sree uma parameswari mills ltd Auditors report

SREE UMA PARAMESWARI MILLS LIMITED ANNUAL REPORT 2002-2003 AUDITORS REPORT To the Members of Sree Uma Parameswari Mills Limited We have audited the attached Balance Sheet of M/a. SREE UMA PARAMESWARI MILLS LIMITED as at 31st March, 2003 and also the Profit and Low Account for the year ended on that date annexed thereto and cash flow statement fin 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. 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, evidences supporting the amounts and disclosures in the financial statements. An audit also includes summing 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. As required by the Manufacturing and other Companies (Auditors Report) order, 1988 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 paragraphs 4 and 5 of the said Order. 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 the purposes 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 and Profit and Lose Account dealt with by this report are in agreement with the books of account; iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the cementing standards except Accounting standard except Accounting standard - 13 as referred to in sub-section (3C) of Section 211 of the Companies Act, 1936; v) On the basis of written representation received from the Directors, as on 31st March 2003 and taken an record basis to Board of Directors, we report that none of the Directors is disqualified as on 31st March 2003 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 Accounts 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 31 at March 2003; b) in the case of Profit and Loss Account, of the LOSS for the year ended on that date and c) in the case of cash flow statement, of the cash flows for the year ended on that date. Subject to: 1) Regarding Non-reconciliation/Confirmation of balance of Sundry Creditors, Loans and Advances and financial institution. [Refer Note No. 7]. 2) Regarding Non-payment of PF and ESI dues for the year ended 31.03.2000, 31.03.2001 and 31.03.2002 amounting to Rs 1.00,40,640% and Rs. 28,38,204/- respectively [Refer Note No.8 (a)] 3) Regarding Non payment of I.O.B Workers Consumer Loan upto 31.03.2003 amounting to Rs 2.83,806/-. [Refer Note No. 8(b)]. 4) Regarding Non payment of Provident fund Loan Recovery from workers unto 31.03.2003 amounting to Rs.3,00,407)-. [Refer Note No.8 (c)]. 5) Regarding Non payment of LIC Salary Raving Scheme of workers and staff unto 31.03.2003 amounting to Rs. 12,34,520% [Refer Note No.8 (d)]. 6) Regarding Non provision of Carrying Charges up to 31.03.2002 amounting to Rs.87,33.609/- [Refer Note No.10(a)]. 7) Regarding Non provision of Interest payable to Rank and Financial Institution for the yeah ended 31.03.2000, 31.03.2001 and 31.03.2002 amounting to Rs. 4,43,25,586/-, Rs 4.63,74,315/ and Rs. 4.64,86,221/, respectively, [Refer Note No.10(b)]. 8) Regarding Non provision of interest on Inter Corporate Deposits, Directors loan and other Deposits for the year ended 31.03.2000, 31.03.2001 and 31.03.2002 amounting to Rs 17,11,134/, Rs.18,07,038/- and Rs.24,65,282/ respectively [Refer Note No.10(c)]. 9) Regarding Non provision of Interest on Him Purchase Loan for the year ended 31.03.2000 and 31.03.2001 amounting to Rs.38,81,159/- and Rs.7.04.441/- respectively [Refer Note No.10(d)]. 10) Regarding Non provision of Bad and Doubtful Debts and Advances amounting to Rs. 5,09,23,916/- and Rs.58,59,378/ respectively. [Refer Note No. 11(a)]. 11) Regarding non provision for interest on Secured Loans from Financial Institution and Bank for the year ended 31.03.2003 amounting to Rs. 4,65,07,100% [Refer Note No. 11(b)]. 12) Regarding Non provision of interest on Inter Corporate Deposits, Directors loan and other Deposits for the year ended 31.03.2603 amounting to Rs.27,35,831/- [Refer Note No.11(c)]. 13) Regarding Non provision of minimum bonus, if any, for the year ended 31.03.2003 [Refer Note No. 12(a)]. 14) Regarding Non provision of diminution in value of investment [Refer Note No. 12(b)]. 15) Regarding Non provision of Interest on Interest, Penal Interest and other charges, if any, for Bank and Financial Institution [Refer Note No. 12(c)]. 16) Regarding Non-reconciliation of Control Excise Duty accounts [Refer Note No. 12(d)] 17) During the Year, Deferred Bereave Expenditure (Public Issue expenses) amounting to Rs 2,95,250/. was written off which is 1/10th of the expenses [Refer Note No 13]. 18) Regarding non-remittance of share Application Mono amounting to Rs. 1,47,105/. which was lying unclaimed beyond 7 years to the Investors Education and Protection Fund within the due date (22.06.2002) as mentioned in the Act. [Refer Note No. 15]. 19) Regarding charging of prior year expenses amounting to Rs. 8,95,686/- [Refer Note. 19]. As referred to in Notes forming part of Accounts and the consequent effect of the deviation as disclosed in the Notes, the Balance Sheet gives a true and fair view of the state of affairs as at 31.03.2003 and the Profit and Loss Account gives a true and fair view of the LOSS of the Company for the year ended on that date. Further without qualifying we state that The accumulated Losses of the company have far exceeded its entire net worth by Rs.1604.69 Lakhs. The Accounts have, however, been prepared by the management on a going concern basis as explained in Note No. 19 of Notes forming part of accounts. This being technical matter in view of uncertainties and other facts and circumstances of the case, we are unable to comment on the same. However, should the Company be unable to continue as a going concern, the extent of the effect of the resultant adjustment on the net worth of the Company as at the Balance Sheet date and Loss for the year is presently not ascertainable. For M.S.JAGANNATHAN & VISVANATHAN, M.J. VIJAYARAGHAVAN Place : Salem, Partner, Date : 14th November. 2003. Chartered Accountants, Auditors. M.No.7534 ANNEXURE TO THE AUDITORS REPORT 1. The Company has not maintained proper records, to stow full particulars including quantitative details and situations of Fixed Assets. The Fixed Assets of the Company hove not been physically verified by the management during the year. In the absence of verification of Fixed Assets we are unable to comment on discrepancies or otherwise between the boob records and the physical inventory. 2. None of the Fixed Assets has been revalued during the year. 3. The Stock-in-trade (including raw materials/ and stock of stones and spare parts of the Company have not been physically verified by the management during the year. We are unable to comment on the extent of discrepancies that exist between the physical stock and the book stock. The valuation of finished goods is made as per AS-2 Valuation of Inventories (revised( is fair and proper and is in accordance with the normally accepted principles and is on the same basis as in last year. The value of Raw Material and Waste is based on the estimate given by the Management after considering the deterioration in quality on account of non moving nature and the valuation is not in accordance with the AB-2 Valuation of Inventories (Revised). 4. Loans secured or unsecured have been taken by the Company, the terms and conditions of which are not prima facie prejudicial to the interest of the Company, from Companies, firms and other parties listed in the Register maintained under Section 301 and from Companies under the same management as defined under Section 370(I-B( of the Companies Act, 1956. 5. The Company has not granted any loan, secured or unsecured to companies, firms or other parties listed in the Register maintained under Section 301 and to Companies under the same management as defined under Section 370 (1- B/ of the Companies Act, 1956. 6. Employees to whom loans or advances in the nature of loans have been given by the Company are repaying the Principal as stipulated or as scheduled. The loans are interest free. 7. In our opinion and according to the information and explanations given to us during the course of our audit, there is adequate internal control procedure commensurate with the size of the Company and the nature of its business of the purchase of stores, raw materials including components, plant and machinery, equipments and other assets and for the sale of goods. 8. In our opinion, the transactions of purchase of goods and materials and sale of goods made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs.50,000/- or more in respect of each party were made at price which were reasonable having regard to prevalent market prices for such goods or materials or the prices at which transactions for similar good9.or materials were made with other parties. 9. As explained to us, unserviceable or damaged stores, raw material and finished goods are determined by the Company. Adequate provision has been made in the accounts for the loss arising on the items so determined. 10. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58-A of the Companies Act, 1956 and the rules framed there under. 11. In our opinion, reasonable records have been maintained by the Company for the sale and disposal of the realisable scrap/by products where applicable and significant. 12. In our opinion, the Company dons not nave sin internal audit system commensurate with its else and nature of its business. 13. On the basis of the records produced, we are of the opinion that prima facie, the cost records and accounts prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956 have been maintained by the Company, However, we are not required to carry out and have not carried out any detailed examination of such accounts d records. 14. According to the words maintained by the Company, the Provident Fund amounting to Rs. 54,96,952/- and Employees State Insurance amounting to Rs. 15,99,447/ have not base emitted with the appropriate authorities for the year April, 2002 to March, 2003. 15. According to the books and records examined by us and the information and explanations given to us, there was no undisputed amounts payable in respect of Income-Tax, Wealth Tax, Customs Duly, Excise and Sales Tax which have remained outstanding as at 31st March, 2003 for period exceeding six months from the date they become payable. 16. On the basis of examination of books, the vouchers produced to us for our verification and examined by us on a test check basis, explanations given and representations made against our inquires, and checks and controls relating to authorizing expenditure on the basis of contractual obligation with the employees/directors and accepted business practices having regard to the companys need and exigencies, we have not come across arty expenses charged to revenue, which, in our opinion and judgment and to the best of our knowledge and belief, could be reported as personal expenses. 17. The Company is a Sick Industrial Company within the meaning of Clause (0) of Section 3(i) of the Sick Industrial Companies (special Provisions) Act, 1985, as declared on 18.03.2002 by the BIFR vide Case No. 12/2001. 18. In respect of the service activities of the Company: a) There is a reasonable system of recording receipts, issues and consumption of materials and stores commensurate with the size and nature of service activities undertaken and such system provided for a reasonable allocation of materials and stores consumed to the relative jobs. b) There is a reasonable system of allocating man hours utilized to the relative jobs commensurate with the size and nature of the Company. c) There is reasonable system of authorization at proper levels with necessary control on the issue of stores and allocation of stores and labour to jobs. There is a reasonable system of internal control commensurate with the size and nature of the Companys service activities. For M.S. Jagannathan & Visvanathan, M.J.VIJAYARAGHAVAN Place : Salem, Partner, Date : 14th November, 2003. Chartered Accountants, Auditors. M.No.7534