coventry spring engineering co ltd Auditors report
COVENTRY SPRING AND ENGINEERING COMPANY LIMITED
ANNUAL REPORT 2004-2005
AUDITORS REPORT
To
the members
1. We report that we have audited the balance sheet of Coventry Spring &
Engineering Company Limited, as at 31st March 2005 and the Profit and Loss
Account of the company for the year ended on that date both as annexed here
to which are in agreement with the companys books of accounts. 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 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 misstatement. An audit includes examining, on 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 the 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) (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.
3. Further to our comments in the Annexure referred to above, we report
that:
(i) 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.
(ii) In our opinion, proper books of account have been kept by the company
as required by the law so far as appears from our examination of those
books.
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account,
(iv) In our opinion, the Balance Sheet, Profit and Loss Account and 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 except for AS15 RE: Retirement benefit for which actuarial
valuation has not been made and AS2 as disclosed in para (c) below.
(v) As per disclosures made by the Directors and taken on record by the
Board, no Directors are disqualified from being appointed as Directors u/s
274(1)(g) of the Companies Act, 1956.
(vi) No provision has been made
a) against the advance / sundry debtors considered doubtful of recovery
amounting to Rs.12751596/- (refer note no. 13 and 14 (a)),
b) against material lying with 3rd parties amounting to Rs.985460/- who
have closed their business (refer note no. 11). The effects of (a) & (b)
has resulted in overstatement of sundry debtors and work in progress by
Rs.12751596/-, Rs.985460/- respectively and understatement of loss by
Rs.13737056/
c) i) Work in progress at Nagpur unit have been valued at certain
percentage of current order value irrespective of actual cost after
allocating overhead.
ii) Finished goods (except slow moving items) have been valued at current
order value irrespective of the date and order value of the respective
items.
In the absence of the costing systems, it is not ascertainable whether the
cost is more/less than the amount at which it has been valued. The extent
of loss effected due to this basis of valuation stated above is not readily
ascertainable.
(vii) Attention is drawn to the note no.
i) 14(b) regarding legal steps take against Debtors for recovery. We are
unable to form any opinion pending disposal of the cases.
ii) 18 regarding appointment of Auditors.
iii) 17 regarding Appointment of Directors
iv) 28 regarding position of Cash Credit account with State bank of India
and non provision of interest thereon.
(viii) In our opinion, and to the best of our information and according to
the explanations given to us, the accounts, subject to para vi above, and
read together with para vii the Significant Accounting Policies and Notes
appearing thereon, give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view:
i) in the case of the Balance Sheet, of the state of affairs of the company
as on 31st March, 2005 and
ii) in the case of the Profit & Loss Account, of the loss of the company
for the year ended on that date.
iii) in the case of the Cash Flow Statement of the Cash Flow of the Company
for the year ended 31st March, 2005
For S. S. Kothari & Co.
Chartered Accountants
R.K. ROYCHAUDHURY
Partner
India Steamship House
21, Old Court House Street, Membership No. 8816
Kolkata - 700 001
29 October, 2005.
Annexure to auditors report
(i) (a) The company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. However fixed
assets acquired prior to 30th April, 1987 have been incorporated at their
respective block written down value as on that date.
(b) The fixed assets have been physically verified by the Management during
the year. No material discrepancies as stated by the Management were
noticed on such verification.
(c) No substantial part of the fixed assets has been disposed of during the
year.
(ii) (a) The inventory has been physically verified during the year by the
management. The frequency of verification is reasonable.
(b) 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) The company has maintained proper records of inventory. The
discrepancies noticed on verification between the physical stocks and the
book records were not material and have been properly dealt with in the
books of accounts.
(iii) (a) The Company has not granted any loan, secured or unsecured, to
the Companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956 in view of above clauses (b),
(c) and (d) of the Order are not applicable to the Company.
(e) The Company has taken an unsecured loan from one party covered in the
register maintained under Section 301 of the Companies Act, 1956 and also
from a Director by way of Fixed Deposit aggregating to Rs.2300000/-.
Maximum balance due at any time during the year is Rs.2327493/- and year
end balance Rs.2327493/-.
(f) The rate of interest and other terms and conditions of the loan is not
prejudicial to the interest of the company.
(g) The Payment of principal amount is regular. However the company is not
regular in the payment of interest on such deposit due to paucity of funds.
(refer note no. 29).
(iv) In our opinion and according to the information and explanations given
to us, there are adequate internal control system commensurate with the
size of the company and the nature of its business with regard to purchases
of inventory, fixed assets and with regard to the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control system.
(v) (a) According to the information and explanations given to us we are of
the opinion that the particulars of contract or arrangements reffered to in
Section 301 of the Companies Act, 1956, have been entered in the registered
required to be maintained under that section.
(b) The transactions of purchase of material from one party made pursuant
to contract / arrangement entered in the registered maintained u/s 301 of
the Companies Act, 1956, aggregating during the year to Rs.5,00,000/- or
more have been made at price at which purchase have been made from other
parties. However in respect of services made pursuant to the
contract/arrangement entered in the register maintained under section 301
of the Companies Act, 1956, aggregating during the year to Rs.5,00,000/- or
more has been made at prices which are not comparable as the process of
material is of special nature specifically made for the particular party
and no alternate source of supply is available to enable a comparison for
the prices paid.
(vi) In our opinion and according to the information and explanations given
to us, the company has complied with the provisions of sections 58A, 58AA
or any other relevant provisions of the Companies Act, 1956 and the
Companies (Acceptance of Deposits) Rules, 1975 as amended upto date with
regard to the deposits accepted from the public.
(vii) The Company has no system of internal audit.
(viii) The Central Government has not prescribed maintenance of cost
records ws 209(1)(d) of the Companies Act, 1956, for the Company.
(ix)(a) The Company is not regular in depositing undisputed Provident Fund.
Employees State Insurance, Labour Welfare Fund, Professional, Tax Sales Tax
and TDS dues within the stipulated time with the appropriate authorities.
Other undisputed statutory liabilities have been deposited on a regular
basis except delays in the few cases. The Company has no liability of
Investors Education and Protection Fund, Wealth Tax and Custom Duty.
According to the information and explanations given to us and as examined
by us, undisputed amounts payable in respect of Provident Fund, Employees
State Insurance, Labour Welfare Fund, Professional Tax, Sales Tax and TDS
of Rs.4924768/-, Rs.350899/-, Rs.31174/-, Rs.64301/-, Rs.762980/- &
Rs.219385/- respectively were in arrears, as at 31st March 2005 for a
period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, There are no
dues of Income Tax, Customs Duty, Excise Duty and Service Tax which have
not been deposited on account of any dispute. In case of Sales Tax the
disputed amount not deposited and there status as on 31.03.2005 are as
follows:
Name of Statute Amount (Rs.) Period Forum
B.F.(ST), 1941 8020 86-87 Revision Board
CST 68783 95-96 Revision Board
W.B.S.T. 474416 97-98 Revision Board
CST 190454 99-00 D.C.Appeal
CST 326143 01-02 D.C.Appeal
W.B.S.T. 106840 02-03 D.C.Appeal
CST 782333 02-03 D.C.Appeal.
(x) In our opinion, the accumulated losses of the company are more than
fifty percent of its net worth. The company has incurred cash losses during
the financial year covered by our audit and also in the immediately
preceding financial year.
(xi) In our opinion and according to the information and explanations given
to us the company has defaulted in repayment of dues to a financial
institution, the over due amount of Corporate Loan taken from a financial
institution is Rs.64706/-.
(xii) We are of the opinion that the company has not granted loans and
advances on the basis of security by way of pledge of shares, debentures
and other securities. Therefore Clause (xii) is not applicable.
(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual
benefit fund/society. Therefore Clause (xiii) is not applicable.
(xiv) In our opinion, the company is not dealing in or trading in shares,
securities, debentures and other investments. Therefore Clause (xiv) is not
applicable.
(xv) The guarantees given by the company for loans taken by others (a
company promoted by Coventry Spring & Engg. Co. Ltd.) from a financial
institution is under dispute pending before the Court of Law. Therefore we
are unable to comment on the same.
(xvi) The Company has not raised any term loan during the year.
(xvii) According to the information and explanations given to us and as
confirmed by the Management no funds raised on short terra, basis have used
for long-term investment.
(xviii) The Company has not made any issue and allotment of shares during
the year. Therefore clause (xviii) is not applicable.
(xix) The Company has not issued any debentures during the year. Therefore
Clause (xix) is not applicable.
(xx) The Company has not raised any money by public issue during the year.
Therefore Clause (xx) is not applicable.
(xxi) According to the information and explanations given to us, no fraud
on or by the company has been noticed or reported during the course of our
audit.
For S. S. Kothari & Co.
Chartered Accountants
R.K.ROYCHAUDHURY
Partner
India Steamship House
21, Old Court House Street, Membership No. 8816
Kolkata - 700 001
29 October, 2005.