krishna synthetics ltd Auditors report

KRISHNA SYNTHETICS LIMITED ANNUAL REPORT 2007-2008 AUDITORS REPORT To The Members of KRISHNA SYNTHETICS LIMITED 1. We have audited the attached Balance Sheet of KRISHNA SYNTHETICS LIMITED (the company) as at March 31, 2008, the relative Profit and Loss Account and the Cash Flow statement for the year ended on that date annexed thereto, (together referred to as financial statements). These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have 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 the 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, of India (the Act), and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we set out 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 in Paragraph 3 above, 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 purposes 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 these books and proper return adequate for the purposes of our audit have been received from the branches not visited by us; (c) The Balance Sheet, Profit and Loss Account and Cash flow statement dealt with by this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash flow Statement dealt with by this report have been prepared in compliance with the applicable accounting standards referred to in Section 211(3C) of the Act; except Accounting Standard 15 relating to retirement benefits to employees. Provisions for retirement benefits have not been made in accounts in absence of actuarial valuation as per note 2(i) in schedule 14 attached hereto. (e) According to the information provided us by the Management, none of the directors are disqualified as on 31st March 2008 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 financial statement together with the Notes thereon and attached thereto in Schedule 14, give in the prescribed manner the information required by the Act and also give respectively, a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of Balance Sheet, of the state of affairs of the Company as at March 31st 2008; (ii) in case of the Profit and Loss Account, of the Loss for the year ended on that date (iii) in the case of cash flow statements, of the cash flows of the company for the year ended on that date For and on behalf of S.P. AGARWAL & CO. Chartered Accountants Place: New Delhi (SHEETAL AGARWAL) Date : August 26, 2008 Partner ANNEXURE TO THE AUDITORS REPORT (Referred to in Paragraph 3 of the Auditors Report of even date to the members of KRISHNA SYNTHETICS LIMITED on the financial statements for the year ended March 31st, 2008) 1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. (b) As explained to us, all these fixed assets have been verified by the management at reasonable intervals, no material discrepancies were noticed on such verification. (c) The company has not disposed off any part of its fixed assets during the year. 2. (a) As informed to us, the stocks were verified at reasonable periods. 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is not maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material. 3. (a) According to the information and explanation given to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the companies act 1956. According to the information and explanation given to us the company has taken unsecured loans from companies, firms or other parties covered in the in the register maintained under section 301 of the Companies Act, 1956. including from Directors and relatives. The companies from whom unsecured loans are taken is Reliance Forms Pvt. Ltd. Rs.3949301/-. (b) The rate of interest and other terms and conditions of loans given or taken, secured or unsecured, are prime facie not prejudicial to the interest of the company. (c) Payment of principal amount and interest are regular as per stipulations. (d) There is no overdue amount of loans taken from or granted to companies, firms or other parties listed in the registers maintained under section 301 of the Companies Act, 1956. 4. In our opinion and according to the information and explanations given to us company is either Dyeing material of other vendors on job basis or let out its property on rent. Company is not having any adequate internal control procedure. 5. (a) 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 transactions that need to be entered into the register maintained under section 301 have been so entered. (b) 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 registers maintained under section 301 and exceeding the value of Five Lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. 6. The Company has not accepted any deposits from the public. 7. The Company is not having Internal Audit System. 8. As informed to us, the central government has not prescribed cost records U/s. 209(1)(d) of the Companies Act, 1956. 9. (a) According to the records of the Company, Employees State Insurance, have not been regularly deposited during the year with appropriate authorities. At the year end following amounts were due and payable by Company: ESI Payable: Rs. 79,668/- (b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth-tax, customs duty and excise duty were outstanding, as at 31/03/2008 for a period of more than six months from the date they became payable. (c) According to the records of the company, there are no dues of sale-tax, income-tax, customs tax/wealth-tax, excise duty/cess which have not been deposited on account of any dispute. 10. The accumulated losses of the company are at Rs. 4,57,15,840/- as at 31/03/2008 which are more than fifty percent of its net worth. The company has incurred cash losses during the financial year covered by our audit. 11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has defaulted in repayment of dues to financial institutions and banks. 12. Based on our examination of documents and records, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion, the company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, the provisions of 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 14. In our opinion, the Company is not dealing in or trading in Shares, Securities, Debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 15. As informed to us, the Company has not given guarantees for loans taken by others from banks or financial institutions. 16. In our opinion, 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 the 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. 18. According to the information and explanations given to us, during the period covered by our audit report, the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956. 19. According to the information and explanations given to us, the Company has not issued any debentures. 20. During the period covered by our audit report, the Company has not raised any money by public issues. 21. To the best of our knowledge and belief and 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 and on behalf of S.P. AGARWAL & CO. Chartered Accountants Place: New Delhi (SHEETAL AGARWAL) Date : August 26, 2008 Partner