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Hotline Teletube & Components Ltd.

BSE: 517208 Sector: Engineering
NSE: N.A. ISIN Code: INE677B01015
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Hotline Teletube & Components Ltd. (HOTLINETELETUBE) - Auditors Report

Company auditors report

HOTLINE TELETUBE AND COMPONENTS LIMITED ANNUAL REPORT 2005-2006 AUDITORS' REPORT To, The Members, Hotline Teletube & Components Limited, Malanpur, M.P. 1. We have audited the attached balance sheet of Hotline Teletube & Components Limited as at 31st March, 2006 and also the Profit and Loss Account and the Cash Flow Statement for the year ended as 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 by the Companies (Auditors Report) (Amendment) Order, 2004] issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give our comments in the annexure on the matters specified in the order to the extent applicable to the Company. 4. The management has .tot considered necessary to make the provision on account of impairment of assets in terms of Accounting Standard - 28 issued by Institute of Chartered Accountants of India for the reasons explained in Note No. - B.2 in Schedule - XIV of the attached Balance Sheet. 5. Subject to point no. 4 and 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 purpose 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of accounts. (iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory accounting standards to the extent applicable specified by the Institute of Chartered Accountants of India referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. (v) On the basis of written representation received from the directors as on 31st March, 2006 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2006 from being appointed as a 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, without considering the effect of the observation in para no. - 4 above, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give 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, 2006; (b) in the case of Profit and Loss Account, of the loss for the year ended on that date; and (c) in the case of Cash Flow statement, of the cash flow for the year ended on that date. For S.S. KOTHARI MEHTA & CO. Chartered Accountants Yogesh K. Gupta Partner Membership No. 93214 Place : New Delhi Date : 23.08.2006 ANNEXURE TO THE AUDITOR'S REPORT (As referred in paragraph 3 of our report to the Members of HOTLINE TELETUBE & COMPONENTS LIMITED on the accounts for the year ended 31st March 2006) (i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies between the book records and the physical inventory have been noticed. c) The company has not disposed off any substantial part of its fixed assets which has any effect on its going concern during the year. (ii) a) The inventory, except lying with the outside parties, has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. b) In our opinion and according to the information and explanation 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) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper records of inventory as far as we could ascertain and no material discrepancies have been noticed between the physical stock and the book records. (iii) a) During the year, as per the information and explanations provided to us, the company has not granted any loan secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Companies Act 1956, therefore provisions of Clause (iii) (a), (b), (c) & (d) of Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the company. b) During the year, as per the information and explanations provided to us, the company has not taken any loan secured or unsecured from companies, firms or other parties covered in the register maintained u/s 301 of the Companies Act 1956, therefore provisions of Clause (iii) (f) & (g) of Companies (Auditor's Report) Order, 2003 (as amended) 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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in Internal Controls system of the Company. (v) a) As per information and explanations given to us by the management, we are of the opinion that all the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 and need to be entered in to the register maintained under that section have been so entered. b) As far as we could ascertain on the basis of our selective checking and according to the information and explanation given to us, transactions made in pursuance to aforesaid contracts or arrangements in respect of each party made during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. (vi) The Company has not accepted any deposits during the year under report from the public under Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956. Therefore, the provisions of Clause 4(vi) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the company. (vii) In our opinion, the Company has a reasonable internal audit system commensurate with the size and nature of its business. (viii) The Central Government has prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for Electronics Industry. We have broadly reviewed the records as maintained. In our opinion, the company has prima facie maintained the cost records. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or not. (ix) a) The company is generally regular in depositing the 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 statutory dues with the appropriate authorities. There was no undisputed amount outstanding at the year end for a period more than six months from the date they become payable. b) The details of sales tax / income tax / custom duty / wealth tax / service Tax / excise duty / cess, which have not been deposited on account of dispute are given hereunder: Name of Statute Nature of Dues Amount (in Rs.) Income Tax Act, 1961 Income Tax 18,32,609 Name of Statute Nature of Dues Period Forum at which dispute is pending Income Tax Act, 1961 Income Tax 2002-03* CIT (Appeals) * Assessment Year (x) The company does not have any accumulated losses. The company has not incurred cash losses during the current financial year as well as in the immediately preceding financial year. (xi) In our opinion and according to the information and explanations given to us, the company has made following defaults in repayment of dues to banks: Particulars Nature of Dues Amount (in Rs.) Term Loan Principal 40,00,000 Interest 8,24,674 Working Capital Loan Principal 9,24,42,446 Interest & Other Charges 97,39,492 Particulars Nature of Dues Period of Default Term Loan Principal Interest Within last 6 months Working Capital Loan Principal Interest & Other Charges (xii) The company has not granted any loans 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 or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the company. (xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the company. (xv) According to the information & explanations given to us the Company has given Corporate Guarantee for loans taken by its related parties from Banks. In our opinion, the terms and conditions of such guarantee are not prejudicial to the interest of the Company. (xvi) To the best of our information and knowledge and as per records verified by us the company has applied its term loans for the purpose for which the loans were obtained. (xvii) According to the information and explanations given to us the funds raised on short term basis have not been used for long term investment. (xviii) The company has not made any allotment of shares during the year under report. (xix) As per information and explanation given to us the company has not issued any debentures. Therefore, the provisions of clause (xix) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the company. (xx) The company has not raised its share capital during the year under report, therefore, the provisions of clause 4(xx) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the company. (xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit for the period ended 31st March 2006. For S.S. KOTHARI MEHTA & CO. CHARTERED ACCOUNTANTS YOGESH K. GUPTA PARTNER MEMBERSHIP NO.: 93214 PLACE : NEW DELHI DATE : 23.08.2006