girnar fibres ltd Auditors report

GIRNAR FIBRES LIMITED ANNUAL REPORT 2006-2007 AUDITORS REPORT To The Members, Girnar Fibres Limited 1. We have audited the attached Balance Sheet of Gimar Fibres Limited as at 31st March 2007 and the Profit and Loss Account 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 standard 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 and report thereto: 3. As required by the Companies (Auditors Report) Order 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956 and on the basis of such checks of the books and records of the Company, as we considered appropriate, we enclose in thin annexure a statement on the matters specified in the said order. 4. Further to our comments in annexure referred to in paragraph [3] above: [a] 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. [b] In our opinion, proper books of account, as required by law, have been kept by the Company so far as appears from our examination of such books. [c] The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of accounts. [d] In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement, dealt with by this report, comply with the Accounting Standards referred in sub-section 3(c) of section 211 of the Companies Act, 1956. [e] Sh. Jatinder Jain and Sh Gulshan Jain haves produced written representation as to whether the Companies in which they are Directors as on 31 March 2007 have not defaulted in terms of Section 274 (1) (g) of the Companies Act,1956, However Sh. Prafulla Jain, Director of the Company has not given written representation as to whether the Companies in which he is, Director as on 31st March 2007 have not defaulted in terms of Section 274(1)(g) of the Companies Act, 1956. [f] In our opinion and to the best of our information and according to the explanations given to us, read with the accounting policies and Notes to the Accounts (Annexure S), the said accounts give the information required by the Companies Act,1956 in the manner so required and give us a true and fair view is in conformity with the accounting principles generally accepted in India: i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2007; and ii) In the case of Profit and Loss Account, of the loss for the year ended on that date. For GUPTA SANJIV & CO. Chartered Accountants PLACE: LUDHIANA [Vijesh Gupta] DATE : 03.09.2007 Partner ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 3 of our report of even date. (i)(a)The Company has maintained proper records showing full particulars Including quantitative details and situation of fixed assets. (b) As informed to us, all the assets have not been physically verified by the management during the year and there is a regular programe 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) During the year, the Company has not disposed off any major part of the plant and machinery. (ii)(a) As informed to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. (b) As informed to us, the procedure of Physical verification of inventories followed by the management is 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. (iii)(a)As certified by the management, the Company has not granted any Unsecured Loan to parties covered in the register maintained under section 301 of the Companies Act,1956 during the year under report. (b),(c),(d) As the Company has not granted any unsecured loan during the year, the provisions regarding rate of interest and other term & conditions in respect of unsecured loans given by the Company are not prima facie prejudicial to the interest of the Company, the receipt of principal amount and interest in respect of the loan, any overdue amount in respect of the unsecured loan respectively are not applicable to the Company. (e) The Company has taken unsecured loan from thirteen parties covered in the register maintained under section 301 of the companies Act, 1956. The amount payable at the close of the year is 541.00 Lacs. (P.Y Rs. 441.00 Lacs) and the maximum amount outstanding during the year was Rs. 541.00 Lacs (P.Y Rs.441.010 Lacs). (f) According to information and explanation given to us,the rate of interest and other terms and conditions in respect of unsecured loan taken by the Company are not prima-facie prejudicial to the interest of the Company. (g) In our opinion and according to the information and explanation given to us, the payment of principal amount in respect of the aforesaid loans is regular. However the Company has not paid interest payable to lender. (N) 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. (v)(a)According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered. (b) In our opinion and according to the information and explanations given to us, the transactions are in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and a exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market rices at the relevant time. The Company has not accepted any deposits as defined under sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 during the year under report. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of they opinion that prima facie the prescribed accounts and records have been made and maintained. (ix)(a) The Company has delayed In depositing with appropriate authorities undisputed statutory due including provident fund, income tax, sales tax, excise duty, cess, etc. (b) According to the information and explanations given to us and as certified by the management, no undisputed amount in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at March 31, 2007 for a period of more than six months from the date they became payable. (c) According to the information and explanation given to us, the Company is contesting certain demands of taxes made by the concerned authorities, the financial impact of the above notices was not quantifiable at this stage and the disputed amount has not been deposited with the concerned authorities. (x) In our opinion, the accumulated losses of the Company are more than hundred percent of its networth. The Company has incurred loss during the financial year covered by our audit. The Company is a sick Company within the meaning of clause (O) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provision) Act, 1985. (xi) As per the CDR package sanctioned vide letter dated 21/05/2005,the company has defaulted in repayment of installment to IFCI and SBI. For UTI, one time settlement has been proposed, the confirmation of which is still pending as on date. For LIC and LIC Mutual Fund the company has defaulted in repayment of the dues. (xii) According to information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) 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. (xiv) 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. (xv) As informed to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions. (xvi) As informed to us, no fresh term loan has been taken by the Company during the year under report. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no fund raised on short term basis has been used for long term investment. (xviii) 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 during the year. (xix) According to the information and explanations given to us, during the period covered by our audit report, the Company has not issuid debentures. (xx) The Company has not raised money by way of public issues during the year under report. (xxi) According to the information arid explanations given to us, no fraud on or by the Company has been noticed or reported during the year under report. For GUPTA SANJIV & CO. Chartered Accountants PLACE: LUDHIANA (VIJESH GUPTA) DATE : 03.09.2007 Partner