HARBOR NETWORK SYSTEMS LIMITED
ANNUAL REPORT 2004-2005
1. We have audited the attached Balance Sheet of HARBOR NETWORK SYSTEMS
LIMITED as at 31st March, 2005 and also the Profit and Loss Account 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 statement
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 misstatements. An audit includes
(a) examining, on a test basis, evidence to support the financial statement
amounts and disclosures in the financial statements (b) assessing the
accounting principles used in the management in the preparation of the
financial statements (c) assessing significant estimates made by management
in the preparation of the financial statements and (d) evaluating 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 in terms of section 227(4A) 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. Further to our comments in the Annexure referred to in paragraph (3)
above and subject to notes as below and read with other notes thereon we
a) Note No. 10 regarding non-provision of the interest on loan amount of
Rs. 24,96,960/- from Punjab & Sind Bank and Rs. 48,89,115/- from Priya Ltd.
as these parties have filed case in the court for recovery. No provision
for interest has been made due to disputed nature of transactions.
c) Note No. 13 regarding non-provision in diminution, if any in the value
of shares held as stock in trade as the market value of these shares is not
5. We have obtained all the information and explanations, which to the best
of our knowledge and belief were necessary for the purpose of our audit.
6. 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 the books of
7. The Balance Sheet and Profit and Loss Account referred to in this report
are in agreement with the books of account of the Company.
8. In our opinion, the accounts comply with the Accounting Standards
referred to in Section 211(3C) of the Companies Act, 1956;
9. On the basis of written representations received from the directors, as
on 31st March, 2005, and taken on record by the Board of Directors, in our
opinion, none of the directors is disqualified from being appointed as
director u/s Section 274(1)(g) of the Companies Act, 1966;
10. Subject to the foregoing and other notes in Schedule J, in our opinion
and to the best of our information and according to the explanations given
to us, the said Balance Sheet and Profit and Loss Account read together
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 in conformity
with the accounting principles generally accepted in India:
i. In the case of Balance Sheet, of the state of affairs of the Company as
at 31st March 2005 and
ii. In the case of Profit and Loss Account of the loss of the Company 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.
For MEHTA & PARMAR
(UDAI S. PARMAR)
Memb. No. 36540
Mumbai : 30th June, 2005
Annexure to Auditors' Report
(Referred to in paragraph 1 of our report of even date on the accounts of
Harbor Network Systems Limited for the year ended 31st March 2005).
In terms of the information and explanations given to us and the books and
records examined by us in the normal course of audit and to the best of our
knowledge and belief, we state as under:
1. The Company has maintained proper records showing full particulars
including quantitative details and situation of Fixed Assets. These fixed
assets were physically verified by the Management during the year. The
frequency of the verification is considered reasonable having regard to the
size of the Company and nature of its assets. We have been informed that no
discrepancies were noticed on such physical verification. Substantial part
of fixed assets have not been disposed of during the year. which will
affect its status as going concern.
2. The stocks of shares have been physically verified by the management
during the year and no discrepancies have been noticed on physical
verification between the physical stocks and book records. We are informed
that no material discrepancies between physical stocks and book records
were noticed on such verification.
3. The procedures of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the
Company and nature of its business. The Company is maintaining proper
records of inventory. There were no discrepancies between physical stocks
and book records.
4. In our opinion valuation of stocks is fair and proper in accordance with
normally accepted accounting principles and is on the same basis as in
5. The company has neither granted nor taken any Loans, secured or
unsecured, to/from companies, firms or other parties covered in the
Register maintained under section 301 of the Companies Act, 1956.
6. In respect of loans and advances in the nature of loans given by the
company, in the absence of terms as to repayment of principal amounts and
payment of interest on such loans/deposits, we are not able to comment in
7. In our opinion and according to the information and explanations given
to us, there are 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. In our opinion, there
is no continuing failure to correct major weaknesses in internal control.
8. There are no transactions exceeding the value of five lakh rupees in the
financial year in respect of any party.
10. The company has not accepted any deposits from the public under the
provisions of section 58A of the Companies Act, 1956 and the rules framed
there under and the directives issued by Reserve Bank of India and the
provisions of Non Banking Financial Companies (Reserve Bank) directions
11. The company has no formal Internal Audit system.
12. The Central Government has not prescribed the maintenance of cost
records by the Company under section 209(1)(d) of the Companies Act, 1956
for any of its products.
13. According to the information and explanations given to us, the
provisions of the Employees' Provident Fund and Miscellaneous Provisions
Act, 1952 and Employees State Insurance Scheme, 1948 are not applicable to
14. According to the information and explanations given to us, no
undisputed amounts payable in respect of wealth tax, custom duty and excise
duty were outstanding as at 31st March, 2005 for a period of more than six
months from the date they became payable. Disputed dues on account of
professional tax of Rs.13.395/-, service tax Rs. 62,677/-, and Rs.15,633.50
for Tax Deducted at Source are outstanding.
15. The company has registered cash losses for the last 7 years, however
the accumulated losses are less than 50% of its net worth.
16. There was a claim by Punjab & Sind Bank against the company towards
invocation of Bank Guarantee. However the Company had contested the claim
successfully with the appropriate authorities. Punjab & Sind Bank has filed
all appeal against the said order with the Appellate authorities. (Ref Note
No. 11 of Schedule 'J').
17. The company is not dealing or trading in shares, debenture, securities
or other investments.
18. The company is not a chit fund, nidhi or mutual benefit fund/society,
19. The company has not given any guarantee for loans taken by others from
bank or financial institutions.
20. The Company has not availed any term loan during the current financial
21. According to the information and explanations given to us and on an
overall examination of the Balance Sheet and the Cash Flow statement of the
company, the company has not raised any funds during the year.
22. In our opinion and according to the information and explanations given
to us, the company has not made any preferential allotment of shares during
the year to parties and companies covered in the register maintained u/s
301 of the Companies Act, 1956.
23. The Company has not issued any debentures during the year, and
accordingly the question of creating security in respect thereof does not
24. The Company has not made any public issue during the year and
accordingly the question of disclosing the end use of money raised by
public issue does not arise.
25. According to the information and explanation given to us, no fraud on
or by the company has been noticed or reported during the course of our
For MEHTA & PARMAR
(UDAI S. PARMAR)
Memb. No. 36540
Mumbai : 30th June, 2005