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Enchante Jewellery Ltd.

BSE: 531148 Sector: Consumer
NSE: N.A. ISIN Code: INE772C01012
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Enchante Jewellery Ltd. (ENHANTEJEWELL) - Auditors Report

Company auditors report

ENCHANTE JEWELLERY LIMITED ANNUAL REPORT 2004-2005 AUDITORS' REPORT TO THE MEMBERS OF ENCHANTE JEWELLERY LIMITED We have audited the attached Balance Sheet of Ms. Enchante Jewellery Ltd. as at 31st March 2005 and also the Profit & Loss Account 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 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis of our opinion. As required by the Companies (Auditor's Report) order, 2003 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 paragraph 4 and 5 of the said order. Further to our comments in the annexure referred to 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 accounts as required by law 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, the Profit & Loss Account and Cash Flow Statement dealt with by this report, comply with the Accounting Standards referred to in sub-section 3(C) of section 211 of the Companies Act, 1956 to the extent applicable to the company. v) On the basis of the written representations receives from the directors as on 31.3.2005 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2005 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the companies Act, 1956. vi) Attention is invited to: a) The preparation of accounts going on concern basis, despite the company being a sick industrial company, and incurring operational losses continuously. vii) a) Note no. 6 of part B of schedule K regarding writing back of Rs 624.65 lakhs in the Profit & Loss Account during the financial year 2002-03 and non provision of interest on amount payable to SBI (amount unascertained), in respect of Loan of State Bank of India. The bank has denied for the OTS proposal as not being acceptable by the bank's appropriate authority, in view of the sacrifice involved on the part of the bank. b) Note no. 14 of part B of Schedule K regarding accounting of liability for bonus on payment basis. (amount unascertained). We further report that the profit for the year and balance in the Profit and Loss Account are without considering the impact of terms mentioned in (vi) and (vii) (b) above, the impact of which could not be determined. Had the effect of item mentioned in para 2 (vii) (a) above been given, the secured loans in the balance sheet would have been Rs.1031.89 Lakhs (as against the reported figure of Rs.407.24 lakhs), and the debit balance in the Profit & Loss Account would have been Rs.1284.77 lakhs (as against the reported figure of Rs 660.12 lakhs). Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, 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 2005; and b. in the case of Profit & Loss account, of the profit for the year ended on that date. For Anuj Kumar Gupta & Co. Chartered Accountants (Anuj Kumar) Proprietor Place : Gurgaon Date : 23rd August, 2005 ANNEXURE REFERRED TO IN PARAGRAPH '3' OF THE REPORT OF EVEN DATE OF THE AUDITORS TO THE MEMBERS OF MS. ENCHANTE JEWELLERY LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2005. 1. a) As informed to us, the company is in the process of compiling the Fixed Assets Records showing full particulars including quantitative details and situation of fixed assets. b) The company has a program of physical verification of fixed assets over a period of three years which is, in our opinion, reasonable having regard to the size of the company and the nature of the assets. However no fixed assets have been physically verified by the management during the year. c) In our opinion, the company has not disposed off a substantial part of the fixed assets during the year and therefore paragraph 4 (i) (c) of the Companies (Auditor's Report) order, 2003 (here in after referred to as the Order) is not applicable. 2. a) Physical verification of inventory has been conducted by the management during the year and, in our opinion, the frequency of verification is reasonable. b) The procedures of physical verification of inventories followed by the management are reasonable and adequate, in relation to the size of the company and nature of its business. c) The company is maintaining proper records of inventories and no material discrepancies have been noticed on physical verification of inventories as compared to the book records. 3. According to the information and explanation given to us the company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, and therefore paragraph 4(iii) of the said order is not applicable. 4. In our opinion and according to information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of the business, for the purchase of inventories and fixed assets and for the sale of goods. We have neither come across nor have we been informed of any major weakness in the internal control procedures. 5. a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the Register in pursuance of Section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and according to the information and explanation given to us, transactions during the year exceeding the value of five lakhs rupees in respect of any party which required to be entered in the register u/s 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. 6. In our opinion and according to the information and explanations given to us, the company has not accepted deposit from the public to which the provisions of section 58A and 58AA of the Companies Act, 1956 and the rules framed there under are applicable, and therefore paragraph 4 (vi) of the order is not applicable. 7. In our opinion, the Company has an internal audit system which is commensurate with its size and nature of business. 8. It has been informed to us that the central Governments has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act,1956 for the products of the company. 9. (a) In our opinion and according to the information and explanations given to us, the company, due to its financial sickness, is on occasion irregular in depositing undisputed statutory dues including provident fund, employees state insurance, and income tax deducted at source with the appropriate authorities. However, all of the undisputed statutory dues as on 31.03.2005 have been paid and therefore the delay does not appear to be willful or intentional. As on 31st March 2005, according to the records of the company, the following are the particulars of undisputed dues on account of provident fund, employees state insurance, sales tax and income tax deducted at source, on which the company was irregular and the dates on with the said payments were made. Name of the statue: Provident Fund Nature of dues: Employer contribution and PF charges for the period from September 04 to March 05 Amount Rs. 76932/- Due Date: 15th of the following month of the month in which amount is deducted. Date of payment: Rs.67129/- pertaining to the period from Sept 04 to Feb 05 has been paid during the month of May 05 and June 05. However the company is still to pay the employer contribution and PF charges for the month of March 05 amounting to Rs.9803/-. Name of the statue: Provident Fund Nature of dues: Employer contribution and PF charges for the period from September 04 to March 05 Amount Rs. 10139/- Due Date: 15th of April 05 Date of Payment: 27-04-2005 Name of the statue: ESI Gurgaon Nature of dues: Employer contribution for March, 05 Rs.1675/-, and OT and trial staff for 2002-03 Amount Rs. : 4164/- Due Date: 21st April, 2004 Date of payment: Rs.1675/- deposited on 15/4/05 and balance on 20-6-2005 Name of the statue: ESI Gurgaon Nature of dues: Payable towards Employers contribution from October 2002 to Sept 05 and March 05, payment made for Contractors, Overtime and Staff on trial, relating to the financial year 2002-03. Amount Rs. : 119402/- Due Date: 21st of following month of the month in which amount is deducted. Date of payment: deposited from 30.04.05 Name of the statue: ESI Delhi Nature of dues: For the month of March 05 Amount Rs. : 318/- Due Date: 21.04.2005 Date of Payment: 16.04.2004 Name of the statue: Tax deducted at source Nature of dues: Deducted on 20.9.04 Rs.472/- Deducted on 31.3.2005 Rs.11698/-, Interest for the year 2004-05 Rs.660/- Amount Rs. : 12830/- Due Date: 7th of following month of the month in which amount is deducted. Amount deducted on the last day of the year can be deposited in two months from the end of the year. Date of Payment: Rs.472/- deposited on 20.5.05. Rs.8526/- deposited on 30.6.05 Rs.3566/- deposited on 24.5.05 Rs.167/- deposited on 30.6.05 (b) As on 31st March 2005, according to the records of the company, the following are the particulars of disputed dues on account of demand of custom duty saved under EPCG Scheme along with interest till the date of payment of payment (Refer to note no 4 of Part B of Schedule K), that have not been deposited. Name of the statute: Demand of custom duty saved along with interest on account of fulfillment of export obligation under EPCG Licence Nature of dues: Custom Duty Amount of demand net of deposits (Rs in Lakhs) Rs. 367.66/- Lakhs Period to which amount relates: FY 1999-2000 Forum where dispute is pending: In view of the company, as per the provisions of the EXIM policy 2003, being a sick unit declared by the Board for Industrial Financial Reconstruction, the company is entitle for an extended period till 01.03.2007 for fulfillment of export obligation. The matter is pending with the office of the Director General of Foreign Trade. Name of the statute: Demand from Provident Fund department's 7Q and 14B of Employees provident fund special provision act 1956. Nature of dues: PF interest and penalty on late payments from March 96 to Feb 2001 Amount of demand net of deposits (Rs in Lakhs): Rs.920305/- Period to which amount relates: FY 1995-96 to 2000-01 Forum where dispute is pending: The Company has filed an appeal with EPF Appellate Tribunal Delhi. Name of the statue: Ommitted wages from 1997 to 2001 Nature of dues: ESI Amount of demand net of deposits (Rs in Lakhs): Rs. 115591 Period to which amount relates: 1996-97 to 2000-01 Forum where dispute is pending: Matter is pending with ESI 10. The company's accumulated losses at the end of the financial year are more than fifty percent of its net worth and it has incurred cash losses in such financial year. The company has been declared a sick industrial company during the year 1999-2000, within the meaning of clause (O) of Sub section (1) of Section (3) of Sick Industrial companies, (Special Provisions) Amendment Act, 1992 vide BIFR letter dated 25-.10-2002. 11 In view of the note number 6 of Part B of Schedule K, we are unable to comment to determine whether there is a default in repayment of loans due to the State Bank of India. 12. The company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities and therefore paragraph 4(XII) of the order is not applicable. 13. The provisions of any special statute applicable to chit fund and nidhi/mutual benefit fund/ society are not applicable to the company and therefore paragraph 4(XIII) of the Order is not applicable. 14. The company is not dealing or trading in shares, securities, debentures and other investments and therefore paragraph 4(XIV) of the Order is not applicable. 15. According to the information and explanations given to us, during the year the company has not given any guarantee for loans taken by others from banks or financial institutions and therefore paragraph 4(XV) of the Order is not applicable. 16. According to the information and explanations given to us the company has not availed any term loans during the year and therefore paragraph 4(XVI) of the Order is not applicable. 17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, in our opinion, there are no funds raised on short term basis which has been used for long term investments and vice versa. 18. The company has not made any preferential allotment of shares during the year and therefore paragraph 4(XVIII) of the Order is not applicable. 19. The company has not issued any debentures during the year and therefore paragraph 4 (XIX) of the Order is not applicable. 20. The company has not raised any money by way of public issues during the year and therefore paragraph 4 (XX) of the Order is not applicable. 21. Based upon the audit procedures performed and as per the information and explanations given to us by the management, we report that no fraud on or by the company has been noticed during the year. For Anuj Kumar Gupta & Co. Chartered Accountants (Anuj Kumar) Proprietor Place : Gurgaon Date : 23rd August, 2005