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Suryachakra Power Corporation Ltd.

BSE: 532874 | NSE: | Series: NA | ISIN: INE274I01016 | SECTOR: Power - Generation & Distribution

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Annual Report

For Year :
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Auditor's Report

1. We have audited the attached Balance Sheet of Suryachakra Power Corporation Limited as at June 30, 2012, the Statement of Profit and Loss 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.

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 for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended, issued by the Central Government in terms of sub-section (4A) of Section 227 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. Attention is invited to:

(a) Note 34 to the financial statements regarding revenue from Andaman & Nicobar Administration (A&N Administration) - pending final agreement with A&N Administration, we are unable to comment on the extent of ultimate recoverability of Rs.10,13,89,890/- withheld by A&N Administration for the year ended June 30, 2012 (31.03.2011: Rs. 5,94,94,972)and the total receivables as at June 30, 2012 of Rs.17,76,78,168 (31.03.2011: Rs. 8,59,04,780) which are subject to confirmation by the A&N Administration. The total interest accrued on such disagreements which are subject to confirmation by the A&N Administration is Rs.12,75,74,329 (31.03.2011: Rs.12,75,74,329).

(b) Note 35 to the financial statements, relating to coal trading receivables (discontinued operation) regarding which we are unable to comment on the extent of realisability of the dues.

(c) Note 36 relating to the Company's assessment that no provision against the carrying amounts of its long term investment and loans extended to its subsidiaries Suryachakra Global Enviro Power LimitedRs.116,93,13,308; Suryachakra Energy (Chhattisgarh)Private Limited Rs.35,66,32,225and Suryachakra Global Ventures Limited Rs.85,01,25,548 is presently necessary, for the reasons stated in the said note. We are unable to comment on the extent of the impairment of the said investment / advances.

The consequential impact of the above matters on the loss for the year ended June 30, 2012 and the retained earnings as at June 30, 2012 is indeterminable.

5. Without qualifying our opinion, we draw attention to:

Note 37 to the financial statements regarding winding up petition filed by one of the unsecured creditors which is pending for hearing before the Honourable High Court of Andhra Pradesh.

6. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) 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 books;

iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet, Statement of Profit and Loss 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;

v) On the basis of written representations received from the directors, as on June 30, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on June 30, 2012 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 at para 4 above, in our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with Significant Accounting Policies 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 June 30, 2012;

ii) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

SURYACHAKRA POWER CORPORATION LIMITED ANNEXURE TO THE AUDITORS' REPORT

(STATEMENT 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 its fixed assets.

b) According to the information and explanations given to us, the management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the Company, during the year, has not disposed off substantial part of fixed assets.

(ii) a) The inventories consisting of raw materials, stores, spares and consumables have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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 are 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 explanation given to us, and on the basis of our examinations of the inventory records, the Company is maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) a) According to the information and explanations given to us, the Company has granted unsecured loan to seven parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.121,17,92,935 and the year-end balance of the loan granted to such parties was Rs.105,26,72,443.

b) In our opinion and according to the information and explanations given to us, the terms and conditions on which the loans have been granted are not prima facie prejudicial to the interests of the Company.

c) According to the information and explanations given to us, the terms of the arrangement do not stipulate any repayment schedule for principal and interest.

d) There is no overdue amount in respect of the above loans.

e) According to the information and explanations given to us, the Company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 3 (e), (f) and (g) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

(iv) In our opinion and, according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and for sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weakness in internal control system.

(v) In our opinion and according to the information and explanations given to us, we are of the opinion that there are no particulars of contracts or arrangements (except unsecured loans taken from the parties stated in para (iii) above), referred to under section 301 of the Companies Act, 1956, that need to be entered into the register maintained under section 301 of the Companies Act, 1956.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from public. Accordingly, the provisions of clause 4(vi) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

(vii) In our opinion and according to the information and explanations given to us, the scope and coverage of the internal audit system needs to be strengthened to make it commensurate with the size and the nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records prescribed under Section 209(1)(d) of the Companies Act, 1956, and we are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

(ix) a) The company is not regular in depositing 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 material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, the following undisputed amounts were in arrears as at June 30, 2012for a period of more than six months from the date they became payable:

Rupees

Tax Deduction at Source 32,68,784

Provident Fund 1,316

VAT 5,46,250

Professional Tax 100

b) According to the information and explanations given to us, there were no dues of Income Tax / Sales Tax / Wealth Tax / Service Tax /

Custom Duty / Excise Duty / Cess which have not been deposited on account of any dispute.

(x) Subject to the matters specified in paragraph 4 of our report of even date, the accumulated losses at the end of the year does not exceed 50% of its net worth at the end of the year. The company has not incurred cash losses in the financial year under report and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks. Details of the same are stated in the Appendix.

(xii) According to the information and explanations given to us, the Company has not granted any loans and 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 / Nidhi / Mutual Benefit Fund / Society. Accordingly, the provisions of clause 4(xiii) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

(xiv) In our opinion and according to information and explanations given to us, the Company does not deal or trade in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors' Report) Order, 2003 are not applicable to the company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the company for loans taken by one of its subsidiaries from banks or financial institutions are not prima facie prejudicial to the interests of the Company.

(xvi) To the best of our knowledge and belief and according to information and explanations given to us, in our opinion, the term loans availed during the earlier years by the Company were, prima facie, applied by the Company for the purposes for which the loans were obtained.

(xvii) According to information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds were raised on short term basis which have been used for long term purposes.

(xviii) During the year under report, 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.

(xix) According to the information and explanations given to us, no debentures have been issued by the Company. Accordingly, the provisions of clause 4

(xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xx) In our opinion and according to the information and explanations given to us, the Company has not raised any money by public issue during the year except by issue of Global Depository Receipts. The proceeds of the same were applied for the purposes for which the issue was made.

(xxi) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us, no instance of fraud on or by the Company was reported during the year, nor have we been informed of such case by the management.

For M.BHASKARA RAO & CO;

Chartered Accountants

Firm Registration No. 000459 S

V.K MURALIDHAR

Partner

Membership No. 201570

Hyderabad, July 16, 2012