| 1) We have audited the attached Balance Sheet of Cana Glass Limited as
on March 31, 2005, the Profit and Loss Account and also 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.
2) 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.
3) As required by the Companies (Auditors Report) Order, 2003, issued
by the Company Law Board in terms of Section 227 (4A) of the Companies
Act, 1956, we enclose in the Annexure a statement on the matters
specified in paragraph 4 and 5 of the said order.
4) Further to our comments in the Annexure referred to above, we report
that:
i.) The Accounts of the company have been prepared on a "Going Concern"
basis. However, having regard to the accumulated losses of the company
which are in excess of the net worth of the company and considering
other factors The Board for Industrial & Financial Reconstruction
(BIFR) in its hearing held on 01.07.2004, issued an order for winding
up of the Company u/s. 20(1) of the Sick Industrial Companies (Special
Provisions) Act, 1985. The Company has filed an appeal with the
Appellate Authority of Industrial and Financial Reconstruction under
section 25 of the Sick Industrial Companies (Special Provisions) Act,
1985 along with a Rehabilitation Scheme. The Rehabilitation Scheme
envisages One Time Settlement with the IDBI & UBI. The said appeal is
registered with the authorities.
ii.) 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;
iii) in our opinion, proper books of accounts as required by law have
been kept by the company so far as appears from our examination of the
said books;
iv. The Balance Sheet, the Profit & Loss Account and Cash Flow
statement dealt with by this report are in agreement with the books of
account.
v) in our opinion, the Balance Sheet, the Profit & Loss Account and the
Cash Flow statement dealt with by this report comply with the mandatory
Accounting Standards referred to in Section (3C) of Section 211 of the
Companies Act, 1956 except as mentioned in (vii) below.
vi) As per the written representation made to the Company by all its
Directors as on 31st March, 2005, no Director is disqualified from
being appointed as Director u/s. 274 (l)(g) of the Companies Act, 1956.
vii) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts, subject to :
Note No. 2 regarding non provision of penal interest
Note No. 11 regarding non provision for stagnant book debts.
And read together with the other Notes thereon, 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
accepted in India.
a) in the case of the Balance Sheet, of the state of affairs of the
Company as on March 31,2005.
b) in the case of the Profit and Loss Account, of the loss for the year
ended on that date, and
c) in the Cash Flow statement of the Cash Flow for the year ended on
that date.
For P.R.G. PAI & Co.
Chartered Accountants
Place : Mumbai P.R.G. PAI
Date: 30.8.2005 Proprietor
ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE
1. The company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. The fixed
assets could not be physically verified by the management as the plant
is under lockout since March 2003. None of the Fixed Assets have been
disposed off during the year.
2. a) The stocks of finished goods, stores, spare parts and raw
materials could not be physically verified during the year by the
management as the plant is under lockout since March 2003.
b) On the basis of our examination of stock records at Head office of
the Company, and the explanations given to us, we are of the opinion
that the valuation of stocks is fair and proper in accordance with the
normally accepted accounting principles and is on the same basis as in
the preceding year.
3. a) The terms and conditions of loans taken from companies, firms or
other parties listed in the Register maintained under Section 301 of
the Companies Act, 1956 are, in our opinion, prima facie not
prejudicial to the interests of the company. During the year, the
Company has taken loans from 4 parties amount to Rs.10,475,150/- as
Interest Free Unsecured Loans. We are informed that the loans taken
from the parties are repayable on demand without interest.
b) The company has granted an interest free security deposit to a
private trust of which two of the Directors of the company are
beneficiaries as consideration for lease of two premises. According to
the information and explanations given to us, the terms and conditions
of the deposit are not prejudicial to the interests of the company.
Save as aforesaid, we are informed that the company has not granted any
loans to companies, firms and other parties listed in the Register
maintained under Section 301 of the Companies Act, 1956.
c) The employees to whom interest free advances in the nature of loans
have been given by the company are not repaying the principal amounts
as stipulated due to non functioning of the factory.
4. In our opinion and according to the information and explanations
given to us, there was no internal control procedures with regard to
the purchase of stores, raw materials, components, plant and machinery,
equipment, finished goods and other assets and with regard to the sale
of goods, as there was no business activity under taken by the company
during the period under audit due to lockout at the factory since March
2003.
5. a) In our opinion and according to the information and explanations
given to us, there was no transactions which needs to be entered in to
a register in pursuance of Section 301 of the Companies Act, 1956.
b) According to the information and explanation given to us there are
no transactions of sales or purchase of goods and materials and
services aggregating to Rs. 500000 or more during the year in respect
of each party made in pursuance of contracts or arrangements entered in
the Register maintained under Section 301 of the Companies Act, 1956.
6. According to the information and explanations given to us, the
company has not accepted any deposits within the purview of Section 58A
and 58AA of the Companies Act, 1956 and the Companies (acceptance of
deposit) Rule 1975.
7. the During Year under consideration, the factory was under lockout
and hence the internal audit system was not followed.
8. The company has not been required by the Central Government to
maintain cost records under Section 209 (1) (d) of the Companies Act,
1956.
9. a) During the year, the company has not deposited Provident Fund and
Family Pension Fund dues with the authorities. We are informed that the
provisions of the Employees State Insurance Act, 1948 are not
applicable to the Company.
b) According to the information and explanations given to us the
following undisputed amounts were outstanding as at 31-03-2005 for a
period more than six months from the date they became payable,
Rs.64,866/- toward Sales Tax, Rs.392,550/- towards Profession Tax,
Rs.624,823/- towards Tax Deducted at Source, Rs. 8,544 towards Labour
Welfare Fund and towards Provident Fund Rs.534,898/-. The dues were
reportedly not deposited due to non availability of funds with the
Company.
10. The company has become a sick industrial company within the meaning
of clause (o) of sub section (1) of Section 3 of the Sick Industrial
companies (Special Provisions) Act, 1985 since 1999.
11. The Company has defaulted in repayment of dues to IDBI and Union
Bank Of India (Secured Creditors). The total dues as per the companies
books of accounts as on 31st March, 2005 amounted to Rs. 231,302,749/-
12. As per records of the company and information given to us, the
company has not granted loan on the basis of security by way of pledge
of shares, debentures and other securities.
13. The company is not a chit fund, nidhi or mutual benefit
fund/society.
14. The company is not dealing or trading in shares, securities,
debentures and other investments.
15. According to information given to us, the company has not given any
guarantee for loans taken by others from bank or financial
institutions.
16. The company has taken Unsecured Interest free term loans from
promoters/shareholders amounting to Rs.10,475,150 to meet its day to
day expenses during the year, to repay some Unsecured Loans (Bills
Discounted) and towards initial payment of One Time Settlement arrived
with one of the Secured Creditors.
17. The funds raised on short term basis have not been used for long
term investments and vice-versa during the year.
18. The company has not allotted any share during the year.
19. During the period covered by our audit report, the company has not
issued debentures.
20. The company has not raised any money by public issue during the
year.
21. Based on our audit and information and explanations given by the
management, we report that three of the creditors have initiated action
u/s 138 of the Negotiable Instrument Act, 1881 against the company for
an amount of Rs. 63,414/-, Rs. 111.364/- & Rs. 100,000/-
For P.R.G. PAI & Co.
Chartered Accountants
Place : Mumabi (P.R.G. PAI)
Date : 30.08.2005 Proprietor |