marvel industries ltd Auditors report
MARVEL INDUSTRIES LIMITED
ANNUAL REPORT 2008-2009
AUDITORS REPORT
TO,
The Members of
Marvel Industries Limited
1. We have audited the attached Balance Sheet of Marvel Industries Limited,
(the Company) as at March 31, 2009, and also the Profit and Loss Account
and the Cash Flow Statement for the year ended on that date annexed thereto
(collectively referred as the financial statements). 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 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 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 (the
Order) (as amended), issued by the Central Government of India in terms
of sub-section (4A) of section 227 of the Companies Act, 1956 (the Act),
we enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the Order.
4. We report that:
(a) No provision is made for the amount of cumulative dividend of Rs.437.72
lacs on overdue Preference Share Capital and interest payable on the same,
the amount in respect of which is not determinable. Consequently, the
balance of Profit and Loss Account is lower by Rs.437.72 lacs.
(b) Company continues to account for the benefit of duty on raw material
cleared under advance license at the time of clearance of goods instead of
the year of export of the goods. Consequently the loss for the year and the
balance of the Profit and Loss Account is lower by Rs.9.25 lacs.
(c) No provision for interest payable aggregating to Rs.4.92 lacs on
unsecured loan has been made in the current year and Rs.31.35 lacs in the
earlier years. Consequently, loss for the current year is lower by Rs.4.92
lacs and the balance of the Profit and Loss Account is lower by Rs.36.27
lacs.
(d) The Company is incurring losses since 1997-98 and its net worth is
completely wiped off. In our opinion at the present borrowings the
operations of the company are not viable and the company would not be able
to pay all its liabilities. The companys application for revival scheme is
pending with Hon. AAIFR for its approval (Refer Note No.8 of Schedule R (B)
and Company expects sanction of the revival scheme, hence the accounts are
prepared on going concern basis.
(e) Some of the balances of loans, sundry debtors, deposits, loans &
advances and creditors are subject to confirmation and adjustments, if any,
on reconciliation, the consequential impact thereof on the financial
statements is not ascertainable.
5. Subject to our comments in paragraph 4 above and further to our comments
in the Annexure referred to 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 those books;
c. The financial statements dealt with by this report are in agreement with
the books of account;
d. On the basis of written representations received from the directors, as
on March 31, 2009 and taken on record by the Board of Directors, we report
that none of the directors is disqualified as on March 31, 2009 from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Act;
e. In our opinion and to the best of our information and according to the
explanations given to us, the financial statements dealt with by this
report comply with the accounting standards referred to in sub-section (3C)
of section 211 of the Act and the Rules framed there under and give the
information, required by the Act, in the manner so required and give a true
and fair view in conformity with the accounting principles generally
accepted in India, in the case of:
i) the Balance Sheet, of the state of affairs of the Company as at March
31, 2009;
ii) the Profit and Loss Account, of the loss for the year ended on that
date; and
iii) the Cash Flow Statement, of the cash flows for the year ended on that
date.
As per our attached report of even date
For NGS & Co.
Chartered Accountant
Sanjay Dosi
Partner
Membership No.36024
Place : Mumbai
Date : 31st July, 2009
Annexure to the Auditors Report of even date to the members of Marvel
Industries Limited, on the financial statements for the year ended March
31, 2009:
Based on the audit procedures performed for the purpose of reporting a true
and fair view on the financial statements of the Company and taking into
consideration the information and explanations given to us and the books of
account and other records examined by us in the normal course of audit, we
report that:
(i) (a) The Company has updated the record showing full particulars
including quantitative details and situation of fixed assets, except in
case of furniture and Fixtures, Electrical Installation and Equipments for
which unit wise record of cost and location has not been maintained.
(b) The fixed assets have not been physically verified by the management
during the year and we are therefore unable to comment on the
discrepancies, if any, which could have arisen on such verification. In our
opinion, the frequency of verification of the fixed assets is also not
reasonable having regard to the size of the Company and nature of its
assets.
(c) In our opinion, a substantial part of fixed assets has not been
disposed off during the year.
(ii) (a) The management has conducted physical verification of the
inventory of stores and spares, and raw materials at reasonable intervals,
however the finished goods and work in progress has not been physically
verified during the year under audit.
(b) The procedures of physical verification of inventory followed by the
management are not 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 the inventory and no
material discrepancies were noticed on physical verification between the
physical stock and book records in respect of raw materials and stores &
spares. The stock of finished goods and work in progress has been taken as
per the records and the certificate of the management, since the physical
verification has not been carried out during the year.
(iii) (a) The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained under
section 301 of the Act. Accordingly, the provisions of clauses 4(iii) (b)
to (d) of the Order are not applicable.
(e) The Company has not taken any loans, secured or unsecured from
companies, firms or other parties covered in the register maintained under
section 301 of the Act. Accordingly, the provisions of clauses 4(iii) (f)
and 4(iii) (g) of the Order are not applicable.
(iv) In our opinion, the internal control system is not adequately
commensurate with the size of the Company and the nature of its business
for the purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, continuing failures were noticed to correct
the major weaknesses in the internal control system.
(v) The Company has not entered into contracts or arrangements referred to
in section 301 of the Act. Accordingly, the provisions of clause 4(v) of
the Order are not applicable.
(vi) The Company has not accepted any deposits from the public within the
meaning of sections 58A and 58AA of the Act and the Companies (Acceptance
of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of
the Order are not applicable.
(vii) The Company did not have an internal audit system during the year.
(viii) According to the information and explanations given to us, Central
Government has not prescribed maintenance of cost records under clause (d)
of sub-section (1) of section 209 of the Act, in respect of Companys
products. Accordingly, the provisions of clause 4(viii) of the Order are
not applicable.
(ix) (a) The Company is generally regular in depositing the undisputed
statutory dues including provident fund, investor education and protection
fund, employees state insurance, income tax, sales tax, wealth tax,
service tax, custom duty, excise duty, cess and other material statutory
dues, as applicable, with the appropriate , authorities. Further, no
undisputed amounts payable in respect thereof of were outstanding at the
year end for a period of more than six months from the date they become
payable.
(b) There are no dues in respect of income tax, sales tax, wealth tax,
service tax, customs duty, excise duty and cess that have not been
deposited with the appropriate authorities on account of any dispute.
Annexure to the Auditors Report of even date to the members of Marvel
Industries Limited, on the financial statements for the year ended March
31, 2009.
(x) In our opinion, the Companys accumulated loss at the end of the
financial year are more than fifty percent of its net worth and has
incurred cash losses during the year as well as preceding financial year.
(xi) In our opinion and according to the information and explanations given
to us, the Company has been declared a sick industrial undertaking by the
Honble Board for Industrial and Financial Reconstruction under section 17
of Sick Industrial Companies (Special Provisions) Act, 1985. The detail of
overdue outstanding (including interest) of Banks, Financial Institutions
as on 31.03.2009 is given here under:
Lender Amount of Default (incl. interest)
(Rs. In Lacs)
The State Industrial & Investment
Corporation Of Maharashtra Limited 3460.58
Kotak Mahindra Bank Limited 4752.34
Assets Reconstruction Company
(India) Ltd** 600.69
* Company had obtained bank overdrafts from Corporation Bank and The South
Indian Bank. These banks, letter assigned the loans to Kotak Mahindra Bank
which has been challenged by the company in various court, including
honble Supreme Court of India.
** During the year, Company has re-negotiated its loan liability due to
Asset Reconstruction Company India Limited (ARCIL) to Rs.325 Lacs. As
per terms of settlement the entire payment is to be made on or before
November 30, 2009.
The effect of the settlement shall be given only on making of the entire
payment as per the terms of the settlement. In case the payment is not made
by November 30, 2009, settlement will be revoked and ARCIL would claim
Rs.1394.73 Lacs towards principal and Rs.4040.59 Lacs towards interest plus
interest for the further period.
(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.
Accordingly, the provisions of clause 4(xii) of the Order are not
applicable.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the
Order are not applicable.
(xiv) The company is not an investment company. Accordingly, the provisions
of clause 4(xv) of the Order are not applicable.
(xv) The Company has not given any guarantees for loans taken by others
from banks or financial institutions. Accordingly, the provisions of clause
4(xv) of the Order are not applicable.
(xvi) According to the information and explanations given to us, the
company has not raised any term loans during the year under audit.
(xvii) According to the information and explanations given to us and on an
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 any preferential allotment of shares to
parties or companies covered in the register maintained under section 301
of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are
not applicable.
(xix) The Company has neither issued nor had any outstanding debentures
during the year. Accordingly, the provisions of clause 4(xix) of the Order
are not applicable.
(xx) The Company has not raised any money by public issues during the year.
Accordingly, the provisions of clause 4(xx) of the Order are not
applicable.
(xxi) No fraud on or by the Company has been noticed or reported during the
period covered by our audit.
As per our attached report of even date
For NGS & CO
Chartered Accountant
Sanjay Dosi
Partner
Membership No.36024
Place : Mumbai
Date : 31st July, 2009