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Pentafour Solec Technology Ltd.

BSE: 500457 Sector: Engineering
NSE: PENTFRSOLC ISIN Code: N.A.
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Pentafour Solec Technology Ltd. (PENTFRSOLC) - Auditors Report

Company auditors report

PENTAFOUR SOLEC TECHNOLOGY LIMITED ANNUAL REPORT 2002-2003 AUDITORS' REPORT 1. We have audited the attached Balance Sheet of M/s. Pentafour Solec Technology Limited as at 31st March 2003 and the profit and loss account and the cash flow statement of the company for the period 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 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 2. As required by the Manufacturing and Other Companies (Auditor's Report) Order, 1998 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of the books and records of the company as we considered appropriate and the information and explanation given to us during the course of our audit, we give the Annexure, a statement on matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the company. 3. Further to our comments in the Annexure referred to in Paragraph 2 above, we report that: (a) The accumulated loss of the company has exceeded its net worth. The accounts have, however, been prepared by the management on a going concern basis as explained in Note 6 & 7 of Schedule 19. This being a technical matter, besides in view of uncertainties, we are unable to comment on the same. However, should the company be unable to continue as a going concern, the extent of the effect of the resultant adjustments on the assets, liabilities and the net worth of the company as at the year end and loss for the year is presently not ascertainable. (b) 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. (c) 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 those books, (d) The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account. (e) In our opinion, the Balance Sheet and Profit and Loss Account have been prepared in compliance with the Accounting Standards as prescribed under provisions of Section 211 (3C) of the Companies Act, 1956 except accounting standards 6,17,18,20 & 22. (f) On the basis of legal opinion obtained by the company and written representation received from the directors, taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2003 from being appointed as a Director of the company in terms of Section 274 (1)(g) of the Companies Act, 1956. (g) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts subject to our comments in paragraph (a) above and read together with Significant Accounting Policies, Contingent Liabilities and other notes of Schedule 1 d particularly Note No.6 & 7 regarding recall of facilities, judicial proceedings by the banks & financial institutions and the accumulated loss of the company having exceeded its entire networth, give the information required by the Act, 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 31st March 2003 and ii) in the case of the Profit and Loss Account, of the loss of the company for period ended on that date. iii) in the case of Cash flow statement of the cash flows for the period ended on that date. for R. Swaminathan & Co. Chartered Accountants Place : Chennai Date : 21st August, 2003 R. Swaminathan Partner Annexure referred to in paragraph 2 of Auditors' Report to the members of Pentafour Solec Technology Limited on the accounts for the period ended March 31, 2003. I. The Company has maintained records showing quantative details and situation of fixed assets. The assets have been physically verified by the management during the year. There is a regular programme of verification which in our opinion is reasonable having regard to the size of the company and the nature of its assets. 2. None of the fixed assets have been revalued during the period 3. Physical verification was conducted by the management during the period in respect of finished goods, stores, spare parts and raw materials. In our opinion the frequency of verification is reasonable. 4. 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. 5. Having regard to the size of operations of the company, the discrepancies noticed on verification as compared to book records were not significant and these have been properly dealt with in the books of accounts. 6 In our opinion and on the basis of our examination of stock records the valuation of stocks were fair and proper in accordance with normally accepted accounting principles and is on the same basis as in the preceding year. 7. During the period the company has nether taken nor granted any loans, secured or unsecured from/to companies, firms or other parties listed in the register maintained under section 301 of Companies Act, 1956 (1 of 1956) except to employees to whom interest free loans or advances in the nature of loans have been given by the company who are repaying the principal amounts as stipulated. 8. The company has an adequate internal control procedure commensurate with the size of the company and nature of its business for purchase of stores, raw materials, including components and other assets and for sale of goods. 9. In our opinion and according to the information and explanation given to us, the transactions of purchase of goods and materials and the sate of goods, materials made in pursuance of contracts arrangements entered in the Register maintained under Section 301 of Companies Act, 1956 (1 of 1956) and aggregating to Rs.50,000 or more during the period in respect of each party have been made at prices which are reasonable having regard to the market prices for such goods, materials or services or the prices at which transactions for similar goods or services have been made with other parties. 10. The Company has not accepted fixed deposit from the public 11. As explained to us, unserviceable or damaged stores, raw materials and finished goods were determined by the management and adequate provision for loss has been made in the accounts. 12. No formal internal audit was carried out during the year However, as explained, effective internal controls are being exercised. 13. The Central Government under section 209(1)(d) of the Companies Act, 1956 has not prescribed for the maintenance of cost accounts and records in respect products manufactured by the company. 14. According to the records produced, information and explanation given to us there has been delay and non-remittance of provident fund and employees state insurance. 15. According to the information and explanation given to us, there were no undisputed amounts payable in respect of Income tax, Wealth tax, Safes tax, Customs duty and Excise duty which have remained outstanding as at 31st March, 2003 for a period of more than six months from the date they became payable. 16. During the course of our examination of books of accounts we have not come across any personal expenses which have been charged to revenue account other than those payable under contractual obligations or in accordance with generally accepted business practice. 17. In respect company's service activity: a) in our opinion and according to the information and explanation given to us the system of recording receipts, issues and consumption of material and stores and allocating materials consumed to relative jobs is not b) though allocation of man hours utilized is not made to relative jobs, in our opinion, control is exercised on total labour utilized on jobs. c) we are informed that the company has a reasonable system of authorization at proper levels and an internal control commensurate with the size of the company and the nature of its business. 18. In our opinion and according to the information and explanation given to us the damaged goods in respect of the trading activity are not significant, having regard to size of the activity and the company has made adequate provision for the loss. 19. The company is a Sick Industrial Company within the meaning of clause (o) of sub section (1) of section 3 of Sick Industrial Companies (Special Provisions) Act,1985 (1 of 1986) as the accumulated loss has exceeded the networth of the company as indicated in para 3 (a) of the audit report. The reference made by the company indicating sickness has been registered by BIFR. for R.Swaminathan & Co. Chartered Accountants Place : Chennai Date : 21st August, 2003 R.Swaminathan Partner