hansaflon plasto chem ltd Auditors report

HANSAFLON PLASTO CHEM LIMITED ANNUAL REPORT 2006-2007 AUDITORS REPORT To The Members of HANSAFLON PLASTOCHEM LTD. We have audited the attached Balance Sheet of HANSAFLON PLASTOCHEM LTD as at 31st March 2007 and the Profit and Loss Account and also the cash statement for the year ended on that date annexed thereto. The 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 in terms of Sec. 227(4A) of The Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraph 4 and 5 of the said order. Further to our comments in the annexure referred to in above paragraph, 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 the audit. b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from examination of the books; c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account; d) In our opinion the Profit & Loss Account and the Balance Sheet comply with the accounting standards specified by the Institute of Chartered Accountants of India referred to in sub section (3C) of section 211 of the Companies Act, 1956. e) On the basis of written representation received from the directors as on 31.03.2007, none of the directors are disqualified as on 31st March 2007 from being appointed as directors in terms of clause (g) of sub-section (1) of Section 274 of The Companies Act 1956. i. Earlier, the company had appealed in AAIFR against the order of BIFR dated 16.03.2004 in which BIFR had recorded that it is just & equitable to wound up the company. The appeal was heard on 04.05.2007 and above- mentioned order was set aside wide order dated 15.05.2007. The opinion held by AAIFR was that the company is capable of being revived as well as is actively interested in revival given the fact that a substantial sum of money has been spent in settling with its secured creditors. ii. As stated in Note 6 of the Notes forming part of the Accounts, Debtors/Creditors/advance are subject to reconciliation/confirmation. iii. As stated in Note 8 of the Notes forming part of the Accounts, company has not transferred Rs. 21,956.22 from the unpaid dividend account to the General Revenue Account of the Central Government in pursuance to sub section (5) of section 205A of the Companies Act 1956. iv. The company had filed an appeal-dated 28.07.2005 against a sales tax demand of Rs.3.20 crores raised by Sales Tax Authorities in Gurgaon. This amount has been waived off wide decision dated 01.09.2006 by Jt. Excise & Taxation Commissioner (Appeals), Faridabad. v. Subject to the matters referred to the items f(i), (ii), (iii) & (iv) above, in our opinion, and to the best of our information and according to the explanation given to us, the accounts 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 Balance Sheet, the state of the affairs of the Company as at 31st March, 2007; ii) In the case of Profit & Loss account, of the Profit of the Company for the year ended on 31st March 2007; and iii) in the case of the cash flow statement ,of the cash flows for the year ended on that date. For ALOK MITTAL & ASSOCIATES CHARTERED ACCOUNTANTS ALOK K. MITTAL Place : New Delhi (PARTNER) Date : 28.08.07 M. No. 71205 ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of our report of even date. (i) The Company has maintained proper records of fixed assets. All the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. (ii) The inventory has been physically verified during the year by the management. The company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material. iii) The company not taken any from the parties listed in the Register maintained under section 301 of the Companies Act, 1956. (iv) In our opinion and according to the information and explanations given to us, the company is yet to introduce adequate internal control procedures 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. (v) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained u/s 301 of the Companies Act, 1956 have been so entered. (vi) The company has not accepted any public deposits, so clause (vi) is not applicable. (vii) In our opinion, the company has yet to establish an internal audit system commensurate with the size and nature of its business. (viii) The company is not required for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 so clause (viii) is not applicable. (ix) (a) According to the record of the Company and as per BIFR order, the company has been asked to submit the Employees share of contribution to Provident Fund dues to the respective department. The company is deducting and depositing employees share with the respective department. The company is contributing its share of contribution of PF. (b) According to the information and explanations given to us and the records of the Company examined by us, the Company has not been regular in depositing undisputed statutory dues i.e. provident fund, investor education protection fund, income tax, were in arrears as at 31st March ,2007 for a period of more than six months from the date they became payable. (c) According to the information and explanation given to us, the company has not deposited sales tax amounting to Rs. 5.55 Lacs as it has applied for waiver/ deferment of sales tax. However, the approval is still waited. (x) The company is not a sick industrial company from A.Y. 2007-08. It has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the company is able to pay principal and interest amount on term loan from IDBI and cash credit from IDBI during the period under audit by making One Time Settlement with Banks, which are secured against all the assets of the company. (xii) According to the information and explanations given to us, company has granted no loans or advances on the basis of security by way of pledge of shares, debentures and other securities, so clause (xii) is not applicable. (xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. (xiv) Based on records examined by us and according to the information and in our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. According, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company. (xv) In our opinion, the company has not given any guarantees for loans taken by others from banks or financial institutions. (xvi) According to the information and explanations given to us , the term loans have been applied for the purpose for which they were raised. (xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the company, we report that no fund raised on short-term basis have been used for long -term investment. (xviii) According to the information and explanations given to us, the company has made preferential allotment of 35,00,000 shares @ Rs. 10 each to Higrow Industries, which is the party, covered in the register maintained under section 301 of the Act. (xix) The company has not issued any debentures. (xx) The company has not raised any money by public issue during this year, so 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 ALOK MITTAL & ASSOCIATES CHARTERED ACCOUNTANTS (ALOK MITTAL) PARTNER M.No.71205 Place : New Delhi Date : 28.08.07