hinafil india ltd Auditors report

HINAFIL INDIA LIMITED ANNUAL REPORT 2011-2012 AUDITORS REPORT To, The Members, We have audited the attached Balance Sheet of HINAFIL INDIA LIMITED as at 31st MARCH, 2012, the Profit and Loss Account for the year ended on that date annexed thereto and the Cash flow Statement 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 Statement based on our audit. 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 a test basis, evidence supporting the amounts and disclosures in the Financial Statement. 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. This report is made solely to the Companys members, as a body, in accordance with the provisions of the Companies Act, 1956. Our audit work has been undertaken so that we might state to the Companys members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the company and the companys members as a body, for our audit work, for this report or for the opinions we have formed. We report that: 1. (a) sale Tax liability of the company has not been accounted for in the books of account. Effect of the same on financial statement could not be ascertained, as the required information could not be made available to us. (c) No provisions has been made in accounts in respect of Gratuity as per AS-15. (Refer Note 9 & 19 of Annexure I). (d) The Company has defaulted in repayment of Term Loan & Working Capital loan taken from Canara Bank, The Bank has initiated recovery action and sold all fixed assets of the company viz. factory / non factory building, plant & machineries, electrical installation etc. and party recovered defaulted loan. Still bank has to recover Rs. 273.82 lac. Subject to foregoing, we further report that: 2. 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; 3. 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; 4. The Balance Sheet, Profit and Loss Account and Cash Flow statement, dealt with by this report are in agreement with the books of accounts; 5. In our opinion Balance Sheet, Profit & Loss Account and Cash Flow Statement comply with Accounting Standards referred to in Sub-sec. (3c) of Sec. 211 of the Companies Act, 1956; 6. On the basis of written representations received by the Company from the Director as regards their eligibility to assume and occupy office as directors as on 31st March, 2011, we report that non of the Directors is disqualified as on 31st March, 2011 from being appointed as a Director under Section 274(1) (g) of the Companies Act, 1956. 7. Subject to foregoing, in our opinion and to the best of our information and according to the explanations given to us the said accounts, subject to the Notes given in Schedule O, Significant Accounting Policies and Notes on account, give the information required by the Companies Act, 1956 in the manner so required and give a true & fair view 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, 2012; ii. In the case of Profit & Loss account, of the loss of the Company for the year ended on that date and; iii. In the case of Cash Flow statement, of the cash flow for the year ended on that date. For RAMESH GAUTAM & CO. Chartered Accountants Sd\- (RAMESH KUMAR JAIN) (Proprietor) M.No. 108887 Place: Mumbai Date : 24.08.2012 ANNEXTURE TO THE REPORT OF THE AUDITORS TO THE MEMBERS OF THE M/s. HINAFIL INDIA LTD. ON THE ACCOUNTS FOR THE YEAR ENDED 31/03/2012. 1. a. The Company has maintained proper records showing full particulars, including quantitative details & situation of fixed assets. b. The Company has physically verified certain assets during the year at reasonable intervals and no material discrepancies were noticed on such verification. c. According to the information and explanation given to us and after taking note of the fact that Canara Bank has auctioned major fixed assets of the company to recover Term Loan and Caah Credit Loans. Due to this we are of opinion that the companys going concern assumption is affected substantially. 2. a. The Management has certified that the physical verification of inventory held by the company was conducted at reasonable intervals during the year and / or at the year- end. b. In our opinion and according to the information and explanations given to us, the procedure of physical verification of Stocks followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business. c. According to information and explanations given to us, the company has maintained proper records of inventory. The discrepancies noticed on such verification as compared to the book records were not material having regard to the size and nature of the operations of the Company and have been properly adjusted in the books of account. 3. a. The Company has granted interest free unsecured loan to the parties covered in the register maintained under section 301 of the Companies Act, 1956. There are two parties, to whom the company has granted such loans; maximum amount involved of such loan granted is Rs. 42.47 Lacs & the year- end outstanding balance of such loan granted is Rs. 28.51 Lacs. b. We have been informed that the Company has not charged interest on such loans and in our opinion terms and conditions are prima facie prejudicial to the interest of the Company. c. We have been informed that there are no stipulations as to repayment of loans. d. Since there are no stipulations as to repayment of such loan, we are unable to comment on overdue amount. e. The company has taken interest free unsecured loan form the parties covered in the register maintained under section 301 of The Companies Act 1956. There is one part form whole the company has taken such loans, Maximum amount involved of such loan aggregated to Rs.2.60 Lac and the year end outstanding balance of such loans taken aggregated to Rs.2.60 lac. f. We have been informed that no interest is paid on said loan and the other terms and conditions of such loans are prima facie not prejudicial to the interest of the company. g. The company is regular in repayment of loans whenever asked for , however there are no stipulations as to time of repayment of principal and interest amount. 4. According to the information and explanations given to us, the company has no formal system of internal control for the purchase of inventory and fixed assets and sale of goods and services, commensurate with the size of the company. Although, the same is personally looked after by the Managing Director of the Company. However, the existing system needs to be strengthened and formalized. 5. 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, there is no transactions made in pursuance of contracts or arrangements entered into the register in pursuance of section 301 of the Act and exceeding the value of Rupees Five Lacs in respect of any party during the year. 6. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed hereunder. 7. According to the explanation and information given to us the company has an internal audit system by its own staff and not by an independent chartered accountant firm. In our opinion the same is required to be properly strengthened and designed to cover allimportant areas so as to commensurate with the size and nature of its business. 8. The Central Government has not prescribed for maintenance of cost records u/s 209(1) (d) of the Companies Act, 1956 (1 of 1956). 9. a. On the basis of information and explanations we report that the Company is not regular in payment of statutory dues with appropriate authorities and subject to our comments in para 1. a), & b) of our report, followings are the statutory dues as per books of accounts, which are outstanding for a period of more than six months from the day they became payable, we are however not able to quantify statutory dues which are outstanding but not provided for in the books of accounts. Amt. Rs. Sales Tax 3,28,618/- Income Tax for FY 0708 10,46,760/- b. According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, there are no dues outstanding of Sales tax, Income Tax, Custom duty, Wealth tax, Excise duty, Cess & Service tax on account of any dispute except what is stated herein below: Assessment Year Type of demand Amount in Authority before dispute dispute pending AY 2005-06 Penalty U/s 24,20,374/- ITAT, Ahmedabad 271(1)(c) of Bench the IT Act AY 2006-07 Income Tax demand 27,74,160/- ITAT, Ahmedabad raised U/s 143(3) Bench of the IT Act AY 2007-08 Income Tax demand 16,06,320/- CIT (A) raised U/s 143(3) of the IT Act 10. The Company has accumulated losses of Rs. 54431314/- as at 31st March 2012, which is exceeding fifty percent of its net worth. The Company has incurred financial cash losses during the year at Rs. 112911/- (Last Year Rs. 11805823/-). 11. As per books and records maintained by the Company and according to the information and explanations given to us, the company has defaulted in repayment of terms loan and working capital loan along with interest, the bank recovered partly by disposing off entire properties including Stock of the company. The company is still o pay Rs.20166907/- towards Term Loan and Rs.7214963\- towards working capital loan as at 31/03/2012.Also company has not taken any loans against debentures. 12. According to the information and explanations given to us and based on the documents and records produced to us, the company has not granted loans and advances on the basis of security by way of pledge of Shares, debentures and other securities. 13. In our opinion, and considering the nature of activities carried on by the Company during the year, the provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / society are not applicable. 14. According to the information and explanations given to us, the company is not dealing 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. 15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by other from banks and financial institutions. 16. This clause is not applicable, as no term loans have been raised during the year. 17. 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 funds raised on short-term basis have been used for long-term investments. 18. The Company has not made any preferential allotment of shares to parties covered in the register maintained under section 301 during the year, hence this clause of the order is not applicable to the company. 19. The Company has not issued any debenture and as such clause 4(xix) of the Order is not applicable to the Company. 20. The Company has not raised any money by public issues during the year. 21. During the course of our examination of the books of accounts and records carried out in accordance with the generally accepted auditing practice and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year nor have we been informed of such case by the management that clauses the financial statements to be materially misstated. For RAMESH GAUTAM & CO. Chartered Accountants Sd/- (RAMESH KUMAR JAIN) (Proprietor) M.No. 108887 Place: Mumbai Date : 24.08.2012