Parekh Platinum Ltd Share Price Auditors Report
PAREKH PLATINUM LIMITED
ANNUAL REPORT 2009-2010
AUDITORS REPORT
To,
The Members of
Parekh Platinum Limited.
1. We were engaged to audit the attached Balance Sheet of Parekh Platinum
Limited as at 31st March, 2010, the Profit and Loss Account and the Cash
Flow Statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Companys management.
2. Our responsibility is to express an opinion on these financial
statements based on our audit in accordance with the standards on auditing
issued by the Institute of Chartered Accountants of India. In view of
matters described in para 3 herein below we were not able to obtain
sufficient appropriate audit evidence to provide a basis for an audit
opinion.
3(a) As referred to in Note 6 and 7 to accounts under Schedule 18 the
Company defaulted in repayment of borrowings from banks and financial
institutions. The lenders initiated recovery proceedings and accordingly
IFCI Ltd. (IFCI), representing the consortium of lenders, initiated
action against the Company under the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interests (SARFESI) Act, 2002.
In September, 2009, IFCI took forceful physical possession of the Companys
manufacturing plant at Gandhinagar including land, building, plant &
machinery. These assets aggregating Rs. 6729.44 lakhs comprise almost the
entire fixed assets of the Company. It issued a public notice for auction
of these assets and eventually sold off some of the said assets. The
Company requested IFCI to furnish the details thereof. However, IFCI has
not responded till date. In view thereof, the Company does not have details
to record accounting entries in respect of deletion of the assets from the
Balance Sheet, profit or loss arising therefrom, resulting tax liabilities
and it continues to show these assets in its books of account. Further,
since the Company does not have details regarding discharge of its various
liabilities out of the realizations, its liabilities also have not been
given any effect for such discharge.
We have also tried to seek confirmations from IFCI regarding related
details and realizations from the sale of the Companys Fixed Assets,
discharge of liabilities etc, but, IFCI has not yet responded to us.
As a result, we are unable to comment on the amount of Fixed Assets
aggregating to Rs. 6729.44 lakhs carried in the Balance Sheet as well as
profit or loss on account of sale thereof which should have been reflected
in the profit and loss account.
(b) As referred to in Note 6 to Accounts under Schedule 18 the Company has
defaulted in the payments of its dues to Secured Lenders and has provided
interest in this respect on the basis of the sanctioned terms upto March
31, 2005. Provision for interest for the period April 1, 2005 to March 31,
2010 has not been made.
As such considering (a) and (b) above, the balances in respect of
borrowings from Banks and Financial Institutions aggregating Rs. 44459.57
lakhs are subject to confirmation and reconciliation and accordingly, we
are unable to comment on the quantification of liability in respect of
borrowings from Banks and Financial Institutions, and are also unable to
comment on the amount of provision that may be required on account of
interest on these borrowings.
(c) As referred to in note no. 11 to Accounts under Schedule 18, Sundry
Debtors, Loans & Advances and Deposit include debts due from related
parties aggregating Rs.11.97 Lacs , Rs 6468.40 Lacs and Rs 1500.00 Laos
respectively. No provision has been made in the accounts and the amount of
provision has not been ascertained for any possible loss arising on account
of erosion in the net worth of these related parties due to losses suffered
by them and doubtful nature of their Debts, Loans & Advances, etc.
In respect of this matter, based on the evidence made available to us, we
are unable to comment on the realisability of these Debtors, Loans &
Advances and Deposits, and are also unable to express an opinion as to the
amount of provision that may be required in this respect.
(d) As referred to in note no. 16 of Schedule 18 being Notes on Accounts,
the company has during the year under consideration written back long
outstanding current liabilities aggregating Rs. 2068.60 Lacs as no longer
payable. In the absence of availability of adequate direct evidences, we
have not been able to verify the above write back.
(e) As referred to in note no. 4 of Schedule 18 being Notes on Accounts,
the management is of the opinion that the provisions in respect of current
liabilities is not in excess of the amount reasonably considered necessary.
However, in view of absence of positive direct confirmation of various
parties in this respect we are unable to express an opinion in this
respect.
4. In view of the significance of the matters described in para 3 herein
above, we have not been able to obtain sufficient appropriate audit
evidence to provide a basis for an audit opinion. Accordingly we do not
express an opinion on the financial statements.
5. As stated in Notes 5 and 9 to Accounts under Schedule 18 the net worth
of the Company has eroded. The Company has not been able to renegotiate its
borrowings from the lenders. The properties of the Company have been taken
over and some of them have been sold off. The products of the Company
continued to be manufactured at Mumbai from leased assets upto 5th
Novemeber 2010 when the Company declared a lock out in view of labour
unrest. The Management is confident of continued operations on lifting of
lock out and the accounts are prepared on a going concern basis. In our
opinion, this situation indicates the existence of a material uncertainty
which casts significant doubt on the Companys ability to continue as a
going concern.
6. 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, (The Act) we give in the Annexure a statement
on the matters specified in paragraphs 4 and 5 of the said order.
7. As required by section 227(3) of the Companies Act, 1956, we report
that:
(a) As described in para 3 here in above, we were unable to obtain all the
information and explanations, which to the best of our knowledge and belief
were necessary for the purpose of our audit.
(b) Due to the possible effects of the matters described in para 3
here in above, we are unable to state whether 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, Profit and Loss Account and Cash Flow Statement
dealt with by this report, are in agreement with the books of account.
(d) Due to the possible effects of the matters described in para 3
hereinabove we are unable to state whether the Balance Sheet, 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) Subject to the reliance placed by us on the legal opinion obtained by
the Company from a practicing Company Secretary stating that privately
placed debentures cannot be construed as Debentures for the purpose of
section 274(1)(g) of the Companies Act 1956 (refer note no. 13 of Schedule
18 and on the basis of written representations received from 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 director in terms of clause (g) of sub-section (1) of
Section 274 of the Companies Act, 1956.
For M/s. Kastury & Talati
CHARTERED ACCOUNTANTS
Firm Registration No. 104908W
Dhiren P. Talati
Partner
M.No.F41867
Place : Mumbai
Date : 27th November, 2010
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS REPORT TO THE
MEMBERS OF PAREKH PLATINUM LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31st
MARCH, 2010.
1(a) The records containing the quantitative details and situation of Fixed
Assets maintained by the Company were destroyed in the floods at the
Companys office in July, 2005.
(b) As referred to in para 3a of our audit report, physical possession of
almost the entire fixed assets of the company have been taken over by IFCI,
Hence the fixed assets have not been physically verified by the Management
during the year under consideration.
(c) As referred to in para 3a of our audit report and note no. 6 & 7 to
Accounts under Schedule 18, IFCI has taken over physical possessions of
almost the entire fixed Assets of the Company and accordingly this
situation indicates the existence of a material uncertainty which casts
significant doubts on the Companys ability to continue as a going concern.
2(a) As explained to us, in respect of Mumbai operations, inventories have
been physically verified during the year by the Management and in our
opinion, the frequency of verification is reasonable. In respect of
Gandhinagar operations, as referred to in note no. 6 & 7 of Schedule 18
being Notes on Accounts, in view of the action taken by IFCI Ltd., the
inventories are no longer in the possession of the Company.
(b) In our opinion and according to the information and explanations given
to us the procedures of physical verification of inventory followed by the
Management in respect of the Mumbai operations, 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 inventory records of the Mumbai
operations of the Company, we are of the opinion that, except for process
inventory the Company is maintaining proper records of its inventory. The
discrepancies noticed on physical verification of inventory, taken at the
year-end, as compared to book records, have been properly dealt with in the
books of accounts and the same were not material.
3(a) During the year under consideration, the Company has granted interest
free unsecured loan to a firm covered in the register maintained under
section 301 of the Companies Act, 1956. The maximum amount involved during
the year was Rs. 6468.40 lakhs and the year end balance is Rs. 6468.40
lakhs
(b) In respect of interest free unsecured loans aggregating Rs.6468.40
lakhs at the year end granted by the Company, the terms of repayment are
not stipulated. In our opinion, the granting of these unsecured loans
without interest and without any stipulation as regards its repayment is
prima facie prejudicial to the interest of the Company. Reference is
invited in this respect to Note No 11 of Schedule-18 being Notes on
Accounts and to our observation in para 3(c) of the Auditors Report of
even date.
(c) Since the unsecured loans granted are interest free and no terms and
conditions are stipulated in respect of the principal amount, in our
opinion, the recovery of the principal amount and interest cannot be termed
as regular.
(d) The Company has not taken any steps for recovery of the principal
amount.
(e) The Company has taken a loan from an individual covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum amount
involved during the year was Rs. 30.06 lakhs and the year end balance was
Rs. 22.55 lakhs
(f) According to the information and explanations provided to us, the loan
is interest free and no terms and conditions are stipulated in respect of
the principal amount and hence cannot be prejudicial to the interest of the
Company.
(g) Since the unsecured loan received is interest free and no terms and
conditions are stipulated in respect of the principal amount, in our
opinion, the repayment of the principal amount and interest cannot be
termed as irregular.
4. In our opinion and according to the information and explanations given
to us, there are generally adequate internal control procedures
commensurate with the size of the Company and the nature of its business
with regard to purchase of inventory and fixed assets and for sale of
goods. Further, on the basis of our examination of the books and records of
the Company and according to the information and explanations given to us
we have neither come across nor have been informed of any continuing
failure to correct major weaknesses in the aforesaid internal control
procedures.
5(a) In our opinion and according to the information and explanations given
to us, 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.
(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 the value of rupees five lakhs in respect of any party
during the year have been made at prices which are reasonable having regard
to the prevailing market prices at the relevant time.
6. The Company has not accepted deposits from public. Hence directives
issued by the Reserve Bank of India and the provisions of Section 58A and
58AA and any other relevant provisions of the Companies Act 1956 and the
rules framed thereunder are not applicable for the year under audit.
7. The Company has no formal internal audit system commensurate with the
size and nature of its business. However the Company has built-in internal
control system.
8. According to the information and explanations given to us, the Central
Government has not prescribed maintenance of cost records under section
209(1)(d) of the Companies Act, 1956, for any of the products of the
Company.
9.(a) According to the records of the Company and the information and
explanations given to us, we have to state that.
i. Undisputed statutory dues in respect of Provident Fund, Employees State
Insurance, Sales tax, customs duty, excise duty and cess have generally
been regularly deposited with the appropriate authorities though there has
been a slight delay in a few cases.
ii. Undisputed statutory dues in respect of Investor Education and
Protection Fund and Income tax have not been regularly deposited with the
appropriate authorities and there have been delays. The undisputed dues
outstanding for more than six months, as at 31st March 2010, from the date
they became payable are as under:
Name of the statute Nature of Amount Period to which the
the dues Rs. lakhs amt relates
Investor Education & Unclaimed 2.04 1996-97
Protection Fund Dividend 5.06 1997-98
Income tax Act, 1961 TDS, 8.54 FY 2003-04 & 2005-06
Income tax 21.35 AY 1996-97, 1999-2000 &
& Interest 2001-02
b) According to the information and explanations given to us and on the
basis of our examination of the records of the Company, the following
disputed statutory dues have not been deposited with the appropriate
authorities:
Name of the statute & Amount Period to Forum where dispute
Nature of dues Rs.lakhs which the is pending
amt relate
Sales tax, Ahmedabad:
Tax, interest & 45.05 FY 2000-01 Deputy Commissioner
penalty of Sales Tax, Ahmedabad
66.38 FY 2001-02 Joint Commissioner
of Sales tax, Ahmedabad
Income tax, Mumbai:
Interest on MAT Income 38.45 A.Y.2000-01 Commissioner of Income
Tax (Appeals)
Income tax, Mumbai:
Block Assessment 23949.72 Block ITAT, Mumbai
Assessment
10. The accumulated losses of the Company exceeded 50% of its net worth at
the end of the financial year and the Company has earned a profit during
the current financial year but has incurred cash losses during the
immediately preceding financial year.
11 The Company has defaulted in repayment of dues to financial
institutions, banks and debenture holders. Further as referred to in Note
No 6 of Schedule 18 being Notes on Accounts, no provision for interest has
been made for the period from 1st April 2005 to 31st March 2010. Subject to
this the period and amount of default which are continuing as at the
balance sheet date are as under:
Particulars Period Amount
Since Outstanding Rs. Lakhs
Dues to Financial Dec., 1998 14909.91
Institution
(Including interest)
Dues to Banks July, 2001 27365.44
(Including interest)
Dues to Debenture Jan., 2001 2078.08
holders
(Including interest)
Total 44353.43
12. Based on our examination of documents and records and information given
by the Company, 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 provisions of any special statute applicable to
chit fund/nidhi/mutual benefit fund/ societies are not applicable to the
company.
14. In our opinion, the Company is not dealing/trading in shares,
securities, debentures and other investments.
15. 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 Banks and Financial institutions.
16. On the basis of the records examined by us and according to the
information and explanations given to us the Company has not obtained any
term loans during the year under consideration and in respect of term loans
obtained by the Company in the earlier years, we are informed that the same
were applied for the purpose for which they were obtained.
17. According to the information and explanations given to us and on the
overall examination of the balance sheet of the company, in our opinion, no
funds raised on short-term basis have been used for long-term investments.
18. According to the information and explanations given to us the Company
has not made any preferential allotment of shares during the year under
consideration to parties and companies covered in the register maintained
under section 301 of the Act.
19. On the basis of the records and documents examined by us and according
to the information and explanations given to us, in our opinion the company
has created securities in respect of debentures issued.
20. According to the information and explanations given to us, the Company
has not raised any money by way of public issues during the year under
consideration.
21. During the course of our examination of the books and records of the
company carried out in accordance with the generally accepted auditing
practices in India and according to the information and explanations given
to us, subject to note no.6 of schedule 18 being Notes on Accounts, we have
neither come across any instance of material fraud on or by the company,
noticed or reported during the year, nor have we been informed of such a
case by the management.
For M/s. Kastury & Talati
Chartered Accountants
Firm Registration No. 104908W
Dhiren P. Talati
Partner
M.No.F41867
Place : Mumbai
Date : 27th November, 2010