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DIAMOND AGRO INDUSTRIES LIMITED
ANNUAL REPORT 2003-2004
AUDITORS' REPORT
1. We have audited the attached Balance Sheet of DIAMOND AGRO INDUSTRIES
LTD. as at March 31, 2004 and also the Profit and Loss Account and also the
(cash flow statements) 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 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
over all financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. As requited by the Companies (Auditor's 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 3 a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to 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 our
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
(and proper returns adequate for the purposes of our audit have been
received from the branches not visited by us. The Branch Auditor's
Report(s) have been forwarded to us and have been appropriately dealt
with);
(c) the balance sheet, Profit and Loss Account and cash flow statement
dealt with by this report are in agreement with the books of account;
(d) in our opinion. the balance sheet, profit and loss account cash flow
statement dealt with by this report company with the accounting standards
referred to in sub-section (3c) of section 211 of the companies Act, 1956;
(e) 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 Director is disqualified as on 31st March 2004 from
being appointed as a director in terms of clause (g) of subsection (1) of
section 274 of the Companies Act, 1956;
(f) 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 manners so required and give a true and
fair views in conformity with the accounting principles generally accepted
in India.
(i) In the case of the balance sheet of the state of affairs of the company
as at 31st March, 2004;
(ii) in the case of Profit and Loss Account, for the year;ended on the
Date; and
(iii) in the case of the cash flow statement, of the cash flows for the
year ended on that date.
For Kapil Kumar & CO.
Chartered Accountants
Date : 30/6/2004 KAPIL KUMAR
Place : Chandigarh (Partner)
ANNEXURE TO THE AUDITORS' REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT
OF EVEN DATE
1. (a) The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
(b) All the assets have not been physically verified by the management
during the year but there is a regular programme of verification 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 Company has sold Solvent extraction Plant along with
Land & Building on which the plant was installed, as approved by BIFR vide
Order dated 13.03.2003. According to the information and explanations given
to us, we are of the opinion that tile sale of the said part of Land &
Building and plant & machinery has not affected the going concern status of
the company.
2.(a) The inventory has been physically verified during the year by the
management. In our opinion, the frequency of verification is reasonable.
(b) The procedures of physical verification of inventories followed by the
management are reasonable and adequate in relation to the size of the
company and the nature of its business.
(c) The company is maintaining proper records of inventory. The
discrepancies. noticed on verification between the physical stocks and the
book records were not material.
3.(a) The company had taken loan from four companies, firms or other
parties covered in the register maintained under section 301 of the
companies Act, 1956. The maximum amount involved during the year was 18.02
Lacs and the year-end balance of loans taken from such parties was Rs.
18.02 Lacs. No Loans have been given to the Companies, firms or other
parties listed in the register maintained U/s 301 of the Companies Act,
1956.
(b) In our opinion, the rate of interest and the other terms and conditions
on which loans have been taken from 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) The company is regular in repaying the principal amounts as stipulated
and has been regular in the payment of interest. The parties have repaid
the principal amounts as stipulated and have been regular in the payment of
interest.
(d) There is no overdue amount of loans taken from companies, firms or
other parties listed in the register maintained under section 301 of the
Companies Act, 1956.
4. 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 purchases
of inventory, fixed assets and the regard to the sale if goods. During the
course of our audit, we have note observed any continuing failure to
correct major weaknesses in internal controls.
5. According to the information and explanations given to us, There are no
transactions that need to be entered into the register maintained under
section 301 of the Companies Act, 1956.
6. In our opinion and according to the information and explanations given
to us, the Company has complied with the provisions of section 58A and 58AA
of the Companies Act, 1956 and the Companies (Acceptance of Deposits)
Rules, 1975 with regard to the deposits accepted from the public. No order
has been passed by the Company Law Board.
7. In our opinion, the company has an internal audit system commensurate
with the size and nature of its business.
8. We have broadly reviewed the books of account relating to materials,
labour and other items of cost 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 and we are of the
opinion that prima facie the prescribed accounts and records have been made
and maintained.
9.(a) The company is depositing with appropriate authorities undisputed
statutory dues including investor education protection fund, employees'
state insurance, income tax, sales tax, wealth tax, custom duty, excise
duty, cess and other material statutory dues applicable to it, except
provident fund which has been deposited with a delay of 2 to 3 months.
However there are no dues outstanding for more than six months old.
(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 31.03.2004 for a
period of more than six months from the date they became payable.
(c) According to the information and explanations given to us, there are no
dues of sale tax, income tax, customs duty, wealth tax, excise duty and
cess which have not been deposited on account of any dispute.
10. In our opinion, the accumulated losses of the company are more than
fifty percent of its net worth. The company has incurred cash losses
during the financial year covered by our audit and the immediately
preceding financial year.
11. The Company has availed Term loan from IFCI the repayment of which
along with Interest was in default, and the Company has made an OTS as per
BIFR Orders dated 13.03.2003, As per BIFR Orders the Balance OTS amout of
Rs.345.00 Lacs was to be repaid in six quarterly installments starting from
24.01.2003 along with Interest PLR, However Principal amount outstanding
towards IFCI as on 31.03.2004 is Rs.16845629/- out of which a Sum of
Rs.11095629/- is in default and a Sum of Rs.646231/- on account of Interest
on Bridge Loan against subsidy from PSIDC Chandigarh is in default.
12. No loans and advances on the basis of security by way off pledge of
shares, debentures and other securities has been granted.
13. 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 are not applicable to the company.
14. 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 are not
applicable to the company.
15. No guarantees have been given for loans taken by others from banks or
financial institutions.
16. In our opinion the term loans have been applied for the purpose for
which they were raised.
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 boon used to finance short-term assets
except permanent working capital.
18. No preferential allotment of shares to parties and companies covered in
the register maintained under section 301 of the Act has been made.
19. The Company has not issued any debentures.
20. We have verified the end use of money raised by public issues as
disclosed in the notes to the financial statements.
21. According to the information and explanations given to us, no fraud on
or by the company has been noticed or reported during the course of our
audit.
For Kapil Kumar & CO.
Chartered Accountants
Date : 30/6/2004 KAPIL KUMAR
Place : Chandigarh (Partner)
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