We have audited the attached Balance Sheet of HYTONE TEXSTYLES LIMITED,
as at 31st March, 2009 and the Profit and Loss Account of the Company
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
1. As required by the Companies (Auditors Report) Order, 2003, as
amended by the Companies (Auditors Report) (Amendment) Order, 2004,
issued by the Central Government of India in terms of Section 227(4A)
of the Companies Act, 1956, based upon such checks of the books and
records as we considered appropriate and according to the information
and explanations given to us, we annex hereto a statement on the
matters specified in paragraphs 4 and 5 of the said Order to the extent
applicable to the Company.
2. Further to our comments in the Annexure referred to in Paragraph-1
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
(ii) In our opinion, proper books of accounts as required by the law
have been kept by the Company so far as appears from our examination of
(iii) The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account;
(iv) In our opinion, the Balance Sheet and Profit and Loss Account
dealt with by this report comply with the Accounting Standards referred
to sub-section 3(C) of Section 211 of the Companies Act, 1956;
(v) In our opinion and as informed to us by the Board of Directors, we
report that all directors are disqualified as on 31st March, 2009 from
being appointed as a director in terms of clause (g) of sub-section (1)
of section 274 of the Companies Act, 1956. (Refer Note 4 of Notes to
Accounts in Schedule 17).
(vi) (a) The accounts have been prepared on the assumption that the
company will continue as a going concern (Refer Note 5 of Notes to
Accounts in Schedule 17).
(b) No provision has been made for interest, penal interest and
liquidated damages on loans, borrowings and working capital facilities
from financial institutions and banks, amounts unascertainable.fRefer
Note 9 of Notes to Accounts in Schedule 17).
(c) The remuneration paid to the manage- rial persons is in excess of
the limits laid down under section 198 and Schedule XIII of the
Companies Act, 1956 and is subject to the approval of the Department of
Corpo- rate Affairs, New Delhi. (Refer Note 18 of Notes to Accounts in
(vii) Subject to the foregoing, and read with the other notes, in our
opinion and to the best of our information and according to the
explanation given to us, the said Balance Sheet and the Profit and Loss
Account read together with the Schedules and 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 of affairs of the
Company as at
31st March, 2009; and
b) in the case of the Profit and Loss Account, of the Company of the
loss for the period ended on that date.
c) in the case of the Cash Flow Statement, of the cash flows for the
period ended on that date
Re: HYTONE TEXSTYLES LIMITED
(Referred to in Paragraph-3 of our report of even date of HYTONE
TEXSTYLES LIMITED on the financial statements for the year ended 31st
1. Fixed Assets.
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed asset.
(b) We are informed that these fixed assets are physically verified by
the management during the year and no material discrepancies between
book records and physical inventory were noticed on such verification.
In our opinion, the frequency of verification is reasonable.
(c) There has not been any substantial disposal of Fixed Assets during
the year and hence its does not affect the going concern status of the
During the year under review there is no closing stock. Accordingly,
sub paragraph (a), (b) and (c) of this clause are not applicable.
3. Loans and Advances either granted or taken
a) According to the verification of books and records and the
information and explanation given tous, no loans have been granted to
companies, firms or other parties listed in
the register maintained under section 301 of the Companies Act, 1956.
Accordingly, sub- paragraphs (a), (b), (c) and (d) are not applicable.
b) As per the records verified by us, the Company has not taken loan
from any party covered in the register maintained under section 301 of
the Companies Act, 1956. The maximum amount involved during the year is
Rs. Nil and the balance of loan taken from such party at the end of the
year was Rs. Nil.
During the year under review, the Company has not taken loan from any
party covered in the register maintained under section 301 of the
Companies Act, 1956 and hence there is no interest paid or repayment of
loan made. Accordingly, sub paragraph (c) and (d) of this clause are
4. Internal Controls
In our opinion and according to the information and explanations given
to us, the internal control procedures prevailing in the company need
to be strengthened further to make them fairly commensurate with its
size and the nature of the business with regard to purchase of
inventories and fixed assets and for the sale of goods. During the
course of our audit, we have observed no continuing failure to correct
major weaknesses in the internal controls.
5. Transactions covered by Section 301
a) During the year, the transactions that need to be entered into a
register in pursuance of Section 301 of the Act have been so entered by
b) Based on information and explanations given to us, the transactions
of purchase of goods and materials exceeding the value of Rs. 5 lacs in
respect of each party pursuant to such contracts or arrangements have
been made at prices which are reasonable having regard to the
prevailing market prices and other conditions at the relevant time.
6. Public Deposits
The company has not invited any deposits from the public with the
purview of Reserve Bank of India and the provisions of Section 58A and
58AA of the Companies Act, 1956 and the Companies (Acceptance of
Deposit) Rules, 1975.
7. Internal Audit
The company has no formal internal audit system. However, its internal
control procedures and the system of internal checking of financial and
other records are, in our opinion commensurate with the size of the
company and the nature of its business.
8. Cost Records
During the year under review, since there is no manufacturing activity
carried on by the company no cost records as prescribed by the Central
Government under section 209(1)(d) of the Companies Act, 1956 need to
9. Statutory Dues
a) According to the information and explanation given to us and based
on the records verified by us, the company is regular in depositing
undisputed statutory. ()ues in respect of Provident Fund, Employees
state Insurance, Income Tax, Sale Tax, Wealth Tax and any other
statutory dues with appropriate authorities and no dues remain
outstanding for a period of more than six months except in respect of
Name of the Nature of Amount Period to which
Statue Dues (Rs.) the amount relates
Muncipal Property Tax 93,15,433/- 2005-2009
MIDC WaterTax 25,863/- 2005-2009
MSEDCo.Ltd. Electricity 34,48/- 2005-2009
b) According to information and explanation given to us and on the
basis of the books and records examined by us, following is the
statement of dues, which have been disputed:
Nameofthe Nature of Amount Period to Forum Where
Statue the Dues (Rs.) which amount dispute
relates is pending
TaxAct, Assessed 32,490/- AY. 1993-94 I.TAT.
10. Accumulated Losses
In our opinion, the accumulated losses of the company are not less than
fifty percent of its net worth. The company has not incurred cash
losses during the current financial year covered by our audit however
it had incurred the same in the immediately preceeding financial year.
11. Dues to Financial Institutions/Banks According to the information
and explanations given to us and on the basis of our examination of the
books of accounts, the company has defaulted in repayment of dues to
Financial Institutions. Following is the statement showing year and
Parties Amount Year From
FromlDBI 12,36,09,149/- Liability accounted
Debentures 5,13,78,399/- Liability accounted
-IDBI till 2003
No provision has been made on the above from the year ended 2003 for
interest, penal interest and liquidated damages on loans, borrowings
and working capital facilities from financial institutions and banks
amounts of which are unascertainable.
12. Loans against Pledge of Securities
According to the information and explanations given to us the company
has not granted loans and advance on the basis of security by way of
pledge of shares, debentures and other securities during the period of
13. Application of Special Statute
The provisions of any special statute applicable to Chit Fund, Nidhi
and Mutual Benefit Society are not applicable to the Company during the
year under review.
14. Dealing/Trading in Shares/Securities
As per the records verified, the company has not dealt with or traded
in shares, securities, debentures and other investments during the year
under review. Therefore, the provisions of clause 4(xiv) of the
Companies (Auditors Report) Order, 2003 are not applicable to the
15. Guarantees Given
According to the information and explanations given to us, the company
has not given any guarantees for loans taken by others from banks and
16. Application of Funds Raised
According to the information and explanations given to us, as also on
the basis of books and records examined by us, the company has not
obtained any fresh term loans during the audit year.
17. Financial Management
According to the information and explanation given to us and on the
overall examination of balance sheet of the company, we report that no
short term funds have been used for long term investments
18. Preferential Allotment
During the year under review, the company has not made any preferential
allotment of equity shares to any party/concern listed in the register
maintained under section 301 of the Companies Act, 1956.
19. Security against Debentures
According to the verification of books and records and the information
and explanations given to us, the company has not issued any debentures
during the year. Accordingly, the provisions of clasue 4(xix) of the
Companies (Auditors Report) Order. 2003 are not applicable to the
20. End use of Public Issue Money
As per information and explanations given to us, the Company during the
year has not raised funds by way of public issue. Thus, the provisions
of clause 4(xx) of the Companies (Auditors Report) Order. 2003 are not
applicable to the company.
Based on our verification of the books of account and other relevant
records and based on the information and explanations given to us, we
have not noticed or reported any fraud on or by the Company during the
year under review.
Mulraj D. Gala
Place : Mumbai Chartered Accountants.
Date : 25th August, 2009 M.No: 41206