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Auditor Report of Sukhjit Starch & Chemicals Ltd.

Mar 31, 2014

We have audited the attached financial statements of The Sukhjit Starch & Chemicals Ltd. as at 31st March, 2014, the Profit and Loss Account and also the Cash Flow Statement for the year ended and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS:

The Company''s Management is responsible for the preparation of these finanacial 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 notified under the Companies Act, 1956 (the Act) read with General Circular 15/2013 dated 13 the Sept., 2013 of the Ministry of Corporate Affairs in respect of section 133 of Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. 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 statements, 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 standard 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 disclosure in the financial statements. The procedure selected depends upon the Auditor''s judgement, including the assessment of the risk 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 of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and 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 basis for our audit opinion.

OPINION:

In our opinion and to the best of our information and according to explanations given to us, the aforesaid accounts, read together with significant accounting policies and notes forming part of accounts, 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 case of balance sheet, of the state of the affairs of the company as at 31st March 2014.

(ii) In case of the profit and loss Acccount, of the profit of the company for the year ended on that date and

(iii) In the case of cash flow statement, of the cash flow for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS :

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 the paragraphs 4 and 5 of the said Order.

2. Further to our comments in Annexure refers to in paragraphs 1 & 2 above, we state that:

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

(c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(d) In our opinion, the Balance Sheet, the Profit & Loss Account and Cash Flow Statement of the company comply with the Accounting Standards as referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable;

(e) As per information and explanations given to us, none of the Directors of the company are disqualified from being appointed as a Director under clause (g) of the Sub-section (1) of Section 274 of the Companies Act, 1956;

INDEPENDENT AUDITORS'' REPORT ANNEXURE TO THE AUDITORS'' REPORT: Annexure to our report of even date to the Members of The Sukhjit Starch & Chemicals Ltd., Phagwara Referred to in Paragraph 1 of our report of even date.

1. In respect of its Fixed Assets :

(a) The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets on the basis of available information.

(b) As per information given to us, the assets have been physically verified by the management at reasonable intervals. The discrepancies noticed on such verifications were not serious and have been properly dealt with in the books of accounts.

(c) No substantial part of fixed assets have been disposed off during the year and therefore, do not effect the going concern assumption.

2. (a) Stock of finished goods, stores, spare parts and raw materials have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on verification between the physical stock and the book recorded were not material.

3. In our opinion and according to the information and explanation given to us, the Company has neither granted nor taken any loans, secured or unsecured to or from the Companies, Firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. The Company has adequate internal control procedure commensurate with the size of the company and nature of its Business with regard to purchase of stores, raw material including components, plant and machinery, equipment and other assets, and for sale of goods. We have not come across any major weakness in internal control.

5. In our opinion and according to the information and explanations given to us, no transaction has taken place with any firm or companies in which the directors are interested, as envisaged under section 301 of Companies Act, 1956.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A/58AA of the Companies Act, 1956 and the rules framed thereunder with regard to the deposits accepted from public.

7. In our opinion, the company has Internal Audit System commensurate with the size and nature of its business.

8. We have broadly reviewed the records maintained by the company in pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Govt, under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax. Sales Tax, Wealth Tax, Custom Duty, Excise Duty, service tax, cess and other material 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, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2014 for a period of more than six months from the date they became payable.

(c) The company has a disputed Central Excise liability of Rs. 22.15 crores (not provided in the accounts), which mainly include Rs. 20.90 crores against sale of Maize Starch since 01.04.1997. The company has explained that the Excise department is alleging the clearance of Maize Starch as that of Modified Starch, so it is totally baseless and it does not foresee any liability to crystallize on this account.

The other major item concerns a demand of Rs. 1.19 crores on exempted goods and the case is pending before The Commissioner, Central Excise.

10. The company does not have accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit or during the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12. The company has not a granted any 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 provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

14. Based on our examination of records and evaluation of related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts and timely entries have been made therein in respect of company''s activities relating to trading/dealing in shares, securities and other investments and these have been held by the company in its own name.

15. The company has not given guarantees for loans taken by others from bank or financial institutions.

16. The term loans have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short-term basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

18. The company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Company Act, 1956.

19. The company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

20. The company has not raised any money by way to public issue during the year.

21. According to the information and explanations given to us, based upon the audit procedures performed and representations made 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 Y.K. SUD & COMPANY

CHARTERED ACCOUNTANTS

(Y.K. SUD)

Place : Jalandhar B.Com., F.C.A.

Dated : 30th May, 2014 Prop.

Memb. No. 16875


Mar 31, 2013

We have audited the attached Balance Sheet of The Sukhjit Starch & Chemicals Ltd. as at 31st March, 2013, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date 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.

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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We report as follows :

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 give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2. Further to our comments in 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 purposes of our audit;

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

(c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(d) In our opinion, the Balance Sheet, the Profit & Loss Account and Cash Flow Statement of the company comply with the Accounting Standards as referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable;

(e) On the basis of the written representations received from the Directors, and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified as on 31st March 2013 from being appointed as a Director under clause (g) of the Sub-section (1) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with significant Accounting Policies and Notes forming part of accounts, 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 the affairs of the company as at 31st March 2013.

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

AUDITORS'' REPORT

ANNEXURE TO THE AUDITORS'' REPORT :

Annexure to our report of even date to the Members of The Sukhjit Starch & Chemicals Ltd., Phagwara Referred to in Paragraph 1 of our report of even date.

1. In respect of its Fixed Assets :

(a) The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets on the basis of available information.

(b) As per information given to us the assets have been physically verified by the management at reasonable intervals. The discrepancies noticed on such verifications were not serious and have been properly dealt with in the books of accounts.

(c) No substantial part of fixed assets have been disposed off during the year and therefore, do not effect the going concern assumption.

2. (a) Stock of finished goods, stores, spare parts and raw materials have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on verification between the physical stock and the book recorded were not material.

3. In our opinion and according to the information and explanation given to us, the Company has neither granted or taken any loans, secured or unsecured to or from the Companies, Firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. The Company has adequate internal control procedure commensurate with the size of the company and nature of its Business with regard to purchase of stores, raw material including components, plant and machinery, equipment and other assets, and for sale of goods. We have not come across any major weakness in internal control.

5. In our opinion and according to the information and explanations given to us, no transaction has taken place with any firm or companies in which the directors are interested, as envisaged under section 301 of Companies Act, 1956.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A/58AA of the Companies Act, 1956 and the rules framed thereunder with regard to the deposits accepted from public.

7. In our opinion, the company has Internal Audit System commensurate with the size and nature of its business.

8. We have broadly reviewed the records maintained by the company in pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Govt, under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, service tax, cess and other material 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, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2013 for a period of more than six months from the date they became payable.

(c) The compnay has a disputed Central Excise liability of Rs. 20.38 crores (not provided in the accounts), which mainly include Rs. 19.12 crores against sale of Maize Starch since 01.04.1997. The company ex- plained that the Excise department is alleging the clearance of Maize Starch as that of Modified Starch, so it is totally baseless and it does not foresee any liability to crystallize on this account.

The other major item concerns a demand of Rs. 1.19 crores on exempted goods and the case is pending before The Commissioner, Central Excise.

10. The company does not have accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit or during the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12. The company has not a granted any 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 provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

14. Based on our examination of records and evaluation of related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts and timely entries have been made therein in respect of company''s activities relating to trading/dealing in shares, securities and other investments and these have been held by the company in its own name.

15. The company has not given guarantees for loans taken by others from bank or financial institutions.

16. The term loans have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short-term basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

18. The company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Company Act, 1956.

19. The company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

20. The company has not raised any money by way to public issue during the year.

21. According to the information and explanations given to us, based upon the audit procedures performed and representations made 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 Y.K. SUD & COMPANY

CHARTERED ACCOUNTANTS

(Y.K. SUD)

Place : Jalandhar B.Com., F.C.A.

Dated : 31st May, 2013 Prop.

Memb. No. 16875


Mar 31, 2012

We have audited the attached Balance Sheet of The Sukhjit Starch & Chemicals Ltd. as at 31st March, 2012, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date 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.

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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We report as follows :

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 give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2. Further to our comments in 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 purposes of our audit;

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

(c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(d) In our opinion, the Balance Sheet, the Profit & Loss Account and Cash Flow Statement of the company comply with the Accounting Standards as referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable;

(e) On the basis of the written representations received from the Directors, and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified as on 31st March 2012 from being appointed as a Director under clause (g) of the Sub-section (1) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with significant Accounting Policies and Notes forming part of accounts, 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 the affairs of the company as at 31st March 2012.

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

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

ANNEXURE TO THE AUDITORS' REPORT :

Annexure to our report of even date to the Members of The Sukhjit Starch & Chemicals Ltd., Phagwara Referred to in Paragraph 1 of our report of even date.

1. In respect of its Fixed Assets :

(a) The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets on the basis of available information.

(b) As per information given to us the assets have been physically verified by the management at reasonable intervals. The discrepancies noticed on such verifications were not serious and have been properly dealt with in the books of accounts.

(c) No substantial part of fixed assets have been disposed off during the year and therefore, do not effect the going concern assumption.

2. (a) Stock of finished goods, stores, spare parts and raw materials have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of its inventories. The discrepancies noticed on verification between the physical stock and the book recorded were not material.

3. In our opinion and according to the information and explanation given to us, the Company has neither granted or taken any loans, secured or unsecured to or from the Companies, Firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. The Company has adequate internal control procedure commensurate with the size of the company and nature of its Business with regard to purchase of stores, raw material including components, plant and machinery, equipment and other assets, and for sale of goods. We have not come across any major weakness in internal control.

5. In our opinion and according to the information and explanations given to us, no transaction has taken place with any firm or companies in which the directors are interested, as envisaged under section 301 of Companies Act, 1956.

6. In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A/58AA of the Companies Act, 1956 and the rules framed thereunder with regard to the deposits accepted from public.

7. In our opinion, the company has Internal Audit System commensurate with the size and nature of its business.

8. We have broadly reviewed the records maintained by the company in pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Govt, under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax. Sales Tax, Wealth Tax, Custom Duty, Excise Duty, service tax, cess and other material 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, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2012 for a period of more than six months from the date they became payable.

(c) The Excise Department has served upon the company, a Show Cause Notice for the clearance of The Maize Starch alleging the same to be classified as Modified Starch and has raised demands amounting to Rs.17.54 crores since 01.04.1997. The company explained that the said demands are totally baseless/ frivolous and has challenged the alleged demands with the Hon'ble High Court of Punjab & Haryana which has since stayed the operation of demand Show Cause Notice.

10. The company does not have accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit or during the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not chit fund or a Nidhi/Mutual benefit fund/Society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

14. Based on our examination of records and evaluation of related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts and timely entries have been made therein in respect of company's activities relating to trading/dealing in shares, securities and other investments and these have been held by the company in its own name.

15. The company has not given guarantees for loans taken by others from bank or financial institutions.

16. The term loans have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short-term basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

18. The company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Company Act, 1956.

19. The company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

20. The company has not raised any money by way to public issue during the year.

21. According to the information and explanations given to us, based upon the audit procedures performed and representations made 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 Y.K. SUD & COMPANY

CHARTERED ACCOUNTANTS

(Y.K. SUD)

Place : Jalandhar B.Com., F.C.A.

Dated : 29th May, 2012 Prop.

Memb. No. 16875


Mar 31, 2010

We have audited the attached Balance Sheet of The Sukhjit Starch & Chemicals Ltd. as at 31st March, 2010, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. 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 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.

We report as follows :

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 give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

2. Further to our comments in 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 purposes of our audit;

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

(c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(d) In our opinion, the Balance Sheet, the Profit & Loss Account and Cash Flow Statement of the company comply with the Accounting Standards as referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable;

(e) On the basis of the written representations received from the Directors, and taken on record by the Board of Directors, we report that none of the Directors of the company are disqualified as on 31st March 2010 from being appointed as a Director under clause (g) of the Sub-section (1) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with significant Accounting Policies and Notes forming part of accounts, 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 the affairs of the company as at 31st March 2010.

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

ANNEXURE TO THE AUDITORSREPORT: Annexure to our report of even date to the Members of The Sukhjit Starch & Chemicals Ltd. Phagwara R to in Paragraph 1 of our report of even date.

1. In respect of its Fixed Assets :

(a) The company has maintained proper records showing full particulars, including quantitative dei situation of its fixed assets on the basis of available information.

(b) As per information given to us the assets have been physically verified by the management at re intervals. The discrepancies noticed on such verifications were not serious and have been prop< with in the books of accounts.

(c) No substantial part of fixed assets have been disposed off during the year and therefore, do«t the going concern assumption.

2. (a) Stock of finished goods, stores, spare parts and raw materials have been physically verified c year by the Management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedure verification of inventories followed by the management are reasonable and adequate in rela size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has proper records of its inventories. The discrepancies noticed on verification between the ph and the book recorded were not material.

3. In our opinion and according to the information and explanation given to us, the Company granted or taken any loans, secured or unsecured to or from the Companies, Firms or other pai in the register maintained under section 301 of the Companies Act, 1956.

4. The Company has adequate internal control procedure commensurate with the size of the c nature of its Business with regard to purchase of stores, raw material including components, r. chinery, equipment and other assets, and for sale of goods. We have not come across any majo internal control.

5. In our opinion and according to the information and explanations given to us, no transaction h with any firm or companies in which the directors are interested, as envisaged under section ¦ niesAct, 1956.

6. In our opinion and according to the information and explanations given to us, the company ha; the directives issued by the Reserve Bank of India and the provisions of Section 58A/58AA of Act, 1956 and the rules framed thereunder with regard to the deposits accepted from publi

7. In our opinion, the company has Internal Audit System commensurate with the size and natur

8. As informed to us the Central Govt, has not prescribed the maintenance of cost records under section 209(1) (d) of the companies Act, 1956.

9. (a) According to the records of the company, the company is regular in depositing with appro undisputed statutory dues including Provident Fund, Investor Education and Protection State Insurance, Income tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, service ta material 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, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2010 for a period of more than six months from the date they became payable.

(c) The Excise Department has served upon the company, a Show Cause Notice for the clearance of The Maize Starch alleging the same to be classified as Modified Starch and has raised demands amounting to * Rs. 15.90 crores since 01.04.1997. The company explained that the said demands are totally baseless/ frivolous and has challenged the alleged demands with the Honble High Court of Punjab & Haryana which has since stayed the operation of demand Show Cause Notice.

10. The company does not have accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit or during the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, bank or debenture holders.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The company is not chit fund or a nidhi/Mutual benefit fund/Society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

14. Based on our examination of records and evaluation of related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts and timely entries have been made therein in respect of companys activities relating to trading/dealing in shares, securities and other investments and these have been held by the company in its own name.

15. The company has not given guarantees for loans taken by others from bank or financial institutions.

16. The term loans have been applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that no funds raised on short-term basis have been used for long term investment. No long term funds have been used to finance short term assets except permanent working capital.

18. The company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Company Act, 1956.

19. The company has not issued any debentures during the year and therefore the question of creating security in respect thereof does not arise.

20. The company has not raised any money by way to public issue during the year.

21. According to the information and explanations given to us, based upon the audit procedures performed and representations made 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 Y.K. SUD & COMPANY

CHARTERED ACCOUNTANTS

(Y.K. SUD)

Place : Jalandhar. B.Com., F.C.A.

Dated : 18th June, 2010 Prop.

Memb. No. 16875

 
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