jhagadia copper ltd Auditors report

JHAGADIA COPPER LIMITED ANNUAL REPORT 2008-2009 AUDITORS REPORT To The members of Jhagadia Copper Limited 1. We have audited the attached Balance Sheet of Jhagadia Copper Limited, as at 31st March, 2009, the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both 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 have 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 mis-statement. 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, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, 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. The Company has incurred continuous losses for several quarters and it is running at substantially lower capacity, mainly due to insufficient working capital. Further, the plan of expansion/modification of manufacturing operations envisaged earlier, have not been materialized. In view of these, there Is likely impairment in the value of fixed assets of the Company. We are informed that restructuring of the Company is contemplated which is likely to reduce the value of the fixed assets and improve availability of the working capital. Under these circumstances, future cash flows & profitability of the Company, required to assess impairment loss of assets, could not be worked out. We are, at present, unable to ascertain the provision required for impairment loss on fixed assets and its impact on the loss for the year and reserves of the Company. 5. Further to our comments in the Annexure referred to in paragraph 3 above and subject to paragraph 4 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 by law 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 accounts; d) In our opinion, the Balance Sheet, the Profit and 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 March 31, 2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2009 from being appointed as a director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956; f) In our opinion and. to the best of our information and according to the explanations given to us, the said accounts 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 Balance Sheet, of the state of affairs of the Company as at 31st March, 2009; (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 Cash Flow Statement, of the cash flows for the year ended on that date. For N.M. RAIJI & CO. Chartered Accountants J.M. GANDHI Place : Mumbai Partner Date : July 29, 2009 Membership No: 37924 Annexure to the Auditors report to the Members of Jhagadia Copper Limited (Referred to in paragraph 3 of our report of even date (i) In respect of its fixed assets (a) The Company has maintained proper records showing full particulars, including quantitative details and the situation of its fixed assets. (b) According to the information and explanations given to us, the fixed assets were physically verified by the management in accordance with the programme of verification .which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material. (c) During the year, disposal of fixed assets is not substantial. (ii) (a) The Company has conducted physical verification of inventory at reasonable intervals during the year. (b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account. (iii) (a) During the year, 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. (b) During the year, Company has not taken any loans from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations provided to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets, and for sale of goods and services. (v) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that there are no contracts that need to be entered in the register maintained under Section 301 of the Act. (vi) The Company has not accepted any deposits from the public. (vii) The Company has an internal audit system which, in our opinion, is commensurate with the size and nature of its business. (viii) We have broadly reviewed the books of account 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 are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. No cost audit was carried out during the year. (ix) (a) The Company was generally regular in depositing undisputed statutory dues in respect of Provident Fund, Income tax; Sales tax (VAT), Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. (b) According to the information and explanation given to us, there is no arrears outstanding of such items for more than six months as at the balance sheet date. (c) As per the records of the Company, and information and explanation provided to us, the details of statutory dues which have not been deposited on account of disputes are given below: Statutory Dues Forum where dispute Financial year Amount in respect of is pending to which the (Rs.in Lacs) matter pertains Income Tax CIT Appeal 2003-04 6.30 Sales Tax Joint Commissionner of Sales Tax 2004-05 16.08 Total 22.38 (x) As at the balance sheet date, the accumulated loss of the Company exceed fifty percent of its net worth. The Company has incurred cash loss during the year and also in the immediately preceding financial year. (xi) As at the balance sheet date, following amounts due to the financial institutions, banks and debenture holders have not been paid by the Company: a) Interest amounting to Rs.13565.36 Lacs for the period 1st April, 2007 to 31st March, 2009 on loans and Optionally Fully Convertible Debentures and principal amounting to Rs. 116.70 Lacs in respect of Option ally Fully Convertible Debentures due during the year 2008-09 for which extension has been sought from the lenders. b) Interest amounting to Rs 775.29 Lacs and principal amounting to Rs.337.12 Lacs towards term loan to one of the financial institution for the period from 1st April, 2005 to 31st March, 2009. c) Interest amounting to Rs.508.42 Lacs for the period from 7th June, 1999 to 7th June, 2001 to the holders of 17.5% Fully Convertible Debenture: d) Interest amounting to Rs.475.67 Lacs and principal amounting to Rs.1912.62 Lacs for. the period from April07 to March09 in respect of short term facilities provided by banks. (xii) Based on our examination and according to the information and explanations given 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. (xiii) The Company is not a chit/nidhi/mutual benefit fund/society, hence clause (xiii) of the Order is not applicable. (xiv) The Company has no dealing or trading in shares, securities, debentures and other investment during the year. (xv) On the basis of the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. (xvi) In our opinion and according to the information and explanations given to us, the term loan have been generally utilized for the purpose for which it was obtained. (xvii) On the basis of our examination of the books of accounts and the information and explanation given to us, in our opinion, during the year the short term loans to the extent of Rs.34.01 Lacs have been utilized for long term investments. (xviii) As explained to us, the preference shares issued during the year are not in the nature of preferential allotment of shares. (xix) In respect of outstanding debentures as on the Balance Sheet date security has been created. (xx) The company has not raised any money by public issues during the year. (xxi) Based on the audit procedures performed and information and explanations given to us 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 N.M. RAIJI & CO. Chartered Accountants J.M. GANDHI Place : Mumbai Partner Date : July 29, 2009 Membership No: 37924