mukesh steels ltd Auditors report

MUKESH STEELS LIMITED ANNUAL REPORT 2009-2010 AUDITORS REPORT To, The Shareholders, Mukesh Steels Limited 1. We have audited the attached Balance Sheet of M/s Mukesh Steels Limited as at 31st March, 2010 and the profit and loss account and cash flow statement for the year ended on that date annexed thereto. 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. 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 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 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraph 4 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 purpose 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 balance sheet, the 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, the profit and 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; e) on the basis of the 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 director is disqualified as on 31s 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, f) we further report that: i) Note No. 4 (Schedule XVI) regarding the charge for depreciation on Plant and Machinery of Furnace Division as continuous process plant; ii) Non compliance of Section 297 of the Companies Act, 1956 with regard to purchase of finished goods from a firm in which directors are interested. g) We further report that had the observation made by us in clause (f) above been considered the profits for the year after taxes would have been Rs 29.34 lacs (against reported figure of Rs.32.77 lacs) and fixed assets have been Rs.246 77 (against reported figures of Rs. 250.20 lacs) h) Subject to above in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956, and in the manner so required and give 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 31st March, 2010; ii) in the case of profit and loss account, of the profit for the year ended on that date; and iii) in the case of cash flow statement, of cash flows for the year ended on that date. For S.C. Vasudeva & Co. Chartered Accountants Firm Reg. No. 000235N (SANJIV MOHAN) PLACE: LUDHIANA Partner DATED: 24th August, 2010 Membership No.: 086066 Annexure to the Auditors Report (Referred to in paragraph 3) (1)a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such physical verification. In our opinion the frequency of physical verification of fixed assets is reasonable having regard to the size of the company and nature of its business. c) According to the information and explanations given to us, the company has not disposed off substantial part of its fixed assets during the year. (2)a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of the year. 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 as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the company and nature of its business. c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of inventory As explained to us, no material discrepancies were noticed on physical verification between physical stocks and book records. (3)(a) According to the information and explanations given to us the company has granted unsecured loans to two Companies and one other party listed in the register maintained under section 301 of the Companies Act, 1956. The amount involved i.e. the maximum amount outstanding during the year was Rs 501.17 lacs. There was no amount outstanding from the said company as at the close of the year (b) In our opinion and according to the information and explanation given to us, The terms and conditions of loan granted are not prima-facie, prejudicial to the interest of the company. (c) The company has taken interest free unsecured loans from One company and three other parties covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved in the transaction is Rs. 415 00 lacs. The amount outstanding as at the close of the year is Rs, NIL (d) According to the information and explanations given to us, the terms and conditions in respect of unsecured loans taken by the Company, are not prima-facie prejudicial to the interest of the company (e) In our opinion and according to the information and explanations given to us, the payment of principal amount in respect of the aforesaid loans is regular. (f) In our opinion and according to the information and explanations given to us, there are no overdue amounts in respect of the transactions listed above. (4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system (5)a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into 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 and exceeding Rupees five lacs or more in respect of each party during the year, have been made at prices which are reasonable having regard to the prevalent market prices at the relevant time. (6) According to the information and explanations given to us the company has complied with the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975 with regard to deposits accepted from the public. According to the information given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal. (7) In our opinion, the company has an internal audit system commensurate with its size and nature of its business. (8) We have broadly reviewed the books of account relating to materials, labour and other items of cost 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, and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained However, we have not made a detailed examination of the same. (9)(a) According to the records of the company, we are of the opinion that the company has been regular in depositing undisputed applicable statutory dues including provident fund, employees state insurance, income tax, sales tax, custom duty, excise duty and other statutory dues with the appropriate authorities. According to the information and explanations given to us no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2010, for a period of more than six months from the date of becoming payable. (b) According to the information and explanations given to us there are no disputed dues in respect of income tax, sales tax, service tax, custom duty, wealth tax, excise duty and cess (10) The company does not have accumulated losses. The latter part of the question relating to net worth is thus not applicable to the company. Further, the company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year. (11) In our opinion and according to the information and explanations given to us, the company has not defaulted in dues to banks (12) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the above said order are not applicable to the company. (13) The company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the above said order are not applicable to the company (14) According to the information and explanations given to us, the company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the company. (15) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks and financial institutions. (16) In our opinion and according to the information and explanations given to us, the company has not received term loan during the year, therefore provisions of clause 4 (xvi) of the above said order are not applicable. (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 no funds raised on short-term basis have been used for long term investment. (18) According to the information and explanations given to us the company during the year 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. (19) According to the information and explanations given to us, the company has not issued debentures during the year ended 31st March, 2010. Accordingly, the provisions of clause 4(xix) of the above said order are not applicable to the company. (20) According to the information and explanations given to us, the company has raised money by way of right issue during the year and has disclosed the end use of money. (21) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year. For S.C. Vasudeva & Co. Chartered Accountants Firm Reg. No. 000235N (SANJIV MOHAN) PLACE: LUDHIANA Partner DATED: 24th August, 2010 Membership No.: 086066