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MTZ Industries Ltd.

BSE: 500275 Sector: Industrials
NSE: METAZINC ISIN Code: INE865A01018
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MTZ Industries Ltd. (METAZINC) - Auditors Report

Company auditors report

MTZ INDUSTRIES LIMITED ANNUAL REPORT 2005-2006 AUDITORS' REPORT TO, THE MEMBERS OF MTZ INDUSTRIES LIMITED We have audited the attached Balance Sheet of MTZ INDUSTRIES LIMITED as at 31st March, 2006, and the Profit and Loss Account of the Company for the year ended on that date and also 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 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 for our opinion. 1. As required by the Companies (Auditors' Report) Order, 2003 (CARO) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement or, the matters specified in paragraphs 4 and 5 of the said Order. 2. Further to our comments in the Annexure referred to in Paragraph 1, 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the above books of account; (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Sub- Section (3C) of Section 211 of the Companies Act, 1956. (e) Attention is invited to the following in Schedule 16: (i) Re: Non-provision for doubtful debts and advances of Rs.133.64 lacs (vide Note No: 8, Sch. No. 16) (ii) Re: Non-provision for interest payable to LIC/GIC of Rs.69.93 lacs (vide Note No. 15, Sch. No. 16) (f) On the basis of written representations received from the Directors of the Company, we report that all the Directors of the Company quality as on 31st March, 2006 for being appointed as Directors of the Company in terms of Section 274(1)(g) of the Companies Act, 1956, except Mr. Sanjay 8. Shah and Mr. S, C. Roongta. 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 read with the significant accounting policies and other rotes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March. 2006; (ii) in the case of the Profit and Loss Account, of the Loss for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the Cash Flow of the Company for the year ended on that date. For R. K. CHAPAWAT & CO. Chartered Accountants RAVIN DRA CHAPAWAT Place : Mumbai Proprietor Dated : 27th November, 2006. Membership No. 37720 ANNEXURE TO AUDITORS' REPORT Re : MTZ Industries Ltd. 1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable having regard to the size of the Company and nature of its fixed assets. (c) The Company has partly disposed off fixed assets during the year, but this would not affect the going concern status of the Company. 2. (a) The management has conducted physical verification of inventory at reasonable intervals. (b) The procedure of physical verification of inventory followed by the management is 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 no material discrepancies were noticed on physical verification. 3. During the year, the Company has not taken/given Loans, secured or unsecured, from/to Companies or Firms or other Parties covered in the Register maintained under Section 301 of the Companies Act, 1956. 4. 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 nature of its business for the purchase of inventory, fixed assets and also for the sale of goods. During the course of our audit, we have not observed any major weaknesses in internal controls. 5. In respect of contracts or arrangements and transactions covered under Section 301 of the Companies Act, 1956: (a) in our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered. (b) In our opinion and according to the information and explanations given to us, there are no transactions in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 aggregating during the year to Rs.5,00,000/- or more in respect of any party. 6. The Company has not accepted any deposits from the public. 7. The Company did not have an internal audit system during the year. 8. We are informed that the maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956. 9. In respect of Statutory Dues (undisputed): (a) According to the records of the Company, it has not been regularly depositing with appropriate authorities, undisputed statutory dues including Provident Fund; ESIC, Income Tax, Sales Tax, Excise Duty and other statutory dues and there have been considerable delays in a number of cases. The details are as under: Statute Nature of Amount A B C Dues (Rs. in sacs) C.S.T Regular 77.85 Balance as on 31.03.2006 B.S.T Regular 28.82 ' Provident Fund- Employees' Regular 45.08 ' Provident Fund- Company's Regular 92.00 ' Excise Duty Regular 27.48 ' Income Tax Assessment Dues 6.64 ' TDS (Salary) Regular 22.56 ' Professional Tax Regular 16.73 ' TDS (Others) Regular 13.06 ' A = Period to which amount relates B = Due Date C = Date of Payment (b) Disputed statutory dues aggregating to Rs.112.93 lacs that have not been deposited on account of matters pending before appropriate authorities are as under: Statute Nature of Dues Forum when Amount dispute is (Rs. in pending lacs) Income Tax Act, 1961 Assessment Dues Commissioner of Income Tax 56.00 Central Excise Act, Assessment Dues Commissioner of 1944 Central Excise 32.00 Sales Tax Act Assessment Dues Dy. Commissioner of Sales Tax (Appeals) 24.93 10. The Company is a Sick industrial Company within the meaning of Clause (o) of Sub Section (1) of Section 3 of the Sick industrial Companies (Special, Provisions) Act, 1985, and a reference has been made to the Board for Industrial and Financial Reconstruction (BIFR). While declaring the Company sick, BIER has appointed IDBI as the Operating Agency under Section 15 of SICA to formulate a Rehabilitation Scheme for it. 11. As per the books and records maintained by the Company and according to the information and explanations given to us, the Company has defaulted in payment of dues to Financial Institutions as under: Financial Institution Principal Interest Total Payable Amount Amount as on 31.03.2006 (Rs. in lacs) (Rs. in lacs) (Rs. in sacs) IDBI Ltd. 235.89 15.74 251.63 LIC 172.50 171.64 344.14 GIC 200.00 213.60 413.60 12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, Clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company. 14. The Company has maintained proper records of transactions and contracts in respect of trading in securities, debentures and other investments and timely entries have been made therein. All shares, debentures and other investments have been held by the Company in its own name. 15. The Company has given guarantees for loans taken by others from Banks and Financial Institutions. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not, prima-facie, prejudicial to the interest of the Company. 16. The Company has not raised any new term loans during the year. The term loans outstanding at the beginning of the year were applied for the purpose for which they were raised. 17. On the basis of information received from the management and based on our examination of the Balance Sheet of the Company as at 31st March, 2006, we find that the funds raised on short term basis have not been used for long term investment and vice-versa. 18. During the year, 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. 19. The Company did not have any outstanding debentures during the year. 20. The Company has not raised any money through Public Issue during the year. 21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year that could cause the financial statements to be materially misstated. For R. K. CHAPAWAT & CO. Chartered Accountants RAVIND A CHAPAWAI Place : Mumbai Proprietor Dated : 27th November, 2006. Membership No. 37720