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Shreeji Industries Ltd.

BSE: 513526 Sector: Others
NSE: N.A. ISIN Code: N.A.
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Shreeji Industries Ltd. (SHREEJIINDS) - Auditors Report

Company auditors report

SHREEJI INDUSTRIES LIMITED ANNUAL REPORT 2003-2004 AUDITORS' REPORT To The Members of SHREEJI INDUSTRIES LIMITED 1. We have audited the attached Balance Sheet of M/S. SHREEJI INDUSTRIES LIMITED, as at 31st March, 2004 the relative Profit & Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both annexed thereto, which we have signed under reference 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 required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. 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 presentation of the financial statements. 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 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we set out in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: Special attention is invited to the following notes in Schedule 15(B), and their consequential impact to the extent ascertained, on the Loss for the year, reserves, assets & liabilities Note-3 regarding accounts of the Company prepared on Going Concern Basis. Note-4 regarding confirmation of balances Note-5 regarding non-provision of Doubtful Debts, Loans & Advances to Suppliers Note-6 regarding non-provision of Interest on certain loans obtained and amount of the same is unascertained. The company has changed the accounting policy and provided interest on certain overdue Bill Discounting and Lease Rentals payable, resulting into loss & liabilities being overstated by Rs.19,29,882/- (Previous Year Rs.19,73,143/-) The Company has provided till date Rs.1,54,72,153/- (Previous Year Rs.1,35,42,271/-) for Interest on Overdue Bill discounting and lease rentals resulted into losses & liabilities being overstated to that extent. Note-7 regarding Advances for Capital Work in Progress Note-8 regarding exclusion of Excise Duty for valuation of Inventories which is not in conformity with As-2, issued by Institute of Chartered Accountants of India. Note-9 regarding non-provision of diminution in the value of investments, which is not a conformity with AS-13, issued by Institute of Chartered Accountants of India. Note-10 regarding non-provision of liabilities towards retirement benefits, which is not in conformity with AS-15 issued by Institute of Chartered Accountants of India. Note-13 regarding redemption of Preference shares Note-23 regarding amount of Share Application Money 5. Subject to our comments in Para 4 above: 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 the law have been kept by the company so far as appears from our examination of these books: c) The Balance Sheet and Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of Account. d) In our opinion, the Balance Sheet, the Profit & Loss Account and the Cash Flow Statement dealt with by this report comply with the applicable accounting standards referred to in Section 211(3C) of the Companies Act, 1956, except as otherwise disclosed in Note Nos. A (vi), (ix) and (xv) of Significant Accounting Policies (Schedule 15) and Note Nos. B 8,9, & 10 of Notes to the Accounts (Schedule 15). e) On the basis of written representation received from the Chairman & Managing Director of the company, as at 31st March, 2004 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2004, from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. f) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet and the Profit & Loss Account, read together with the Notes thereon and the relevant statement of accounting policies attached thereto and subject to our comment in Para (4) above, gives the information required by the companies Act, 1956 in the manner so required and gives true and fair view: (i) In the case of Balance Sheet of the state of affairs of the company as at 31st March, 2004. (ii) In the case of Profit & Loss Account, of the Loss for the year ended on that date; and (iii) In the case of the Cash Flow Statements, of the cash flows for the year ended on that date. FOR, AGRAWAL & MANDOWARA Chartered Accountants PLACE: AHMEDABAD. (S.N. MANDOWARA) DATED: 23rd July, 2004. Partner Membership No. 38413 ANNEXURE TO THE AUDITOR'S REPORT As required by the Companies (Auditor's Report) order, 2003 issued by the Company Law Board in term of Section 227 (4A) of the companies Act 1956 on the basis of such checks, as we considered appropriate we report that: 1. a) The company has maintained proper records showing full particulars including quantitative details and situations of fixed assets. b) All the Fixed assets have not been physically verified by the management during the year, but there is a regular programme of verifications which in our opinion is reasonable having regards to the size of the company and nature of the fixed assets. According to the explanations given to us no material discrepancies have been noticed on verification. c) The Company has not made substantial disposals of fixed assets during the year, which would affect the going concern assumption. 2. a) The inventories have been physically verified by the management. In our opinion, the frequency of such verification is reasonable. b) In our opinion and according to the information and explanation given to us, the procedure for physical verification of inventories followed by the management were 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, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. 3. a) According to the information and explanations given to us, the Company has granted interest free Unsecured loans / Advances to Two (2) parties covered in the register maintained under Section 301 of the Companies Act, 1956. The Maximum amount involved during the year was Rs. 6,33,630/- and the year end balance Rs.4,20,134/-. The company has not taken any Loan Secured or unsecured form the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. b) The terms and conditions of the interest free unsecured loans / advances granted are not, prima facie, prejudicial to the interest of the Company. c) The parties to whom interest free unsecured loans/advances granted, there were no stipulation for repayment of the loan/advances. d) The parties to whom interest tree unsecured loans/advances granted. there were no stipulation for repayment of the loans/advances, hence there is no overdue amount of such loans/advances. 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 the nature of its business, with regard to purchase of inventories & fixed assets and for the sale of goods. During the course of our audit we have not come across any continuing failure to correct major weakness in internal controls. 5. a) In our opinion and according to the information and explanations, given to us, transactions that needed to be entered into a register in pursuance of 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, the transactions with the parties as listed in the register maintained under section 301 of the Act, in excess of Rs.5,00,000/- are at prices which are reasonable having regard to the prevailing market prices at the relevant time. 6. According to information and explanations given to us, the Company has not accepted any deposit falling within the purview of Section 58-A and 58-AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. 7. In our opinion, the Company has an adequate internal audit system commensurate with its size and the nature of its business. 8. We are informed that the Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products manufactured by the Company. 9. a) According to the information and explanations given to us and on the basis of the examination of the books of Account, the Company is not regular in the depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, excise duty custom duty, cess and any other statutory dues during the year with the appropriate authorities. According to the information and explanations given to us, except for the cases stated below, there are no undisputed amount payable in respect of statutory dues as at 31st March, 2004 for a period of more than six months form the date they become payable. Nature of Dues Amount involved Provident Fund Rs.1,58,835/- Professional Tax Rs. 24,400/- Preference Dividend Tax Rs. 6,050/- b) As per the information and explanations given to us, there are no disputed amounts payable in respect of sales tax, income tax, custom duty, wealth tax, excise duty and cess. 10. a) The accumulated losses of the company exceeded fifty Percent of its net worth at the end of the financial year. The company has incurred cash losses during the current year and also during the immediately preceding financial year. The company is a sick industrial company with in the meaning of clause (O) of section 3(1) of the Sick Industrial Companies (Special provisions) Act, 1985 and we are informed by the company that the company has made a reference to the Board for Industrial and Financial Reconstructions and the same has been registered vide case no.401/2002. 11. The Company has defaulted in the repayment of dues to the Financial institutions and Banks. The principal amount and interest of Rs.1,86,27,115/- is already due for repayment to the Financial institutions and the principal amount of Rs.3,25,88,448/- is already due for repayment to the Bank, and the company has provided interest on approximate basis arbitratorly without any conformation from the Bank and shown in other liabilities. 12. According to the information and explanations given to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities. 13. The Company is not a chit fund / nidhi / mutual benifit fund / society. 14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. 15. According to the information and explanations given to us, the Company has not given any guarantee for the loans taken by other from banks for financial institutions. 16. According to the information and explanations given to us, the Company has not raised any short-term or long-term funds during the year under review. 17. According to the information and explanations given to us, the Company has not raised any short-term or long-term funds during the year under review. 18. The Company has not made any preferential allotment of shares to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956, during the year. 19. The Company has not issued any debentures and so no securities have been created during the year. 20. The Company has not raised any monies by way of public issue during the year. 21. To the best knowledge and belief and according to information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year. FOR, AGRAWAL & MANDOWARA Chartered Accountants PLACE: AHMEDABAD (S.N. MANDOWARA) DATED: 23rd July, 2004. Partner Membership No. 38413