposits also are secured by charge on companysf nancial assets (Refer Note No.B(1 )(i)).

xx) The Company has not made any public issues.

xxi) As per the explanations given to us and also on the basis of verification made by us, we report that no fraud on or by the Company has been noticed or reported during the course of audit.

for RAO & SWAM,

Chartered Accountants

FRN.003105S

UDUPI PV Shenoy

Augusts,2010 Partner

Membership No. 020205



 
Subscribe now to get personal finance updates in your inbox!