We have audited the attached Balance Sheet of MANDOVI PELLETS LIMITED
as at March 31,2004 and also the Profit and Loss Account and the Cash
Flow Statement of the Company for the year ended on that date, annexed
thereto and report thereon as follows:
1 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. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. 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 the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3 These financial statements have been prepared on the basis that the
Company is a going concern although its accumulated losses exceed the
aggregate of its paid up capital and reserves. The accounts do not
include any adjustments relating to the recoverability and
classification of the recorded asset amounts and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern. The Managements reasons for basing the
accounts on the going concern assumption are the expected future
benefits of modernisation/refurbishment, the continued support it has
received from its Holding Company, the anticipated support from the
State Government and changes in the economic scenario with the Company
having entered into contracts for supply of pellets to overseas and
domestic buyers. This has been elaborated in Note Nos. 5 and 11 in
Schedule 9. We are unable to express our opinion as to whether or not
the application of the going concern basis is appropriate in
preparing the financial statements of the Company.
4 As required by the Companies (Auditors Report) Order, 2003, issued
by the Central Government in terms of Section 227 (4A) of the Companies
Act, 1956, we give in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said Order, to the extent applicable to
5 Further to our comments in the Annexure referred to in paragraph 4
(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 account as required by law have
been kept by the Company so far as it 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) subject to our comments in paragraph 3 above, the Balance Sheet,
Profit and Loss Account and Cash Flow Statement dealt with by this
report are in compliance with the Accounting Standards referred to in
Section 211(3C) of the Companies Act, 1956;
(e) subject to our comments in paragraph 3 above, in our opinion and to
the best of our information and according to the explanations given to
us, the said accounts give the information required by the Companies
Act, 1956, in the manner so required except as stated in note 12
relating to disclosure of information in respect of amounts due to
Small Scale Industrial Undertakings in Schedule 9 to the accounts
and, give a true and fair view in conformity with the accounting
principles generally accepted in India :
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2004;
(ii) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date and
(iii) in case of the Cash Flow Statement of the cash flows for the year
ended on that date.
(f) on the basis of written representations received from directors, as
on 31st March 2004, and taken on record by the Board of Directors, we
report that no director is disqualified from being appointed as
Director of the Company under clause (g) of sub section (1) of section
274 of the Companies Act, 1956;
For S. B. BILLIMORIA & CO.
Sanjiv V. Pitgaonkar
Membership No. 39826
Date : 22nd June, 2004.
ANNEXURE TO THE AUDITORSREPORT
(Referred to In paragraph 4 of our report of even date)
1 The nature of the Companys business/activities during the year is
such that clauses (xiii) and (xiv) of paragraph 4 of the order are not
applicable to the Company.
2 In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) Some of the fixed assets were physically verified during the year
by the management in accordance with a programme of verification, which
in our opinion provides for physical verification of all the fixed
assets at reasonable intervals. According to the information and
explanations given to us no material discrepancies were noticed on such
(c) Assets disposed off by the Company during the year did not
constitute a substantial part of its fixed assets.
3 In respect of its inventories:
(a) As explained to us, inventories of finished goods, raw materials
and stores and spares of grinding media and coke breeze aggregating Rs.
10,354,821 were not physically verified, as there were no movements
consequent to stoppage of production activities.
Other stores and spares were physically verified during the year by the
management at reasonable intervals.
(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 were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed in respect of
inventories physically verified.
4 The Company has not granted any loans, secured or unsecured, to any
Company, firm or other parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
In respect of loans taken by the Company from companies, firms or other
parties covered in the register maintained under Section 301 of the
Companies Act, 1956, according to the information and explanations
given to us:
(a) The Company has taken loans aggregating Rs.215,516,486 from one
such Company during the year. At the year-end, the outstanding balance
of these loans aggregated Rs. 504,008,199.
(b) The rate of interest and other terms and conditions of the said
loans are, in our opinion, prima facie, not prejudicial to the interest
of the Company.
11 The accumulated losses of the Company as at the end of the financial
year have exceeded fifty per cent of Its net worth as at the end of the
year. The Company has not incurred cash losses during the current
financial year. However, the Company had suffered cash losses In the
Immediately preceding financial year.
12 The Company did not have any dues to financial institutions and
banks that were outstanding as at the year-end. The Company has not
issued debentures that were outstanding during the year.
13 The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
14 In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee in respect of
loans taken by others from banks and financial institutions.
15 To the best of our knowledge and belief and according to the
information and explanations given to us, there was no term loan
availed by the Company during the year.
16 According to records examined by us and the information and
explanations given to us, on an overall basis, funds raised on short
term basis have, prima facie, not been used during the year for long
term investment (fixed assets, etc,). Funds raised on call basis from
its Holding Company have been utilised for repayment of long term
17 According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and Companies covered in the Register maintained under Section 301 of
the Companies Act, 1956 during the year.
18 According to the information and explanations given to us and the
records examined by us, the Company has not issued any debentures
during the year.
19 The Company has not raised any money by public issue during the
20 To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
was noticed or reported during the year.
For S. B. BILLIMORIA & CO.
Sanjiv V. Pugaonkar
Membership No. 39826
Place : Mumbai,
Date : 22nd June, 2004.