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Tamil Nadu Industrial Explosives Ltd.

BSE: 524028 Sector: Industrials
NSE: N.A. ISIN Code: INE398G01017
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Tamil Nadu Industrial Explosives Ltd. (TNINDLEXPLO) - Auditors Report

Company auditors report

TAMIL NADU INDUSTRIAL EXPLOSIVES LIMITED ANNUAL REPORT 2010-2011 AUDITORS' REPORT To The Members of Tamil Nadu Industrial Explosives Limited 1. We have audited the attached Balance Sheet of Tamil Nadu Industrial Explosives Limited, Chennai as at 31st March, 2011 and also the annexed Profit & 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 the 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 include 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 (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on matters specified in paragraphs 4 and 5 of the Order. 4. We invite your attention to: (a) Despite continuing losses incurred by the Company, the accumulated losses exceeding the capital by more than three times and taking into account the various non provisions amounting to Rs. 1376.98 lakhs disclosed hereunder, the accounts of the Company have been prepared on Going Concern basis, on which we are unable to express any opinion thereon. (b) Note No. 9 of Schedule 21 regarding non-provision of interest and penal interest of Rs. 180.58 lakhs for the year and the accumulated interest and penal interest of Rs. 1196.40 lakhs upto the year 2009-1O payable to State Government on the low interest loans and ways and means advance. (c) The effect of above non-provision of interest and penal interest, and non provision of Bad and Doubtful debts have resulted in the understatement of net loss for the year by Rs. 180.58 lakhs, understatement of accumulated losses by t 1376.98 lakhs, and understatement of unsecured loans by Rs.1376.98 lakhs. (d) Note No. 17 of Schedule 21 regarding non-confirmation of balances in respect of Sundry Debtors, Advances and Sundry Creditors. 5. Further to our comments in the statement 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 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 those books; (c) The Balance Sheet, Profit & Loss Account and Cash Flow dealt with by this report are in agreement with the books of account; (d) In our opinion, the Balance Sheet, Profit & Loss Account, Cash flow dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; (e) As per the Notification No. GSR 829(E) dated 21.10.2003, issued under section 620 of the Companies Act, 1956, Clause G of sub-section (1) of Section 274 of the Companies Act, 1956 is not applicable to this Company. (f) Subject to our remarks in paragraph (4) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 Balance Sheet, of the State of affairs of the Company as at 31st March, 2011; ii. In the case of Profit & Loss Account, of the loss for the year ended on that date; and iii. In the case of Cash Flow Statement, of the cash flow for the year ended on that date. For V. RAMASWAMY IYER & CO., Chartered Accountants Firm Regn No. 002974S D.V. Yegnanarayanan Partner Membership No. 10472 Place: Vellore Date : November 03, 2011 ANNEXURE TO AUDITORS' REPORT Statement referred t5 in paragraph (3) of our report of even date i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) We are informed that all the fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification. (c) During the year, the Company has not disposed off a substantial part of its fixed assets. ii. (a) The management has conducted physical verification of finished goods, raw materials and spares and stores in its possession at reasonable intervals. The stock of finished goods with consignment agents and third parties have been verified by the management at the year end. In our opinion the frequency of verification is reasonable. (b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. iii. According to the information and explanations given to us, the Company has not taken or granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. In view of this, clauses iii (b) (c), (d) (f) and (g) of paragraph 4 are not applicable and hence not reported upon. iv. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control systems in respect of these areas. v. According to the information and explanations given to us, the Company has not entered into any transaction that needs to be entered into the register maintained under section 301 of the Act. vi. The Company has not accepted any deposits from the public within the meaning of section 58A, 58AA or any relevant provisions of the Companies Act, 1956 and rules framed there under. vii. No internal Audit was conducted during the year. viii. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub- section (1) of section 209 of the Companies Act, 1956 for the products of the Company. ix. (a) From our examination of the books and records of the company as produced to us and from the information and explanations given to us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Income-tax, Customs Duty, Excise Duty, Cess and other statutory dues applicable to it. Undisputed Sales tax amounting to Rs. 3,63,315/- and provident fund amount Rs. 13,69,930/- are outstanding for more than 6 months. We are informed that Employees State Insurance is not applicable to the Company, and no payment relating to Investor Education and Protection Fund have been made so far. (b) According to the information and explanations given to us and the records of the Company produced and examined by us the particulars of Income tax which have not been deposited as on March 31, 2011 on account of dispute are as follows: Name of the Nature of the dispute Amount Period to which Forum where statute (Rs.) it relates disputes are pending Income tax Provisions regarding 8996302 Financial Year Commissioner additions to be made 2000-01 of Appeals, to Book Profits u/s Chennai 115JB of the Income tax Act, 1961 Provisions regarding 5227017 Financial Year Commissioner additions to be made 2001-02 of Appeals, to Book Profits u/s Chennai 115JB of the Income tax Act, 1961 x. The accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth. Further the Company has incurred cash losses of Rs. 1030.43 lakhs in the current financial year and Rs. 538.12 lakhs in the immediately preceding financial year. The amount of cash losses have been arrived at after giving effect to the amounts quantified in the audit qualifications. xi. Based on our audit procedures and as per the information and explanations given by the management, the Company did not have any dues to a financial institution or debenture holders and has not defaulted in repayment of dues to banks. xii. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted 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 or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company. xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company. xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. xvi. From our examination of the records of the Company and according to the information and explanations given to us by the management, the Company has applied the term loans for the purpose for which the loans were obtained during the year. xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment, xviii. The Company has not made any preferential allotment of shares to partners or companies covered in the register maintained under section 301 of the Companies Act, 1956. xix. The Company has not issued any debentures during the year. xx. The Company has not raised any money by way of public issue during the year. xxi. According to the information and explanations given to us and on the basis of examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, we have neither come across any fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management. For V. RAMASWAMY IYER & CO., Chartered Accountants Firm Regn No. 002974S D.V. Yegnanarayanan Partner Membership No. 10472 Place: Vellore Date : November 03, 2011 PRINCIPAL ACCOUNTANT GENERAL (C & RA), TAMIL NADU COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF TAMIL NADU INDUSTRIAL EXPLOSIVES LIMITED, CHENNAI FOR THE YEAR ENDED 31 MARCH 2011. The preparation of financial statement of Tamil Nadu Industrial Explosives Limited, Chennai for the year ended 31 March 2011 in accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the management of the Company. The Statutory Auditors appointed by the Comptroller and Auditor General of India under Section 619(2) of the Companies Act, 1956 are responsible for expressing opinion on these financial statements under section 227 of the Companies Act, 1956 based on independent audit in accordance with the Auditing and Assurance Standards prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit Report dated 03.11.2011 I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under Section 619(3)(b) of the Companies Act, 1956 of the financial statements of Tamil Nadu Industrial Explosives Limited, chennai for the year ended 31st March, 2011. This supplementary audit has been carried out independently without access to the working papers of the Statutory Auditors and is limited primarily to inquiries of the Statutory Auditors and company personnel and a selective examination of some of the accounting records. On the basis of my audit, nothing significant has come to my knowledge which would give rise to any comment upon or supplement to Statutory Auditors' Report under section 619(4) of the Companies Act, 1956.. For and on the behalf of the Comptroller & Auditor General of India (SUBHASHINI SRINIVASAN) PRINCIPAL ACCOUNTANT GENERAL PLACE: Chennai-18 DATE : 18.01.2012