To The Members
(Report on the Accounts for the year ended 31st March, 2005 in compliancewith Section 227(2) of the Companies Act, 1956).
1. We have audited the attached Balance Sheet of THE AMBIKA SILK MILLS CO. LTD.as at 31st March, 2005 and also the annexed Profit and Loss Account of theCompany for the year ended on that date. These financial statements are the responsibilityof the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by The Companies (Auditor's Report) Order, 2003 (CARO, 2003), asamended, issued by the Central Government of India in terms of Sub-Section (4A) of Section227 of the Companies Act, 1956 and on the basis of such checks of the books and records aswe considered appropriate, and on the basis of information and explanations given to usduring the normal course of audit, which were necessary to the best of our knowledge andbelief, we enclose in the Annexure a statement on matters specified in paragraphs 4 &5of the said Order.
4. Further to our comments in the Annexure referred to in Paragraph, 3 above, we reportthat:
A) We have obtained all the information and explanations which to the best of ourknowledge 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 theCompany, so far as appears from our examination of the books.
C) The Balance Sheet and Profit & Loss Account dealt with by the Report are inagreement with the books of account and generally comply with the accounting standardsreferred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable tothe Company.
D) On the basis of our examination of the books and records of the Company and writtenrepresentations / confirmations received from the directors as on 31st March2005 and taken on record by the Board of Directors of the Company, we report that primafacie none of the directors of the Company is disqualified as at 31st March2005 from being appointed as a director in terms of Clause (g) of Sub-Section (1) ofSection 274 of the Companies Act, 1956 with reference to the matters relating to theCompany
E) Reference is invited to Note No.6 to accounts regarding preparation of the accountsas a 'Going Concern', despite accumulated losses resulting in erosion in net worth, andthe Company's ability to continue as a going concern which as explained by the Managementis primarily due to immovable property at Mahalaxmi being held and possessed by theCompany.
F) Subject to our observation in Para 4(E) above; in our opinion, and to the best ofour information and according to the explanations given to us, the accounts read togetherwith significant accounting policies, contingent liabilities and other notes thereon, givethe information required by the Companies Act, 1956 in the manner so required and furthersubject to the following and Annexure attached hereto :-
a) Note No. 2(a) of contingent liabilities read with Note No.3 relating to claim byworkers. Amount not ascertained.
b) Note No. 2(b) of contingent liabilities relating to Excise Duty liability ofRs.58,963/-.
c) Note No. 7 relating to non-provision of gratuity liability, amount unascertained.
d) Note No.8 regarding claim lodged with Insurance Company and position of acceptanceor otherwise of the said claim.
Give a true and fair view in conformity with the accounting principles generallyaccepted in India :
i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2005; and
ii. In the case of Profit and Loss Account, of the 'Profit' of the Company for the yearended on that date.
| ||For O.K. MALPANI & ASSOCIATES |
| ||Chartered Accountants |
| ||(Omprakash Malpani) |
| ||Proprietor. |
| ||Membership No. 038537 |
|Place : Mumbai || |
|Date : 27th May, 2005. || |
TO THE MEMBERS OF
The Ambika Silk Mills Co. Ltd.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE.
(i) In respect of Company's Fixed Assets:
(a) The Company is maintaining proper records showing full particulars, includingquantitative details and situation of fixed assets.
(b) As explained to us, the fixed assets have been physically verified by themanagement at reasonable intervals during the year under the report in accordance with aphased-verification programme, which in our opinion is reasonable, having regard to thesize of the Company and nature of its business and assets. According to the informationand explanations given to us, no material discrepancies were noticed on such physicalverification as compared with the records of fixed assets.
(c) During the year under report the Company has not disposed off any of its fixedassets and the going concern status of the Company is not affected.
(ii) As the Company does not hold inventories as defined in Accounting Standard (AS) 2on Valuation of Inventories, Clause 4(ii) of the Companies (Auditor's Report)Order, 2003 regarding physical verification of inventories and maintenance of records ofinventories is presently not applicable to the Company.
(iii) In respect of loans, secured or unsecured, granted or taken by the Companyto/from 301 of the Companies Act, 1956:
(a) The Company has not granted any loan, secured or unsecured, to companies, firms orother parties covered in the register maintained under Section 301 of the Companies Act,1956. Accordingly, Clause 4 iii(a), to iii(d) of the Companies (Auditor's Report) Order,2003, as amended, are not applicable to the company for the year ended report.
(b) The Company had taken unsecured loans from a director covered in the registermaintained under Section 301 of the Companies Act, 1956. The maximum amount involvedduring the year was Rs.2,00,35,000/- and the year-end balance of loan taken from suchdirector was Rs.2,00,35,000/-.
(c) In our opinion and according to the information and explanations given to us, theterms and conditions on which unsecured interest free loans have been taken from thedirector covered in the register maintained under Section 301 of the Companies Act, 1956as referred to in Clause (iii) (b) above are not prima facie prejudicial to the interestof the Company.
(d) There are no stipulations as to the re-payment of principal amounts of suchinterest-free unsecured loans taken from the director covered in the register maintainedunder Section 301 of the Companies Act, 1956 as referred to in Clause (iii) (b) above.
(d) In the absence of any re-payment stipulations, there is no question of overdueamount of such interest free unsecured loans taken from the Director covered in theregister maintained under Section 301 of the Companies Act, 1956.
(iv)On the basis of selective checks carried out during the course of audit and in ouropinion and according to the information and explanations given to us, there is adequateinternal control system commensurate with the size of the Company and the nature of itsbusiness for purchase of fixed assets, There is no purchase of inventory or sale of goodsand services by the Company. During the course of our audit, no major weakness has beennoticed in the internal control system. We have not observed any failure on the part ofthe Company to correct major weakness in internal control system.
(v) In respect of transactions covered under Section 301 of the Companies Act, 1956:
(a) In our opinion and according to the information and explanations given to us, thereare no transactions made in pursuance of contracts or arrangements referred in Section 301of the Companies Act, 1956.
(b) In view of foregoing, Clause 4 (v)(a) and (b) of the Companies (Auditor's Report)Order, 2003 is not applicable to the Company.
(vi) In our opinion and according to the information and explanations given to us, theCompany has not invited and accepted any deposits from the public within the meaning ofSection 58 A, 58AA or any other relevant provisions of the Companies Act 1956, and theCompanies (Acceptance of Deposits) Rules, 1975 during the year under report.
(vii) In our opinion, the Company has an internal audit system commensurate with thesize of the Company and the nature of its business.
(viii) As explained to us, the Central Government has not prescribed the maintenance ofcost records by the Company under Section 209(l)(d) of the Companies Act, 1956 in respectof any of the Company's Products/Activities.
(ix) In respect of statutory dues:
(a) According to the records examined by us, the Company is generally regular indepositing during the year the undisputed statutory dues including Provident Fund,Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax,Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues, tothe extent applicable to it, with the appropriate authorities. According to theinformation and explanations given to us, there are no arrears of undisputed outstandingstatutory dues as at 31st March, 2005 for a period of more than six months from the datethey became payable.
(b) According to the information and explanations given to us, tine dues of Income Tax,Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise duty and Cess which have not beendeposited on account of any dispute, as on 31.03.2005, and the forum where the dispute ispending are as under:
|Name of Statute ||Nature of Statutory Dues ||Total Amount Involved in Dispute (In Rupees) ||Period to Which the Amount relates ||Forum where Dispute is Pending |
|Excise Act ||Excise Duty ||92,414/- ||1985 & ||Show Cause |
| || ||Amount Paid ||1986 ||Notice by Excise |
| || ||33,433/- || ||Authorities |
| || ||Unpaid Amount || || |
| || ||58,981/- || || |
(x) The accumulated losses of the Company exceed fifty percent of its net worth at theend of the financial year covered by our audit. The Company has not incurred cash lossesin such financial year and in the immediately preceding financial year.
(xi) According to the information and explanations given to us and based on thedocuments and records produced to us, the Company has not taken any loan from financialinstitutions or banks. The Company does not have any debenture holder.
(xii) According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.
(xiii) In our opinion and according to the information and explanations given to us,the Company is not a chit fund, nidhi, mutual benefit fund / society. Therefore, Clause4(xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.
(xiv) According to the information and explanations given to us, the Company is not adealer or trader in shares, securities, debentures and other investments. Therefore,Clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 is not applicable to theCompany.
(xv) According to the information and explanations given to us and the representationsmade by the management and based on documents and records produced to us, the Company hasnot given any guarantee for loans taken by others from banks or financial institutions.
(xvi) The Company has not raised any term loan during the year.
(xvii) According to the information and explanations given to us and on overallexamination of the Balance Sheet and Cash Flows of the Company, we report that the fundsraised on short term basis have prima facie not been used for long term investment.
(xviii) The Company has not made any preferential allotment of shares to parties andcompanies covered in the Register maintained under Section 301 of the Companies Act, 1956during the year.
(xix) The Company did not issue any debentures during the year. Hence, Clause 4 (xix)of the Companies (Auditor's Report) Order, 2003 regarding creation of security or chargein respect of debentures issued is not presently applicable to the Company.
(xx) The Company has not raised any money by way of public issue during the year.Accordingly, Clause 4 (xx) of the Companies (Auditor's Report) Order, 2003 on the end useof money raised by public issues is not presently applicable to the Company.
(xxi) Based on the audit procedures performed and the information and explanationsgiven by the management, we report that to the best of our knowledge and belief no fraudon or by the Company has been noticed or reported during the year, that causes thefinancial statements to be materially misstated.
For O.K.MALPANI & ASSOCIATES
Membership No. 038537
DATED : 27th May 2005.