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Sonu Synthetics Ltd.

BSE: 512491 Sector: Industrials
NSE: N.A. ISIN Code: N.A.
BSE 05:30 | 01 Jan Sonu Synthetics Ltd
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Sonu Synthetics Ltd. (SONUSYNTHETICS) - Auditors Report

Company auditors report

SONU SYNTHETICS LIMITED ANNUAL REPORT 2005-2006 AUDITORS' REPORT TO THE MEMBERS We have audited the attached Balance Sheet of SONU SYNTHETICS LIMITED as at 31st March, 2006 and also the annexed Profit and Loss Account of the company for the year ended on that date. 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. 1. 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 2. 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, we annex hereto a statement on the matters specified in Paragraphs 4 and 5 of the said order. 3. 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 purposes of our audit; b) In our opinion, proper books of accounts as required by law have been kept by the company so far, as appears from our examination of the books of the Company; c) The Balance Sheet and the Profit and Loss Account dealt with by the report are in agreement with the books of accounts of the company. d) The Balance Sheet and the Profit and Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, in so far as they are applicable to the Company, subject to Note No. 13 (Schedule U - Notes to Accounts) with respect to non-provision of Retirement Benefits in accordance with Accounting Standard 15 (AS - 15), the impact of which cannot be quantified in the absence of adequate information. e) On the basis of written representations received from the directors of the company, and taken on record by the Board of Directors, none of the directors are disqualified under Section 274(1)(g) of the Companies Act, 1956. f) In view of Note No. 2 (ii) (Schedule U) dealing with the suit filed by the Banks, which is under the consideration of the Debt Recovery Tribunal (DRT) and take-over of the immovable financial assets of the company by Asset Recovery corporation of India Ltd. (ARCIL), and considering the absence of prospects of expeditious rehabilitation, based on available information, we are unable to comment on the fundamental assumption of Going-Concern. g) Based on available information, it is not possible to quantify the disputed amount of statutory dues, since the company has been unable to furnish the necessary information with verifiable evidence. h) In our opinion and to the best of our information and according to the explanations given to us, subject to: i) Note No. 3 regarding confirmation from various parties; ii) Note No. 6 regarding non provision of liabilities / dues of the financial institutions and banks; iii) Note No. 7 regarding provision of interest due to the financial institutions and banks, the correctness of which cannot be ascertained in the absence of confirmation. iv) Note No. 9 regarding the non-transfer of unpaid dividend to the Central Government pursuant to Section 205C of the Companies Act, 1956 and, the consequent penalties /fees payable arising therefrom. v) Note No. 10, which is self-explanatory. vi) Note No. 13, regarding the non-provision of retirement benefits, the impact of which cannot be quantified. vii) Note No. 14. regarding correctness of amounts deducted towards the Provident Fund and their deposit with the prescribed authorities. viii) Suit filed against the Company by one of the shareholders of the Company, the impact of which cannot be quantified based on available information; AND ix) Subject to sub-paragraph f) and g) of Paragraph 3 of this report, the said accounts read together with the notes thereon give the information as required by the Companies Act, 1956 in the manner so required, but we are unable to specifically opine whether they present a true and fair view, (on account of the Assumption of Going-Concern, being questionable as various issues and matters being sub-judice with quasi judicial / judicial and statutory authorities and pending determination): i. In the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2006; and ii. In the case of the Profit and Loss Account, of the Loss for the year - ended on that date; iii. In the case of Cash Flow Statement, of the cash flow for the year ended on that date. For and on behalf of NEETA AND CO. CHARTERED ACCOUNTANTS NEETA H. BAKSHI MUMBAI (PROPRIETOR) 2nd September, 2006 ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2006 OF SONU SYNTHETICS LIMITED On the basis of such checks as we considered appropriate and in terms of the information and explanations given to us, we state that: 1. According to the information and explanation given to us, the Company has not updated the fixed assets register with respect to additions made from the year ending 31st March, 2003. 2. The fixed assets have net been verified by the Management. 3. The Company has not disposed of any of its fixed assets during the year under review and none of its fixed assets have been revalued. However, attention is invited to Note No. 2 (ii) (Schedule U) dealing with the suit filed by the Banks, which is under the consideration of the Debt Recovery Tribunal (DRT) and the takeover of the immovable financial assets of the company by Asset Recovery corporation of India Ltd. (ARCIL). Based on available information and circumstances existing, we are unable to comment on the fundamental assumption of Going Concern. 4. With respect to its inventory: (a) As explained to us, the Management has physically verified the stocks at the close of the year. In our opinion, the frequency of physical verification needs to be increased to make it reasonable. (b) The procedures of physical verification, which are followed by the Management are reasonable and adequate in relation to the size of the company and the fact that the business was suspended. (c) The discrepancies noticed on physical verification of stocks as compared to the book records were not material and have been properly dealt with in the books of accounts. 5. With respect to loans, it is stated as under:- (a) the company has not taken loans from / given loans to persons, firms or other parties covered by Section 301 of the Companies Act, 1956, during the year under review. (b) According to information and explanation given to us, the Company has not taken any new loan secured or unsecured during the year under review. However, the loans taken from eleven parties in the past amounting to Rs. 13,12,447/- continues to be outstanding. (c) There is no stipulation regarding the repayment of the Principal amount in respect of the said loan. 6. In our opinion and according to the explanations given to us, the internal controls in respect of purchases of stores, rain materials, including components, plant & machinery, equipments and other assets and for the sale of goods needs to be strengthened to make in commensurate with the size of the company and the nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls. 7. According to the information and explanations given to us, (a) The register under Section 301 is not maintained. (b) The company has not entered into any contracts or arrangement covered by Section 301 of the Companies Act, 1956 during the year under review and there are no / transactions that are required to be entered into the register. 8. During the year under review the company has not accepted deposits from the public. 9. The Company does not have an internal audit system and no comments are therefore applicable. 10. Maintenance of Cost Records is not applicable to the company for the year under review, since it has not carried on any operations. 11. With respect to statutory dues, it is stated that: (a) As per the records of the company and the information made available by the company, the company has not deposited statutory dues including Provident Fund and Employees State Insurance with appropriate authorities. Based on available information, we are not in a position to confirm the correctness of the quantification of the undisputed statutory dues. As per information given to us by the Management, the following is the list of undisputed statutory Dues: Name of the Nature of dues Amount Due Remarks Statute Employees For the Year ending Unpaid, Due Provident Employees March, 2005 - date as per Fund and Provident fund Rs.285996/- statute Miscellaneous And Admn. Provision Charges Act, 1952 Income Tax Tax deducted For the year ending Unpaid, Due Act, 1961 at source March, 2003 - Date as per Rs.114787/- statute March 2004 - Unpaid, Due Rs.100780/- Date as per statute March, 2005 - Rs.48390/- Professional Profession For the Year ending -Do- Unpaid Tax Tax March, 2003 - Rs.10,685/- March, 2004 - Rs.4,375/- The Company has disputed the income Tax of Rs. 14.84 Lakhs, which is pending before the Income Tax Appellate Tribunal pertaining to Block Assessment (1988 - 98). 12. The accumulated losses of the Company exceeds 50% of net worth of the Company. The Company has made a reference to the Board for Industrial and Financial Reconstruction in accordance with the provision of Sick Industrial Companies (Special Provisions) Act, 1985. 13. The Company has defaulted in the repayment of dues to a financial institution or bank. All the Secured loans taken by the Company has been declared as Non Performing Assets by the respective financial institution and Banks as on 31st March, 2006. As per the Books of accounts of the company, the total outstanding to the banks and financial institutions aggregate to Rs. 38,19,97,502/-. 14. The Company has not given any guarantee for loans taken by others from bank or financial institutions. 15. The Company has not taken any term loan during the year under review. 16. On an overall examination of the Balance Sheet of the Company, it is stated that no funds raised on short-term basis have been used for long- term investment and vice versa. 17. The Company did not have any outstanding debentures during the year. 18. The Company has not raised any money through public issue during the year. 19. The Company has not made any preferential allotment of equity shares during the year under review. 20. 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 causes the financial statements to be materially misstated. For and on behalf of NEETA AND CO. CHARTERED ACCOUNTANTS NEETA H. BAKSHI MUMBAI (PROPRIETOR) 2nd September, 2006