We have audited the attached Balance Sheet of The Scindia Steam
Navigation Company Limited as at 31st March, 2011 and also the Profit
and Loss Account and 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.
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 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
As required by the Companies (Auditor''s Report) Order, 2003 as amended
by the Companies (Auditor''s Report) (Amendment) Order, 2004 issued by
the Central Government in terms of provisions 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.
Further to our comments in the annexure referred to above, we report
a) We have obtained all the information and the explanations, which to
the best of our knowledge and belief were necessary for the purposes of
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 those
c) The Balance Sheet, Profit & Loss account and Cash Flow Statement
dealt with by this report are in agreement with the Company''s books of
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) We are informed that in terms of clarification issued by Ministry of
Finance, Justice and Company Affairs, Department of Company Affairs,
Government of India vide General circular No.8 dated 22nd March, 2002 ,
the directors of the Company are not subject to any disqualification
under section 274(1 )(g) of the Companies Act, 1956, as their
appointment is made by the Government of India;
f) The shipping operations of the company stand suspended. The company
has continuously incurred losses and thereby net worth of the company
has been totally eroded and a substantial loss is carried forward as at
31 March, 2011. The company has filed a petition with the High Court
of Bombay on February 28, 2011 to wind up the company by Order of the
court under the relevant provisions of the Companies Act, 1956. In view
of these facts, the company will no longer be a ''Going Concern''.
Despite this, the accounts of the company have been prepared on a
''Going Concern Basis'' in the absence of adequate data and information
for its compilation on an alternative basis. Consequently, no
adjustments are made in accounts relating to the recoverability of
recorded asset amounts and in respect of recorded liabilities and
contingent liabilities that might devolve on the company. (Refer note
no. 5 of notes forming part of accounts)
g) 77ie Company has granted a loan to Scindia Workshop Limited, the
Subsidiary Company. Outstanding amount of such loan with accrued
interest as at 31st March, 2011 is Rs.1707Lakhs (Previous year Rs.1938
Lakhs). The recoverability of this amount is, in our opinion,
dependent on outcome of (he review application to be made before the
Division Bench of the Higfi Court of Bombay by the Subsidiary for
further enhancement of compensation for the land and buildings acquired
by the Government of Maharashtra (Refer note no. 6 of notes forming
part of accounts)
We further report that subject to f and g above, the effect of which
could not be quantified, in our opinion and to the best of our
information and according to the explanations given to us, the said
accounts read together with 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:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011; and (ii) in the case of the Profit and
Loss Account, of the Loss of the Company for the year ended on that
(iii) in the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT (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 fixed assets have been physically verified by the management at
reasonable intervals and no discrepancies were noticed on such
(c) The Company has already disposed off substantial part of its fixed
assets. (Also refer point f of our main report.)
(ii) Since the Company does not hold any stock during the year, the
requirement of clauses 4 (ii) (a), (b), (c) of the Order are not
applicable to the company.
(iii) The Company has not granted or taken any loans, secured or
unsecured to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956 except
for a loan of Rs.1707 Lakhs to its Subsidiary namely Scindia Workshop
Limited (SWL). In respect of loan granted to subsidiary company there
is no stipulation as regards repayment. Interest charged up to the
financial year 1995-96 is also not recovered. The recovery of the
principal and interest due from the said subsidiary is dependent on the
outcome of the appeal filed for enhancement of compensation as detailed
in note no 6 to the accounts.
(iv) On the basis of checks carried out in course of our audit and
according to the information given to us, we are of the opinion that
there are adequate internal control systems commensurate with the size
of the Company and the nature of its business although there are no
purchase of fixed assets,
sale of goods and services.
(v) As informed to us, there are no transactions of purchase of goods,
materials and services and sale of goods, material and services with
the parties stated in the register maintained as per section 301 of the
Companies Act 1956.
(vi) During the year the Company has not accepted any deposits from the
public, therefore the provisions of Section 58A, 58AA or other relevant
provisions of the Companies Act, 1956 and the Companies (Acceptance of
Deposit) Rules 1975 are not applicable to the Company.
(vii) In our opinion, the Company''s present internal audit system,
though not formal, is generally commensurate with the size and nature
of its business.
(viii) The maintenance of cost records under section 209(1) (d) of the
Act, 1956 is not applicable to the Company.
(ix) (a) According to the records of the Company, the company has been
generally regular in depositing undisputed statutory dues including
Investor Education and Protection Fund, Income Tax, Wealth Tax, Service
Tax, Custom Duty, Cess and other material statutory dues with the
appropriate authorities. Based on our audit procedures and according
to the information and explanations given to us, there are no arrears
of statutory dues which remained outstanding as at 31st March, 2011 for
a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us and the
records of the Company, there are no dues of sales tax, custom duty,
income tax, wealth tax, service tax, excise duty/cess which have not
been deposited on account of any dispute.
(x) The Company''s accumulated losses, as on 31 March 2011 is more than
fifty percent of its net worth. The Company has incurred cash losses in
the financial year covered by this report and has also incurred cash
losses in the immediately preceding financial year.
(xi) As per the books of the Company and as per the information and
explanations given to us, the Company has defaulted in payment of dues
to a bank on Cash credit account and the total amount due including
interest thereon up to 31.03.2011 is Rs.2763 Lakhs (P.Y.2384 Lakhs).
(xii) The Company has not granted loans and advance on the basis of the
security by way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund and nidhi/mutual benefit funds/
societies and therefore the requirements of clauses 4 (xiii) are not
applicable to the company.
(xiv) The Company does not deal or trade in shares, securities,
debentures and other investments. Accordingly, the provisions of clause
(xiv) of the Order are not applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has not given guarantee for loans taken by others from bank or
(xvi) There are no term loans obtained by the Company during the year.
(xvii) According to the information and explanations given to us and on
overall examination of the balance sheet of the Company, we report that
funds raised on short-term basis have not been used to finance long
(xviii) The Company has not made any preferential
allotment of shares to parties
or companies covered under section 301 of the Companies Act, 1956.
(xix) During the year Company has not issued any debentures.
(xx) The Company has not raised any money through a public issue during
(xxi) Based upon the audit procedure and the information and
explanation given to us, we report that there are no frauds on or by
the Company noticed or reported during the year.
For K. S. AIYAR & CO.
Firm Regn. No.100186W
Membership No: 38128
Date:20th June, 2011