ESL INDUSTRIES LIMITED
ANNUAL REPORT 2004-2005
ESL INDUSTRIES LIMITED
We have audited the attached Balance Sheet of ESL INDUSTRIES LIMITED as at
31st March, 2005 and alto the Profit & Loss Account for the period ended on
the date annexed thereto and the cash flow statement for the period 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. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall statement presentation. We believe that our audit provides a
reasonable basis of our opinion.
As required by the Companies (Auditors Report) Order 2003 issued by the
Central Government of India in terms of the sub-section (4A) of section 227
of the Companies Act, 1956, we enclose in the annexure a statement on the
matters specified paragraphs 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
(ii) In our opinion, proper books of account as required by law have been
kept by the company so tar as appears from our examination of those books
(iii) The Balance Sheet & Profit & Loss Account dealt with by this report
are in agreement with the books of account;
(iv) In our opinion the Balance Sheet & Profit & Loss Account dealt with by
this report comply with the Accounting standards referred to in sub-section
(3C) of Section 211 of Companies Act, 1956;
(v) On the basis of written representations received from the Director as
on 31st March, 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 Director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956
(vi) 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 principle, generally accepted
(a) In the case of the Balance Sheet of the state of affairs of the Company
as at 31st March, 2005:
(b) In the case of the Profit & Loss Account, of the Loss for the period
ended on that date; And
(c) In the case of the Cash Flow of the cash flows for the period ended on
For S.SURESH & CO.,
PLACE : HYDERABAD S.SURESH
DATE : 29.08.05 PROPRIETOR
ANNEXURE TO THE AUDITORS' REPORT
1. (a) The Company has maintained proper records showing full particulars
including quantitative details and situation of Fixed Assets.
(b) As explained to us, the fixed assets have been physically verified by
the management at reasonable intervals and no material discrepancies
between the book records and the physical inventory have been noticed on
(c) The Company has not disposed off substantial part of the Fixed Assets
during the year.
II. (a) The Inventory has been physically verified during the year and in
our opinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of the 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 and as explained
to us, no material discrepancies were noticed on physical verification of
stocks as compared to book records.
III. (a) The Company has not either granted or taken any loans, secured or
unsecured to from Companies, Firms or other Parties covered in tile
register maintained U/s.301 of the Companies Act, 1956.
(b) As the Company has not either granted or taken and loans covered in the
register maintained U/s.301 of the Companies Act 1956, the applicability o
the clause regarding interest and other terms and conditions for secured
and unsecured Loans and the prima facie prejudicial to the interest of the
Company does not arise.
(c) On the basis of our checking and according to the information and
explanations given to us during the course of out audit no loans or
advances in the nature of loans have been given by the Company hence the
ability of the clause regarding regular payment of principal amount and
interest does not arise.
(d) No loans have been taken from or granted to Companies, Firms & other
parties listed in the register U/s.301 of the Companies Act, 1956 , hence
overdue amount of more than rupees one lac does not arise and the clause is
IV. In our opinion and according to the information and explanations given
to us, there are generally adequate internal control procedures
commensurate with the size of the company and the nature of its business
with regard to purchase of inventory and fixed assets and for sale of
goods. There is no continuing failure by the company to correct any major
weaknesses in internal control.
V. (a) In our opinion and according to the information and explanation
given to us, since no such transactions have been made by the company
exceeding the value of Five Lacs Rupees in respect of any party in the
financial year, the entry in the register U/s.301 of the Companies Act,
1956 does not arise.
(b) According to the information and explanations given to us no such
transactions made by the applicability of the clause of charging the
reasonable price having regard to the prevailing market prices at the
relevant time does not arise.
VI. The Company has not accepted any deposits from the public and hence the
applicability of the clause of directives issued by the Reserve Bank of
India and provisions of section 58A and 58AA of the Companies Act, 1956 and
the rules framed there under does not arise. As per information and
explanations given to us the order from the Company Law Board has not been
received by the Company.
VII. In our opinion, the company is NOT having internal audit system,
commensurate with its size and stature of its business.
VIII. In respect of the Company, the Central Government has not prescribed
maintenance of cost records under clause (d) of sub-section (I) of section
209 of the Companies Act, 1956.
IX. a) The Company is regular in depositing statutory dues including Income
Tax with the appropriate authorities and at the last of the financial year
there were no amounts outstanding which were due for more than 6 months
from the date they became payable.
b) According to the information and explanations given to us, no undisputed
amounts are payable in respect of Income Tax, as at the end of the period,
for a period snore than six months from the date they became payable.
X. The Company has been registered for a period of not less than 5 years,
and its accumulated losses at the end of the financial dear is less than
fifty percent of its net worth and the company has incurred cash losses in
this financial year, and in the financial year immediately preceding such
financial year also.
XI. According to information and explanations given to us, the Company has
defaulted in repayment of dues to financial Institutions or banks or
debenture holders and the amount of default is as follows:
Term Loan 8.983.000.00 Working Capital
Limits with Banks 39,529,682.0
XII. According to the information and explanations given to us, 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 hence the
applicability of the clause regarding maintenance of adequate documents in
respect of loans does not arise.
XIII. This clause is not applicable to this Company as the Company is not
covered by the provisions of special statute applicable to Chit Fund in
respect of Nidhi Mutual Benefit Fund Societies.
XIV. According to the information and explanations given to us, the company
is not dealing or trading in shares, securities, debentures and other
investments and hence the provisions of clause 4(xiv) of the Companies
(Auditor's Report) Order 2003 are not applicable to the Company.
XV. 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, and hence the applicable of this clause regarding
terms and conditions which are prejudicial to the interest of the company
does not arise.
XVI. According to the information and explanations given to us, the Term
Loans were applied by the company for the purpose for which the loans were
XVII. According to the information and explanations given to us, not funds
are raised by the Company on short-term basis. Hence the clause of short
term funds being used for long-term investment and vice versa does not
XVIII. According to the information and explanations given to us, 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 and hence-the applicability of the clause regarding the
price at which shares have been issued and whether the same is prejudicial
to the interest of the Company does not arise.
XIX. According to the information and explanations given to us, the company
does not have any debentures and hence the applicability of the clause
regarding the creation of securities in respect of debentures issued does
XX. According to information and explanations given to us, the company has
not raised money by way of public issues during the year, hence the clause
regarding the disclosure by the management on the end use of money raised
by Public Issue is not applicable.
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 audit.
For S.SURESH & CO.,
PLACE : HYDERABAD S.SURESH
DATE : 29.08.05 PROPRIETOR