shree rajasthan texchem ltdmerged Auditors report

SHREE RAJASTHAN TEXCHEM LIMITED ANNUAL REPORT 2005-2006 AUDITORS REPORT TO THE MEMBERS OF SHREE RAJASTHAN TEXCHEM LIMITED We have audited the attached Balance Sheet of M/s. Shree Rajasthan Texchem Limited as at 31st March 2006 and also the Profit and Loss Account and 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. 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 amount 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 presentations. We believe that our audit provides a reasonable basis for our opinion. As required by The Companies (Auditors Report) Order, 2003 as amended by the Companies ( Auditors Report) (Amendment) Order 2004 (together the Order), 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 Statements on the matters specified in paragraphs 4 and 5 of the said order, to the extent applicable to the company. Further to our comments in the Annexure referred to above, we report that; 1. 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; 2. 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 the books; 3. The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the Books of account. 4. In our opinion the Profit and Loss Account and the Balance Sheet of The Company comply with the accounting standards referred to in the sub section (3C) of the Section 211 of the Companies Act 1956 to the extent applicable. 5. On the basis of written representations received from the directors, as on 31st March 2006 and taken on record by the Board of Directors, we report that none of the Director is disqualified as on 31st March 2006 from being appointed as director in terms of the clause (g) of sub section (1) of section 274 of the Companies Act 1956. 6. In our opinion and to the best of our information and according to the explanation given to us, the said accounts give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principals generally accepted in India; i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31.03.2006 and ii) in case of Profit and Loss Account, of the Profit of the Company for the year ended on that date. iii) In the case of cash flow statements, of the cash flows for the year ended on that day. For and on behalf of M/s M. C. Bhandari & Co. Chartered Accountants, Sd/- Place Udaipur (V CHATURVEDI) Date 21st June, 2006 (Partner) ANNEXURE TO THE AUDITORS REPORT REFERRED TO IN PARAGRAPH 1 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) The fixed assets have not been physically verified by the management at the end of the year. There is regular programme of verification which in our opinion is reasonable having regard to the size of the company and the nature of its assets. c) During the year, the company has not disposed of any substantial / major part of Fixed Assets. (ii) a) As explained to us, the inventory had been physically verified during the year by the management. 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 inventory 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 and on the basis of our examination of the records of inventory, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records are not material and have been properly dealt with in the books of accounts. (iii) a) The Company has granted loan to a Company covered in the register maintained under section 301 of the Companies Act, 1956 aggregating to Rs. 300.00 Lacs and the year-end balance of loans granted to such parties was Rs. 100.00. b) In our opinion, the rate of interest and other terms and conditions of above loans granted by the Company are not prima facie, prejudicial to the interest of the company c) According to the information and explanations given to us, the parties to whom loan and advance in the nature of loan have been given are repaying the principal amount as stipulated and are also regular in payment of interest. d) The company has taken loan from a company covered in the register maintained under section 301 of the Companies Act, 1956 aggregating to Rs. - lacs and which was Rs. 235 Lacs at the close of the year. e) In our opinion, the rate of interest and other terms and conditions of above loans taken by the company are not prima facie prejudicial to the interest of the company. f) The company is regular in payment of Principal amount and interest as per stipulations. (iv) 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 nature of its business with regard to the purchase of inventory and fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls. (v) In respect of transactions entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956. a) Based on audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us we are of the opinion that the contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under section 301, and ; b) According to information and explanations given to us each of such transactions made in pursuances of such contracts or arrangements have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time. (vi) The Company has not accepted deposits from public so the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Act and the rules framed there under are not applicable to the Company during the year under report. (vii) In our opinion the Company has an internal audit system commensurate with the size and the nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company relating to the manufacture of yarn 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 maintained. We have not however made a detailed examination of the records with a view to determining whether they are accurate or complete. (ix) a) According to the records of the Company and information and explanations given to us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty, Cess and other statutory dues with the appropriate authorities except Provident Fund of Rs. 30.05 lacs against which amount is lying in the Bank in the form of Fixed Deposits as per court orders and shall be deposited on receipt of confirmed demand from department. b) According to the records of the Company and information and explanations given to us (i) disputed excise duties amounting to Rs.98.47 Lacs are pending, since the matters amounting to Rs. 77.56 Lacs are pending with High Court, Rs.18.61 Lacs with Commissioner (Appeals) and Rs.2.30 Lacs with Dy. Commissioner. Against these demands a sum of Rs.75.67 Lacs is deposited under protest. (ii) T.C. Cess amounting to Rs.20.25 lacs not deposited as same is disputed and appeal is pending with Textile Committee Cess Tribunal, Mumbai. (iii) disputed Sales Tax demands amounting to Rs. 36.39 Lacs are pending, since the matters are pending with Rajasthan Tax Board, a sum of Rs. 8.63 Lacs is deposited under protest. (x) The Company has neither accumulated losses as at 31st March 2006 nor it has incurred cash losses during the financial year ended on that date or in the immediately preceding financial year. (xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to financial institutions, banks and debentures holders (xii) According to the information and explanations 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) The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company. (xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. (xv) 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. (xvi) To the best of our knowledge and belief and according to the information and explanations given to us term loans availed by the Company were prima facie, applied by the Company during the year for the purposes for which the loans were obtained. (xvii) According to the Cash Flow Statement and records examined by is and according to the information and explanations given to us, on overall basis, funds raised on short term basis have prima facie, not been used during the year for long term investment. (xviii) The Company has made allotment of Preference shares to parties and Companies covered under register maintained under Section 301 of the Companies Act 1956 during the year and the price at which the Preference shares have been issued is not prejudicial to the interest of the Company. (xix) According to the information and explanations given to us and the records examined by us no debentures have been issued hence creation of security does not arise. (xx) The Company has not raised money by any public issues during the year and hence the question of disclosure and verification of end use of such money does not arise. (xxi) 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 and on behalf of M/s M. C. Bhandari & Co. Chartered Accountants Sd/- Place Udaipur (V CHATURVEDI) Date 21st June, 2006 (Partner)