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Magnus Rubber Industries Ltd.

BSE: 523882 Sector: Others
NSE: N.A. ISIN Code: N.A.
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Magnus Rubber Industries Ltd. (MAGNUSRUBBER) - Auditors Report

Company auditors report

MAGNUS RUBBER INDUSTRIES LIMITED ANNUAL REPORT 2004-2005 AUDITORS' REPORT To The Members, 1. We have audited the attached Balance Sheet of MAGNUS RUBBER INDUSTRIES LIMITED, as at 31st March, 2005, Together with the Profit & Loss Account of the Company for the year ended on that date annexed thereto both of which we have signed under references to this report. 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 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 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 presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors' 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 annex hereto a statement on the matters specified in paragraphs 4 & 5 of the said order. 4. Further to our comments in paragraph 3 above, we report that a. 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. b. 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. c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account. d. Profit and Loss Account and the Balance Sheet comply with the Accounting standards referred to in Section 211(3C) of the Companies Act, 1956 to the extent applicable, except stated otherwise. e. In our opinion and to the best of our information, and according to the explanations given to us, we report that the directors have become disqualified from being appointed as directors of the Company under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, as the company has defaulted in payment of deposits due for repayment as well as payment of interest on deposits accepted. However, the company is declared a Sick Company by BIFR and restructuring scheme proposed by the company is under consideration by Operating Agency (IDBI) and BIFR and as per the said restructuring scheme exemption is sought by the company from applicability of Provision of Section 274 (1)(g)(B) of the Companies Act, 1956. 5. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read together with the notes thereon subject to i) Information regarding outstanding liability of Small Scale Industries, required to be disclosed as per Notification No. GSR 129(E) dated 22nd February, 1999 issued by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs, has not been disclosed for want of details (Refer Note No. 3 (A & B) (Schedule 16). ii) Non Provision of estimated liability for Gratuity (Amount not quantifiable) required to be made according to the requirements of Accounting Standard 15 regarding 'Accounting for Retirement Benefits in the Financial Statement of employers' has not been made in the accounts (Refer Note No. 9 - Schedule 16). iii) Non-provision for estimated liability of interest payable to parties for Bill Discounting facility as well as inter corporate loans taken by the company in earlier years (Amount not quantifiable) (Refer Note No. 8- Schedule 16). iv) Non-provision of Rs.12.72 lacs being Interest payable on deposits accepted by company (Refer Note No. 11(i) - Schedule 16). v) Non-provision of Interest payable to IDBI for quarter ended March, 2002 to 31st March, 2005 (Refer Note No. 1101) - Schedule 16). vi) Non-provision of Interest payable to Bank of India for Working Capital facilities for the period 1st April, 2004, to 31st March, 2005 (Refer Note No. 11(iii) - Schedule 16). vii) Non-provision of Interest payable on delayed/non payment of Sales-tax deferment dues as well as delayed payment of current sales-tax dues (Amount not quantifiable) (Refer Note No. 11 (iv) - Schedule 16). viii) Non-provision of interest / penaly amounting to Rs.0.90 lacs payable on Income tax (TDS). (Refer Note No. 11 (vi)- Schedule 16). give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view 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 Profit and Loss Account of the Loss for the year ended on 31st March, 2005 and c) In so far as it relates to the Cash Flow Statement. of the cash flows of the company for the year ended on that date. For MUKESH R. CHOKSHI & CO., Chartered Accountants MUKESH R. CHOKSHI Place : Ahmedabad Proprietor Date : 31/08/2005 Membership No.36270 ANNEXURE TO THE AUDITOR'S REPORT ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2005 OF MAGNUS RUBBER INDUSTRIES LTD. 01. (a) The company has maintained proper records showing full particulars inducing quantitative oxtails and situation of fixed assets. (b) A major portion of fixed assets have been physically verified by the management at the year end. In our opinion, the frequency of verification is reasonable having regard to the size of the company and nature of its business. To the best of our knowledge and as explained to us, no material discrepancies have been noticed on such verification. (c) In our opinion and according to the information and explanations given to us, no fixed assets have been dispossed off by the company during the year so as to affect its going concern. 02. (a) As explained to us, the stock of stores, spares, packing materials, raw materials, works in process and finished goods have been physically verified by the management during the year. (b) The procedures explained to us, which are followed by the management for physical verification of inventories, are, in our opinion, reasonable and adequate in relation to the size of the company and nature of its business. (c) In our opinion, the discrepancies noticed on physical verification of the aforesaid stocks as compared to book records, except the stock of Raw Materials, Packing Materials, stock of stores & spares and work in process for which no records are maintained were not material and the same have been properly dealt with in the books of account. 03. (a) In earlier years, the company has granted unsecured loan amounting to Rs.57,54,114 - to one company covered in the register maintained under section 301 of the Companies Act, 1956. No interest has been charged on above said loan since 01/04/1996 as per the accounting practice followed by the company. As the said loan has become doubtful of recovery, the principal as well as interest charged in books up to 01/04/1996 has become prejudicial to the interest of the company. (b) During the year, the bankers of the company (Bank of India) have realised collateral securities by way of pledged shares of Indian Companies of late promoter Shri Rajesh N. Sheth and appropriated towards overdue interest on working capital facilities availed by the company. In view of the above, an amount of Rs.14,08,629/- has been treated as unsecured interest free loan from Director, covered in the register maintained under section 301 of the Companies Act, 1956. As there is no stipulation as to repayment, the reporting on regularity on repayment does not arise. 04. In our opinion and according to the information and explanations given to us, there are general adequate control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and for sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls. 05. On the basis of the audit procedures performed by us and according to the information; explanations and representations given to us by the management, we are of the opinion that there are no transactions that need to be entered in to the register maintained under section 301 of the Companies Act, 1956. 06. In our opinion and according to the information and explanations given to us, the company has not complied with the provisions of the Section 58A of the Companies Act and the Companies (Acceptance of Deposits) Rules 1975 with regard to the deposits accepted in earlier years as to maintenance of liquid assets, non payment of Interest, as well as non repayment of deposits due for repayment. Though the company has defaulted In repayment of deposits none of the deposits are covered under the provisions of Section 58 AA of the Companies Act, 1956. As Informed to us, no order has been passed by the Company Law Board or National Company Law Board Tribunal or Reserve Bank of India or any other court or any other tribunal, 07. The company has yet,not set up Internal Audit System. 08. The Central Government has not prescribed maintenance of Cost Records under section 209 (1)(d) of the Companies Act, 1956. 09. (a) According to the records of the Company, undisputed statutory dues in respect of Provident Fund and Income tax (TDS) have generally been regularly deposited with the appropriate authorities, though there has been a slight delay in a few cases. As regards statutory dues like Investor Education and Protection Fund, Employees State Insurance, Wealth Tax, Service Tax, and Custom Duty are not applicable to the company. As regards statutory dues in respect of Excise Duty and cess, the company has been regular in depositing with the appropriate authorities. As regards undisputed Sales-tax dues, as well as Interest/penalty on Income tax (TDS), the following dues remained In arrears as on the fast day of financial year for a period of more than 6 months from the date on which they became payable. Name of the Statute Nature of Amount Period to Due Date the dues Rs. which the Date of Amount Payment relates Central Sales tax 1700000 31/05/01 Unpaid Sales tax under 1933384 31/05/02 ' Sales tax deferment 1933384 31/05/03 ' scheme of Government 1933384 31/05/04 ' of Gujarat. Sales tax 7500152 7500152 Income tax Act Interest/ 90163 1997-98 Overdue ' penalty to on TDS 1999-2000 According to the information and explanations given to us and the records of the company examined by us, there were no disputed dues of Sales Tax, Income Tax, Custom Duty, Service Tax, Wealth Tax, Excise Duty, and Cess as at 31st March, 2005. 10. The accumulated losses of the company exceeds its share capital eroding its entire net worth, as at the end of the financial year. As regards reporting on the clause of cash losses,both in the financial year under report and in the immediately preceeding financial year, it is not possible to comment in respect of the same in view of non consideration of unquantified qualifications. 11. On the basis of records examined by us and the information and explanations given to us, the company has defaulted in repayment of dues to a financial institution and Bank as under A. FINANCIAL INSTITUTION (I.D.B.I.) PARTICULARS OUTSTANDING OVERDOES AS AT 31/03/2005 AS AT 31/03/2005 Term Loan 1,00,00,000 1,00,00,000 Funded Interest Term Loan 35,05,854 35,05,854 Interest accrued and due on Term Loan (*) 55,06,816 55,06,816 (*) Represents provision of interest upto 31/12/2001. The above position has been arrived at subject to non provision of interest / penal interest since 01/01/2002 to 31/03/2005. B. BANK (BANK OF INDIA) The company has availed Working Capital facilities from Bank of India. The interest on the said facilities has not been paid / provided for the period 01/04/2004 to 31/03/2005. The amount has not been quantified. 12. As explained to us, tire company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities. 13. In our opinion, the company is not a chit fund or nidhi / mutual benefit fund / society and therefore, the provisions of clause 4 (XIII) of the Companies (Auditors Report) Order 2003 are not applicable to the company. 14. 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 (Auditors Report) Order 2003 are not applicable to the company. 15. According to the information and explanations given to us, and the representations made by the management, the company has not given any guarantee for loans taken by others from Bank or financial institution. 16. On the basis of the records examined by us, the company has not taken any term loan during the year under report and therefore, the comment on its application has not been made. 17. According to the information and explanations given to us and on an overall examination, the Balance sheet of the company, we report that short term funds aggregating to Rs.45291223/- have been used for financing losses as well as for long term assets after considering all liabilities as short term as they have become overdue for payment. 18. According to the information and explanations given to us, dung the year the company has not made any preferential allotment of the shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. 19. On the basis of the records and documents examined by us, the company has not issued any secured debentures during the year. 20. The company has not raised any money by public issue during the year. 21. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the company has been noticed or reported, by the company during the year. For MUKESH R. CHOKSHI & CO., Chartered Accountants MUKESH R. CHOKSHI Place : Ahmedabad Proprietor Date : 31/08/2005 Membership No.36270