USHA (INDIA) LIMITED
ANNUAL REPORT 2003-2004
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
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
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
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
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,
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
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.
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
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
6. The Company has not accepted any deposits from the public during the
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
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
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
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
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
iii) Rs. 50000 03.02.2000 Not Paid Refer Schedule 'C'
thousand and Note No. B
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
Rs. 30000 thousand
v) Rs. 664952 Proportionate amount as per Not Paid Refer Schedule 'C'
thousand principal due as aforesaid
on I to IV
vi) Rs. 45905 FY 2001-02 Not Paid Refer Schedule 'C'
thousand (Exact date not available) and Note No. B.29
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
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)
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
and due as
on VII to
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
xiii) Rs.180000 12.01.1999 Not Paid Refer Schedule 'A'
thousand and Note No.
(Redeemable B-2(i) of
Preference Schedule 'O'
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)
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
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
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