Hyderabad Flextech Ltd merged Auditor Reports

HYDERABAD FLEXTECH LIMITED ANNUAL REPORT 2008-2009 AUDITORS REPORT To The Members of HYDERABAD FLEXTECH LIMITED. HYDERABAD (A.P) 1. We have audited the attached Balance Sheet of HYDERABAD FLEXTECH LIMITED. HYDERABAD (A.P) as at 31st March, 2009 and also the Profit and Loss Account for the year ended on that date annexed thereto and the cash flow statement for the period 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 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: 3. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of Section 227(4A) 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. 4. 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 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 Cash flow statement dealt with by this report are in agreement with the books of account. iv) In our opinion, the Balance Sheet and the Profit & 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. excepting Accounting Standard-15, Employee Benefits. v) On the basis of the written representations received from the Directors as on 31st March, 2009 and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2009 from being appointed as a Director in terms of clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956. vi) a) The company has not followed the methods prescribed in AS-15, for providing its liability towards gratuity and leave-encashment. These liabilities are provided for on an estimated basis. Since the company did not obtain actuarial valuation for gratuity liability and leave-encashment the amount of short or excess provision could not be ascertained. Consequently its impact on the loss for the year could not be commented upon. b) The Company has given loan to a body corporate in which some of the directors are interested without complying with the provision of Sec. 295(1) (d) of the Companies Act. (Refer Note No. 11 Notes to Accounts) vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to our remark in para vi) above, 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 principles generally accepted in India: a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009; b) In the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date; and c) In the case of Cash flow Statement of the cash flows for the year ended on that date. For BRAHMAYYA & CO. Chartered Accountants. (D. SEETHARAMAIAH) Partner Membership No.: 2907 Place: Hyderabad Date : 02.09.2009 ANNEXURE Statement on the Companies (Auditors Report) Order 2003 Re: HYDERABAD FLEXTECH LIMITED i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b) 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. No material discrepancies were noticed on such verification. c) During the year, the company has not disposed off any of its fixed assets. ii) a) The inventory has been physically verified during the year by the management. In our opinion, 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 is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. iii) a) The Company has granted an unsecured loan to a company, covered in the register maintained under Section 301 of the Act. Maximum amount involved us Rs. 9.00 lakhs and the year end balance was Rs. 9.00 lakhs. b) According to the information and explanations to given to us, we are of the opinion that the rate of interest and terms and conditions are prima facie prejudicial to the interest of the Company on account of the following reasons: i) The Company has granted the loan at free of interest, and ii) There are no covenants with regard to the repayment of the loan. c) The company has taken interest free unsecured loans from four parties covered in the register maintained under section 301 of the Companies Act, 1956. Maximum amount involved in the transactions was Rs. 540.91 lakhs and the year end balance was Rs. 501.64 lakhs. d) In our opinion terms and conditions of unsecured loans taken by the Company are not prima facie prejudicial to the interest of the Company. e) We are informed that no terms are stipulated for repayment of unsecured loan. Hence, we cannot comment upon whether the Company is repaying principal amounts regularly. iv) In our opinion and according to the information and explanations given to us. there are adequate internal control systems 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. 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 contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section: and b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi) The company has not accepted deposits from the public. vii) In our opinion the company has internal audit system commensurate with the size and nature of its business. viii) The Central Government has not prescribed under clause (d) of sub- section (1) of Section 209 of the Companies Act. maintenance of cost records for the products of the Company. ix a) According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues viz., Sales Tax, Custom Duty. Cess and other material statutory dues applicable to the Company. However, the Company is not regular in depositing with appropriate authorities undisputed statutory dues in respect of tax deducted at source, PF and ESI. b) According to the information and explanations given to us. no undisputed amounts payable in respect of Income-tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March, 2009 for a period of more than six months from the date they became payable. x) The Company has accumulated losses amounting to Rs. 14.22 crores at the end of the financial year under report which are more than 50% of its net worth and the Company has not incurred in cash losses in the financial year and incurred cash loss in the immediately preceding financial year. xi) The company has not availed loans during the period under report. Hence, the clause (xi) of the above said order in respect of repayment of dues to financial institutions is not applicable. xii) 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 company is neither a chit fund nor a nidhi mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the above referred Order are not applicable to the company. xiv) The company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the above referred Order are not applicable to the company. xv) The company has not given any guarantee for loans taken by others from banks or financial institutions. xvi) During the period under report the Company has not availed any term loans. xvii) According to the information and explanations given to us and on all 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 investment. xviii) The company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year. xix) The company has not issued any debentures Accordingly, the provisions of clause 4(xix) of the above referred Order are not applicable to the company. xx) During the year the company has not raised money by public issues. Accordingly, the provisions of clause 4(xx) of the above referred Order is not applicable to the Company. 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 BRAHMAYYA & CO. Chartered Accountants. (D. SEETHARAMAIAH) Partner Membership No.: 2907 Place: Hyderabad Date : 02.09.2009