Bell Ceramics Ltd merged Auditor Reports

BELL CERAMICS LIMITED ANNUAL REPORT 2010 AUDITORS REPORT To The Members of BELL CERAMICS LTD. We have audited the attached Balance Sheet of BELL CERAMICS LTD., as at 31st December, 2010, the Profit and Loss Account and also the Cash Flow Statement for the period 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 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. 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 to the extent applicable to the Company. Further to our comments in the Annexure referred to above, we report that: (i) We have obtained all the information and explanations, which to best of our knowledge and belief were necessary for the purposes of our audit; (ii) 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 ; (iii) The Balance Sheet, the Profit and Loss Account and also the Cash Flow Statement dealt with by this report are in agreement with the books of account; (iv) In our opinion, the Balance Sheet, the Profit and Loss Account and also 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; (v) The Company had filed an application during the previous year with the Central Government for seeking approval for removal of disqualification of certain Directors for subsequent appointments / reappointments that occurred on 1.04.2008 due to default in repayment of then existing debentures, which had however, during earlier year, been restructured into loan by the debenture holder(s) with effect from 1.04.2008 itself. Subject to a favourable consideration of the above and on the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st December 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; (vi) In our opinion and according to the information and 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: a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st December, 2010; b) in the case of the Profit and Loss Account, of the loss for the period ended on that date; and c) in the case of the Cash Flow Statement, of the cash flows for the period ended on that date. For R P MALHAN & COMPANY Chartered Accountants Firm Regn No. : 000960N Place : New Delhi VIKAS VIG Date : 25.02.2011 Partner Membership No : 16920 ANNEXURE TO THE AUDITORS REPORT 1a) In our opinion and as per the information and explanation provided to us, the Company is maintaining proper records showing full particulars including quantitative details and situation of its fixed assets. 1b) All the assets have not been physically verified by the Management during the year, however, there exists a programme of verification of the assets over a period. In our opinion, the frequency of verification of the fixed assets by the management is at reasonable intervals having regard to the size of the Company and nature of the assets and no material discrepancies were noticed on such verification. 1c) During the year, the Company has not disposed off a substantial part of the fixed assets. Based on the information and explanation given by the management and on the basis of audit procedures performed by us, we are of the opinion that the sale of the fixed assets, if any, has not affected the going concern status of the Company. 2a) The inventories (except for clay, body and glaze material in work in process, owing to their nature), have been physically verified during the year by the management. In our opinion, the frequency of the verification is reasonable. 2b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the Management were found reasonable and adequate in relation to the size of the Company and the nature of its business. 2c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account. 3. As informed to us, the Company has not taken / granted any loans, secured or unsecured from / to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. 4. 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 with regard to purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control systems. 5a) 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 the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. 5b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are prima facie reasonable having regard to prevailing market prices at the relevant time where such prices are available. 6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits covered by the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 and hence the provisions of clause 4 (vi) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 7. Internal audit has been conducted by an independent firm of Chartered Accountants during the period and is commensurate with the size of the Company and nature of its business. 8. The Central Government has not prescribed for the Company the maintenance of cost records under clause (d) of Sub Section of (1) of Section 209 of the Companies Act, 1956 and hence the provisions of clause 4(viii) of the Companies (Auditors Report)Order, 2003 are not applicable to the Company. 9a) The Company has generally been regular in depositing undisputed statutory dues including provident fund, investor education protection fund, employees state insurance, income tax, sales tax, value added tax, wealth tax, service tax, custom duty, excise duty, cess and other applicable statutory dues with appropriate authorities except delays in deposit in few cases of tax deducted at source and value added tax. According to the information and explanations given to us, except for dues of tax deducted at source and fringe benefit tax (including interest on delay of deposit) of Rs.16,976,800/- (Rs.16,043,111/- since paid) outstanding for the period of more than six months from the date they became payable, there are no undisputed amounts outstanding as at the year end for a period of more than six months from the date they became payable in respect of income tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess. 9b) According to the records of the Company, there are no dues outstanding of income tax, sales tax, wealth tax, service tax, custom duty, excise duty or cess on account of any dispute except as follows: Nature of Statute Year to Amount Forum where dispute is which it unpaid pending relates (Rs in lakhs) Uttar Pradesh Trade Tax Act, 2006-07 1.88 Joint Commissioner(Appeals), Trade Tax Range - III, Lucknow Andhra Pradesh Value 2005-06 4.90 High Court of Andhra Pradesh Added Tax Act, 2005 2006-07 Central Excise & 1994-95 0.20 Customs Excise& Service Tax Customs Act Appellate Tribunal (CESTAT), Mumbai Central Excise & 2007-08 21.54 Commissioner (Appeals), Customs Act Vadodara Income Tax Act, 1961 AY 1990-91 16.93 Supreme Court of India Central Excise & Jan. 2005 to 11.02 Commissioner (Central Customs Act March 2010 Excise & Customs)- (Service Tax) Appeals, Bharuch & Bangalore Income Tax Act, 1961 AY 1995-96 22.37 Income Tax Appellate Tribunal, Ahmedabad Andhra Pradesh Value 2006-07 to 20.25 Additional Commissioner Added Tax Act, 2005 2009-10 (CT) (Legal), Hyderabad, Andhra Pradesh TOTAL 99.09 10. In our opinion the accumulated losses of the Company are not more than fifty percent of its net worth. The Company has not incurred cash losses during the financial year covered by our audit as also during the immediately preceding financial year. 11. Based on our audit procedures and in our opinion and according to the information and explanations given by the management, the following amounts are overdue to a financial institution, bank or debenture holders as at the Balance Sheet date: Name of the Financial Year to which it relates Overdue Amount Institution (including interest) (Rs. in lakhs) IDBI Bank Limited April 2008- December 2010 440.96* Bank of India 2010-2011 28.95 *represents interest recompense amount (refer note 4 of Schedule 17B attached to the accounts) 12. 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 the provisions of clause 4(xii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society, hence the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 14. Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts of dealing or trading in shares and timely entries have been made in those records. We also report that the Company has held the shares as investments in its own name. 15. The Company has not given any guarantee for loans taken by others from banks or financial institutions, hence the provisions of clause 4 (xv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 16. In our opinion and according to the information and explanations furnished to us, the term loans have been applied for the purpose for which they were raised. 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 purposes. 18. As the Company made no preferential allotment of shares to any parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, the provisions of clause 4 (xviii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 19. As the Company has not issued any debentures the provisions of clause 4 (xix) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 20. As the Company has not raised any money by public issues the provisions relating to end use thereof as per clause 4(xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 21. Based upon the audit procedures performed and according to the 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 R P MALHAN & COMPANY Chartered Accountants Firm Regn No. : 000960N Place : New Delhi VIKAS VIG Date : 25.02.2011 Partner Membership No : 16920