ALCOBEX METALS LIMITED
1. We have audited the attached Balance Sheet of ALCOBEX METALS LIMITED
as at 31st March, 2009, 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.
2. We conducted our audit in accordance with auditing standards generally accepted in
India. Those Standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
3. As required by the Companies (Auditors' Report) Order, 2003 as amended by the
Companies (Auditor's Report) (Amendment) Order 2004, issued by the Central Government of
India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956, and on the
basis of such checks as we considered appropriate and according to the information and
explanations given to us, we enclose in the Annexure a statement on the matters specified
in paragraphs 4 & 5 of the said order.
4. Attention is invited to the following notes in Schedule 25.
4.1 Note no. 2.2 regarding accumulated losses of the Company having exceeded the net
worth of the Company. This along with other matters as set forth in the financial
statements raise doubt that the Company will be able to continue as a going concern which
is dependant on various factors stated therein.
4.2 Note no. 3 regarding prior approval not obtained from Central Government in respect
of transactions covered under Section 295/297 of the Companies Act, 1956.
4.3 Note no. 4 regarding land not being depicted separately.
4.4 Note no 5.1 regarding satisfaction/ charge to be created in favour of Banks/
Financial Institutions in terms of reworked out package of loans shown under the head
"secured Loans" approved by them
4.5 Note no 5.2 regarding the effect of the One Time Settlement of its dues with
various Banks / Financial Institutions not being given in the accounts and also non
provision of further liability towards interest at prevalent cap rate (amount
unascertained) /penal interest which have occurred for reason stated therein
4.6 Note no. 7 regarding semi finished goods aggregating to Rs. 75.45 lacs being
accounted for on the basis of a certificate from management for reasons stated therein.
4.7 Note no 9.1 regarding confirmation/reconciliation of various accounts under the
head Sundry Debtors, loans and advances, liabilities and loans (secured and unsecured).
4.8 Note no. 10 (b) regarding interest recoverable from various banks aggregating to
Rs. 62.57 lacs on the basis of reworked out package approved by the banks in earlier years
for which no provision has been made for reason stated therein.
4.9 Note no 20 regarding segment information as required by the Accounting Standard
(AS) 17 'Segment Reporting' has not been disclosed.
4.10 Note no. 25 sets out the Company's view regarding accounting of deferred tax
assets aggregating to Rs. 5299.44 lacs (inclusive of Rs. 5162.44 lacs on account of
unabsorbed depreciation/ business loss). In our opinion, the recognition of deferred tax
on account of unabsorbed depreciation / business loss is not in conformity with Accounting
Standard Interpretation (ASI) 9.
The consequential effect of the adjustments, if carried out of the amounts to the
extent ascertainable would have increased the loss for the year by Rs. 5362.01 lacs and
reduced the Current Assets and deferred tax by Rs. 62.57 lacs and Rs 5299.44 lacs
respectively. As regards our comments in other points in para 4 above, the effect is not
quantifiable at this stage.
5. Further to our comments In the Annexure referred to in para 3 above and subject
to our comments in paragraph 4 above, we report that:
i) 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;
ii) in our opinion proper books of account as required by law have been kept by the
company so far as appears from the examination of such books.
iii) the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by
this report, are in agreement with the books of account;
iv) in our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow
Statement comply with the Accounting Standards referred to in sub section (3C) of Section
211 of the Companies Act, 1956 except as mentioned in Note 20 as regards Segment
Reporting and Note 25 as regards Taxes on income contained in Schedule 25;
v) 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 is disqualified as
on 31st March, 2009 from being appointed as a director in terms of clause (g)
of sub-section (1) of section 274 of the Companies Act, 1956;
vi) 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 Schedules 1 to 25 give the
information required by the Companies Act, 1956, in the manner so required and subject
to our comments in para 3 & 4 above give a true and fair view in conformity with
the accounting principle generally accepted in India:
i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st
ii) in the case of the Profit & Loss Account of the loss for the year ended on that
iii) in the case of the Cash Flow Statement of the Cash Flows for the year ended on
for RAY & RAY
Membership No. 80085
Place: New Delhi
Date : 5lh September, 2009
ANNEXURE REFERRED TO IN PARAGRAPH 3 IN OUR REPORT OF EVEN DATE TO THE SHAREHOLDERS OF
ALCOBEX METALS LIMITED.
1.1 The Company has generally maintained proper records showing full particulars
regarding valuation of different type of assets including quantitative details and
situation of fixed assets.
1.2 The fixed assets are physically verified by the management according to a phased
programme designed to cover all items over a period of two years, which in our opinion, is
reasonable having regard to the size of the company and the nature of its business.
Pursuant to the programme, a portion of the fixed assets has been physically verified by
the management during the year. No material discrepancy was noticed on the verification
1.3 During the year no substantial part of fixed assets has been disposed off by the
Company. Therefore, the provisions of clause (i) (c) of paragraph 4 of the aforesaid
Order, in our opinion are not applicable to the Company.
2.1 As explained to us, the inventories in company's custody have been physically
verified by the management during the year and at the year end. As regards semi
finished goods at the year end aggregating to Rs 75.45 lacs reference is drawn to Note 7
in schedule 25. In case of semi finished goods lying with third parties aggregating to
Rs.36.80 lacs, certificates confirming stocks in quantitative terms has been received at
the year end.
2.2 The procedures of physical verification of inventories followed by the management,
as observed by us to the extent possible, are reasonable and adequate in relation to the
size of the company and nature of its business.
2.3 On the basis of our examination of inventory records of the company, we are of the
opinion that, the company is maintaining proper records of its inventory except for
semi finished goods which is accounted for on the basis of technical estimates (Note 7
Schedule 25). The discrepancies, which were noticed on physical verification of
inventory as compared to book records were not material and have been properly dealt with
in the books of account.
3.1 a) The Company has not granted any loans, secured or unsecured to companies, firms
or other parties covered in the register maintained under Section 301 of the Companies
b) In view of our comments in paragraph 3 (a) above, clauses (iii) (b) to (d) of
paragraph 4 of the aforesaid Order are not applicable to the Company.
c) The Company has taken unsecured loans from two companies covered in the register
maintained under Section 301 of the Companies Act, 1956 in earlier years. The maximum
amount involved during the year and the year end balance of loan taken was Rs. 223.03
d) In our opinion, the rate of interest and other terms and conditions on which loans
have been taken from companies / parties listed in the register maintained under Section
301 of the Companies Act, 1956 are prima facie not prejudicial to the interest of the
e) The Company has generally been regular in the payment of interest wherever
applicable. In absence of any stipulation as regards repayment of loan, we are unable to
make any specific comment on the repayment of principal amount of loans taken.
4. In our opinion and according to the information and explanations given to us and having
regard to management representations that for some items purchased for which comparable
alternative quotations are not available / obtained because of nature / quality of such
items & delivery schedule, the internal control system needs to be strengthened as
regards confirmation / reconciliation of balances, dispatch of goods & reusability of
debts in order to be commensurate with the nature of its business with regard to
purchase of inventory, fixed assets and with regards to sale of goods & services.
However, in our opinion, subject to above, there is no other continuing failure to
correct major weakness in internal control system in these areas.
5.1 On the basis of the audit procedures performed by us, and according to the
information, explanation and representations given to us, we are of opinion that, the
contract or arrangement in which directors were interested as contemplated under Section
297 and sub section (6) of Section 299 of the Companies Act, 1956 and which were required
to be entered in the register maintained under Section 301 of the said Act, have generally
been so entered.
5.2 In our opinion and according to information and explanations given to us, the
transactions made in pursuance of contracts or arrangements entered in the register
maintained under Section 301 of the Companies Act, 1956 have been made at price which
are reasonable having regards to prevailing market prices at that time or at prices
determined by the management in absence of market quotation for similar items as the
management has stated that the goods/ services are made /supplied to order according to
6. The Company has not accepted any deposits from the public and consequently the
provisions of Section 58A, 58 AA or any other relevant provisions of the Companies Act,
1956 and rules framed there under are not applicable. Further, during the course of our
audit, we have neither come across nor have we been informed of any order passed under the
aforesaid sections by national Company law Board or National Company Law Tribunal or any
court or any other Tribunal.
7. On the basis of the concurrent / internal audit reports broadly reviewed by us, we
are of the opinion that, the coverage of concurrent / internal audit functions carried out
by a firm of Chartered Accountants appointed by the management in consultation with
Financial Institution/ Banks is commensurate with the size of the Company and nature of
8. The Central Government has not prescribed the maintenance of cost records under
clause (d) of sub-section(1) of section 209 of the Companies Act, 1956 in respect of the
activities carried out by the Company.
9.1 According to records of the Company, undisputed statutory dues including provident
fund, investor education and protection fund, employees' state insurance, income tax,
sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory
dues applicable to it, has not been regularly deposited with appropriate authorities
and there has been delays in large number of cases.
Further, since the Central Government has till date not prescribed the amount of cess
payable under section 441A of the Companies Act, 1956, we are not in a position to comment
upon the regularity or otherwise of the Company in depositing the same.
9.2 According to information and explanations given to us, there are no undisputed
amount payable in respect of Income tax, wealth tax, sales tax, custom duty and excise
duty & other statutory dues which were outstanding at the year end for period of more
than six months from the date they become payable.
9.3 According to the information and explanations given to us, there are no dues
outstanding of income tax, sales tax, custom duty, wealth tax, service tax and cess on
account of any dispute other than excise duty and sales tax as indicated below:
||Name of the statute
||Nature of dues
||Forum where dispute is pending
Amount Rs. in lacs
||The Central Excise Act, 1944
||Show Cause Notice Suppt. Central Excise Range -1 Jodhpur
||Central Sales Tax Act, 1956
||Commercial tax Offered, Special Range -1, Jodhpur
10. The Company's accumulated losses at the end of the financial year are more than
fifty percent of its net worth. The Company has Incurred cash loss during the year and
also in the immediately preceding financial year.
11. The Company has defaulted in the repayment of dues to Financial
Institutions/Banks. The defaulted amount of principal amounted to Rs. 3377.31 lacs. In
addition to above, the estimated interest amounting to Rs. 1992.37 lacs is also in default
from various dates. In absence of details and pending approval of Financial
Institutions/Banks on the application of the Company for deferment, the period of default
could not be disclosed.
12. The Company has not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities. Accordingly, clause 4 (xii) of the
Order is not applicable to the Company.
13. The Company is not a chit fund or a nidhi / mutual benefit fund / society and
accordingly, clause 4 (xiii) of the Order is not applicable to the Company.
14. The company has not dealt or traded in shares, securities, debentures and other
investments and accordingly, clause 4 (xiv) of the Order is not applicable to the Company.
15. According to the information and explanations given to us, the Company has not
given any guarantee for loans taken by others from banks or financial institutions.
Accordingly, clause 4 (xv) of the Order is not applicable to the Company.
16. During the year, the Company did not take any fresh term loan. Accordingly, clause
4 (xvi) of the Order is not applicable to the Company for the current year.
17. According to the information and explanations given to us and on an overall
examination of the Financial Statements and after placing reliance on the reasonable
assumptions made by the Company for classification of short term and long term usages of
funds, we are of the opinion that prima facie short term funds have been utilized to
the extent of Rs. 5.43 lacs for long term purposes (purchase of assets).
18. The Company has not made any preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the Companies Act, 1956
during the year. Accordingly, clause 4 (xviii) of the Order is not applicable to the
Company for the current year. However, reference is invited to Note 12 in Schedule 25.
19. The Company has not issued any fresh debentures during the year. Accordingly,
clause 4 (xix) of the Order is not applicable to the Company. However, the Company has
created securities in respect of debentures issued earlier year.
20. The Company has not raised any money by public issues during the year. Accordingly,
clause 4 (xx) of the Order in is not applicable to the Company for the current year.
21. During the course of our examination of the books and records of the Company
carried out in accordance with the generally accepted auditing practices in India, and
according to the information, explanations and representations given to us, no fraud on or
by the company has been noticed or reported during the year by the Company.
for RAY & RAY
Membership No. 80085
Place: New Delhi
Date: 5th September, 2009