1. We have audited the attached Balance Sheet of HIND SYNTEX LIMITED
as at March 31,2012 and also the Profit and Loss Account and the Cash
Flow Statement of the Company for the year 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 financialstatements 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
3. As required by the Companies (Auditor''s 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 on the basis of such
checks, we considered appropriate and the information and explanations
given to us, on the matters specified in paragraphs 4 of the said
4. Further to our comments in the Annexure referred to above, we
(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
(b) 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
(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) Refer to Note No. 28 to Accounts relating to the charge to the
Profit & Loss Account of Rs. 25,71,545 in respect of Gratuity and of
17,21,679 in respect of Compensated Absences. In the absence of
detailed information from an independent actuary, interalia, as to the
present value of obligation and employee benefits cost to be recognised
respectively in the Balance Sheet and Profit & Loss Account, we are
unable to ascertain the adjustment and the charges which should have
been made to the Profit & Loss Account, respectively, in respect of
Gratuity and Compensated Absences, as contemplated by the Accounting
Standard-15 (AS-15) on Employees Benefits [AS-15 (Revised)] and
accordingly, we are unable to comment on the effect thereof on the Loss
for the year and the consequential effect on Debit balance in the
Profit & Loss Account, and Current Liabilities and Provisions carried
forward at the year end.
Further, in view of the absence of the information as aforesaid, the
Company has not made disclosures of reconciliation of obligation, fair
value of plan assets, actuarial assumptions, etc. as required by AS-15
Further, as stated in Note 34 to the Accounts, on the basis of the
working prepared by the Company to ascertain the impairment in terms of
Accounting Standard-28, Impairment of Assets, no impairment loss has
been recognised. However, in view of the uncertainty Involved with the
internal restructuring (refer note 26 of the accounts), and since the
future cash flow prepared to determine the value in use are on basis of
such restructuring, we are unable to comment whether there is an
impairment of assets.
Subject to our observation as mentioned in paragraph (d) above, in our
opinion, the Balance Sheet, Profit and Loss Account and Cash Flow
Statement comply with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act, 1956;
(e) On the basis of written representations received from the
Directors, as on March 31,2012 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31,2012 from being appointed as a director in terms of clause (g)
of sub-section (1) of Section 274 of Companies Act, 1956;
(f) Based on a technical opinion, the Company has provided depreciation
on all plant and machinery (including Power Plant) as continuous
process plants at the rate pursuant to notification in GSR No.756E
dated 16.12.1993 on straight line method.
On the basis of the Guidance Note issued by the Institute of Chartered
Accountants of India on Some Important Issues Arising From The
Amendments To Schedule XIV to the Companies Act, 1956, in our opinion,
depreciation should have been provided at the rate other than that
provided for continuous process plant Schedule XIV of the Companies
Had depreciation been provided at the rate other than that provided for
continuous process plant, depreciation for the year would have been Rs.
1,00,18,680 (instead of Rs. 3,63,45,678), Loss for the year (Net of
Deferred Tax Assets of Rs. 85,41,795 for such depreciation) would have
been 17,10,29,139 (instead of 110,58,97,941) and at the year end, Net
Block of Fixed Assets would have been Rs. 13,40,48,404 (instead of Rs.
29,19,18,598), Debit Balance in the Profit and Loss Account, after
adjusting balances in Reserves and Surplus (except to the extent of X
89,17,860 on account of Capital Reserves), (Net of Deferred Tax Asset
of Rs. 5,12,20,984 for such depreciation) would have been Rs. 50,83,66,206
[instead of Debit Balance in the Profit and Loss Account, after
adjusting balances in Reserves and Surplus (except to the extent of Rs.
89,17,860 on account of Capital Reserves), of 140,17,16,996] and there
would have been Deferred Tax Asset (Net) of Rs. Nil (instead of Deferred
Tax Assets (Net) of Rs. Nil).
(g) We would like to draw attention to Note 26(b) to the Accounts
relating to non availability of loan statement and balance confirmation
of loans outstanding from some of the lender banks/institutions as on
March 31, 2012, due to which the interest charged to Profit & Loss
Account is determined on the basis of the interest rate specified in
the Corporate Debt Restructuring Scheme and therefore, the outstanding
loan and interest balance has been taken as per the records of the
(h) Subject to our observations as mentioned in paragraph (d) and (f)
above, in our opinion and to the best of our information and according
to the explanations given to us, the said accounts, read together with
notes thereon and significant Accounting Policies siatsd in Schedule
XIV 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 the Balance Sheet, of the state of affairs of the
Company as at March 31,2012;
(ii) in the case of the Profit and Loss Account, of the Loss of the
Company for the year ended on that date;
(iii) in the case of Cash Flow Statement, of the Cash Flows of the
Company for the year ended on that date.
Annexure referred to in paragraph 3 of the Auditors'' Report of even
date to the members of HIND SYNTEX LIMITED on the accounts for the year
ended March 31, 2012.
On the basis of such checks as we considered appropriate and in terms
of information and explanations given to us, we state that:
(i) (a) The Company is generally maintaining proper records to show
full particulars, including quantitative details and situation of fixed
(b) As explained to us, the Company has a phased programme of physical
verification of fixed assets which, in our opinion, is reasonable
having regard to the size of the Company and the nature of its assets.
No material discrepancies were noticed on such verification.
(c) The Company has not disposed off any substantial part of its fixed
assets during the year so as to affect its going concern, subject to
Note 27 of Notes to the Accounts relating to assets transferred to
Pillukhedi Unit from Birgod Unit.
(ii) (a) The inventories have been physically verified by the
management during the year. In our opinion, the frequency of
verification is reasonable.
(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) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between physical inventories and
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
(iii) (a) As per the information furnished, the Company has not granted
any loans, secured or unsecured, to companies, firms or other parties
covered in the register maintained under Section 301 of the Companies
(b) As the Company has not granted any loans, secured or unsecured to
Companies, firms or other parties covered in
(c) the register maintained under Section 301 of the Companies Act,
1956, Clause (iii) (b) of the Order relating to the & rate of interest
and terms and conditions being prima facie prejudicial to the Company,
Clause (iii) (c) relating to
(d) regularity of receipt of principal amount and interest and Clause
(iii) (d) relating to steps taken for recovery of overdue principal and
interest of more than rupees one lakh, are not applicable.
(e) During the year, the Company has not taken any loans, secured or
unsecured from companies, firms or other parties covered in the
register maintained under section 301 of the Act.
(f) As the Company has not taken any loans, secured or unsecured from
companies, firms or other parties covered in & Register maintained
under Section 301 of the Act, Clause (iii) (f) of the Order relating to
rate of interest and terms
(g) and conditions being prima facie prejudicial to the interest of
Company, Clause (iii) (g) relating to regularity in repayment of
principal amount and interest, are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods. As
informed to us, the Company is not engaged in the sale of any services.
During the course of our audit, no major weakness has been noticed in
these internal control systems.
(v) According to the information and explanations given to us, we are
of the opinion that there are no transactions that need to be entered
into the register maintained under section 301 of the Companies Act,
1956. Consequently, reporting on clause 4(v)(b) of the said Order does
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
during the year. Hence, the question of complying with the directives
issued by the Reserve Bank of India and provisions of Section 58A and
58AA or any relevant provision of the Act, and the rules framed there
under, does not arise. Accordingly clause 4(vi) of the order is not
(vii) In lieu of Corporate Debt Restructuring, the Monitoring committee
has appointed an independent firm of Chartered Accountants as
Concurrent Auditor to conduct concurrent audit of the Company on
monthly basis, in view of which, the Board of Directors had decided to
discontinue separate internal audit of the Company.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of Cost Records under Section 209(1 )(d) of the Companies
Act, 1956, in respect of the manufacturing activities of the Company to
which the said rules are applicable and are of the opinion that prima
facie the t prescribed accounts and records have been made and
maintained. We have, however, not made a detailed examination of the
records with a view to determine whether they are accurate or complete.
(ix) (a) According to the information and explanations given to us and
the records examined by us, the Company has been regular in depositing
undisputed statutory dues including Provident Fund, Investor Education
and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax,
Wealth-tax, Service-tax, Customs Duty, Excise-duty, Cess and other
material Statutory dues, applicable to it and there were no arrears of
such statutory dues as on March 31,2012 for a period of more than six
months from the date they became payable. (b) According to the
information and explanations given to us, given herein below are the
details of dues of sales tax, income tax, wealth tax, service tax,
customs duty, excise duty, cess which have not been deposited on
account of disputes and the forum where the dispute is pending:
Name of the Nature of Amount in Period to which Forum where
statue the dues Rs. the amount relate dispute is
Entry Tax Act,
1976 Entry Tax 4,10,968 1997-98 Tribunal,
(x) in our opinion, the accumulated losses of the Company as at the end
of the financial year are more than fifty percent of its net worth. The
Company has incurred cash losses during the year under audit. However
in the immediately preceding financial year there were no cash losses.
(xi) In view of the sanction of CDR package and related extension of
the due dates, the Company has defaulted in following repayment of dues
to Banks or Institutions:
I. Period Amount in Rs.
Period Total Amount paid Default
Amount due on or before amount
2006-07 5,19,40,846 1,69,37,863 3,50,02,983
2007-08 6,65,26,092 2,52,92,744 4,12,33,348
2008-09 7,51,11,312 28,00,000 7,23,11,312
2009-10 7,51,11,312 - 7,51,11,312
2010-11 8,12,79,485 1,84,00,000 6,28,79,485
2011-12 7,87,79,485 - 7,87,79,485
Total 42,87,48,532 6,34,30,607 36,53,17,925
Period Amount of Year in which Amount of
Default made default made default as on
good good March 31,2012
2006-07 97,27,401 2007-08 2,52,75,582
2007-08 29,08,204 2008-09 3,83,25,144
2008-09 - - 7,23,11,312
2009-10 - - 7,51,11,312
2010-11 - - 6,28,79,485
2011-12 - - 7,87,79,485
1,26,35,605 - 35,26,82,320
II. Interest Amount in Rs.
Period Total Amount paid Default
Amount due on or before amount
2006-07 3.80,10,844 1,75,48,156 2,04,62,688
2007-08 5,66,94,298 2,64,29,413 3,02,64,885
2008-09 6,08,18,220 90,42,313 5,17,75,907
2009-10 6,17,02,017 25,76,644 5,91,25,373
2010-11 7.02,73,125 47,75,462 6,54,97,663
2011-12 7,51,77,927 1,41,27,308 6,10,50,619
Total 36,26,76,431 7,44,99,296 28,81,77,135
Period Amount of Year in which Amount of
Default made default made default as on
good good March 31,2012
2006-07 - - 2,04,62,688
2007-08 10,97,696 2008-09 2,91,67,189
2008-09 - - 5,17,75,907
2009-10 - - 5,91,25,373
2010-11 - - 6,54,97,663
2011-12 67,87,415 2008-09 to 5,42,63,204
Total 78,85,111 - 28,02,92,024
(xii) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and /
or advances on the basis of security by way of pledge of shares,
debentures and other securities.
(xiii) As the Company is not a chit fund, Nidhi, mutual benefit fund or
society the provisions of Clause 4 (xiii) of the Order are not
applicable to the Company.
(xiv) According to the information and explanations given to us, in our
opinion the Company is not dealing or trading in shares, securities,
debentures and other investments and hence, the requirements of Clause
4(xiv) of the Order are not applicable to the Company.
(xv) As the Company has not given any guarantee for loans taken by
others from banks or financial institutions, clause 4(xv) of the Order
is not applicable to the Company.
(xvi) In our opinion, the term loans availed by the Company were prima
facie, applied for the purpose for which the loans were obtained.
(xvii) According to the information and explanations given to us and on
examination of the financial statements of the Company, we report that,
the Company has utilized short-term funds for long- term purpose
amounting to Rs.730.39 lacs. The utilization of short term funds
towards long terms funds is due to recovery of interest on term loan by
(xviii) According to the information and explanations given to us, as
the Company has not made any preferential allotment of shares during
the year, Clause 4 (xviii) of the Order is not applicable.
(xix) According to the information and explanations given to us, as the
Company has not issued any debentures and hence, the question of
creating security or charges in respect thereof does not arise, Clause
4 (xix) of the Order is not applicable.
(xx) As the Company has not raised any money by public issues during
the year, Clause 4 (xx) of the Order is not applicable.
(xxi) Based on the audit procedures performed and information and
explanations given to us by the management, we report that no fraud on
or by the Company has been noticed or reported during the course of our
For Bansi S Mehta & Co.
Firm Registration No. 100991W
Place : Plllukhedi Divyesh I. Shah
Dated : May 25, 2012 Partner
Membership No: 37326