We have audited the attached Balance Sheet of M/s. Indore Wire Company
Ltd. as at 31st March, 2005 and the annexed the Profit and Loss Account
and also cash flow statement of the Company for the year then ended on
that date and report that these financial statements are the
responsibility of the companys management. Our responsibility is to an
express an opinion on this financial state- ment 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
examine, on a test basis, evidence supporting the amount and
disclosures in the financial statement. 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 pro- vides a reasonable basis
for our opinion.
1) As required by the Companies (Auditors Report) order, 2003 issued
by the Companies Law Board in terms of Section 227 (4A) of the
Companies Act, 1956, we enclosed in the annex- ure a statement on the
matters specified in paragraphs 4 and 5 of the said order.
2) Further to our comments in the annexure referred to above, we report
i. We have obtained all the information and explanations which to the
best of our knowl- edge and belief were necessary for the purpose of
ii. 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
iii. The Balance Sheet, Profit and Loss Account and Cash Flow dealt
with by this report are in agreement with the books of account.
iv. In our opinion and based on Information & explanations given to us,
none of the Direc- tors are disqualified as on 31st March, 2005 from
being appointed as Direcotrs in terms of clause (g) of Sub-Section (1)
of Section 274 of the Companies Act, 1956.
v. In our opinion, balance sheet and profit and loss account dealt with
by this report com- ply with, the accounting standards referred to in
sub-section (3C) of section 211 of the Company Act, 1956;
vi. Attention is invited to the following notes in schedule No. 15 :-
i. Note No. 7 regarding non provision of interest liability Rs. 2171.94
Lacs. This is contrary to the accounting practice recommended by the
Institute of Chartered Accountants of India. Consequently loss for the
year is under stated by Rs. 2171.94 Lacs.
ii. Note No. 8 regarding diminution in the value of investment of RS.
79.26 Lacs & 43.75 Lacs and the consequential affect there of in the
Profit & Loss Account and Balance Sheet.
iii. Note No. 10 regarding non provision of doubtful debts RS. 890.82
iv. Note No. 4 regarding non provision of Gratuity liability amounting
to Rs. 33.99 Lacs
vii In our opinion and to the best of our information and according to
explanation give to us. The said Balance Sheet and Profit & Loss
Account read with the signifi- cant accounting policies and notes
thereon give the information required by the Companies Act, 1956 in the
manner so required and give a true & fair view :
a) in case of Balance Sheet of the state of affairs of the Company as
at 31st March, 2005 and
b) in case of Profit and Loss Account of the Loss for the year ended on
ANNEXURE TO AUDITORS REPORT
This is the Annexure referred to in our report on the Balance Sheet as
at 31st March,2005
1. a) The Company has maintained proper records showing full
particulars including quantitative details and situation of the Fixed
b) As explained to us, the Assets have been physically verified by the
management in accordance with a phased programme of verification, which
in our opinion, is reasonable, considering the size and the nature of
its business. The frequency of verification is reasonable and no
material discrepancies have been noticed on such physical verification.
Substantial part of Fixed Assets have not been disposed off during the
year, which will effect its status as going concern.
2. a) The inventories have been physically verified by the management
during the year at reasonable intervals.
b) In our opinion, the procedures of physical verification of the
inventories followed by the management are reasonable and adequate in
relation to the size of the Company and nature of its business.
c) The Company has maintained proper records of inventories and
discrepancies noticed on physical verification of inventories as
compared to book records were not material. However, the same have
been properly dealt with, in the Books of Accounts.
3. a) The Company has granted / taken unsecured loan from the
companies, firms or other parties listed in the register, maintained
u/s. 301 of the Companies Act, 1956 The maximum amount involved during
the year was RS. 27,01,886 and the year end balance of loans taken from
such parties was RS. 27,01,886. However no loan was raised from such
parties during the year.
b) The rate of interest and other terms and conditions in respect of
these loans taken from / granted to the company, firm & Other parties
are in our opinion, prima facie not prejudicial to the interest of the
c) In respect of loans given by the Company, where stipulations have
been made, they have generally repaid the principal amounts as
stipulated and have been regular in payment of interest, where
d) There are no overdue amounts of loan taken / granted.
4. In our opinion and according to the information and explanation
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 Audit, no major weakness has
been noticed in the Internal controls regarding purchase of inventory
and fixed assets and sale of goods.
5. a. In our opinion and according to the information and explanation
given to us, and as confirmed by the company secretary of the company
and 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 the transactions that need to be entered into the register
maintained under section 301 have been so entered.
b. The transactions of purchase and sale of goods, materials and
services made in pursuance of contracts or arrangements entered in the
register maintained u/s. 301 of the Companies Act, 1956 aggregating
during the year RS. 5,00,000/- or more in respect of each party have
been made at price which are reasonable having regard to prevailing
6. As per the information and explanation given to us the Company has
not accepted any depos- its from the public during the year from the
public covered by the directors issued by the Reserve bank of India and
section 58A and 58AA of the companies Act 1956.
7. As per information and explanation provided to us the Company has
an adequate internal audit system commensurate with the size of the
company and nature of its business.
8. The Central Government has not prescribed the maintenance of cost
records u/s. 209 (1) (d) of the companies Act, 1956 as such this clause
is not applicable.
9. According to the records of the company, the company is regular in
depositing undisputed statutory dues including Provident Fund,
Employees State Insurance , Income-Tax, Sales Tax, Wealth Tax, Customs
Duty, Excise Duty, Cess and other statutory dues with appropriate
authorities except the following :
Payments outstanding for more then Six Months as on 31.03.05
Statutory Laws Amount
Entry Tax 7,10,389
Payments outstanding on account of Legal disputes
S.NO Name of the Nature of
Statute Statutory Dues
1 Central Excise Central Excise Duty
Act, 1944 * (For demand of
by CBEC with
demand is NIL)
2 Income Tax Income Tax for
Act 1961 AY 1997-98
3 Central Sales tax Central Sales Tax
4 MPCT Commercial Tax
5 Entry Tax Act Entry Tax
Forum where dispute is Amount
Supreme Court 23,66,863
Comm. C. E. (Appeals) 13,17,500
First Appellate Authority 2,75,97,949*
Commissioner of Income Tax 54,17,379/-
Appeals-Range 3 Mumbai
Assessing Officer 13,06,727
Addl. Commissioner of 12,13,3774
Appellate Forum (Bhopal) 68,03,433
Addl Comm of CT 1,55,13,575
Addl Comm of CT 35,83,693
Dy Comm of CT 8,55,765
10. The company is a Sick Industrial unit within the meaning of Clause
(o) of subsection (1) of Section 3 of the Sick Industrial companies
(Special Provisions) Act, 1985. The accumulated losses at the end of
the financial year are Rs.84.66 Crores which is far in excess of its
net worth. However the company has not incurred cash losses during the
year and in the preced- ing financial year.
11. According to the information and explanation given by the
management the company has defaulted in repayment of its dues to the
financial institutions and banks. The detail is men- tioned hereunder :
Overdue status as on 31 March 2005
Financial Institutions Principal Balance as Overdue Amount
SIDBI(WC) 300 224.99 224.99
SB of lndore(WC) 1103 1208.77 1208.77
Bank of Bahrain(WC) 1112 1099.90 1099.90
State Bank of Mauritius (WC) 709.45 748.74 748.74
IDBI Bank(WC) 762 642.60 642.60
Janta Sahakari Bank (WC) 300 287.35 287.35
Indian Overseas Bank (WC) 390 339.57 339.57
GE Capital (WC) 600 579.00 579.00
IDBI(TL) 2800 3810.91 3810.91
IDBI(WCTL) 1000 1218.65 1218.65
EXIM Bank(TL) 400 548.63 548.63
12. Based on our examination of the records and the information and
explanation given to us the company has not granted any loans or
advances on the basis of security by way of pledge of shares,
debentures or other securities.
13. The provisions of any special statute applicable of Chit Fund,
Nidhi or Mutual Benefit Fund/ Societies are not applicable to the
14. The Company is not dealing or trading in shares, securities,
debentures or other investments and hence, the requirements of Para
4(xiv) are not applicable to the Company.
15. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institutions.
16. According to the records of the company and the information and
explanation given to us the company has not raised term loans during
17. On the basis of our examination of the cash flow statement, no
funds have been raised during the year.
18. As per the information provided to us the company has not made any
preferential allotment of shares to parties and companies covered in
the register maintained u/s. 301 of the Companies Act, 1956 during the
19. The company has not issued any debentures and hence creation of
security does not arise.
20. The Company has not raised any money by way of public issues
during the year.
21. On the basis of our examination and according to the information
and explanations given to us, no fraud, on or by the Company, has been
noticed or reported during the year.
FOR R.D. JOSHI & COMPANY
Place: INDORE H.L. Joshi
Date : 5th September, 2005 Partner