elbee services ltd Auditors report

ELBEE SERVICES LIMITED ANNUAL REPORT 2003-2004 AUDITORS REPORT TO THE MEMBERS OF ELBEE SERVICES LIMITED 1. We have audited the attached Balance Sheet of ELBEE SERVICES LIMITED, as at 31st March 2004 and also the Profit and Loss Account for the year ended on that date. 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. These 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 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 Manufacturing and other Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub- section(4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to 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 purpose of our audit. ii. In our opinion proper books of account, as required by law, have been kept by the Company subject to our observations in paragraph 4(1) above and, so far as it appears from our examination of such books, and proper returns adequate for the purpose of out audit have been received from branches not visited by us; iii. The reports on the accounts of the branches audited by other auditors have been forwarded to us and the same been considered by us in preparing our report; iv. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account; v. In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting standards referred to in sub- section(3C) of section 211 of the Companies Act, 1956 to the extent applicable; vi. In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit and Loss Account read with the significant accounting policies in schedule 18 and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and gives a true and fair view in conformity with the accounting principles generally accepted in India: a) In the case of the Balance Sheet, of the state of affairs as at 31st March, 2004; and b) In the case of the Profit and Loss Account of the Loss for the year ended on that date. vii. On the basis of the written representation received from Directors as on 31st March 2004, and taken on record by the board of Directors we report that the none of the Directors are disqualified as on 31st March 2004 from being appointed as Director in terms of section 274(1)(g) of the Companies Act, 1956. For Hemant Kumar Mehta Chartered Accountants Place: Mumbai (Hemant Kumar Mehta) Date : 31st January, 2005 (Proprietor) ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date) 1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) All the assets have not been physically verified by the management during the year, except at few branches of the Company, but there is a regular Programmed of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification. (c) In respect of the leased assets, confirmations from some of the lessees are awaited. (d) During the year, the company has not disposed off a major part of the fixed assets. (e) None of the fixed assets has been revalued during the period. 2. (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. (b) The procedures 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) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. 3. In our opinion, the term and conditions on which unsecured loan have been taken from companies listed in the register maintained under section 301 of the Company Act, 1956 are not prime-facie prejudicial to the interests of the company. We are informed that there are no companies under the same management as this Company within the meaning of section 370(1B) of the Companies Act, 1956. 4. The Company has granted interest-free unsecured loans, advances in the nature of loans to Companies and other parities listed in the register maintained under section 301 of the Companies Act, 1956 aggregating to Rs.1761.03 lacs of which Rs.63.81 lacs has been provided for as doubtful of recovery and for the balance amount of Rs. 1679.17 lacs, we are unable to express our opinion on the recoverability or otherwise of the said loans as well as whether the terms and conditions of such loans/advances are prima facie prejudicial to the interests of the Company. 5. The Company had given interest free loans and advances in the nature of loans to parties, which we are informed are repayable on demand of which certain advances, including loans given to parties are considered doubtful of recovery and are fully provided for aggregating to Rs.14.50 lacs, expect such loans/advances given to certain companies, aggregating to Rs.56.37 lacs as at 31st March 2004. Which are considered as good of recovery by the management. We are unable to opinion on recoverability or otherwise of these loans/advances. Employees to whom interest free loans have been given are generally repaying the principal amounts as stipulated, except in case of some of the employees who have left the Companys services, where reasonable steps are being taken by the Company for recovery of the principal amount or these have been fully provided for where such advances are considered as doubtful of recovery. 6. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls. 7. According to the information and explanations given to us, there are no transactions of purchase of goods and materials and sale of goods and services, made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956, and aggregating during the period of Rs. 50,000/- or more in respect of each party. 8. The company has not accepted any deposits in terms of provisions of sections 58A & 58AA of the Companies Act, 1956. 9. The Company has an internal audit system, which in our opinion needs to be strengthened to be commensurate with the size and nature of its business. 10. The Central Government has not prescribed any rules for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956. 11.(a) The company is regular in depositing with appropriate authorities undisputed statutory dues including income tax, sales tax, Excise Duty, 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, sales tax, Excise duty and cess were in arrears, as at 31st March, 2004 for a period of more than six months from the date they became payable except in the case of sales tax of Rs.4.20 lacs, and income tax of Rs. 343.63 lacs of which Rs. 11.41 lacs have been paid subsequently. (c) According to the information and explanation given to us, there are no dues of sale tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute In our opinion, the company is not a 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. 12. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. 13. The company has not given guarantees for loans taken by others from banks or financial institutions. 14. As explained to us, the Company has a procedure for determination of unserviceable or damaged packing materials and on that basis, no provision is considered necessary in this regard. 15. The company has not raised any term loans during the year under consideration. 16. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the company, we report that the 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. 17. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301, of the Act. 18. According to the information and explanations given to us, during the period covered by our audit report, the company had not issued debentures. 19. Company has not received any fund by way of public issues. 20. We are informed that the Company does not generate any by-product or scrap. 21. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit. For Hemant Kumar Mehta Chartered Accountants Place: Mumbai (Hemant Kumar Mehta) Date : 31st January, 2005 (Proprietor)