1. We have audited the attached balance sheet of Nilachal Refractories
Limited, as at 31 st March, 2012, the Profit & Loss account and also
the cash flow statement 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 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 of
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. The liability for Gratuity and leave salary payable to the staffs
has been made as per actual liability as on 31s'' March'' 2012 and not as
per actuarial valuation and the liability remains non funded.
5. Further to our comments in the Annexure referred to above and
subject to note 4 above and read together with other notes in the
schedule annexed to the financial statements for the year, we report
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
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 our
c. The balance sheet, profit & 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
companies act, 1956.
e. On the basis of written representations received from the directors
and taken on record by the Board of Directors we report that none of
the directors is disqualified as on 3 lsl March, 2012 from being
appointed as a director of the company in terms of section 274( 1) (g)
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 financial statements together
with the schedules and notes thereon and attached thereto 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:
L In the case of balance sheet, of the state of affairs of the company
as at 3 lsl March, 2012;
ii. In the case of profit and loss account, of the profit for the year
ended on that date; and
iii. In the case of cash flow statement, of the cash flows for the
year ended on that date.
ANNEXURE TO AUDITOR''S REPORT FOR THE YEAR ENDED 31st MARCH, 2012 OF
NILACHAL REFRACTORIES LIMITED.
(Referred to in paragraph 3 of our report of even date)
i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
(b) The assets have been physically verified by the management during
the year where no material discrepancies were noticed.
(c) No fixed assets has been disposed off during the year.
(ii) (a) The inventory has been physically verified during the year by
the management where no material discrepancies were noticed.
(b) The procedure of physical verification of inventory followed by the
management is reasonable and adequate in relation to the size of the
company and the nature of its business.
(c) The company is maintaining proper record of inventory.
iii) (a) It is reported to us that the company have not granted any
loan, secured or unsecured to companies, firms or other parties covered
under section 301 of the Companies Act, 1956.
(b) In view of our comment in paragraph 3(a) above , clause 3(b), 3(c)
and 3(d) of the paragraph 3 of the aforesaid order are not applicable
to the Company.
(c) The company has taken loans, secured or unsecured from the
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act. In order to meet its financial
commitment, unsecured loan from the promoters/share holders amounting
to Rs.2222 lakh involving 15 parties has brought in further and have
balance of Rs. 3747 lakh at the year end (31s1 March 2012),
(d) Interest has been charged on such loans during the year and other
terms and conditions of the loans taken by the Company, secured or
un-secured are, prima facie, not prejudicial to the interest of the
(e) The Term Loan repayment is done on demand and during the year under
review, the principal has been partly repaid to the tune of Rs 1005
lakh involving 9 parties and hence principal and interest are regular
(iv) In our opinion and according to the information and explanations
given to us and considering the status of the company mentioned
elsewhere in this report, there are adequate internal control system
commensurate with the size of the company and the nature of its
business for the purchases of inventory and fixed assets and for the
sale of goods and services. During course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
v) a) According to the information and explanation given to us, the
particulars of contracts and arrangements referred in section 301 of
the companies Act, 1956 other than as mentioned in clause (iii) above
has been entered in the register maintained under that section.
b) In our opinion and according to the information and explanations
given to us, where each of such transactions is in excess of Rs.5 lakhs
in respect of any party, the transactions have been made at prices
which are prima facie reasonable having regard to the prevailing market
prices at the relevant time.
(vi) We informed that, the unsecured loan brought in by the
Promoters/shareholders are not covered under Public Deposit pursuant to
clause 2(b) (xi) of the Companies (Acceptance of Deposits) Rules, 1975
(vii) The company has an internal audit system by external agency,
commensurate with its size and nature of its business.
viii) Maintenance of cost records is being done as prescribed by the
Central Government under section 209( 1) (d) of the Companies Act, 1956
in respect of the company.
(ix) a) The Company have paid undisputed statutory dues of Provident
Fund, Employees'' State Insurance and Service Tax but there have been
few instances for delayed payments in respect of the same, as regards
to other statutory dues like Income Tax, Sales Tax, Wealth Tax, Customs
Duty, Excise Duty, Cess and Investor Education and Protection Fund, no
irregularities in deposit of undisputed dues were noticed.
(b) According to the information and explanations given to us, the
disputed tax liability of sales tax and entry tax assessment which have
not been deposited is listed below:
Financial year to
which the Forum where matter is pending Amount
matter pertains Rs. In Lakhs
1999-00 to 2001-02 Additional Commissioner of Sales
Central Zone, Orissa, Cuttack
2001-02 Assistant Commissioner of 3.38
Commercial Tax, Range-II, Orissa,
Cuttack (Entry Tax)
2002-03 Joint Commissioner of Commercial
Angul Range, Angul, Orissa,
2002-03 Joint Commissioner of Commercial
Angul Range, Angul, Orissa,
(x) The accumulated losses of the company are more than fifty percent
of its net worth at the year end. The company has not incurred cash
loss during the year covered under thi s audit and had not incurred
cash loss in the immediately preceding year.
(xi) As per the records and documents produced before us, we are of
opinion that the company is regular in payment of dues to the Bank
against Term Loan in the year under review.
(xii) The company has not granted any loans or advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) The provisions of any special statute applicable to chit fund or
a nidhi/mutual benefit fund/ society are not applicable to the company
(xiv) The company is not dealing in or trading in shares, securities,
debentures and other investments
(xv) As reported to us the company has not given any guarantee for
loans taken by others.
(xvi) No Term Loan was taken during the year under Audit.
(xvii) According to the information and explanations given to us the
fund brought in is being utilized for revival of the company and on an
overall examination of the balance sheet of the company, we report that
no funds raised on short term basis have been used for long term
(xviii) The Company has not made any preferential allotment of shares
during the year.
(xix) The company has not issued any debenture during the year.
(xx) The company has not raised money by public issue during the year.
(xx) According to the information and explanations given to us during
the course of our audit no fraud on or by the company has been noticed
or reported during the year.
For P. Mukhopadhyay & Co.
(Registration no. 302085E)
Place : Kolkata Partner
Dated : September 4,2012 Membership Number: 050384