Mar 31, 2015
1. We have audited the accompanying standalone financial statements of
SOUTHERN MAGNESIUM AND CHEMICALS LIMITED, HYDERABAD, TELANGANA ("The
Company"), which comprise the Balance Sheet as at 31st March2015, the
Statement of Profit and Loss, Cash flow statement for the year then
ended and a summary of the significant accounting policies and other
explanatory information.
Management's Responsibility for the Standalone Financial Statements
2. The Company's Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act 2013 ("the Act") with
respect to the preparation and presentation of these standalone
financial Statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company in
accordance with the accounting principles generally accepted in India,
including the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules 2014. This
responsibility also includes maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding of the
assets of the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
3. Our responsibility is to express an opinion on these standalone
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 there under.
4. 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.
5. An audit involves performing procedures to obtain audit evidence
about the amounts and the 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 the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
6. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our qualified audit opinion on
the standalone financial statements.
Basis for Qualified Opinion
7. Company had paid preference dividend on cumulative preference
shares without setting off accumulated losses and depreciation and
preference shares are also redeemed despite unavailable profits for
distribution of dividends, thereby the Company has not complied with
the provisions of Section 55 of the Companies Act 2013.
8. The Company has not adopted and complied with the requirements of
AS-15 'Employee Benefits' in respect of the Gratuity liability, which
constitutes a departure from the Accounting standards referred to in
section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014. In view of this the liability of the company in this regard
could not be ascertained. Consequently, we are unable to comment about
the impact of this on the profit for the year, income tax and
shareholder's funds
Qualified Opinion
9. In our opinion and to the best of our information and according to
the explanations given to us , except for the effects of the matter
described in the Basis for Qualified Opinion Paragraph, the standalone
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 31 March 2015 and its profit and its cash
flows for the year ended on that date.
Emphasis of matter
10. We draw attention to Note 21.1 in the financial statements which
state that the Company's current liabilities exceeded its current
assets by Rs. 56.05 lakhs. Further, as indicated by the Company's
Balance Sheet as at March 31,2015, the net worth of the Company has
eroded completely. These conditions indicate the existence of a
material uncertainty that may cast significant doubt about the
Company's ability to continue as a going concern.
Report on Other Legal and Regulatory Requirements
11. As required by the Companies(Auditor's Report) Order 2015 ("the
Order") issued by the Central Government of India in terms of
sub-section(11) of section 143 of the Act, we give in the Annexure, a
statement on the matters specified in paragraphs 3 and 4 of the Order ,
to the extent applicable.
12. As required by Section 143 (3) of the Act, we report that:
(a) we have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit;
(b) in our opinion, proper books of account as required by law have
been kept by the company so far as it appears from our examination of
those books;
(c) the Balance Sheet, the Statement of Profit and Loss and Cash Flow
statement dealt with by this report are in agreement with the books of
account;
(d) except for the matter described under the basis for qualified
opinion paragraph, in our opinion, the Balance sheet, Statement of
Profit and Loss, and Cash flow Statement comply with the Accounting
Standards specified under Section 133 of the Act, read with Rule 7 of
the Companies (Accounts) Rules 2014.
(e) on the basis of the written representations received from the
directors as on 31st March 2015 taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March 2015
from being appointed as a director in terms of Section 164 (2) of the
Act and;
(f) with respect to the other matters to be included in the Auditor's
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. the Company does not have any pending litigations which would
impact its financial position
ii. the Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. there were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company.
ANNEXURE REFERRED TO PARAGRAPH 11 OF OUR REPORT OF EVEN DATE
Statement on the Companies (Auditor's Report) Order, 2015
i) (a) The Company maintains proper records showing full particulars,
including quantitative details and situation of fixed assets;
(b) The fixed assets have been physically verified by the management at
reasonable intervals and no material discrepancies were noticed on such
verification.
ii) (a) Management had physically verified the inventory at reasonable
intervals.
(b) In our opinion the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
(c) The Company maintains proper records of inventory and no material
discrepancies were noticed on physical verification.
iii) (a) The Company has not granted any loans, secured or unsecured
to/from Companies, firms or other parties covered in the register
maintained under Section 189 of the Companies Act, 2013.
(b) In view of our comment in clause iii (a) above, clause iii (b), of
paragraph 3 of the aforesaid Order are not applicable to the Company.
iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business.
v) The Company has not accepted deposits from the public. Hence the
provisions of Sections 73 to 76 and other relevant provisions of the
Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules,
2014 are not applicable to the Company.
vi) In view of the present activity carried on by the company the Para
3(vi) of the said Order with respect to cost records is not applicable.
vii) a) According to the records, the Company is regular in depositing
with appropriate authorities undisputed statutory dues like Income-tax,
Service tax and other statutory dues applicable to it.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income-tax, Wealth tax,
Service tax, Sales tax and Cess were in arrears, as at 31st March, 2015
for a period of more than six months from the date they became payable.
c) In our opinion and according to the information and explanations
given to us, there are no dues of Sales tax, Income-tax, Wealth tax,
Service tax and Cess which have not been deposited on account of any
dispute.
viii) The Company has no accumulated losses at the end of the financial
year under report and the Company has not incurred any cash losses in
the financial year and in the immediately preceding financial year.
ix) According to the information and explanations given to us, the
Company has not availed any loans from financial institutions or banks.
x) In our opinion and 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.
xi) The company has not availed any term loans. Accordingly the
provisions of Para 3(xi) of the above referred order are not applicable
to the Company.
xii) Based upon the audit procedures performed and according to 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.
For K.S.RAO & Co
Chartered Accountants
Firm's Regn. No.003109S
Sd/-
(P.GOVARDHANA REDDY)
Place : HYDERABAD Partner
Date : 30.05.2015. Membership No. 029193
Mar 31, 2014
We have audited the accompanying Financial Statements of SOUTHERN
MAGNESIUM AND CHEMICALS LIMITED, HYDERABAD (A.P) ("The Company") which
comprise the Balance Sheet as at 31st March, 2014, the Statement of
Profit and Loss and Cash flow Statement for the year then ended, and
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 in the sub-section(3C) of section 211
of the Companies Act 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor''s Responsibility
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 the
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 judgement, including the assessment of
the risks of material misstatements of the financial statements,
whether due to fraud or error. In making those risk assessments, the
Auditor considers internal control relevant to the company''s
preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances
but not for the purpose of expressing an opinion on the effectiveness
of the entity''s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by the 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 qualified audit opinion.
Basis for Qualified Opinion
The Company has not adopted and complied with the requirements of AS-15
''Employee Benefits'' in respect of the Gratuity liability, which
constitutes a departure from the Accounting standards referred to in
section 211(3C) of the Act. In view of this the liability of the
company in this regard could not be ascertained. Consequently, we are
unable to comment about the impact of this on the profit for the year,
income tax and shareholder''s funds.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in 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 profit for
the year ended on the date; and
(c) In the case of the Cash flow statement, of the cash flows for the
year ended on that date.
Emphasis of matter
We draw attention to Note 20.1 in the financial statements which states
that the Company''s current liabilities exceeded its current assets by
Rs. 2.065 crores. Further, as indicated by the Company''s Balance Sheet
as at March 31, 2014, the net worth of the Company has eroded
completely. These conditions indicate the existence of a material
uncertainty that may cast significant doubt about the Company''s ability
to continue as a going concern.
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, the Statement of Profit and Loss and Cash Flow
statement dealt with by this report are in agreement with the books of
account;
(d) except for the matter described under the basis for qualified
opinion paragraph, in our opinion, the Balance sheet, Statement of
Profit and Loss, and Cash flow Statement comply with the Accounting
Standards referred to in sub-section (3C) of section 211 of the Act;
(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 Act;
(f) Since the Central Government has not issued any notification as to
the rate at which 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.
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE
Statement on the Companies (Auditor''s Report) Order 2003 Re: SOUTHERN
MAGNESIUM AND CHEMICALS LIMITED
i) (a) The Company maintains proper records showing full particulars,
including quantitative details and situation of fixed assets;
(b) The fixed assets have been physically verified by the management at
reasonable intervals and no material discrepancies were noticed on such
verification.
(c) The company had not disposed off any fixed assets during the year.
ii) (a) Management had physically verified the inventory at reasonable
intervals.
(b) In our opinion the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
(c) The Company maintains proper records of inventory and no material
discrepancies were noticed on physical verification.
iii) Sub-paras (a) to (d) of paragraph (iii) with regard to Principal
Recoveries and overdue amounts, are not applicable since the Company
has not granted any loans.
(e) The Company has taken unsecured loans in earlier years from two
Companies and from other three parties covered in the register
maintained under section 301 of the Act. The maximum amount outstanding
at the beginning of the year was Rs. 240.50 lakhs and the year end
balance was Rs.172.00 lakhs and
(f) In our opinion the terms and conditions on which the unsecured
loans were availed by the Company are not prima facie prejudicial to
the interest of the company.
(g) The company has repaid principal amount of Rs.68.50 lakhs during
the year and the loans are interest free.
iv) In our opinion there are adequate internal control systems
commensurate with the size of the company and the nature of its
business, for the purchase of inventory and fixed assets and for the
sale of goods and there were no weaknesses in internal control system.
v) (a) There were no transactions that need to be entered into a
register required to be maintained under section 301 of the Act during
the year except acceptance of unsecured loans from directors and
inter-corporate deposits.
(b) In view of the above comment, clause v (b) of Para 4 of the said
Order is not applicable.
vi) The Company has not accepted deposits from the public, so the
directives issued by the Reserve Bank of India and the provisions of
sections 58A, 58AA or any other relevant provisions of the Act and the
rules framed there under are not applicable to the Company during the
year under report.
vii) The Company has no internal audit system. However, there are
adequate internal control procedures commensurate with its size and
nature of its business.
viii) It is informed that Cost Accounts and records have been made and
maintained and the same were not reviewed by us.
ix) (a) The Company is not regular in depositing undisputed statutory
dues inrespect of Provident Fund and Sales Tax.
An undisputed amount of Rs.93,080/- in respect of interest on Sales Tax
was in arrears as at 31.03.2014 for a period of more than six months
from the date it became payable.
The Company deposits regularly Excise Duty, Service Tax and Income Tax.
During the year under report there were no amounts depositable in
respect of Investor Protection Fund, Employee''s State Insurance, Wealth
Tax, Customs Duty.
(b) There are no dues of sales tax, income tax, custom tax, wealth tax,
cess which have not been deposited on account of any dispute.
x) Company''s accumulated losses at the end of the financial year were
more than 50% of its net worth and it had not incurred cash loss in the
period under report and also in the immediately preceding financial
year.
xi) Company has not borrowed money from a financial institution or from
a bank. Hence, clause (xi) of the above said Order is not applicable
with regard to defaults in repayments of dues.
xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii) This clause is not applicable to the Company since this Company
is neither a Chit Fund nor Nidhi/ mutual benefit fund Society.
xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments.
xv) As per the information given by the Company it has not given any
guarantee for loans taken by others from bank or financial
institutions.
xvi) During the year under report the Company has not availed term
loans. Hence clause (xvi) of the above said Order is not applicable.
xvii) In our opinion the funds raised on short-term basis were not used
for long term investment.
xviii) During the period under report the company had not made any
preferential allotment of shares to parties and companies covered in
the Register maintained under section 301 of the Act.
xix) This clause is not applicable since the Company has not issued any
Debentures.
xx) During the period under report the management has not raised any
money through public issue.
xxi) During the year under report no fraud on or by the company has
been either noticed or reported.
For K.S.RAO & CO.,
Chartered Accountants
Firms'' Regn.No.003109S
(P.GOVARDHANA REDDY)
Place: Hyderabad Partner
Date: 26.05.2014 Membership No.029193
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying Financial Statements of SOUTHERN
MAGNESIUM AND CHEMICALS LIMITED, HYDERABAD (A.P) ("The Company")
which comprise the Balance Sheet as at 31st March, 2013 and the
Statement of Profit and Loss and Cash flow Statement for the year then
ended, and 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 in the sub-section(3C) of section 211
of the Companies Act 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
Auditor''s Responsibility
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 the
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
misstatements 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 the 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 qualified audit opinion.
Basis for qualified opinion:
The Company has not adopted and complied with the requirements of AS-15
''Employee Benefits'' in respect of the Gratuity liability, which
constitutes a departure from the Accounting standards referred to in
section 211(3C) of the Act. In view of this the liability of the
company in this regard could not be ascertained. Consequently, we are
unable to comment about the impact of this on the profit for the year,
income tax and shareholder''s funds.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in 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, 2013;
(b) In the case of the Statement of Profit and Loss, of the profit for
the year ended on the date; and
(c) In the case of the Cash flow statement, of the cash flows for the
year ended on that date.
Emphasis of matter
We draw attention to Note 21.1 in the financial statements which states
that the Company''s current liabilities exceeded its current assets by
Rs. 2.32 crores. Further, as indicated by the Company''s Balance Sheet
as at March 31,2013, the net worth of the Company has eroded
completely. These conditions, indicate the existence of a material
uncertainty that may cast significant doubt about the Company''s
ability to continue as a going concern.
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, the Statement of Profit and Loss and Cash Flow
statement dealt with by this report are in agreement with the books of
account;
(d) except for the matter described under the basis for qualified
opinion paragraph, in our opinion, the Balance sheet, Statement of
Profit and Loss, and Cash flow Statement comply with the Accounting
Standards referred to in sub-section (3C) of section 211 of the Act;
(e) on the basis of Written representations received from the Directors
as on March 31, 2013 and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a Director in terms of clause (g) of sub-section (1) of
section 274 of the Act;
(f) Since the Central Government has not issued any notification as to
the rate at which 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.
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE
Statement on the Companies (Auditor''s Report) Order 2003 Re: SOUTHERN
MAGNESIUM AND CHEMICALS LIMITED
i) (a) The Company maintains proper records showing full particulars,
including quantitative details and situation of fixed assets;
(b) The fixed assets have been physically verified by the management at
reasonable intervals and no material discrepancies were noticed on such
verification.
(c) The company had not disposed off any fixed assets during the year.
ii) (a) Management had physically verified the inventory at reasonable
intervals.
(b) In our opinion the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
(c) The Company maintains proper records of inventory and no material
discrepancies were noticed on physical verification.
iii) Sub-paras (a) to (d) of paragraph (iii) with regard to Principal
recoveries and overdue amounts, are not applicable since the Company
has not granted any loans.
(e) The Company has taken unsecured loans in earlier years from two
Companies and other three parties covered in the register maintained
under section 301 of the Act. The maximum amount outstanding at the
beginning of the year was Rs.260.50 lakhs and the yearend balance was
Rs.240.50 lakhs and
(f) In our opinion the terms and conditions on which the unsecured
loans were availed by the Company are not prima facie prejudicial to
the interest of the company.
(g) The company has repaid principal amount of Rs.20.00 lakhs during
the year and the loans are interest free.
iv) In our opinion there are adequate internal control systems
commensurate with the size of the company and the nature of its
business, for the purchase of inventory and fixed assets and for the
sale of goods and there were no weaknesses in internal control system.
v) (a) There were no transactions that need to be entered into a
register required to be maintained under section 301 of the Act during
the year except acceptance of unsecured loans from directors and inter
corporate deposits.
(b) In view of the above comment, clause - v (b) is not applicable.
vi) The Company has not accepted deposits from the public, so the
directives issued by the Reserve Bank of India and the provisions of
sections 58A, 58AA or any other relevant provisions of the Act and the
rules framed there under are not applicable to the Company during the
year under report.
vii) The Company has no internal audit system. However, there are
adequate internal control procedures commensurate with its size and
nature of its business.
viii) It is informed that Cost Accounts and records have been made and
maintained and the same were not reviewed by us.
ix) (a) The Company is not regular in depositing undisputed statutory
dues including Provident Fund and Sales Tax.
An undisputed amount of Rs.3,01,195/- in respect of interest on Sales
Tax was in arrears as at 31.03.2013 for a period of more than six
months from the date they became payable.
The Company deposits regularly Excise Duty, Service Tax and Income Tax.
During the year under report there were no amounts deposit able in
respect of Investor Protection Fund, Employee''s State Insurance,
Wealth Tax, Customs Duty.
(b) There are no dues of sales tax, income tax, custom tax, wealth tax,
cess which have not been deposited on account of any dispute.
x) Company''s accumulated losses at the end of the financial year were
more than 50% of its net worth and it had not incurred cash loss in the
period under report and incurred cash loss in the immediately
preceding financial year.
xi) Company has not borrowed money from a financial institution or from
a bank. Hence, clause (xi), of the above said order is not applicable
with regard to defaults in repayments of dues.
xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii) This clause is not applicable to the Company since this Company
is neither a Chit Fund nor Nidhi/ mutual benefit fund Society.
xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments.
xv) As per the information given by the Company it has not given any
guarantee for loans taken by others from bank or financial
institutions.
xvi) During the year under report the Company has not availed term
loans. Hence clause (xvi) of the above said order is not applicable.
xvii) In our opinion the funds raised on short-term basis were not used
for long term investment.
xviii) During the period under report the company had not made any
preferential allotment of shares to parties and companies covered in
the Register maintained under section 301 of the Act.
xix) This clause is not applicable since the Company has not issued any
Debentures.
xx) During the period under report the management has not raised any
money through public issue.
xxi) During the year under report no fraud on or by the company has
been either noticed or reported.
For K.S.RAO & CO.
Chartered Accountants
Firm Registration No.003109S
Sd/-
(P. Govardhana Reddy)
Partner
Membership No. 029193
Place : Hyderabad
Date : 30.05.2013
Mar 31, 2010
We have audited the attached Balance Sheet of SOUTHERN MAGNESIUM AND
CHEMICALS LIMITED, HYDERABAD (A.P) as at 31st March, 2010, and also the
Profit and Loss Account for the year ended on that date annexed thereto
and the cash Flow Statement for the period ended on that date. 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.
We conducted our audit in accordance with the auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion and report that:
1. As required by the Companies (Auditors Report) Order, 2003, issued
by the Central Government of India in terms of Section 227 (4A) of the
Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraph 4 and 5 of the said Order.
2. Further to our comments in the Annexure referred to in paragraph 1
above :
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, Profit and Loss Account and Cash Flow statement
dealt with by this report are in agreement with the books of account.
d) In our opinion, the Balance Sheet, Profit and Loss account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of Section 211 of the
Companies Act, 1956 excepting AS-15, employees Benefits.
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 31st March,
2010 from being appointed as a Director in terms of clause (g) of
sub-section (1) of Section 274 of the Companies Act, 1956 :
f) The Company has not adopted and complied with the requirements of
AS-15 Employee Benefits in respect of gratuity liability. In view of
this the liability of The Company in this regard could not be
ascertained. Consequently, we are unable to comment about the impact of
this on the loss for the year.
g) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read in conjunction
with the Schedules annexed therewith and subject to our comments given
in para f above, give the information required by the Companies Act,
1956, in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India :
I) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010 :
II) In the case of the Profit and Loss account, of the Loss of the
Company for the year ended on that date; and
iii) In the case of cash flow statement, of the cash flows for the year
ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE
i) (a) The Company maintains proper records showing full particulars,
including quantitative details and situation of fixed assets:
(b) The fixed assets have been physically verified by the management at
reasonable intervals; no material discrepancies were noticed on such
verification.
(c) During the year the Company disposed of assets, in our Opinion this
do not effect the going concern assumption.
ii) (a) Management had physically verified the inventory at reasonable
intervals.
(b) In our opinion the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) The Company maintains proper records of inventory and no material
discrepancies were noticed on physical verification.
iii) (a) to (d) Since the Company has not granted any loans, our
comments do not arise with regard to the principal recoveries and
overdue amounts in respect of loans granted.
(e) The Company has taken unsecured loans from two companies and other
three parties covered in the register maintained under section 301 of
the Act. The amount involved in transactions is Rs.262.5 lakhs and
(f) In our opinion the terms and conditions on which the unsecured
loans were availed by the Company are not prima facie prejudicial to
the interest of the Company.
(g) The Company has not repaid principal amount and the loans are
interest free.
(iv) In our opinion there are adequate internal control systems
commensurate with the size of the Company and the nature of its
business, for the purchase of inventory and fixed assets and for the
sale of goods and there were no weaknesses in internal control system.
(v) (a) There were no transactions that need to be entered into a
register required to be maintained under section 301 of the Act during
the year except acceptance of unsecured loans from directors and
Corporate Deposits.
(b) In view of the above comment clause - V (b) is not applicable.
(vi) The Company has not accepted deposits from the public, so the
directives issued by the Reserve Bank of India and the provisions of
sections 58 A, 58 AA or any other relevant provisions of the Act and
the rules framed there under are not applicable to the Company during
the year under report.
(vii) The Company has no internal audit system. However, there are
adequate internal control procedures commensurate with its size and
nature of its business.
(viii) The Central Government has not prescribed u/s 209 (1) (d) of the
Act the maintenance of cost records for the products of the Company.
ix) (a) The Company is regular in depositing undisputed statutory dues
including provident fund, investor education protection fund, employees
state insurance, income tax, sales tax, wealth tax, customs duty and
excise duty etc.
(b) There are no dues of sales tax, income tax, custom tax, wealth tax,
cess which have not been deposited on account of any dispute.
x) Companys accumulated losses at the end of the financial year were
more than 50% of its net worth and it had incurred cash losses in the
period under report and also in the immediately preceding financial
year.
xi) Company has not borrowed money from a financial institution or from
a Bank. Hence, clause (xi), of the above said Order is not applicable
with regard to defaults in repayments of dues.
xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii) This clause is not applicable to the Company since this Company
is neither a Chit Fund or Nidhi/ Mutual benefit fund Society.
xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments.
xv) As per the information given by the Company it has not given any
guarantee for loans taken by others from bank of financial
institutions.
xvi) During the year under report the Company has not availed term
loans. Hence clause (xvi) of the above said order is not applicable.
xvii) In our opinion the funds raised on short term basis were not used
for long term investment.
xviii) During the period under report the Company had not made any
preferential allotment of shares to parties and companies covered in
the Register maintained under section 301 of the Act.
xix) This clause is not applicable since the Company has not issued any
Debentures.
xx) During the period under report the management has not raised any
money through public issue.
xxi) During the year under report no fraud on or by the Company has
been either noticed or reported.
for K.S.Rao & Co.,
Chartered Accountants
Sd/-
Place : Hyderabad (P. Govardhan Reddy)
Date : 12-08-2010 Partner
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