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Nachmo Knitex Ltd.

BSE: 514328 Sector: Industrials
NSE: N.A. ISIN Code: INE228C01015
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Nachmo Knitex Ltd. (NACHMOKNITEX) - Auditors Report

Company auditors report

NACHMO KNITEX LIMITED ANNUAL REPORT 2007-2008 AUDITORS' REPORT To, The members of NACHMO KNITEX LIMITED Ahmedabad 1. We have audited the attached balance sheet of Nachmo Knitex Limited as at March 31, 2008 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 statements based on our audit. 2. 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 mis-statement. 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 issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956 of India and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in the annexure a statement on the matters specified in the said order. 4. Further to our comments in the annexure referred to 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 purposes of our audit. (b) In our opinion, proper books of account as required by law subject to note no.9 of schedule 18(B) regarding non provision of Interest and additional liability on account of withdrawal of CDR package have been kept by the company so far as appears from our examination of those, books. (c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account. (d) In our opinion, subject to note no.9 of schedule 18(B) regarding non- provision of interest and additional liability on account of withdrawal of CDR package the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in section 211 (3C) of the Companies Act, 1956. (e) On the basis of written representations received from the directors as on March 31, 2008 and taken on record by the board of directors, we report that, none of the directors is disqualified as on March 31, 2008 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. (f) Attention is invited to note no.9 of schedule 18(B) regarding additional liability due to withdrawal of corporate debt restructuring (CDR) package and non-provision of interest amounting to Rs.283.12 lacs. (g) Attention is invited to note no.12 of schedule 18(B) regarding preparation of accounts on going concern assumption. (h) 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 significant accounting policies (schedule 18-A) and notes thereon (schedule 18-B) 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 the balance sheet, of the state of affairs of the company as at March 31, 2008. (ii) In the case of profit and loss account, of loss of the company for the year ended on that date; and (iii) In the case of cash flow statement, of the cash flows for the year ended on that date. For Dhirajlal Shah & Go. Chartered Accountants Pravin R. Shah Place: Ahmedabad Partner Date : April 30, 2008 Membership no. :5390 ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph 3 of our report of even date) i. a) The company has maintained proper records showing full particulars of quantitative details and situation of fixed assets. b) As explained to us, physical verification of a major portion of fixed assets as at March 31, 2008 was conducted by the management during the year. In our opinion, the frequency of physical verification is reasonable. We are informed that no material discrepancies were noticed on such verification. c) According to information and explanations given to us, during the year, the company has not disposed off any substantial/major part of fixed assets. II. a) As explained to us, the inventory has been physically verified at the year end by the management. In our opinion, the frequency of verification is reasonable. b) In our opinion and according to the information and explanations given to us, the procedures of 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) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of inventory, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to tire book records were not material and have been properly dealt with in the books of accounts. III. a) The company has taken loan from two companies covered in the register maintained under section 301 of the Companies Act, 1956. The closing balance have been aggregating to Rs.75 lacs. In our opinion, the rate of interest and other terms and condition on which loans have been taken from companies listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie, prejudicial to the interest of the company. There are no repayment during the year and there are no overdue amount of loans taken from the companies covered in the register maintained under section 301 of the Companies Act, 1956. b) The company has not granted any loans during the year to parties covered in the register maintained under section 301 of the Companies Act, 1956. Sub-clause (b), (c), (d) of the Subpara 4 of the order are not applicable. IV. 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 the purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls. V. In respect of contract or arrangement entered in the register maintained in pursuance of section 301 of the Companies Act, 1956. a) Based on audit procedures applied by us, to the best of our knowledge and belief'and according to the information and explanations given to us, we are of the opinion that the particulars of contracts and arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and accordingto the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance of section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. VI. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder, with regard to deposits accepted from the public. As informed to us no order has been passed by the Company Law Board, National Tribunal, Reserve Bank of India or any other Court or Tribunal. VII. In our opinion the company has an internal audit system commensurate with its size and the nature of its business. VIII. We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records have been prescribed under clause (d) of sub-section (1) of section 209 of the Act and are of the opinion that the prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. IX. a) According to the information and explanations given to us and according to the books and records have been produced and examined by us, in our opinion, the company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employee state insurance, income tax, sales tax, wealth tax, service tax, VAT, customs duty, excise duty, cess and other statutory dues with the appropriate authorities during the year. Further no undisputed statutory dues are outstanding as on March 31, 2008 for a period of more than six months from the date they became payable. b) According to the information and explanations given to us, following are the particulars of disputed dues that have not been deposited: Nature of Nature Amount A B statute of dues Rupees in lacs Gujarat Sales Tax Sales Tax 27.77 2002-03 Gujarat Sales Tax Act, 1969 Appellate Tribunal The Central Excise Duty 1,162.13 2002-03 Commissioner of Central Excise and Salt Excise Act, 1944 The Income Income-tax 2.90 Asst. Gujarat High Court Tax Act, 1961 Year 1988-89 The Income Income-tax 6.45 Asst. Gujarat High Court Tax Act, 1961 Year 1996-97 The Income Income-tax 2.44 Asst. Commissioner of Tax Act, 1961 Year Income-tax (Appeals) 2003-04 A = Period to which the amount relates B = Forum where dispute is pending X. The accumulated losses of the company exceed the net worth at the end of the financial year. The company has incurred cash losses during the financial year covered by our audit as well as immediately proceeding such financial year. XI. According to the information and explanations given to us, the company has defaulted in repayment of dues to banks and financial institutions. The details of which are as follows: (Rupee in lacs) Period of default Principal Interest Total Within the year under review 3,006.09 283.12 3,289.21 Since prior to the year under review 1,270.00 210.00 1,480.00 Total 4,276.09 493.12 4,769.21 Refer note no.9 of schedule 18 (B) to the balance sheet, regarding additional liability due to withdrawal of corporate debt restructuring package. XII. According to the information and explanations given to us, the company has not granted any loans and advances 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, nidhi or mutual benefit fund/ societies. Therefore, clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 is not applicable to the company. XIV. In our opinion and according to the information and explanations given to us, the company is not a dealer or trader in shares, securities, debentures and other investments. Therefore, clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 is not applicable to the company. XV. According to the information and explanations given to us, in our opinion, the terms and conditions on which the company has given guarantee for loan taken by others from banks or financial institutions are not prima facie prejudicial to the interests of the company. XVI. The company has not raised any new term loan during the year. The term loans outstanding at the beginning of the year were applied for the purposes for which they were raised. XVII. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, there are no funds raised on a short-term basis which have been used for longterm basis. XVIII. The company has not made any preferential allotment to parties and companies covered under register maintained under section 301 of the Companies Act, 1956 during the year arid hence the question of whether the price at which the shares have been issued is prejudicial to the interest of the company does not arise. XIX. According to the information and explanations given to us and the records examined by us, no debentures have been issued hence the question of creating security does not arise. XX. The company has not raised money by any public issues during the year and hence the question of disclosure and verification of end use of money does not arise. XXI. During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and to the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the company was noticed or reported during the year, nor have been informed of such case by the management. For Dhirajlal Shah & Co. Chartered Accountants Pravin R. Shah Place: Ahmedabad Partner Date : April 30, 2008 Membership no.: 5390