intercorp industries ltd Auditors report

INTERCORP INDUSTRIES LIMITED ANNUAL REPORT 2006-2007 AUDITORS REPORT TO THE MEMBERS OF INTERCORP INDUSTRIES LIMITED 1. We have audited the attached Balance Sheet of INTERCORP INDUSTRIES LIMITED as at 31st March, 2007 and also 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 the 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 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 (the order) issued by the Central Government 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) Subject to 4(d) & 4(e) below 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 by law have been kept by the Company so far as appears from our examination of such books; c) The Balance Sheet, Profit & Loss Account and the Cash Flow Statement dealt with by this Report are in agreement with the books of account; d) Note No. 9 regarding non-availability of confirmation of balance from bank to whom term loan is outstanding; e) Note no. 2 (vi) regarding non-availability of demurrage payable, if any, (Amount unascertained); f) Non-provision of Interest of Rs.2,79,84,487/- on term loan. Cumulative amount of Interest not provided till date Rs.16,19,69,627/-(Refer Note no. 8); g) We further report that without considering Para 4(d) & (e) the effect of which could not be determined, had the observations made by us in Para 4(f), above been considered, the loss for the year would have been Rs.2,81,26,837/- (as against the reported figure of Rs.1,42,350/-) and accumulated loss would have been Rs.21,92,57,316/- (as against reported figure of deficit Rs19,12,72,829/-); h) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards referred to in Sub- Section (3C) of Section 211 of the Companies Act, 1956; i) On the basis of written representations received from the Directors, and taken on record by Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2007 from being appointed as a Director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956; 5) Subject to Paras 4(d), (e) & (f) above with consequential impact as given in Para 4(g) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together 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 & 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, 2007; ii) In the case of the Profit and 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 flow of the Company for the year ended on that date. FOR JAGDISH CHAND & CO. Chartered Accountants PLACE: NEW DELHI. (PRAVEEN KUMAR JAIN) DATED: 30th July, 2007 PARTNER M.No. 85629 ANNEXURE TO THE AUDITORS REPORT ANNEXURE REFERRED TO IN PARAGRAPH (3) OF THE AUDITORS REPORT TO THE MEMBERS OF INTERCORP INDUSTRIES LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31.03.2007 i) a) The Company is maintaining proper records to show full particulars, including quantitative details and situation of fixed assets. b) As explained to us, the Company has a programme of physically verifying all its fixed assets over a period of three years, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this programme, the management during the year physically verified some of the fixed assets. The discrepancies notice on such verification between the physical balances and the fixed asset records were not material and have been property dealt with in the Books of Account. c) In our opinion and according to the information and explanations given to us substantial part of the fixed assets has not been disposed off by the Company during the year. ii) There were no Stocks during the year, Hence, Paragraphs ii(a), (b) and (c) of the aforesaid order are not applicable to the Company during the year. iii) a) According to the information and explanation given to us, the Company has during the year , not granted any loans, secured or unsecured to companies, Firm of other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly paragraphs 4(iii)(a), (b), (c) and (d) of the Order, are not applicable. d) According to the information and explanation given to us the Company has during the year, not taken any loans, secured or unsecured from Companies, Firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly paragraphs 4(iii)(e), (f) & (g) of the order are not applicable. iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedure commensurate with the size of the Company and the nature of its business with regard to the purchase of inventories, fixed assets and sale of goods/services. However, there are no purchase of Inventories, fixed Assets and sale of goods / services during the year. We have not observed any major weaknesses in the internal control procedures during the course of audit. v) a) In our opinion and according to the information and explanation given to us, there are no transactions that need to be entered into the Register maintained under section 301 of the Companies Act, 1956. (b) In our opinion and according to the information and explanation given to us, as there are no transactions that need to be entered in to the Register maintained under section 301 of the Companies Act,1956, paragraph 4(v)(b) of the order is not applicable. vi) The company has not accepted any deposits from the Public, paragraph 4 (vi) of the order is not applicable. vii) The Company does not have a system of Internal Audit. viii) We have been informed that the Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956. ix) (a) According to records of the Company and information and explanations given to us, the Company has been regularly depositing the undisputed statutory dues with the appropriate authorities. There are no undisputed statutory dues as of March, 2007 outstanding for a period of more than six months from the date they become payable. (b) According to the information and explanation given to us , there are no such statutory dues , which have not been deposited on account of any dispute, except in respect of Sale Tax under Rajasthan Sales Tax Act of Rs.29,695/- for the year 1997-98 which is pending before Deputy Commissioner of Sales (Appeals), Jaipur. x) Accumulated losses of Rs.35,32,42,456/- as on 31st March 2007 are more than fifty percent of Companys net worth. Cash losses in financial year 2006-07 and 2005-06 are Rs.2,81,97,714/- and Rs.2,75,63,974/- respectively. These amounts have been stated after considering qualifications as per paragraph 4 of Audit Report but without considering effect of un-quantified qualifications given in Audit Report. xi) The Company has defaulted in repayment of dues to a financial institution (Now Bank). Principal of Rs.4,37,00,000/- and Interest Accrued and due thereon Rs. 6,35,45,988/- are in default since September 1997 and September 1995 respectively. (Refer Note No. 8) xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the Order is not applicable. xiii) As the company is not a chit fund / nidhi / mutual benefit funds/ society to which the provisions of special statute relating to chit fund are applicable, paragraph 4(xiii) of the Order is not applicable. xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the Order is not applicable. xv) We are informed that during the period, the Company has not given any guarantee for loans taken by others from banks or financial institutions. xvi) We are informed that the Company has not obtained any term loans during the year. 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 short term funds have not been used to finance long term investments. xviii) The company has not made any preferential allotment of shares during the year. xix) The Company has not issued any debentures during the year. xx) The Company has not raised money by way of public issue during the year. xxi) Based upon the audit procedures performance and information and explanations given by the management , we report that , no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended March31, 2007 FOR JAGDISH CHAND & CO. Chartered Accountants PLACE: NEW DELHI. (PRAVEEN KUMAR JAIN) DATED: 30th July, 2007 PARTNER M.No. 85629