Hanjer Fibres Ltd Auditor Reports

HANJER FIBRES LIMITED ANNUAL REPORT 2011-2012 AUDITORS REPORT TO THE MEMBERS OF HANJER FIBRES LIMITED. 1. We have audited the attached Balance Sheet of HANJER FIBRES LIMITED as at 31st March, 2012 and also Profit & Loss Account for the year ended on that date annexed thereto and Cash Flow Statement for the year ended on that date. 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 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 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 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 Orders. 4. Further to our comments in the Annexure referred to in paragraph (3) above. Company has not provided interest on outstanding tern loan/overdraft during the subject F.Y.201112. Had interest been provided, loss of the company increased by Rs. 7,32,68,249/-(Seven crores thirty two lacs sixty eight thousand two hundred and forty nine rupees only). On account of this non provision, reserve and surplus amount is overstated by 7,32,68,249/- and secured loan is understated by the same amount. 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 purpose 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 and profit & loss account and cash flow statement dealt with by this report are in agreement with the books of account. d) In our opinion, the profit & loss account and balance sheet 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, to the extent applicable except AS- 29 on Provision, contingent Liabilities and Contingent Assets. e) On the basis of the written representations received from the Directors for the year ended March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors are prima facie disqualified as on March 31, 2012 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 together with the schedules and notes thereon give the information-required by the Companies Act, 1956 in the manner so required and give subject to our observations in paragraph 4 foregoing, a true and 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 2012 and ii. in the case of the profit and loss account, of the loss for the year ended on that date. iii. in the case of cash flow statement, of the cash flows for the year ended on that date. For S.M. BHAT & ASSOCIATES Chartered Accountants (S.M. BHAT) Proprietor Membership Number: 30696 Place: Mumbai Dated: 31st May, 2012. ANNEXURE TO THE AUDITORS REPORT (Annexure referred to in Paragraph (3) of the Auditors Report of even date to the members of HANJER FIBRES LIMITED for the year ended 31st March, 2012) 1a) The Company has generally maintained proper records showing particulars including quantitative details and situation of its fixed assets b) As explained to us, fixed assets are physically verified by the management according to a phased verification programme, which, in our opinion is reasonable having regard to the size of the Company and nature of its assets. Pursuant to the programme, a portion of the fixed assets of the Company has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed. c) In our opinion, and according to the information and explanations given to us, a substantial part of fixed assets has not been disrobed off by the Company during the year. 2a) As explained to us, inventories have been physically verified during the year by the management, except for inventories lying with third parties, which have, however been substantially been confirmed by them. In our opinion the frequency of verification is reasonable. b) In our opinion, 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) On the basis of our examination of the inventory records in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material. 3.a) The Company had taken interest free loan from the parties listed in the registered maintained u/s. 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 11,23,200/- and the year end balance of loans taken during the year was Rs. 11,28,200/-. The Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the registered maintained u/s. 301 of the Companies Act, 1956. b) In our opinion other terms and conditions on which loans have been taken from the parties listed in the registered maintained u/s. 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. c) There is no stipulation with regards to repayment and the loans are interest free hence no question of regularity in repayment of principal or interest arises. d) There is no overdue amount of loans taken from the parties listed in the registered maintained u/s. 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, for the purchase of inventory, fixed assets and for the sale of goods. Further on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control procedures. 5. On the basis of the audit procedures performed by us, and according to the information, explanations and representations given to us, there are no transactions with the parties in which directors were interested, and which were required to be entered in the register maintained under section 301 of the Companies Act, 1956. 6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit under the provisions of Sections 58A and 58AA of the Act and the rules framed there under. 7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. 8. 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(I)(d) of the Companies Act, 1956 in respect of the Companys products to which the said rules are made applicable, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate. 9.a) According to the records of the Company, it has been regular in depositing undisputed statutory dues including provident fund, employees state insurance, wealth tax, custom duty, excise duty, cess and other statutory dues with the appropriate authorities, b) According to the information and explanations given to us, except disputed sales tax duos of Rs. 13,661,826 , there are no dues of, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute. 10. The Company has incurred cash losses, in the financial year under report and in the immediately preceding financial year. The Company has accumulated losses of Rs. 11,87,16,235/- at the end of the financial year. 11. On the basis of the records examined by us and the information and explanations given to us, we arc of the opinion that the Company has defaulted in repayment of dues to financial institutions and banks. 12. As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities; 13. In our opinion the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore the provision of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to Company 14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures or other investments. 15. According to the information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institution; 16. On the basis of the records examined by us, and relying on the information compiled by the Company for co-relation the funds raised to the end use of term loan, we have to state that, the Company has, prima-facie, applied the term loans for the purposes for which they were obtained. 17. According to the information and explanations given to us and on an overall examination of the financial statements of the Company and after placing reliance on the reasonable assumptions made by the Company for classification of long term and short term usages of funds, we are of the opinion that, no funds raised on short term basis have been used for long term investment. No long-term funds have been used to finance short-term assets except permanent working capital. 18. The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956; 19. On the basis of the records and documents examined by us, the Company has not issued any debentures during the year; 20. The Company has not raised any money by public issue, during the year; 21. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the Company, has been noticed or reported by the Company during the year; For S.M. BHAT & ASSOCIATES Chartered Accountants (S.M. BHAT) Proprietor Membership Number: 30696 Place: Mumbai Dated: 31st May, 2012.