wopolin plastics ltd Auditors report

WOPOLIN PLASTICS LIMITED (Formerly known as BAJAJ PLASTICS LIMITED ANNUAL REPORT 2005-2006 AUDITORS REPORT TO THE MEMBERS OF WOPOLIN PLASTICS LIMITED (FORMERLY KNOWN AS BAJAJ PLASTICS LIMITED) We have audited the attached Balance Sheet of Wopolin Plastics Limited (Formerly known as Bajaj Plastics Limited), as at 31st March, 2006 and also 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. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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. 1. 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 enclose in the Annexure a statement on the matters specified. 2. Further and subject to our comments in the Annexure referred 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 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 and 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 in this report comply with the Accounting Standards referred in Sub-Section(3C) Section 211 of the Companies Act, 1956. v) On the basis of the written representations received from the Directors, as on 31st March, 2006 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2006 from being appointed as a Directors 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 read together with the notes thereon and in particulars (1) The Company has incurred the net loss of Rs.75,854,493/- during the year ended 31st March, 2006 and as of that date its total liabilities exceeded its total assets by Rs.1,168,157,701/-. These factors along with other matters as set forth in Note no. 11, raise substantial doubt that the Company will be able to continue as a going concern. Consequently, adjustment may be required to be made to the recorded value of assets and its consequential effect on profit/loss which are not made as the same is unascertainable and accordingly not made in the financial statements. (2) Note no. 10 regarding non-provision of impairment loss as per Accounting Standard 28(AS-28). (3) Note no.7 regarding non- provision of interest on unsecured loans of Foundry Division. (4) Note no. 8b regarding non-provision of depreciation on the fixed assets of the Foundry Division and (5) Note no.6 regarding non-provision of excise duty on finished goods give the information as 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, 2006: b. In the case of the Profit and Loss Account, of the Loss for the year ended on that date; c. In the case of Cash Flow Statements of the Cash Flows for the year ended on that date. For K.C. Agrawal & Co. Chartered Accountants K.C. Agrawal Proprietor Nagpur Dated: 16th October, 2006 ANNEXURE TO THE AUDITORS REPORT (Referred to in Paragraph 1 of our report of even date) 1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets, other than Electrical Installation, Furniture & Fittings. Office Equipments and Factory Fixtures. (b) As explained to us, all the fixed assets except Electrical Installation, Furniture & Fittings, Office Equipments and Factory Fixtures have been physically verified by the management at reasonable intervals during the year. No material discrepancies were noticed on such verification. (c) During the year no fixed assets have been disposed off. 2. (a) The inventories have been physically verified by the management at reasonable intervals. (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 records of inventory, We are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material in relation to the size of the Company and the nature of its business and the same have been properly dealt with in the books of account. 3. The Company has not granted/taken any loan secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, requirements of Clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of the Order are not applicable. 4. In our opinion, and according to the information and explanations given to us, there are adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system. 5. (a) Based upon the audit procedures performed by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of the contracts or arrangements referred to in the section 301 of the Act have been entered in the register required to be maintained under the Section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under Section 301 and exceeding the value of Rupees Five Lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. 6. During the year Company not accepted any deposits from the public. 7. In our opinion the Company has an Internal Audit system commensurate with the size and nature of the Companys business. 8. As informed 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 information and explanations given to us and on the basis of records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues, including Provident Fund, Investor Education Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it. (b) The details of Custom Duty which have not been deposited on account of dispute with the appropriate authorities are as under: Status Amount (Rs.) Forum where dispute is pending Custom Duty 82,333,155 The Commissioner of Customs (Appeals), Mumbai 10. The accumulated losses of the Company as at the end of the year are more than fifty percent of its net worth. The Company has also incurred cash losses during the year and also in the immediately preceding financial year. 11. The Company has defaulted in repayment of its total dues amounting to Rs.1,542,521,051/- to financial institutions, banks and debenture holder from time to time during the period 01.01.1997 to 31.03.2006. 12. 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 Company is not carrying on business of chit fund of Nidhi/Mutual Benefit Fund/Society. Therefore, the provision of Clause (4xiii) of the Order are not applicable to the Company. 14. The Company is not dealing in or trading in shares, securities, debentures or other investments. 15. The Company has not given any guarantee for loans taken by others from Bank or Financial Institutions. 16. No term loan was raised during the year. 17. According to the information and explanation given to us and on the basis of records of the Company and on an overall examination of the Balance Sheet of the Company, we report that short term funds raised during the year except Rs. 1,155,600 were not applied for long term investment. 18. The Company has not made any preferential allotment of shares during the year. 19. Security or charge has been created in earlier year on debentures issued by the Company. 20. During the year, the Company has not raised any money by Public Issue(s). 21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit. For K.C. Agrawal & Co. Chartered Accountants K.C. Agrawal Proprietor Nagpur Dated: 16th October, 2006