cana glass ltd Auditors report

CANA GLASS LIMITED ANNUAL REPORT 2004-2005 AUDITORS REPORT To, The Shareholders, Cana Glass Limited, Mumbai. 1) We have audited the attached Balance Sheet of Cana Glass Limited as on March 31, 2005, 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. 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, issued by the Company Law Board 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. 4) Further to our comments in the Annexure referred to above, we report that: i) The Accounts of the company have been prepared on a Going Concern basis. However, having regard to the accumulated losses of the company which are in excess of the net worth of the company and considering other factors The Board for Industrial & Financial Reconstruction (BIFR) in its hearing held on 01.07.2004, issued an order for winding up of the Company u/s. 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company has filed an appeal with the Appellate Authority of Industrial and Financial Reconstruction under section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985 along with a Rehabilitation Scheme. The Rehabilitation Scheme envisages One Time Settlement with the IDBI & UBI. The said appeal is registered with the authorities. ii.) 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; iii) 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 said books; iv. The Balance Sheet, the Profit & Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account; v) in our opinion, the Balance Sheet, the Profit & Loss Account and the Cash Flow statement dealt with by this report comply with the mandatory Accounting Standards referred to in Section (3C) of Section 211 of the Companies Act, 1956 except as mentioned in (vii) below ; vi) As per the written representation made to the Company by all its Directors as on 31st March, 2005, no Director is disqualified from being appointed as Director u/s. 274 (1)(g) of the Companies Act, 1956. vii) in our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to : Note No. 2 regarding non provision of penal interest Note No. 11 regarding non provision for stagnant book debts. And read together with the other Notes thereon, 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 accepted in India. a) in the case of the Balance Sheet, of the state of affairs of the Company as on March 31, 2005; b) in the case of the Profit and Loss Account, of the loss for the year ended on that date, and c) in the Cash Flow statement of the Cash Flow for the year ended on that date. For P.R.G. PAI & Co. Chartered Accountants P.R.G. PAI Proprietor Place : Mumbai Date : 30.8.2005 ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE 1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The fixed assets could not be physically verified by the management as the plant is under lockout since March 2003. None of the Fixed Assets have been disposed off during the year. 2. a) The stocks of finished goods, stores, spare parts and raw materials could not be physically verified during the year by the management as the plant is under lockout since March 2003. b) On the basis of our examination of stock records at Head office of the Company, and the explanations given to us, we are of the opinion that the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. 3. a) The terms and conditions of loans taken from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 are, in our opinion, prima facie not prejudicial to the interests of the company. During the year, the Company has taken loans from 4 parties amount to Rs. 10,475,150/- as Interest Free Unsecured Loans. We are informed that the loans taken from the parties are repayable on demand without interest. b) The company has granted an interest free security deposit to a private trust of which two of the Directors of the company are beneficiaries as consideration for lease of two premises. According to the information and explanations given to us, the terms and conditions of the deposit are not prejudicial to the interests of the company. Save as aforesaid, we are informed that the company has not granted any loans to companies, firms and other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. c) The employees to whom interest free advances in the nature of loans have been given by the company are not repaying the principal amounts as stipulated due to non functioning of the factory. 4. In our opinion and according to the information and explanations given to us, there was no internal control procedures with regard to the purchase of stores, raw materials, components, plant and machinery, equipment, finished goods and other assets and with regard to the sale of goods, as there was no business activity under taken by the company during the period under audit due to lockout at the factory since March 2003. 5. a) In our opinion and according to the information and explanations given to us, there was no transactions which needs to be entered in to a register in pursuance of Section 301 of the Companies Act, 1956. b) According to the information and explanations given to us there are no transactions of sales or purchase of goods and materials and services aggregating to Rs.500000 or more during the year in respect of each party made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956. 6. According to the information and explanations given to us, the company has not accepted any deposits within the purview of Section 58A and 58AA of the Companies Act, 1956 and the Companies (acceptance of deposit) Rule 1975. 7. the During Year under consideration, the factory was under lockout and hence the internal audit system was not followed. 8. The company has not been required by the Central Government to maintain cost records under Section 209 (1) (d) of the Companies Act, 1956. 9. a) During the year, the company has not deposited Provident Fund and Family Pension Fund dues with the authorities. We are informed that the provisions of the Employees State Insurance Act, 1948 are not applicable to the Company. b) According to the information and explanations given to us the following undisputed amounts were outstanding as at 31-03-2005 for a period more than six months from the date they became payable, Rs.64,866/- toward Sales Tax, Rs.392,550/- towards Profession Tax, Rs.624,823/- towards Tax Deducted at Source, Rs. 8,544 towards Labour Welfare Fund and towards Provident Fund Rs.534,898/-. The dues were reportedly not deposited due to non availability of funds with the Company. 10. The company has become a sick industrial company within the meaning of clause (o) of sub section (1) of Section 3 of the Sick Industrial companies (Special Provisions) Act, 1985 since 1999. 11. The Company has defaulted in repayment of dues to IDBI and Union Bank Of India (Secured Creditors). The total dues as per the companies books of accounts as on 31st March, 2005 amounted to Rs. 231,302,749/-. 12. As per records of the company and information given to us, the company has not granted loan on the basis of security by way of pledge of shares, debentures and other securities. 13. The company is not a chit fund, nidhi or mutual benefit fund/society. 14. The company is not dealing or trading in shares, securities, debentures and other investments. 15. According to information given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions. 16. The company has taken Unsecured Interest free term loans from promoters/shareholders amounting to Rs. 10,475,150 to meet its day to day expenses during the year, to repay some Unsecured Loans (Bills Discounted) and towards initial payment of One Time Settlement arrived with one of the Secured Creditors. 17. The funds raised on short term basis have not been used for long term investments and vice-versa during the year. 18. The company has not allotted any share during the year. 19. During the period covered by our audit report, the company has not issued debentures. 20. The company has not raised any money by public issue during the year. 21. Based on our audit and information and explanations given by the management, we report that three of the creditors have initiated action u/s. 138 of the Negotiable Instrument Act, 1881 against the company for an amount of Rs. 63,414/- , Rs. 111,364/- & Rs. 100,000/- For P.R.G. PAI & Co. Chartered Accountants (P.R.G. PAI) Proprietor Place : Mumbai Date : 30.08.2005