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Bhor Industries Ltd.

BSE: 523808 Sector: Industrials
NSE: BHORIND ISIN Code: INE160C01010
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Bhor Industries Ltd. (BHORIND) - Auditors Report

Company auditors report

BHOR INDUSTRIES LIMITED ANNUAL REPORT 2004-2005 AUDITORS' REPORT To The Members, BHOR INDUSTRIES LTD. 1. We have audited the attached Balance Sheet of BHOR INDUSTRIES LTD. as at 31st March 2005 and also the annexed Profit and Loss Account of the Company for the year ended on that date and the Cash Flow statement for the year ended on that date. 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 misstatement(s). An audit includes examining, on a test basis, evidence supporting the amounts and the 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 and we report that i) The Company has closed the operations of Its existing activities by shutting down the plants over the years and have dismantled some plant even after the Balance sheet date. Moreover, the accumulated losses of the company have exceeded its networth and the company is not in a position to receive any financial support from any sources for the revival. All these factors raise a substantial doubt whether the company will be able to continue as a Going concern. Consequently, adjustments may be required to the recorded amounts of the assets & liabilities Including classification there of. The financial statement (and Notes thereto) do not disclose this fact ii) The Company has not compiled with As 29 'Provisions, Contingent Liabilities and contingent Assets' and in view of non availability of required information, the amount of contingent liabilities to be provided In the books is in determinate. iii) The Company has not compiled with the requirement of AS 24 'Discontinuing Operation' in view of which we are unable to determine Its Impact on the financial statements. iv) Deferred Taxation reserve is not created as required by the AS 22 'Deferred Taxation' issued by The Institute of Chartered Accountants of India, the amount of which is not ascertainable. 2. Further, subject to our comments referred to in paragraph 1, we report that: i) We have obtained all the information and explanations except as stated In para 1(ii) above, which to the best of our knowledge and belief were necessary for the purpose of our audit. ii) In our opinion, proper books of accounts, as required by law, have been kept by the Company except as stated In pare 1(i) above so far as it appears from our examination of books. iii) The Balance Sheet and Profit and Loss Account dealt with by this Report are in agreement with the books of accounts. iv) In our opinion, the Profit and Loss Account and the Balance Sheet comply with the Accounting Standards as referred in the Section 211(3C) of the Companies Act, 1956 except those stated In pare 1 (ii), (iii) and (iv) above. v) On the basis of written representations from the Directors, taken on record by the Board of Directors, none of the Directors are disqualified as on 31st March 2005 from being appointed as a Director under Section 274(1)(g) of the Companies Act, 1956. 3. We further report that the aggregate effect of the items mentioned in para 1 above on the Profit for the year and on the Profit and Loss Account, Current Assets and Current Liabilities at the end of the year, to the extent the resultant impact could be determined / quantified / ascertained, without considering wholly the effects of the items mentioned in para 1(i), (ii), (iii) and (iv) being not ascertainable / quantified / determinable. 4. Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read 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: i) In case of the Balance Sheet of the state of affairs of the company as at 31st March, 2005 and ii) In the case of the Profit & Loss Account of the profit for the year ended on that date. iii) In the case of the Cash flow statement, of the cash flows for the year ended on that date. 5. Further, 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 and on the basis of the information and explanations given to us and such checks as we considered appropriate, we report that: 1. (a) The records of fixed assets maintained by the Company are incomplete except at the Feeds Division. (b) Assets have not been physically verified during the year and therefore the discrepancies cannot be ascertained. (c) The Company has disposed off substantial part of Fixed Assets. Therefore the Going Concern status of the Company is affected. 2.(a) We are informed that the stocks of stores, spare parts and raw materials have been physically verified by the Management at reasonable intervals. (b) In our opinion, the procedure of physical verification of stocks followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business. (c) As per the information and explanations given to us the discrepancy between physical stocks and book records noticed on detailed physical verification was not material compared to the stocks being carried and has been written off. 3.(a) The register under section 301 is not updated. Hence we are unable to comment whether any loans & advances are taken /granted by the Company. However, we are informed by the Company that they had taken loans amounting to Rs.1,26,10,000/- from associated companies and firms in the past, repaid during the year with interest and had granted an amount of Rs.1,64,768/- to 3 parties. (b) In the absence of any written agreement we are unable to comment upon the rate of interest and other terms of advances granted. However, we are informed by the Company that these advances are interest free and therefore in our opinion are prejudicial to the interest of the Company as far as it relates to granting of advances. (c) The overdue amount of advances granted to each party is not exceeding One Lakh Rupees. 4. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of stores, raw materials including components, plant and machinery, equipment and for the sale of goods. 5. (a) We are informed that there were no transactions of purchase of goods and materials and services and sale of goods, materials and services made in pursuance of contracts or arrangements which are required to be entered in the register, to be maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 5,00,000 or more in respect of each party. (b) Since there are no transactions of purchase and sale required to be listed in register maintained under section 301. This clause is not applicable during the year under audit. 6. According to the information and explanations given to us, and in our opinion, the Company has not accepted / renewed any deposits from the public. Hence the provisions of section 58A of the Companies Act, 1956 and the Rules framed thereunder with regard to the deposits are not applicable. 7. The Company does not have the system of internal audit commensurate with the size of the Company and the nature of its business. 8. The Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for any of the products of the Company. 9. (a) The Company is generally regular in depositing the undisputed statutory dues. According to the information and explanation given to us, no undisputed amounts payable in respect of Income Tax and custom duty that have not been deposited on account of matters pending before appropriate authorities as follows. (b) According to the records of the Company, the disputed statutory dues that have not been deposited on account of matter pending before appropriate authorities are as given below except for Customs duty liability for which the Company is served with notices, (the details as per note no B: 2 d of Schedule 7 amount of which is unascertainable). S. Amount No Particular (in Lakhs) Forum where cases is pending 1 Cen. Excise 349.24 Dy. Comm. of Cen. Excise. 2. Cen. Excise 25.36 CEGAT 3 Cen. Excise 247.45 High Court 4 Cen. Excise 7.01 Dy. Comm. of Cen. Excise (Appeals) 5 Income Tax 145.67 Income Tax Appellate Tribunal 6 Income Tax 984.68 CIT (Appeals) 7 Income Tax 98.86 IT Dept. for Appeal Effect 10. The Companies Accumulated Losses have exceeded its net worth. This is despite profits earned by the company during last two years. 11. The outstanding defaulted dues of the financial institutions as on Balance sheet date are amounting to Rs. 4,61,04,079/- 12. According to the information and explanation given to us, the Company has not granted any loans and advances by way of pledge of shares, Debentures and other securities and hence the question of documentation is not applicable during the year under audit. 13. In our opinion the Company is not a chit fund and nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(13) of the order are not applicable to the Company. 14. In our opinion and according to the information and explanation given to us the Company is not a dealer or a trader in securities. 15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. 16. According to the information and explanations given to us by the Company, term loans were applied for the purpose for which the loans were obtained. 17. During the year company has not taken any long term and short term loans. Therefore, application of such funds during the year does not arise. 18. The Company has not made any preferential allotment of shares during the year under audit to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. 19. According to the records of the Company, the Company has not raised any funds by way of debentures. 20. The Company has not raised any money through a public issue during the year. 21. According to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year. For JCR & Co. Chartered Accountants V. V. Shenoy Partner Mumbai, July 20, 2005

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