filaments india ltd Auditors report

FILAMENTS INDIA LIMITED ANNUAL REPORT 2003-2004 AUDITORS REPORT To, The Members of FILAMENTS INDIA LIMITED 1. We have audited the attached Balance sheet of FILAMENTS INDIA LIMITED as at 31st March 2004, 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 misstatements. 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 the 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 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 paragraph 4 & 5 of the said order. 4. Attention is invited to the following notes in schedule 15: a) Balances of major sundry debtors, creditors and loans and advances are subject to confirmation and reconciliation. (Para 2 (v)). b) Flat purchased at Kolkata for Rs 8.49 lakhs is yet to be registered in the name of the company. 5. Further to our comments refereed to in para 3 above and subject to our comments in para 4 above with consequential aggregate effects on the loss for the year, accumulated loss and net assets, the quantification of which could not be determined, 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 accounts as required by law have been kept by the company so far as appears from our examination of those books; iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts; iv) In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; v) On the basis of written representations received from the Directors as on 31st March 2004, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2004 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 statements of accounts read together with the Significant Accounting Policies and Notes on Accounts as referred in Schedule-15 thereto, 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 generally accepted in India: a) In the case of Balance Sheet, of the state of affairs of the company as at 31st March 2004. b) In the case of Profit and Loss Account, of the "Loss" for the year ended on that date and c) In the case of Cash Flow Statement, of the Cash Flow for the year ended on that date. FOR S. BHANDARI & CO. CHARTERED ACCOUNTANTS Place: Bhiwadi (P.D.BAID) Date : 30 June 2004 PARTNER ANNEXURE REFERRED TO IN PARA 1 OF OUR REPORT OF EVEN DATE (OF WS FILAMENTS INDIA LIMITED FOR THE YEAR 2003-2004) i) a) The company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets. b) As explained to us, Fixed Assets of the company are physically verified according to a phased program designed to cover all items over a period of two years which, in our opinion, is reasonable. Pursuant to the program, physical verification of. the Fixed Assets was carried out during the year by the management and discrepancies noticed were not material. c) The company has not disposed off substantial part of fixed assets during the year. ii) 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 inventory followed by the management are generally reasonable and adequate in relation to the size of the company and the nature of its business. c) The company has generally maintained proper records of inventory. However, the system of recording of consumption of stores and spares needs to be further strengthened. The discrepancies noticed on verification of inventories as compared to book records were not material and have been properly dealt with in the books of accounts. iii) a) The company has taken an interest-free unsecured loan from one company covered in the register maintained u/s 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs two lakh and the year-end balance was nil. There is one company covered in the register maintained u/s 301 of the Companies Act, 1956 to whom the company has granted loans/advances. The maximum amount involved during the year is Rs 6,93,448/- and the year-end balance was Rs 6,64,254/-. b) There is no stipulation of interest either on loans taken or on loans given. The other terms and conditions of loans taken and loans given are not prima facie prejudicial to the interest of the company. c) As per the information made available to us, the loan taken by the company is repayable on demand. The loans and advances given by the company are also repayable on demand. d) There is no overdue amount of loans given to or taken from the parties covered in the register maintained u/s 301 of the Companies Act, 1956. iv) 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 for the sale of goods. However, according to the information and explanations given to us, the internal control procedures for the purchase of inventories and fixed assets should be further strengthened. During the course of our audit, we have not observed any continuing failure to correct major , weaknesses in internal controls. v) a) According to the information and explanations given to us, we are of the opinion that during the year, there has been no transaction that needed to be entered into the register maintained under Section 301 of the Companies Act, 1956. b) Accordingly, the provisions of clause 4(v)(b) of the said order are not applicable to the company. vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder. vii) In our opinion, the company has an internal audit system commensurate with the size of the company and the nature of its business. viii) As explained to us, the Central Government has not prescribed for maintenance of Cost Records under section 209(1)(d) of the Companies Act, 1956. ix) a) The company is generally regular in depositing, with the appropriate authorities, undisputed statutory dues including investor education and production fund, income tax, wealth tax, customs duty, excise duty, cess and other statutory dues applicable to it. However, during the year, there are some delays in depositing with the appropriate authorities, undisputed statutory dues in respect of provident fund, employees state insurance and sales tax. According to the information and explanations given to us, no such undisputed statutory dues were outstanding as at 31 March 2004 for a period of more than six months from the date they became payable. b) According to the information and explanation given to us, no disputed dues of sales tax, income tax, customs duty, wealth tax, excise duty and cess were outstanding as at 31st March 2004. x) The accumulated losses of the company are not more than fifty per cent of its net-worth at the end of the financial year. The company has incurred cash losses during the financial year covered by our audit as well as in the financial year immediated preceding such financial year. xi) The company has defaulted in repayment of dues (both principal and interest) to IDBI during the year, which were as under. Nature of payment Due date Amount Interest 01 July 2003 1,85,062.58 Interest 01 October 2003 17,14,215.00 Interest 01 January 2004 17,38,858.00 Principal 01 October 2003 16,11,000.00 Principal 01 January 2004 16,11,000.00 Total 68,60,135.58 As explained in note (xii) of Schedule-15, the IDBI has restructured the liabilities including the above over dues, under Debt Restructuring Package for textile units. Further to above, the company has defaulted in repayment of dues of devolved LC liability of bank as working capital under: Date Amount 12 March 2004 9,53,680.85 17 March 2004 4,26,839.92 27 March 2004 15,13,525.94 xii) In our opinion, the company has not granted any loans and advances on the basis of security by way of pledge of share debentures and other securities. xiii) As per the information and explanations given to us, the provisions of any special statute applicable to a chit fund do not apply to the company. The company is also not a nidhi/ mutual benefit fund/ society. xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. xv) As per the information and explanations given to us, the company has not given any guarantee for loans taken by other from banks or other financial institutions. xvi) According to the information. and explanations given to us, during the year, the company has obtained no term loan the repayment period beyond 36 months. xvii) According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statement of the company, we report that as at 31st March 2004, long term funds to the tune of Rs. 114 lakhs (approved and short-term funds to the tune of Rs. 38 lakhs (approx.) (without considering permanent working capital) have been primarily used to finance the cash losses of the company. xviii) The company has not made any preferential allotment of shares during the year. xix) The company has not issued any debentures. xx) The company has not raised any money by way of public issue during the year. xxi) According to the information and explanation given to us, no fraud on or, by the company has been noticed or report during the year. FOR S. BHANDARI & CO. CHARTERED ACCOUNTANTS Place: Bhiwadi (P.D.BAID) Date : 30 June 2004 PARTNER (M. No. 72625)