Metrochem Industries Ltd merged Auditor Reports

METROCHEM INDUSTRIES LIMITED ANNUAL REPORT 2009-2010 AUDITORS REPORT TO THE MEMBERS 1.0 We have audited the attached Balance Sheet of Metrochem Industries Limited as at 31st March, 2010 and also the Profit and Loss Account for the year ended on that date annexed thereto and the 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. 2.0 We have conducted our audit in accordance with auditing standards generally accepted in India. These 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. 3.0 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 annex hereto a Statement on the matters specified in paragraphs 4 and 5 of the said Order. 4.0 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 purpose 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, Profit & 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, 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; v) On the basis of written representations received from the directors, as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause(g) of sub-section(1) of section 274 of the Companies Act, 1956; vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statement give the information 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, 2010; b) in the case of the Profit & Loss Account, of the profit/loss for the year ended on that date; and c) in the case of the Cash Flow statement, of the cash flows for the year ended on that date. For, DEEPAK SONI & ASSOCIATES Chartered Accountants Ahmedabad DEEPAK SONI 28th August , 2010 (PROPRIETOR) Membership No. 31138 Firm Reg. No. 102250W Annexure referred to in paragraph 3 of the Auditors Report of even date on the accounts for the year ended 31st March, 2010 of Metrochem Industries Limited On the basis of such checks as we considered appropriate and in terms of the information and explanations given to us, we state that: (i)(a) The Company has generally maintained proper records showing particulars, including quantitative details and situation of fixed assets. (b) As explained to us, fixed assets, according to the practice of the Company, are physically verified by the Management at reasonable intervals, in a phased verification-programme, which, in our opinion, is reasonable, looking to the size of the Company and the nature of its business. (c) The Company in Scheme of Demerger of its Industrial undertaking at Umraya has disposed off substential part of the fixed assets during the year under review. The going concern status of the Company has however not been effected. (ii)(a) During the year, the inventories have been physically verified by the management, except for stock lying with outside parties, which have, however, been confirmed by them. In our opinion, the frequency of verification is reasonable. (b) In our opinion and according to the information and explanations given to us, 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 record of inventories, we are of the opinion that, the Company is maintaining proper records of inventories. Discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account. (iii)(a)(I) According to the information and explanations given to us, the Company has not granted loans to firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (II) According to the information and explanation given to us, the Company had taken loans from the parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 39.66 crores and the year end balance of loan taken from such parties was Rs 13.78 crores. (b) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from the companies and other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. (c) The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest. (d) There is no overdue amount in respect of loans taken from or granted to companies and other parties listed in the register maintained under section 301 of the Companies Act, 1956. (iv) 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 and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls. (v)(a) On the basis of the audit procedures performed by us, and according to the information, explanations and representations given to us, we are of the opinion that, the transactions in which directors were interested, and which were required to be entered in the register maintained under Section 301 of the Companies Act, 1956, 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 register maintained under Section 301 of the Companies Act, 1956 exceeding the value of rupees five lacs in respect of any party during the year have been made at price which are reasonable having regard to prevailing market prices at that time. (vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A of the Companies Act, 1956 and its Rules, and also the directives of Reserve Bank of India. The Company has not defaulted in repayments of deposits and therefore compliance of Section 58AA or obtaining any order from the National Company Law Tribunal does not arise (vii) On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, coverage of internal audit functions carried out by the internal audit department constituted by the management is commensurate with the size of the Company and the nature of its business. (viii) 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(1)(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 determining whether they are accurate . (ix)(a) According to the records of the company and according to explanations given to us, the statutory dues payable by the Company comprise of provident fund, investors education and protection fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess, octroi, entry tax, purchase tax, municipal tax, service tax and other applicable statutory dues. According to the records of the Company, the Company is regular in depositing undisputed statutory dues with the appropriate authorities. There are no undisputed statutory dues as referred to above as at 31st March, 2010 outstanding for a period of more than six months from the date they became payable. (b) On the basis of our examination of the documents and records and representations made by the Management, the statutory disputed dues which have not been deposited with the appropriate authorities are as under : Name of Statue Nature of the dues Amount Forum where dispute (Rs.inLacs) is pending The Income Tax Act, 1961 Variations made in regular assessment 38.53 The Commissioner of Income Tax (Appeal)/ITAT The Sales Tax Act Variations made in regular assessment 33.09 The Jt.Commissioner of Sales Tax (Appeals) (x) The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both, in the financial year under report and in the immediately preceding financial year. (xi) On the basis of the records examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, banks or debenture holders. (xii) In our opinion and according to the information and explanations given 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; (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society and therefore, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. (xiv) In respect of investments dealt or traded by the Company, proper records are maintained in respect of transactions and contracts and timely entries have been made therein. All the investments are held by the Company in its own name; (xv) 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; (xvi) In our opinion, the Company has not raised any term loan during the year under review. (xvii) According to the Cash Flow Statement and other records examined by us and the information and explanations given to us, on an overall basis, funds raised on short terms basis have not, prima facie, been used during the year for long terms investment and vice versa. (xviii) The Company during the year under review 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. (xix) On the basis of the records and documents examined by us, the company has not issued any secured debentures during the year. (xx) The Company has not raised any money by way of public issue during the year and therefore paragraph 4(xx) of the Order is not applicable. (xxi) 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 during the course of our audit during the year . For, DEEPAK SONI & ASSOCIATES Chartered Accountants Ahmedabad DEEPAK SONI 28th August , 2010 (PROPRIETOR) Membership No. 31138 Firm Reg. No. 102250W