ANNUAL REPORT 2005-2006
THE MEMBERS OF
THE DAWN MILLS COMPANY LIMITED
1. We have audited the attached Balance Sheet of THE DAWN MILLS COMPANY
LIMITED, Mumbai as at 30th June, 2006 and the related Profit and Loss
Account and the Cash Flow Statement for the period ended on that date
annexed thereto. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. 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, 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 (Auditor's 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 in paragraphs 4 and 5 of the said Order.
4. Further and subject to our comments in the Annexure referred to in
paragraph 3 above, we report that:
(a) 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;
(b) 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 the 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) In our opinion, 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 Act;
(e) On the basis of written representations received from the directors, as
on 30th June, 2006, and taken on record by the Board of Directors, we
report that none of the directors is disqualified as on 30th June, 2006
from being appointed as a director in terms of clause (g) of sub-section
(1) of section 274 of the Companies Act, 1956;
(f) In our opinion and to the best of our information and according to the
explanations given to us, the said accounts read with the 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 generally accepted in India:
(a) In the case of the Balance Sheet, of the state if affairs of the
Company as at 30th June, 2006;
(b) In the case of Profit and Loss Account, of the Loss of the Company for
the period ended on that date; and
(c) in the case of cash flow statement, of the cash flow for the period
ended on that date.
For CHANDRAKANT & SEVANTILAL
PRADEEP S. SHAH
M. No. 30632
Mumbai : 11th December, 2006
ANNEXURE TO THE AUDITORS' REPORT ON THE ACCOUNTS FOR THE PERIOD ENDED 30TH
JUNE, 2006 OF THE DAWN MILLS COMPANY LIMITED:
(Referred to in paragraph 3 thereof)
1.(a) The Company has maintained proper records to show full particulars
including quantitative details and situation of fixed assets as from the
(b) As explained to us, certain items of fixed assets were physically
verified by the management once during the year which, in our opinion, is
reasonable. No material discrepancies were observed on such verification.
(c) During the year the Company has disposed off substantial part of Plant
and Machinery. However, as explained in Note No.6 in Schedule 13, the
Company is treated as 'going concern' in view of the development stated in
the said note.
2.(a) The inventory, have been physically verified by the management at the
end of the accounting period. In our opinion, the frequency of verification
(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 operations of the
Company and the same have been properly dealt with in the books of account.
3.(a) During the period, the Company has received repayment of loan of
Rs.2.9 crores given during the earlier year to a company covered in the
register maintained u/s.301 of the Companies Act, 1956. Except for the said
loan, the company has not granted any loans to companies, firms or other
parties registered u/s.301 of the Companies Act, 1956.
(b) In our opinion, the rate of interest and other terms and conditions
thereof were not prima facie prejudicial to the interest of the Company.
The said Company was regular in repayment of principal amount as well as
(c) During the period the Company has taken loans from two Companies
covered in the register maintained u/s.301 of the Companies Act, 1956.
The maximum amount involved during the period and the year-end balance of
such loan aggregates Rs.18.68 Cr. and Rs.6.70 Cr. respectively.
(d) In our opinion, the rate of interest and other terms and conditions of
the said loans taken are not prima facie prejudicial to the interest of the
(e) The Company is regular in repayment of principal amount and interest on
the said loans taken.
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 and, fixed assets and for the sale of goods and services.
During the course of our audit, no major weakness has been noticed in the
internal control system.
5.(a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that contracts or arrangements that need to be entered in the
register maintained under section 301 of the Act have been so entered.
(b) The Company has not purchased or sold during the period any goods or
materials exceeding rupees five lakh in value from / to any of the parties
mentioned in the register maintained u/s.301 of the Companies Act, 1956.
6. During the year the Company has not accepted any deposits to which
provisions of Sections 58A and 58AA or any other relevant provisions of the
Companies Act, 1956 and the rules framed thereunder would apply.
7. The internal audit system, in our opinion, is adequate and commensurate
with the size and nature of Company's business.
8. We have broadly reviewed the books of account maintained by the Company
pursuant to the Rules made by the Central Government forth e maintenance of
cost records under Section 209(1)(d) of the Companies Act, 1956, and we are
of the opinion that prima facie the prescribed accounts and records have
been made and maintained. The said records are maintained till the
continuation of the manufacturing operations upto 25th August, 2005. We
have not, however, made a detailed examination of the said records.
9.(a) According to the information and explanations given to us, based on
the 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, excised-duty,
cess and other statutory dues applicable to it.
(b) According to the information and explanations given to us, there were
no undisputed amounts payable in respect of the statutory dues referred to
in clause (a) above which have remained outstanding as at 30th June, 2006
for a period of more than six months from the date they became payable.
(c) According to the information and explanation given to us and based on
the records of the Company, except as reported below, there are no dues of
Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty or
Cess, which have not been deposited on account of any dispute. The details
of excise duty which have not been deposited on account of dispute with the
Central Excise authorities are as under:
Name of the Nature of Amount Forum where
Statute Dues (Rs) dispute is
Excise Duty Excise duty 2,12,920 Addl.
The Central claimed on Commissioner
Excise Act, loss in job of Central
1944. work during Excise.
10.(a) The Company has no debit balance in Profit & Loss account. The
payments made during the period in respect of Voluntary Retirement Scheme
declared by the Company as well as payments under such schemes during the
period prior to the accounting year 2003-04 have been treated as Deferred
Revenue Expenditure and are carried forward to the extent of unamortized
balances to be written off in the subsequent years under the head
The above unamortized balances have not been considered in determining the
profit or loss reflected in Profit & Loss account.
(b) The Company has incurred cash loss during the period covered by the
report but had not incurred any cash loss in the financial year immediately
preceeding the period covered by the Report.
11. Based on our audit procedures and on the basis of information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to the banks. There are no
dues to any financial institution or debenture holders.
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. The Company is not carrying on the chit fund business, hence, the
provisions of any special statute applicable to chit fund are not
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. The term loans were applied for the purpose for which they were raised.
The term loans were repaid during the period.
17. During the period the funds raised on short term basis have been used
for long term investment. The said funds are mainly used for the purpose of
payments made under Voluntary Retirement Scheme.
18. The Company has not made any preferential allotment of shares to
parties or companies covered in the Register maintained under section 301
of the Companies Act, 1956.
19. There are no debentures issued and outstanding during the period.
20. During the period, the Company has not raised 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 CHANDRAKANT & SEVANTILAL
PRADEEP S. SHAH
M. No. 30632
Mumbai : 11th December, 2006