TO THE MEMBERS OF TTG INDUSTRIES LIMITED
1. 1 .We have audited the attached Balance Sheet of TTG Industries Ltd as atMarch 31, 2009 and the related Profit and Loss Account and Cash Flow statement for theyear ended on that date annexed thereto, which we have signed under reference to thisreport.These financial statements are the responsibility of the Company's management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with accounting 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 basis forour opinion.
3. As required by the Companies(Auditor's Report) Order, 2003 as amended by TheCompanies (Auditor's Report) (Amendment) Order, 2004 issued by the Government of India interms of Section 227(4A) of the Companies Act, 1956 of India (the Act) and on the basis ofsuch checks of the books and records of the company as we considered appropriate andaccording to the information and according to the information and explanations given tous, we give in the annexure a statement on the matters specified in paragraphs 4 and 5 ofthe said Order.
On the basis of the audit described, we report the following :
a) It was informed to us that the Board of Industrial and Financial Reconstruction(BIFR) has declared the company as a sick industrial company in terms of Section 3 (1) (o)of Sick industrial Company (Special Provision) Act 1985, in the hearing held on 17thAugust, 2005.
b. It was further informed to us that based on the above order read in conjunction withthe Techno-economic and Viability report prepared by M/s.lTCOT Consultancies &Services Ltd., where it has held that the company is technically and financially viable.The company therefore has adopted the applicable Accounting Standards (AS 1) as applicableto a "Going Concern".
3.1. Certain balances with Banks and Sundry Creditors, Sundry Debtors, Loans andAdvances and Unsecured Loans are subject to confirmation and reconciliation.
3.2. As stated in Note 17 Schedule O' Annexed to the Balance Sheet, no provision hasbeen made in the books for any interest or other charges that may be payable on theoutstanding balances of Secured Loans, Hire Purchase Contracts and other Unsecured Loans.We are informed that the company is unable to quantify the amount in view of BIFRdeclaring the company to be sick. In our opinion, the loss is , to that extent,understated.
3.3. Included under the head Sundry Debtors Rs.60.85 Lakhs (Previousyear Rs.69.76lakhs) and Loans and Advances (Rs. 1606.81 lakhs (Previous year Rs. 1574.13 lakhs) whichhave been considered good and recoverable in accounts but which in our opinion a portionof them, is doubtful of recovery. However, certain Bad debts have been written off duringthe year. In our opinion, both the above accounts have been overstated and consequently,the Loss for the year is understated.
3.4. Fixed Assets include Hydraulic Braking systems and Rotor Blades for Wind EnergyGenerators (Cost-Rs.105.4 lakhs WDV - Rs.72.90 lakhs as on March 31, 2009) which are heldby respective suppliers for Maintenance purposes. As these assets have been undermaintenance since 1999-2000 we are of the opinion they are no longer fit for use are to bescrapped. Assets for the year are therefore over stated by Rs.72.90 lakhs (Written downvalue) and the losses for the year correspondingly understated.
3.5. Assets in the nature of Wind Energy Generations(WEGs Cost Rs.806.48 lakhs,WDV-Rs.374.95 lakhs as on March 31, 2009) located at the Wind Farm of the company atKethanur have been dismantled and removed from the site for maintenance purposes is to beconfirmed.
3.6. As stated in Note 21 under Schedule O" to the Balance Sheet, Fixed Assetsinclude an item of Plant and Machinery (WEG Mould cost Rs.178.10 lakhs, WDV -Rs.76.04lakhs as on March 31,2009) held under contract of hire purchases, the liability in respectof which was taken over by a third party in partial settlement of dues to the Company. Thehire purchase vendor has taken possession of the asset in partial settlement ofoutstandings. However pending receipt of details final settlement of accounts on disposal,the asset continues to be carried in books and no adjustment has been made in the accountof the said third party.
4. On the basis of the audit referred to above and further to comments in the Annexurereferred subject to our observations contained in paragraph 3.1 to 3.6 above we report.
4.1. We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;
4.2. 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 produced to us;
4.3. The Balance Sheet , Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;
4.4. In our opinion, the said Balance Sheet, Profit and Loss Account and Cash FlowStatement read with the Notes thereon comply with the accounting standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956.
4.5. The Directors of the company have submitted written declarations, which have beentaken on record by the Board of Directors of the company, that they were not, as on March31,2009 isqualified from being appointed as a director of this company by virtue of theirbeing directors in a public company which has defaulted in terms of Section 274(1) (g) ofthe Companies Act, 1956;
4.6. In our opinion and to the best of the information and according to explanationsgiven to us the said accounts give the information required by the Companies Act 1956,Ithe manner so required.
4.7. In view of the observation contained in paragraphs 3.1 to 3.6 above and theinadequacy of records and details, we are unable to express our opinion on whether thesaid accounts read with the Notes thereon, gives a true and fair view in conformity withthe accounting principles generally accepted in India.
a. In the case of the Balance Sheet of the state affairs of the company as at March 31,2009.
b. In the case of the Profit and Loss Account, of the loss for the year ended on thatdate, and,
c. In the case of the Cash Flow Statement, of the cash flow for the year ended on thatdate.
|Place: Chennai ||G.PARTHASARATHY |
|Date: 30.6.09 ||Chartered Accountant |
ANNEXURE TO AUDITORS' REPORT
UNDER SECTION 227 (4) (A) OF THE COMPANIES ACT, 1956 TO THE MEMBERS OF TTG INDUSTRIESLIMITED
1. In respect of Fixed Assets.
a. Fixed assets of the company have been physically verified by the management duringthe year and there is a regular programmed of verification which in our opinion isreasonable having regard to the size of the company and nature of its assets. No materialdiscrepancy has been noticed on such verification.
b. The company has not sold /disposed off any significant portion of the fixed assetsduring the year.
2. In respect of Inventories.
a. As explained to us, stocks stores and spare parts have been physically verified bythe management at reasonable intervals.
b. In our opinion and according to information and explanations given to us, theprocedure for physical verification of inventory appears to be reasonable and adequate inrelation to the size of the company and nature of its business.
c. In our opinion and according to information and explanations given to us the companyhas maintained proper records of its inventory. The discrepancies notices on physicalverification between physical stock and book stock were not material.
d. According to the information and explanations available the company has not takenany loans secured or unsecured to/from companies firms, or parties listed in the registermaintained under section 301 of the Companies act 1956.
3. In our opinion and according to information and explanations given to us during thecourse of audit, there are adequate internal control procedure commensurate with the sizeof the company and nature of its business for purchase of inventory, fixed assets and withregard to sale of goods.
4. In respect of transactions to be entered in the Register maintained in pursuant ofsection 301 of the Companies Act 1956.
a. According to information and explanations given us, there were no Transaction duringthe year that needed to be entered into the register.
b) In our opinion and according to information and explanations given to us there areno transactions made in pursuance of contracts or arrangements entered in the registerunder section 301 of the Companies Act, 1956 and exceeding the value of Rs. Five Lakhs inrespect of any party during the year have been made at prices which are reasonable havingregard to the prevailing market prices at the relevant time.
5. The company has not accepted any Fixed Deposit during the year.
6. The company has no internal audit systems commensurate with the size of the companyand nature of its business.
7. In our opinion the company is not required to maintain cost records as prescribed bythe Central Government under section 209(1) (d) of the Companies Act 1956.
8. Statutory and Other Dues.
8.1.The company has deposited P.F and ESI dues but is in arrears with regard to IncomeTax deducted at source, Sales tax and other statutory dues as per the following details
|Name of statute ||Nature of dues ||Amount in lakhs ||Period year ended ||Due date ||Date of payment |
|IT Act ||TDS from contract ||8.11 ||2003-04 ||31.03.04 ||Nil |
|CST ||Disputed ||24.19 ||Prior to 2006-07 ||- ||Nil |
|Service Tax Act || ||3.30 ||2003-2004 & 2006-2007 ||31.03.04 31.03.07 ||Nil |
9. In our opinion and according to information and explanations given to us theaccumulated losses of the company are more than fifty percent of its net worth. Thecompany has incurred cash losses during the year covered by our audit and as well, in theimmediate preceding financial year.
10. According to information and Explanations given to us by the Management we are ofthe opinion that the company has defaulted in repayment of dues to banks /institutions/Hire purchase finance which is continuing since the immediate preceding previous year.However during the year the company has started making payment to Banks, Institutions andHire purchase Financiers.
In respect of cash credit loans.
Central Bank of India Rs.294.29 lakhs
In respect of term loans
Central Bank of India Rs.912 lakhs
In respect of Term Loans from Institutions
Hire Purchase Finance and Others Rs.115.59 lakhs.
Letter of Credit and Bank Guarantee Rs.691.16 lakhs.
Interest accrued on the above loans unpaid as on 31.03.09 stands at Rs.1860.74 lakhs.
11. According to the information and explanation to us and based on our examination ofdocuments and records we are of the opinion that no loans and advances have been given onthe basis of security by way of pledge of shares debentures or securities.
12. The company is not a chit fund or nidhi/ mutual benefit fund society. Therefore theprovisions of clause 4 (xiii) of the
Companies (Auditors Report) Order 2003 are not applicable to the company.
13. The company is not dealing in or trading in shares, securities debentures and otherinvestments. Accordingly the provision of clause(xiv) of the Companies (Auditors Report)Order 2003 are not applicable to the company.
14. The company has not availed any term loan funds during the year.
15. According to the information and explanations given to us and an overallexamination. Of the balance sheet of the company we report that no funds raised on shortterm basis have been used for long term investment. No Long term funds have been used tofinance short term assets expect permanent working capital.
16. The company has not made preferential allotment of shares to parties and companiescovered in the register maintained under section 301 of the Companies Act, 1956.
17. The company has not issued any debentures and hence no securities for the same wereprovided for by the company.
18. The company has not raised any money by public issued during the year.
19. According to information and explanations given to us, no fraud on or by thecompany was noticed or reported during the course of audit.
|Place :Chennai ||G.PARTHASARTHY |
|Date : 30.6.09 ||Chartered Accountant |