BAHUMA POLYTEX LIMITED ANNUAL REPORT 2003-2004 AUDITORS REPORT To, The Members of Bahuma Polytex Ltd. We have audited the attached Balance Sheet of M/S. BAHUMA POLYTEX LIMITED as at 31st March, 2004 and the Profit & Loss Account and also the cash flow statements for the year ended on that date annexed there to. 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 of material misstatement. 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. The Company is a sick unit as its cumulative losses exceeds its net worth. The Company has stopped its operations and there is no revival plan proposed by the management in the near future. In light of this the going concern status of the Company is no longer applicable and hence the accounts are drawn considering the realisability of the assets and liabilities. As required by the companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Sub-section (4A) of section 227of the companies Act.1.956, We enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said order. Further to our comments in the annexure referred to above, we report that (1) 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. (2) 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 those books. (3) The Balance Sheet and Profit & Loss Accounts and cash flow statement dealt with by this Report are in agreement with the Books of Accounts. (4) In our opinion,the balance Sheet and Profit and Loss Account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub. section (3C) of section 211 of the Companies Act, 1956. (5) On the basis of written representations received from the directors, as on 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. (6) Subject to above and note No (4) & (5) in notes to the accounts, 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. (a) In the case of the Balance Sheet of the state of Affairs of the Company as at 31st March 2004 and (b) In the case of Profit & Loss Accounts of the Loss for year ended on that date. (c) In the case of cash flow statement of the cash flows for the year ended on that date. FOR DHARMENDRA & ASSOCIATES (Chartered Accountants) DHARMENDRS SOLANKI PLACE: AHMEDABAD PROPRIETOR DATE : 26-8-2004 Membership No. 42412 ANNEXURE TO THE AUDITOR'S REPORT 31st MARCH, 2004: With reference to the annexure referred to in paragraph 1 of the Auditor's Report to the members of M/s BAHUMA POLYTEX LTD. on the financial statement for the year ended on 31st March, 2004, we report that 1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) All the Assets have been physically verified by the management once at the end of the year which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (c) During the year, the company has not disposed off a major part of the plant and machinery. 2. (a) Since the company has discontinued operations the provisions relating to clause (ii) (a) (b) (c) are not applicable. 3. (a) The company had taken interest free loan from directors / persons covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 49.97 lacs and the year end balance of loans taken from such parties was Rs. 49.97 lacs. There are no firms covered in the register maintained under section 301 of the Companies Act, 1956 to which the company has granted loans. (b) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from/ granted to Companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company. (c) According to information and explanations made available to us , no terms and conditions for repayment of loan taken by the company is stipulated and hence no comment is made regarding repayment of principal. Also, since the loans are interest free the provision regarding regularity in repayment of interest is not applicable. Since no loans are granted by the company the clause regarding repayment of principal and interest is not applicable. (d) According to information and explanations made available to us, no terms and conditions for repayment of loan taken by the company is stipulated and hence no comment is made regarding overdue in repayment of principal. Since no loans are granted by the company clause relating to overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the companies Act, 1956 is not applicable. 4. As the Company has not carried out any activity during the year the said clause regarding adequate internal control procedures are not applicable. 5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in to the register maintained under 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, there are no transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5.00 lacs in respect of any party during the year. 6. The Company has not accepted any deposits from the public and consequently the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable. 7. The Company no longer has an internal audit system. 8. We are informed that the Central Government has prescribed the maintenance of cost record under Section 209 (1) (d) of the Companies Act, 1956 for the manufacturing activities carried on by it. However during the year company has not undertaken any manufacturing activity and hence no records are maintained by the company. 9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the company has been generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employee' state insurance, income tax, sales tax wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it. As explained to us, the company did not have any dues on account of Investor Education and Protection Fund. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March,2004 for a period of more than six months from the date they became payable other than those stated in Appendix-I of this report. (c) According to information and explanations given to us, there are no dues of sales tax, income tax, customs duty,wealth tax, excise duty,cess which have not been deposited on account of any dispute, other than those stated in Appendix-II to this report. 10. In our opinion, the accumulated losses of the company are more than its net worth. The company has incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. 11. In our opinion and according to the information and explanations given to us, the company is in default regarding the repayment of dues to a financial institution, bank or debenture holders. The outstanding due to these lenders as on 31-03-04 is as under. (Rs. in lacs) Particulars Amount Interest accrued and due 694.78 Principal payment due 995.37 1690.15 12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. 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 are not applicable to the company. 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. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company. 15. In our opinion, the terms and conditions on which the company has not given guarantees for loans taken by others from banks or financial institutions. 16. This clause is not applicable as no term loans are raised by the company. 17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the no funds raised on short-term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets except permanent working capital. 18. According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. 19. According to the information and explanations given to us, the Company has not issued any debentures during the period covered by our audit report. 20. The Company has not raised any money by public issue during the year. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year. PLACE: AHMEDABAD FOR DHARMENDRA & ASSOCIATES DATE : 26-8-2004 (Chartered Accountants) DHARMENDRA SOLANKI PROPRIETOR Membership No. 42412 ANNEXURE TO THE AUDITOR'S REPORT 31st MARCH, 2004 Appendix-I Details of Statutory dues not paid which are undisputed. Name of the Statute Nature of the Dues Amount in Rs. Period to which the amount relates Employees Provident Basic Dues 6431.00 Oct-94 to Oct-2000 Fund Act. Damages Payable 354056.00 Oct-92 to April-2001 Interest Penalty U/s 7Q 1405.00 As above Total 361892.00 Appendix-II Details of Statutory dues which have not been deposited on account of dispute. Name of the Nature of the Amount in Rs. Period to which Forum where Statute Dues the amount relates dispute is pending Central Difference in 1) 14,21,792/- July'98 to Sept'98 Commissioner Appeals Excise Act duty payable 2) 1,91,093/- Oct'98 to Dec'98 Commissioner Appeals on account of 3) 1 ,17,778/- Jan'99 to March'99 Commissioner DTA sales from Appeals EOU division