Punjab Woolcombers Ltd Auditor Reports

PUNJAB WOOLCOMBERS LIMITED ANNUAL REPORT 2003-2004 AUDITORS REPORT To The Members, Punjab Woolcombers Limited Dhandari Kalan, Ludhiana. Dear Sirs, We have audited the attached Balance Sheet of the Punjab Woolcombers Limited as at 31st March, 2004 and also the Profit & Loss Account of the Company for the year ended on that date and annexed thereto. These financial statements are the responsibility for the Companys management. Our responsibility is to express an opinion on these financial statement 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 (Audits Report) Order, 2003 issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956 we enclose in the annexure a statement as the matters specified a paragraph 4&5 of the said Order. 2. Further to our comments in the annexures referred to in paragraph (1) above: a) We have obtained all the information and explanations, which to the best of our knowledge and belief where necessary for the purpose of our audit. b) In our opinion, proper books of accounts, as required by law, have been kept by the Company so far as it appears from our examination of the books. c) The Balance Sheet and Profit & Loss Account debit with by this Report are in agreement with the books of account. d) In our opinion, the Profit & Loss Account and the Balance Sheet complies with the mandatory Accounting Standard referred to in Section 211(3C) of the Companies Act, 1956 subject to Note No. B regarding non-charging of interest on Cash Credit Limit amounting to Rs.78.80 lacs due to which current financial year loss has been understated by 78.80 lacs, Note No. 9 regarding balance confirmation of Debtors and Creditors. e) i) We report that all the directors of the Company as on 31.03.2004 are disqualified from being re-appointed as director as the Company has defaulted in the terms of clause (g) of the sub-section (1) of the Companies Act. ii) The written representation (in term of section 274(i)(g) of the Companies Act from all the directors are disqualified from being appointed as director as mentioned in e(i) above. f) In our opinion and to the best of our information and according to the explanation given to us, the said statement of accounts, read with notes thereon (Schedule XXII give the information required by the Companies Act, 1956 in the manner Note No.8 regarding non-charging of interest on Cash Credit limit amounting to Rs.78.80 lacs due to which current Financial Year loss has been understated by Rs.78.80 lacs. Note No.9 regarding balance confirmation of Debtors and Creditors. g) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet and Profit and Loss Account together with the notes thereon and attached thereto give the Information required by the Companies Act, 1956, in the manner so required and give a true, and fair view. i) In the case of Balance Sheet of the State of affairs of the Company as at 31st March, 2004 and ii) In the case of Profit & Loss Account of the profit/loss for the year ended on that date. for S. TANDON & ASSOCIATES Chartered Accountants Sd/- Place : Ludhiana (AMARPREET SINGH) Dated : 31.08.2004 Partner ANNEXURE TO THE AUDITORS REPORT Annexure referred to in paragraph 3 of the auditors report to the members of punjab woolcombers ltd on the accounts for the year ending 31.03.2004. 1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets. (b) As explained to us, the Company has the system for the verification of the fixed assets, which is designed to cover all assets over a period of three years, which in our opinion is reasonable having regard to the size of the company. The Fixed Assets have been physically verified by the management during the year and no maternal discrepancies were observed. 2. (a) According to the information and explanations given to us, the procedures of physical verification of stock followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. (b) On the basis of our examination of the records of inventories as compared to the book records were not material and have been property dealt with in the books of accounts. 3. According to the information and explanations given to us the company has not provided any interest on the loans which have been granted to the parties listed in the register maintained under section 301 of the Companies Act, 1956 during the year because the companies to which the loans had been granted have been referred to BIFR. 4. According to the information and explanations given to us, the company has not taken any loans from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. 5. In our opinion and according to the informations and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the underlying internal controls. 6. (a) Based on the audit procedures applied by us and according to the informations given to us, the transactions that needs to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered so far. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of the contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 exceeding the value of Rs. 500 lacs 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 except for the items stated to be of proprietary nature where the question of comparison does not arise. 7. According to the information and explanations given to us, the Company has not accepted any deposit from the public, paragraph 4(vi) of the order not applicable. 8. In our opinion, the company has the adequate internal Audit system commensurate with the size and nature of business. 9. We have broadly reviewed the books of accounts maintained by the company pursuant to the Rules made by Central Government lot the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been made & maintained. 10. (a) According to the records of the Company, information and explanation given to us, the undisputed statutory dues including Provident Fund Employee State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, R&D Cess and other material statutory dues applicable to the Company have not been regularly deposited with the appropriate authority. As detailed below: Particulars Amount Payable Sales Tax Payable Rs. 13.35 lacs Surcharge on Sales Tax Rs. 1.25 lacs E.S.I. Payable Rs. 40.43 lacs RE Payable Rs. 139.25 lacs T.D.S. Payable Rs. 7.14 lacs Central Sales Tax Payable Rs. 15.30 lacs Surcharge on CST Rs. 0.76 lacs (b) According to the information and explanations, given to us there are no undisputed amount payable in respect of Sales Tax, Income Tax, Wealth Tax, Excise Duty, Custom Duty were in airier to a period of more than six months from the date they become payable. 11. The accumulated losses at the end of the financial year ending 31.03.2004 are Rs.83.76 Crore. Further the company has incurred cash tosses during the financial year ending 31.03.2004. The Company is Sick Industrial Company within the meaning of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1956. 12. In our opinion and according to the information and explanations given to us, the company has defaulted in repayment of dues (Principal & Interest) to the financial institutions (IFCI), Banks (S.B.O.P) and to debenture holders (Principal & Interest). 13. As tile Company has not granted any loans and advances on the basis of security by way of pledge of shares debentures and other securities, paragraph 4 (xiii) of the order is not applicable. 14. As the company is not chit fund/nidhi/mutual benefit fund/society to which the provisions of special statute relating to chit fund are applicable. Paragraph 4(xii) of the Order is not applicable. 15. According to Information and explanations given to us, the Company has not dealt or traded in shares, securities, debentures and other investments. Therefore the provisions of clause 4 (xiv) of the Companies (Auditors Report) order, 2003 are not applicable to Company. 16. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by other form banks of financial institutions during the year. 17. According to the information and explanations given to us, the term loans taken during the year have been applied for the purpose for which they were raised. 18. According to the information and explanations given by the management 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, Also no long term funds have been used to finance short term assets except permanent working capital. 19. As the Company has not made Preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, paragraph 4(xviii) of the order is not applicable. 20. As the Company has not issued any debentures during the year, paragraph 4(xix) of the order is not applicable. 21. During the year, since the company has not raised money by way of public issue, paragraph 4(xx) of the order is not applicable. For S. TANDON & ASSOCIATES CHARTERED ACCOUNTANTS Sd/- (AMARPREET SINGH) PLACE: LUDHIANA PARTNER DATED: 31.08.2004