insta finance ltd Auditors report

GUJARAT PERTORP ELECTRONICS LIMITED ANNUAL REPORT 2003-2004 AUDITORS REPORT To The Members of Gujarat Perstorp Electronics Limited. 1. We have audited the attached Balance Sheet of Gujarat Perstorp Electronics Limited as at 31st March, 2004, the Profit & Loss Account and 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 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 in paragraph 3 above, we report that: a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; b. In our opinion, proper books of account as required bylaw have been kept by the Company so far as appears from our examination of those books; c. The Balance Sheet, the Profit & Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; d. In our opinion, the Balance Sheet, the Profit & Loss Account and the 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; e. 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. As regards Government Nominee Directors, they are exempt from the provisions of Section 274(1)(g) in view of the general circular issued by the Department of Company Affairs. f. Attention is invited to Note No. 1 in Schedule 188 regarding accounts of the Company prepared on going concern basis. Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with significant accounting policies and 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 generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2004; (ii) in the case of the Profit & Loss Account, of the loss for the year ended on that date; and (iii) in the case of, the Cash Flow Statement, of the cash flows for the year ended on that date. For C.C. Chokshi & Co. Chartered Accountants Gaurav. J. Shah Race: Ahmedabad Partner Date: May 22, 2004 Membership No.: 35701 ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 3 of our report of even date on the accounts of Gujarat Perstorp Electronics Limited as at 31st March, 2004) 1. The nature of the Companys activities during the year is such that the requirements of clause (viii), (xii), (xiii) and (xiv) of paragraph 4 of the Companies,(Auditors Report) Order, 2003 are not applicable to the Company. 2 (a) The Company has maintained proper records showing full particulars including quantitative details and situations of fixed assets. (b) According to the information and explanations given to us, the Company has a programme of physical verification of major fixed assets which, in our opinion is reasonable having regard to the size of the Company and the nature of its assets. We were informed that no material discrepancies were noticed on such verification. (c) The Company has not disposed off a substantial part of the fixed assets during the year. 3 (a) The inventories have been physically verified during the year by the management except for the stock seized by the Excise Authorities and lying at the bonded warehouse. In our opinion, the frequency of verification is reasonable. (b) In our opinion and according to the information and explanations given to us, 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) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventories and no material discrepancies were noticed on physical verification between the physical stocks and the book records. 4. (a) The Company has not granted any, loans to companies, firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956. The Company had taken loan of Rs.3269.65 lacs from a company covered in the register maintained under section 301 of the Companies Act, 1956. There has not been any loan transaction with the Company during the year and the outstanding balance as at the beginning of the year has continued to be the same as at the end of the year. (b) In our opinion, the terms and conditions of the interest free loan stated in 4(a) above are not, prima facie, prejudicial to the interest of the Company. (c) As per the directives of the BIFR, the Company is not required to repay the above stated loan till net worth of the Company turns positive. (d) There is no overdue amount in respect of the above stated loan. 5. 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 purchase of inventory and fixed assets and for the sale of goods. During the course of audit, we have not observed that there are no material weaknesses hence, question of continuing failure does not arise. 6 (a) According to the information and explanations given to us, there are no transaction that need to be entered into the register maintained under section 301 of the Companies Act, 1956. (b) According to the information and explanations given to us, and as stated in 6(a) above, there is no transaction that need to be entered into the register maintained under section 301 of the Companies Act, 1956, and hence the question of reasonable prices in respect of such transactions as regards to the prevailing market prices does not arise. 7. The Company has not accepted any deposits from the public. 8. In our opinion, internal audit carried out during the year by a firm of Chartered Accountants appointed by the management, has been commensurate with the size of the Company and the nature of its business. 9. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it. (b) According to information and explanations given to us, there are no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess which were in arrears as at 31st March, 2004 for a period of more than six months from the date they became payable. (c) According to the information and explanations given to us, there is a disputed demand of custom duty of Rs.555.85 lacs, the matters is pending with CEGAT 10. The accumulated losses of the Company have exceeded fifty percent of its net worth as at the end of the year. The Company has incurred cash losses during the year and during the immediately preceding financial year. 11. The Company has defaulted in repayment of installments of dues to banks amounting to Rs.110.30 lacs for 31 months and debenture holders amounting to Rs.415.04 lacs for 31 months. The period of default has been calculated effective from the date on which the Rehabilitation Scheme was approved by Gujarat High Court/BIFR. 12. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. 13. In our opinion and according to the information and explanations given to us, term loans availed by the Company were applied by the Company for the purposes for which the loans were obtained. 14. 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. No long-term funds have been used to finance short-term assets except permanent working capital. 15. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in register maintained under Section 301 of the Companies Act, 1956. 16. According to the information and explanations given to us and the records examined by us, securities have been created in respect of the debentures issued. 17. During the year, the Company has not raised money by way of Public Issue. 18. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year. For C.C. Chokshi & Co. Chartered Accountants Gaurav. J. Shah Place: Ahmedabad Partner Date : May 22, 2004 Membership No.: 37501