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Hindustan Adhesives Ltd.

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Sep 24, 16:00
259.00 -2.05 (-0.79%)
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    260.85 (100)

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Annual Report

For Year :
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Auditor's Report

ANNUAL REPORT 2005-2006 AUDITORS' REPORT TO THE MEMBERS OF HINDUSTAN ADHESIVES LIMITED 1. We have audited the attached Balance Sheet of M/s Hindustan Adhesives Limited as on 31st March, 2006, the Profit and Loss Account for the year ended on that date and 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 have 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 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. 3. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India under sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraph (4) & (5) of the said Order. Attention of members is drawn on following: (a) Fresh negotiation settlement with IDBI now transferred to SASF, as per negotiation the amount of accrued benefit of Rs. 351.31 Lacs shall be adjusted (Refer Note No.2 of Notes on Accounts appearing in Schedule 'T'). (b) Non-provision of interest on outstanding loans of The Benaras State Bank Limited (Merged with Bank of Baroda) amounting to Rs. 209.27 Lacs (Refer Note No.3 of Notes on Accounts appearing in Schedule 'T'). (c) Non-provision of insurance claim due to uncertainty in realisation of Rs. 37.83 Lacs (Refer Note No. 4 appearing in Schedule 'T'). (d) Non identification of dues to Small Scale Industrial Undertakings (Refer Note No. 10 of Notes on Accounts appearing in Schedule 'T'). 4. Further to our comments in Annexure referred to above, we report that: (i) We have obtained all the information and explanation, which to the best of our knowledge and belief were necessary for the purpose of our audit; (ii) In our opinion, proper books of account as required bylaw, have been kept by the Company so far as appears from our examination of those books; (iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account; (iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; (v) On the basis of written representations received from the directors, as on 31st March, 2006, and taken on record by the Board of Directors, we report that none of the director is disqualified as on 31st March, 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; (vi) Subject to our comments above, in our opinion and to the best of our information and according to the explanations given to us, the said statements of accounts read together with the Notes appearing in Schedule 'T' 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: (a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; (b) in the case of Profit arid Loss Account, of the Profit of the company for the year ended on that date; and (c) in case of the Cash Flow Statement, of the cash flows of the company for the year ended on that date. 5. We further report that had the observations made by us in Paragraph '3' been considered, the Profit for the year would have been Rs. 185.08 (As against the reported figure of Profit of Rs 5.21 Lacs and the accumulated debit balance of Profit and Loss Account would have been Rs. 499.53 (As against the reported figure of Rs. 679.40 Lacs). For SALARPURIA & PARTNERS CHARTERED ACCOUNTANTS Place: 1008, Chiranjiv Tower, 43, Nehru Place, (KAMAL KUMAR GUPTA) New Delhi-110 019 PARTNER Date : 04/09/2006 M.No. 89190 ANNEXURE TO THE AUDITOR'S REPORT (Referred to in paragraph 3 of our Report of even date) (i) (a) The Company is. maintaining proper records showing full particulars including quantitative details and situation of fixed assets. (b) The management at reasonable intervals has physically verified the fixed assets, no material discrepancies were noticed on such verification. (c) No substantial parts of fixed assets have been disposed off during the year which effects going concern. (ii) (a) The physical verification of inventory has been conducted by the management at reasonable intervals. (b) In our opinion the procedures of physical verification of inventory followed by the management are reason able and adequate in relation to the size of the company and the nature of its business. (c) In our opinion the Company is maintaining proper records of inventory and the discrepancies noticed on physical verification were not material and have been properly dealt with in the books of accounts; (iii) In respect of loans, secured or unsecured, granted or taken by the company to or from companies, firms or other parties covered under the register maintained U/s. 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has taken unsecured loans from 6 (Six) parties covered under the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved in such loans during the year aggregates to Rs.61.45 Lacs and the closing balance outstanding as on 31st March 2006 is Rs. 61.45 Lacs. (b) The unsecured loans taken by the company are interest free loans. In our opinion the other terms and conditions of such loans taken by the company are prima facie not prejudicial to the interests of the company (c) There is no pre-determined schedule for repayment of unsecured loans. (d) As there is no schedule for repayment of unsecured loans taken by the company, therefore, we are not in a position to comment on steps, if any, taken by the company for repayment of the same, (e) The company has not granted any loans to companies, firms or other parties covered under the register maintained U/s. 301 of the Companies Act, 1956, except temporary advances which are recovered as stipulated. (iv) In our opinion and according to the information and explanations given to us the company has an adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. There is no continuing failure or weakness in internal control system. (v) According to the information and explanation given to us, the transactions that need to be entered into the register in pursuance of section 301 of the Companies Act, 1956 has been so entered. In our opinion and according to the information & explanation given to us, there were no transactions made in pursuance of contracts or arrangements entered in the register mentioned under section 301 of the Companies Act exceeding the value of Rs. Five lacs in respect of any party during the year. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any public deposits for which the provisions for compliance U/s. 58A and 58AA or any other relevant provisions of the Companies Act, 1956 applies. (vii) The Company has an internal audit system commensurate with its size and nature of its business. (viii) The Central Government has not prescribed maintenance of cost records for the company U/s.209 (1)(d) of the Companies Act, 1956. (ix) (a) The Company is generally regular in depositing undisputed applicable statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and any other statutory dues with the appropriate authorities. (b) Following disputed dues of Sales Tax and Excise Duty/cess have not been deposited :- Sl. No. Name of the State/ Nature Amount A B of Dues (Rs.) 1 The Central Sales Tax act, 1956 24,16,974/- 2003-04 Assessing Officer Deputy (Central Sales Tax) 480/- 1999-00 Commissioner (Sales Tax 64,207/- 2004-05 Assessment) 2 The Delhi Sales Tax Act, 1975 2,77,303/- 2003-04 Assessing Officer Deputy (Local Sales Tax) 2,124/- 2004-05 Commissioner (Sales Tax Appeal)-II 3 The Uttar prades Trade Tax Act, 60,881/- 2003-04 Assessing Officer Deputy (Local Sales Tax) Commissioner 4 The Central Excise Act, 1944 1,95,000/- March, High Court (Penalty for 1998 wrong MODVAT Credit) A ->> Period to which Amount Relates B ->> Authority where dispute is pending (x) The Company has been registered for a period of more than five years; its accumulated losses at the end of the financial year are more than fifty percent of its net worth. However, The Company has not incurred cash loss during the year under report and also in the financial year immediately preceding the financial year under report. (xi) According to the information and explanations given to us, the company has defaulted in repayment of dues to the financial institutions and banks as follows: (a) Amount payable to 'The Bank of Baroda' amounting to Rs. 2,69,33,412/- outstanding since 31/03/2002 stands unpaid as on 31/03/2006 also. However, the matter is disputed and the bank has filed suit with the Debt Recovery Tribunal. (b) Under an onetime settlement on 21St July,2005 with stressed Assets Stabilization Fund (SASF) the liability in respect of Term Loan & Interest accrued there on payable to IDBI has been settled at Rs. 625 Lac which was scheduled to be paid in 12 quarterly installment. The Company had paid only one installment of Rs. 52 Lacs only, subsequent installment fall due during the year could not be paid However, the company has re negotiated with SASF after the close of the year. According to the fresh settlement the liabilities payable to SASF stands at Rs. 358 Lacs only out of which Rs. 50 Lacs has been upfront on receipt of section letter and the balance of Rs.308 Lacs is payable in six quarterly installments beginning w.e.f. 01.10.2006. (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, Nidhi /Mutual Benefit Fund/Societies are not applicable to this company. (xiv) The company is not dealing or trading in business of securities, debentures and other investments. (xv) According to the information and explanations given to us, there remain no direct or indirect liability on account of corporate guaranty given by the company to the Financial Institutions. and bank in respect of loan taken by the other body corporate, as all the liabilities towards such loan are repaid / discharged by the said body corporate. (xvi) In our opinion and according to the information and explanations given to us, the term loans obtained in earlier years and continued to remain outstanding during the financial year under report are applied for the purpose for which the loans were obtained. (xvii) According to the information and explanations given to us and on an overall examination of financial statements of the company and after placing reliance on the reasonable assumption made by the company for the classification of long term and short term use of funds we are of the opinion that, prime-facie, long term funds have not been utilised for short term purposes. (xviii) 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. (xix) The Company has not issued any debentures since inception. (xx) The company has not raised any money by public issue during the year. (xxi) According to the information and explanations given to us no fraud on or by the company has been noticed or reported during the year under report. For SALARPURIA & PARTNERS CHARTERED ACCOUNTANTS Place: 1008, Chiranjiv Tower, 43, Nehru Place, (KAMAL KUMAR GUPTA) New Delhi-110 019 PARTNER Date : 04/09/2006 M.No. 89190