DHARENDR AGRO FOOD INDUSTRIES LIMITED ANNUAL REPORT 2002-2003 AUDITORS' REPORT TO THE MEMBERS OF DHARENDR AGRO FOOD INDUSTRIES LIMITED WE HAVE AUDITED THE ATTACHED BALANCE SHEET OF M/S. DHARENDR AGRO FOOD INDUSTRIES LIMITED, AS AT 31ST MARCH, 2003 AND ALSO THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE COMPANY FOR THE YEAR ENDED ON THAT DATE ANNEXED THERETO AND THE CASH FLOW STATEMENT FOR THE YEAR ENDED ON THAT DATE. THESE FINANCIAL STATEMENT ARE THE RESPONSIBILITY OF THE MANAGEMENT OF THE COMPANY OUR RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE FINANCIAL STATEMENT BASED ON OUR AUDIT: We have conducted our audit in accordance with auditing standards generally accepted in India. Those standard required that we plan and perform the audit to obtain reasonable about whether the financial statement are free of material misstatement. An audit includes clause examining on a test basis, evidence supports the account and disclosures in the financial statements. An audit also including assessing the accounting principles used and significant estimates estimates made by management, as well evaluating the overall presentation of the statements. We believe that our audit provides a reasonable basis of our opinion. We report that: 1. As required by the Manufacturing and other Companies (Auditors Report) Order, 2000, issued by the Company Law Board in terms of sub-section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matter specified in paragraphs 4 and 5 of the said order. 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 basis. 2. Further to our commensurate 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 purpose of our audit. (B) In our 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 accounts for the purpose of our audit except for matters referred in above paragraphs and Notes of the Accounts. (C) The Balance Sheet referred to in this report is in agreement with the Books of Accounts. (D) In our opinion the Balance sheet and Profit & Loss Account comply with the accounting standard referred to in sub-section (3C) of section 311 of the companies Act, 1956, to the extent applicable, except note No. 2 of Schedule - 22 relating to retirement benefits (Accounting standard - 15) and note No. 3 relating to Accounting for Taxes (Accounting Standards-22). the said Balance Sheet and Profit & Loss Account are in agreement with the Books of Accounts. (E) On the basis of our review of the confirmation received from the companies in which the Directors of the Company are Director of the information and explanations given to us, all the directors of the Company is prime facie as at 31st March 2003 disqualified from being appointed as a Director as per terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. (F) In our opinion and to the best of our information and according to the explanation give to us, and subject to our observation stated above the said Balance sheet and Profit & Loss Account read together with notes there on give the information required by the Companies Act, 1956 is the manner so required and give a true and fair view. 1. Note. 2 of schedule-22 relating to retirement benefit which are accounted for on payment basis, the event of non-compliance in value terms is not ascertainable. 2. Note No. 3 relating to non-provision of deferred Tax Asset the Accounting Standard-22, the amount is not ascertainable: The said accounts read together with notes on accounts, give the information required by the Companies act, 1956 in the manner so required and the Balance sheet given true and fair view of the state of company Affairs as at 31st March 2003, the Profit & Loss Account gives a true and fair view of the loss for the year ended on that date and cash flow statement true and fair view of the cash flow of the Company on that date. For BHARAT PARIKH & ASSOCIATES Chartered Accountants (Bharat Parikh) Partner Place : Vadodara Date : 01/09/2003 ANNEXURE TO AUDITORS' REPORT As required by the Manufacturing and other companies (Auditors Report) order, 1988 and on the basis of such checks we considered appropriate we further report that: 1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed Assets. The fixed assets have been physically verified by the management. In our opinion the frequency of verification is reasonable. No material discrepancies have been noticed verification. 2. None of the fixed assets have been revalued during the year. 3. The stock and finished goods, stores, spares parts and raw materials have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. 4. In our opinion, the procedure of physical verification of stocks followed by the management are reasonable and adequate relation to the size of the company and the nature of its business. 5. The discrepancies noticed on physical verification of stocks as compared to books were not material and the same have been properly dealt with in books of accounts. 6. In our opinion, the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles and is on the basis as in the preceding year. 7. The company has not taken any Loan Secured or Unsecured from Companies, firms or other parties listed in the register maintained under section 301 and / or from the Companies under the same management as defined under Section 370 (1B) of the Companies Act, 1956. 9. In respect of Loans and Advances in the nature of Loans given by the company parties have repaid the principal amount as stipulated and also have been regular in payment of the interest where applicable. 10. In our opinion and according to the information and explanation given to us there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of stores, Raw Materials including Components, Plants and Machinery, Equipment and other assets and for the sale of goods. 11. In our opinion and according to the information and explanations given to us the price paid for purchase of goods and materials & sales of goods materials and services, made in purchase of contacts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to Rs. 50,000/- or more in respect of each party are reasonable having regard to the prevailing market prices as transaction for similar goods or services have been made with other parties. 12. As explained to us, the company has regular procedure for the determination of unserviceable or damaged stores, Raw materials and Finished Goods Adequate provision has been made in the accounts for the loss arising on the items so determined. 13. The Company does not any deposits, to which the provision of section 28A of the companies Act, 1956 and the rules framed there under are applicable. 14. In out Opinion, reasonable records have been maintained by the company for the sale and disposal of scrap. the company has no by-products. 15. In our opinion and according to the information and explanations given to us there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of Stores, Raw materials including components, Plant and Machinery, Equipment and other assets. 16. We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(D) of the companies act, 1956 in respect of the company products to which the said rules are made applicable and are of the opinion that prima facie the prescribed records have been made and maintained. we have however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete. 17. According to the records of the Company Employees state Insurance dues have been regularly deposited during the year with the appropriate authorities. And the company has compelled with the formalities under the Provident Fund Act. 18. According to the information and explanation given to us and the records examined by us no personal expenses have been charged to revenue account, other that those payable under contractual obligation or in accordance with generally accepted business practice. 19. According to the records of the Company, there were no undisputed amounts payable in respect of Income-Tax, Wealth Tax, Sales Tax, customs duty and Excise Duty outstanding as at 31st March 2003 for a period of more that Six Months from the date they become payable. 20. In out opinion the company is not a Sick Industrial company within the meaning of cause (O) of sub-section 3 of the Sick Industrial companies (Special Provision) Act, 1985. 21. In respect of Trading activities according to information and explanation given to us there were no damaged goods of significant value. For BHARAT PARIKH & ASSOCIATES Chartered Accountants (Bharat Parikh) Partner Place : Vadodara Date : 01/09/2003