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Usha (India) Ltd.

BSE: 500431 Sector: Others
NSE: USHAINDIA ISIN Code: INE068A01019
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Usha (India) Ltd. (USHAINDIA) - Auditors Report

Company auditors report

USHA (INDIA) LIMITED ANNUAL REPORT 2003-2004 AUDITORS' REPORT TO THE MEMBERS OF USHA (INDIA) LIMITED We have audited the attached Balance sheet of Usha (India) Limited as at 31st March, 2004, the profit and loss account and the Cash flow statement for the year ended on that date annexed thereto in which the accounts of the branches are incorporated. 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 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 from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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. 1. As required by the Companies (Auditors 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 of books and records of the Company as were made available/provided to us and according to the information and explanations given to us during the course of audit, We enclose in the annexure, a statement on the matters specified in paragraphs 4 & 5 of the said order: 2. Further to our comments referred to in paragraph 1 above, we report and invite attention as under:- a) i) Accounts of the Company have been prepared on going concern basis inspite of the fact that entire networth of the company has been wiped off. In respect of the default by the company in repayment of borrowings from banks / Financial Institutions and other liabilities the company has been unable to re-negotiate its borrowings and liabilities from the respective bankers/ Institutions and other creditors. In view of various financial, Operating and other indications there is significant uncertainty that the company will be able to continue as going concern. Consequently adjustments may be required to the recorded assets amount and classification of liabilities / loans. ii) Search & Seizure operation was carried out at the premises of the company by the Income Tax Authorities on 14.02.200:. During the course of search various books of account! documents/records were seized. The books of accounts for the period up to the date of Search were recompiled from the available subsidiary records & information available in the computer system of the company. The opening Balances have been taken on the basis of those recompiled books of account only. The resultant impact on the accounts is presently unascertained. (Refer to Note No.B.12 of Schedule `D). iii) No provision has been made for liquidated charges/Penal interest payable to banks/ financial institutions for delay and default in repayment of their loans/debentures and also no provision has been made for interest on certain Liabilities/loans from Banks / Institutions. (amount unascertained) (Refer Note No.B.16, B.19, B.28 and B.29 of Schedule `D ). iv) The accompanying statement of accounts does not comply with the Accounting Standard (.4S - 17) - `Segment Reporting' issued by the Institute of Chartered Accountants of India and accordingly are subject to omission o1 disclosure of information dealt and required therein (Refer Note No B. 36 of schedule 'O ). v) Note No.8.12 and 8.14 of Schedule 'O' regarding balances of Sundry Debtors, Creditors, Loans, Advances and other liabilities being subject to confirmation and reconciliation. The resultant impact on the accounts is presently not ascertainable. vi) Note No.B.15 of Schedule 'O' regarding some unconfirmed bank balances with schedule bank in current accounts and margin money accounts and regarding non-confirmations of loans from banks, financial institution. The banks statement of various accounts including Current accounts are not available with the company for any part of the year. The resultant impact thereof on the accounts is presently unascertained. vii) Note No. 8.26 of Schedule 'O' regarding taking over of possession of company's immovable property by lender bank under the Securitisation And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002. In the opinion of management no effect is required to be taken in the accounts. viii) The dividend on preference shares declared in the earlier years amounting to Rs. 70560 thousand is still unpaid and has not been transferred to unpaid dividend account as required by section 205 A of 'The companies Act, 1956'(Refer Note No B.37 of schedule 'O ). ix) Note No. 8.27 of Schedule 'O' regarding pending adjustment relating to Investments amounting to Rs. 39816 thousand. The impact on the amount is presently unascertained. x) Miscellaneous income as shown In Schedule L Includes Rs. 1987 thousand for which no proper document evidence/ satisfactory explanation has been provided to us (Refer Note No. B.30 of schedule 'O') xi) Inventories have not been physically verified during the year. Hence the differences between physical stock and books records remained unascertained. Also the net realizable value used for valuation of most of the inventories is merely the estimate of management. No documentary evidencelbasis is available for it. The Excise records containing movement of inventories and payment of Excise duty / availment of MODVAT has not been provided in respect of Gauriganj Division and Bhimtal Division. Even Book records of inventories in respect of Gaurfganj Division has not been made available to us. (Also Refer Note No. B.31 of Schedule 'O'. xii) The various documentary records relating to Fixed Assets, borrowing, old Contingent liability figures, guarantees, investments, remained unavailable to us by the company. (Also Refer Note No. B.12 and B.22 of Schedule 'O' xiii) Note No. 8.13 regarding revocation of various guarantees given by the company. In the opinion of management, no effect is required to be taken in the accounts. xiv) On the basis of test checks carried out during the course of our audit, certain expenses charged In the Profit & Loss account under various heads were found to be without proper supportings/documentary evidences. (Refer Note No. 8.25 of Schedule 'O'. b) On an overall consideration and in view of remarks in Para (a) above and in annexure referred to in Para 1 above we have not been provided all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. c) On an overall consideration and in view of remarks in Para (a) above and in annexure referred to in Para 1 above, In our opinion, proper books of account, as required by law have not been kept by the Company so far as appears from our examination of such books. d) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account and returns. e) On an overall consideration and in view of remarks in Para (a) above and in annexure referred to in Para 1 above; In our opinion, the balance sheet profit and loss account and cash flow statement do not .comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956. f) The directors of the company have not produced written representation as to whether any other companies, in which they are director as on 31st March, 2004, had not defaulted in terms of section 274(1)(g) of the Companies Act 1956. However, the company has failed to redeem its debentures on due date as further explained In note no.8.3(a) (1) (ii) and (W) of schedule "O" on notes to the account and also payment. of dividend on preference shares and such failure continues for more than one year, therefore, all the directors of the company (other than nominee directors of Institutions) are prima facie disqualified from being appointed as a director In any other public company In terms of clause (g) of sub section (1) of section 274 of the companies act 1956. g) In our opinion and to the best of our information and according to the explanations (to the extent given to us), on an overall consideration and in view of remarks In pare (a),(b),(c) and (e), the said accounts read together with Notes thereon, do not give the information required by the Companies Act 1956, in the manner so. required and do not 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 the company's affairs as at 31st March, 2004 ; ii) In the case of profit and loss account of the loss 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 and on behalf of P BHOLUSARIA & Co. Chartered Accountants (AMIT GOEL) Partner M.NO. : 92648 Place: New Delhi Date : 2nd September, 2004 ANNEXURE TO THE AUDITOR'S REPORT (Referred to in paragraph (1)of our report., even data on the Accounts of Usha (India)Ltd. for the year ended 31 March 2004) a. The Company has not produced before us record showing full particulars including quantitative details and situation of its fixed assets. (Refer Note No.B-22 of schedule 'O') Physical verification of Fixed Assets was not carried out by the management during the year. The company has not disposed of substantial part of the fixed assets during the year. a. As explained to us, inventories have not been physically verified by the management during the year. Since inventories have not been physically verified during the year, no comments can be made with regard to reasonability and adequacy of procedures of physical verification. In our Opinion, the company is maintaining proper record of inventories except for Gauriganj Branch. Since inventories were not physically verified during the year, We are unable to comment about the discrepancies between the physical stocks and book records. 3. According to the information and explanation given to us during the year the company has neither granted nor taken any loans, secured or uncecured, to or from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956. In view of what has been stated above, clause (iii) (b), (iii)(c) and (iii) (d) of para 4 of the order are not applicable to the company. Reference is however invited to note no. B-24 of schedule 'O' regarding outstanding doubtful loans of Rs. 38764 thousand granted to subsidiary / erstwhile subsidiary companies in earlier years We have neither been provided evidence regarding any steps taken by the company for the recovery of these loans nor there are any stipulations in writing regarding the terms and conditions of interest or repayment. 4. In our opinion and according to the information and explanations given to us the internal control procedures had to be strengthened to be commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for sale of goods. 5. According to the information and explanation given to us the company has not entered into any transaction during the year, which needed to be entered into the register maintained under section 301 of the Companies Act, 1956. 6. The Company has not accepted any deposits from the public during the year. 7. The Company has an internal audit system. However the areas and scope of internal audit need to be enlarged to make it commensurate with its size and nature of its business. 8. According to the information and explanations given to us the maintenance of Cost records has not been prescribed under section 209 (i) (d) of Companies Act, 1956. 9. a. According to the available records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund. Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other statutory dues as applicable to the Company have not been generally regularly deposited by the company during the year with the appropriate authorities. As stated to us and as per books of account, no undisputed amount payable in respect of the aforesaid dues were outstanding as at 31st March, 2004 for a period to more than six months from the date of becoming payable. We have however not been provided the necessary information and documentary evidence including assessment orders made during the year in respect of various dues which in our opinion were been (recorded in the books of accounts and no undisputed amount payable in respect of aforesaid dues were outstanding as at 31st March 2004 for a period of more than 6 months from the date they become payable). In view thereof and as further stated in Note given below in Para (b), We are unable to comment about any undisputed amount of statutory dues, outstanding for more than 6 months as at 31st March 2004 the date of there becoming payable. b. Subject to note given below the disputed statutory dues that have not been deposited on account of matters pending before appropriate authorities as per the list provided by the Company are as under:- Sl. No. Nature Forum where Dispute Amount (Rs.) of Dues Is pending (a) Income Tax Commissioner of Income Tax (Appeal) Rs.37464 thousand (b) Income Tax Income Tax Appellate & Tribunal Rs. 140 thousand (c) Sales Tax Asst. Commissioner Rs. 1992 thousand (Sales Tax) Appeal, Delhi (d) Sales Tax Sales Tax Tribunal, Chandigarh Rs. 32820 thousand (e) Sales Tax JETC (A), Faridabad Rs. 24692 thousand (f) Sales Tax A.C.(Taxation) Rs. 159 thousand (g) Custom Assessing Officer Rs. 9891 thousand (h) Custom CESTAT Rs. 112 thousand (i) Excise Duty Supreme Court Rs. 50 thousand (j) Property Tax Assessing Officer Rs. 245 thousand Note :- The aforesaid detail is as provided by the Company. However the supporting evidence regarding the amount of demand such as assessment orders demand notices could note be provided by the company. Also the evidence of pending disputes such as filing of appeal representation made by company has also not been made available to us. We are therefore unable to comment whether the aforesaid particulars are complete and correct. 10. The accumulated losses of the Company as at the year end are more than 50% of its net worth. The Company has incurred Cash losses during the year as well as in the immediately preceding financial year. 11. As per the information and explanation given to, and as per balance sheet as on 31.3.2004, the company has defaulted in repayment of dues to financial institutions, bank and debenture holders as under:- Amount Due date of Payment Date of Remarks Payment i) Rs. 500000 15.04.99 - Rs. 50000 thousand Refer Schedule 'C' thousand 15.07.99 - Rs. 70000 thousand and Note No. B. 15.10.99--Rs. 100000 thousand 3(a)(i)of Schedule 'O' 15.01.00--Rs. 30000 thousand 15.04.00--Rs. 50000 thousand 15.07.00--Rs. 70000 thousand 15.10.00--Rs. 100000 thousand 15.01.01--Rs. 30000 thousand Rs. 500000 thousand Not Paid ii) Rs. 30000 3 Yearly installement Not Paid Refer Schedule 'C' thousand of Rs. 10000 thousand and Note No. B. each starting from 3.2.1999 3 (a)(ii)of Schedule 'O' iii) Rs. 50000 03.02.2000 Not Paid Refer Schedule 'C' thousand and Note No. B 3(a)(ii)of Schedule'O' iv) Rs. 30000 1.4.1999 - Rs. 10,000 thousand Not Paid Refer Schedule 'C' thousand 1.4.2000 - Rs. 10,000 thousand and Note No. B 1.4.2001 - Rs. 10,000 thousand 3(a)(ii)of Schedule'O' Rs. 30000 thousand v) Rs. 664952 Proportionate amount as per Not Paid Refer Schedule 'C' thousand principal due as aforesaid (Interest accrued and due on I to IV above) vi) Rs. 45905 FY 2001-02 Not Paid Refer Schedule 'C' thousand (Exact date not available) and Note No. B.29 of Schedule'O' vii) Rs 140000 14 quarterly installement Not Paid Refer Schedule 'C' thousand of Rs. 10000 thousand each and Note No. B.29 starting from 1.10.1999 3(b)(i) of Schedule 'O' viii) Rs 177481 16 quarterly installement Not Paid Refer Schedule thousand Rs. 11250 thousand each 'C' of and Note Starting from15.01.1999 No.83(b)(i) of Schedule'O' ix) Rs 16414 3 half yearly Not Paid Refer Schedule 'C' thousand installement of US$ and Note No. 13 61666.66 from 15th May 2001 3(b)(iii) of and 3 half yearly installement Schedule'O' of US$ 63300 from 15th July 2001 x) Rs. 249704 Proportionate amount Not Paid Refer Schedule 'C' thousand as per principal due (Interest as aforesaid accrued and due as on VII to IX above) xi) Rs. 37724 Sept 2001 Rs. 19108 Not Paid Refer Schedule thousand thousand and March 2002 and Note No. 8.16 Rs. 18616 thousand of Schedule 'O' xii) Rs. 58572 F.Y. 2001-02 Not Paid Refer Note thousand (EXACT DATE NOT available) No. B-28 of schedule 'O' xiii) Rs.180000 12.01.1999 Not Paid Refer Schedule 'A' thousand and Note No. (Redeemable B-2(i) of Preference Schedule 'O' Shares) xiv) Rs 70560 Dividend Provided Not Paid Refer Schedule 'J' thousand upto 31.12.2000 and Note No. B-.37 (Dividend on (Exact due date of dividend of Schedule 'O' Preference payment not available) share) Note :- The aforesaid detail and amounts are as per the books of account of company and other available information. The above detail does not include unprovided interest, the amount of which is unascertained. Similarly the above detail also does not include amount payable to bank/institutions on account of revocation of guarantees given by the company on behalf of others. (Refer Note No. B-13 of Schedule 'O') 12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion, The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, clause (xiii) of Pare 4 of the order is not applicable to the company. 14. As per the informations and explanation given to us, during the year,the company has not done any transaction/contracts in securities, debenture sand other investment. As informed to us, all the investments are held by the company in its own name except to the extent of exemption under section 49 of the Companies Act, 1956. We have, however not been provided physical certificates/depository statements for the investment held. Hence we are unable to comment about the same. Also the complete details/comfirmation and status of investment pledged by the company are available with It. 15. As per the information and explanation given to us, during the year the company has not given any guarantee for loans taken by others from banks or financial institutions. In respect of guarantees given in earlier year, in view of Note no. B-13 of Schedule 'o' the terms and conditions of guarantees are, in our opinion, prejudicial to the interest of the company. 16. As per the information and explanation given to us and on the basis of examination of balance sheet the company has not obtained any term loan during the year. In respect of term loans obtained during the earlier year's we are unable to comment as to whether the term loans were applied for the purposes for which the loans were obtained as we have not audited the accounts of those earlier years. 17. As per the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that the company has not raised any funds during the year either on long term or on short term basis. 18. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act,1956. 19. As per the information and explanation given to us,during the year, the company has neither issued any debentures nor created any securities in respect of debentures. In respect of debentures issued during the earlier years and creation of securities in respect thereto reference is invited to note no.8.3(a) of schedule 'O'. Since we have not audited the accounts of those earlier year, nor necessary documents in the regard has been made available to us, we are unable to comment about the same (Also refer note no. B-12and note no. B-22 of Schedule 'O' 20. The Company has not raised any money by way of public issue during the year. 21. As informed to us by the management, no major fraud on or by the company has been noticed or reported during the year. Reference is how ever invited to Note No. 13.25 of Schedule 'O' Regarding non availability of evidence in respect of some of the expenses. In term of said note we are unable to state whether or not there was some fraud involved in it. For P. BHOLUSARIA & CO. Place: New Delhi Chartered Accountants Date: 2nd September, 2004 AMIT GOEL M.No.:92648