1. We have audited the attached Balance Sheet of VIDEOCON INDUSTRIES
LIMITED, as at 31st December, 2010, Profit and Loss Account and also
the Cash Flow Statement of the Company for the period 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 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.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued
by the Central Government in terms of Section 227(4A) of the Companies
Act, 1956, on the basis of such checks as considered appropriate and
according to the information and explanations given to us during the
course of the audit, we give in the Annexure hereto a statement on the
matters specified in Paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
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
audit;
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 those
books. Proper returns adequate for the purpose of our audit have been
received from branches not visited by us. The branch Auditors Reports
have been forwarded to us and have been appropriately dealt with;
c) The Balance Sheet, Profit and Loss Account and the Cash Flow
Statement dealt with by the report are in agreement with the books of
account and with the audited returns from the foreign branches;
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 Section 211(3C) of the Companies Act, 1956;
e) According to the information and explanations given to us and 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 from being appointed as a director 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
explanations given to us, the said financial statements, read together
with the signifcant accounting policies, paragraph 4 above and 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 December, 2010;
(ii) In the case of the Profit and Loss Account, of the profit for the
period ended on that date; and
(iii) In the case of the Cash Flow Statement, of the cash flows for the
period ended on that date.
ANNEXURE REFERRED TO THE AUDITORS’ REPORT
Statement referred to in paragraph 3 of the Auditors’ Report of even
date to the Members of VIDEOCON INDUSTRIES LIMITED on the financial
statements for the period ended 31st December, 2010.
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As per the information and explanations given to us, physical
verification of fixed assets, other than those under joint venture, has
been carried out at reasonable intervals in terms of the phased
programme of verification adopted by the Company and no material
discrepancies were noticed on such verification. In our opinion, the
frequency of verification is reasonable, having regard to the size of
the Company and nature of its business.
(c) In our opinion, during the period the Company has not disposed off
any substantial part of fixed assets.
(ii) (a) As per the information and explanation given to us, the
inventories (excluding stock of crude oil lying at extraction site with
the Operator) have been physically verified during the period by the
management. In our opinion, having regard to the nature and location of
stocks, the frequency of the physical verification is reasonable.
(b) In our opinion and according to the information and explanations
given to us, procedures of physical verification of inventory followed
by the management are reasonable and adequate in relation to the size
of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. As per the
information and explanations given to us, the discrepancies noticed on
physical verification of stocks were not material in relation to the
operations of the Company and the same have been properly dealt with in
the books of account.
(iii) (a) As per the information and explanations given to us, 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.
(b) As the Company has neither granted nor 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,
sub-clauses (b), (c), (d), (f) and (g) of Clause
(iii) of paragraph 4 of the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and the nature of its business with regard
to purchases of inventory and fixed assets and for the sales of goods
and services. During the course of our audit, we have not observed any
continuing failure to correct the major weakness in the internal
controls systems.
(v) (a) 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 particulars of contracts or
arrangements referred to in Section 301 of the Companies Act, 1956,
have been entered in the register required to be maintained under that
Section.
(b) In our opinion and according to the information and
explanations given to us, the transactions made in pursuance of
contracts or arrangements entered in the register maintained under
Section 301 of the Companies Act, 1956, and exceeding the value of
Rupees Five Lakhs, in respect of any party during the period, have been
made at prices which are reasonable having regard to prevailing market
price at the relevant time.
(vi) The Company has not accepted any deposits from the public within
the meaning of the provisions of Sections 58A and 58AA or any other
relevant provision of the Companies Act, 1956 and rules made
thereunder.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
(viii) The Central Government has prescribed maintenance of the cost
records under Section 209(1)(d) of the Companies Act, 1956, in respect
of the Company’s products. As per the information and explanations
provided to us, we are of the opinion that prima facie, the prescribed
records have been made and maintained. We have however not made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
(ix) (a) According to the information and explanations given to us and
the records examined by us, the Company is regular in depositing with
appropriate authorities undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees’ State
Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty,
Excise duty, Cess and other statutory dues wherever applicable.
According to the information and explanations given to us, no
undisputed arrears of statutory dues were outstanding as on 31st
December, 2010 for a period of more than six months from the date they
became payable.
(b) According to the records of the Company examined by us and
information and explanations given to us, the particulars of dues of
Sales tax, Income tax, Wealth tax, Service tax, Custom duty, Excise
duty, Cess which have not been deposited on account of disputes, are
given below:
Nature of
Statute Nature of Dues Amount
(Rs. Million) Forum where
dispute is
pending
1. Customs
Act, 1962 Custom Duty 120.51 CESTAT
1.13 Asst. Commissioner
0.93 Commissioner (Appeals)
1.31 Addl. Commissioner
200.61 Supreme Court
18.86 Deputy Commissioner
57.32 Commissioner
Custom Penalty 11.00 Commissioner
2. Central
Excise Act,
1944/ Finance
Act, 1994 Excise Penalty 8.25 Commissioner (Appeals)
(Service Tax
Provisions) 0.12 Asst. Commissioner
92.93 CESTAT
Service Tax and
Education Cess 1.06 Asst. Commissioner
9.73 Addl. Commissioner
0.83 Commissioner
(Appeals)
1.91 CESTAT
97.75 Commissioner
Excise Duty 4.61 Joint Commissioner
76.87 CESTAT
12.61 Commissioner
9.65 Commissioner
(Appeals)
0.20 Dy. Commissioner
3.82 High Court
3. Central
Sales Tax
Act, 1956
and State
Sales Sales Tax 21.40 Jt.Commissioner
(Appeals)
Tax Acts
of various
States 14.65 Dy.Commissioner
(Appeals)
12.83 Appellate Tribunal
0.46 Supreme Court
2.28 Addl. Commissioner
5.33 Commissioner
(Appeals)
20.17 Sr. Asst. Commissioner
4. Income
Tax Act,
1961 Income Tax 351.13 Appellate Tribunal
5. Navi
Mumbai
Municipal
Corporation Cess 372.30 High Court
(x) There are no accumulated losses as at 31st December, 2010. The
Company has not incurred any cash losses during the period covered by
our audit and the immediately preceding financial year.
(xi) Based on our audit procedures and the information and explanations
given by the management, we are of the opinion that the Company has not
defaulted in repayment of dues to financial institutions, banks or to
debenture holders during the period.
(xii) Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and/or
advances on the basis of security by way of pledge of shares,
debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund Company or nidhi/
mutual benefit fund/ society. Therefore the Clause(xiii) of paragraph
4 of the Order is not applicable to the Company.
(xiv) The Company has maintained proper records of transactions and
contracts in respect of dealing and trading in shares, securities,
debentures and other investments and timely entries have generally been
made therein. All shares, debentures and other securities have been
held by the Company in its own name except to the extent of the
exemption granted under Section 49 of the Companies Act, 1956.
(xv) According to the information and explanations given to us, the
terms and conditions of guarantees given by the Company for loans taken
by others from banks or financial institutions are prima facie not
prejudicial to the interest of the Company.
(xvi) According to the information and explanations given to us, the
term loans raised during the period were applied, on an overall basis,
for the purposes for which the loans were obtained.
(xvii) According to the information and explanations given to us and on
our overall examination of the balance sheet of the Company, we report
that the Company has not used funds raised on short term basis for
long-term investments.
(xviii) The Company has not made any preferential allotment of shares
during the period to parties and companies covered in the register
maintained under Section 301 of the Companies Act, 1956.
(xix) The Company has not issued any secured
debentures during the period. The Company has created security in
respect of debentures issued in earlier years.
(xx) During the period,
the Company has raised money through right issue. The Company has
disclosed on the end use of money raised and have verified the same.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
period.
For KHANDELWAL JAIN & CO. For KADAM & CO.
Chartered Accountants Chartered Accountants
Firm Registration No. 105049W Firm Registration
No. 104524W
SHIVRATAN AGARWAL U. S. KADAM
Partner Partner
Membership No. 104180 Membership No. 31055
Place : Mumbai
Date : 26th May, 2011
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