FILAMENTS INDIA LIMITED
ANNUAL REPORT 2003-2004
The Members of
FILAMENTS INDIA LIMITED
1. We have audited the attached Balance sheet of FILAMENTS INDIA LIMITED as
at 31st March 2004, the Profit and Loss Account and also the Cash Flow
Statement 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 misstatements. An audit includes examining, on 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 the management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. As required 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, a statement on the
matters specified in paragraph 4 & 5 of the said order.
4. Attention is invited to the following notes in schedule 15:
a) Balances of major sundry debtors, creditors and loans and advances are
subject to confirmation and reconciliation. (Para 2 (v)).
b) Flat purchased at Kolkata for Rs 8.49 lakhs is yet to be registered in
the name of the company.
5. Further to our comments refereed to in para 3 above and subject to our
comments in para 4 above with consequential aggregate effects on the loss
for the year, accumulated loss and net assets, the quantification of which
could not be determined, we report that:
i) 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;
ii) 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;
iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of accounts;
iv) In our opinion the Balance Sheet, 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;
v) On the basis of written representation's 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;
vi) In our opinion and to the best of our information and according to the
explanations given to us, the said statements of accounts read together
with the Significant Accounting Policies and Notes on Accounts as referred
in Schedule-15 thereto, 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 Balance Sheet, of the state of affairs of the company as
at 31st March 2004.
b) In the case of Profit and Loss Account, of the "Loss" for the year ended
on that date and c) In the case of Cash Flow Statement, of the Cash Flow
for the year ended on that date.
FOR S. BHANDARI & CO.
Place: Bhiwadi (P.D.BAID)
Date : 30 June 2004 PARTNER
REFERRED TO IN PARA 1 OF OUR REPORT OF EVEN DATE (OF WS FILAMENTS INDIA
LIMITED FOR THE YEAR 2003-2004)
i) a) The company has generally maintained proper records showing full
particulars including quantitative details and situation of fixed assets.
b) As explained to us, Fixed Assets of the company are physically verified
according to a phased program designed to cover all items over a period of
two years which, in our opinion, is reasonable. Pursuant to the program,
physical verification of. the Fixed Assets was carried out during the year
by the management and discrepancies noticed were not material.
c) The company has not disposed off substantial part of fixed assets during
ii) 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 inventory followed by the
management are generally reasonable and adequate in relation to the size of
the company and the nature of its business.
c) The company has generally maintained proper records of inventory.
However, the system of recording of consumption of stores and spares needs
to be further strengthened. The discrepancies noticed on verification of
inventories as compared to book records were not material and have been
properly dealt with in the books of accounts.
iii) a) The company has taken an interest-free unsecured loan from one
company covered in the register maintained u/s 301 of the Companies Act,
1956. The maximum amount involved during the year was Rs two lakh and the
year-end balance was nil. There is one company covered in the register
maintained u/s 301 of the Companies Act, 1956 to whom the company has
granted loans/advances. The maximum amount involved during the year is Rs
6,93,448/- and the year-end balance was Rs 6,64,254/-.
b) There is no stipulation of interest either on loans taken or on loans
given. The other terms and conditions of loans taken and loans given are
not prima facie prejudicial to the interest of the company.
c) As per the information made available to us, the loan taken by the
company is repayable on demand. The loans and advances given by the company
are also repayable on demand.
d) There is no overdue amount of loans given to or taken from the parties
covered in the register maintained u/s 301 of the Companies Act, 1956.
iv) 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 for the sale of goods.
However, according to the information and explanations given to us, the
internal control procedures for the purchase of inventories and fixed
assets should be further strengthened. During the course of our audit, we
have not observed any continuing failure to correct major , weaknesses in
v) a) According to the information and explanations given to us, we are of
the opinion that during the year, there has been no transaction that needed
to be entered into the register maintained under Section 301 of the
Companies Act, 1956.
b) Accordingly, the provisions of clause 4(v)(b) of the said order are not
applicable to the company.
vi) In our opinion and according to the information and explanations given
to us, the company has not accepted any deposits from the public within the
meaning of Section 58A and 58AA of the Companies Act, 1956 and the rules
vii) In our opinion, the company has an internal audit system commensurate
with the size of the company and the nature of its business.
viii) As explained to us, the Central Government has not prescribed for
maintenance of Cost Records under section 209(1)(d) of the Companies Act,
ix) a) The company is generally regular in depositing, with the appropriate
authorities, undisputed statutory dues including investor education and
production fund, income tax, wealth tax, customs duty, excise duty, cess
and other statutory dues applicable to it. However, during the year, there
are some delays in depositing with the appropriate authorities, undisputed
statutory dues in respect of provident fund, employees' state insurance and
sales tax. According to the information and explanations given to us, no
such undisputed statutory dues were outstanding as at 31 March 2004 for a
period of more than six months from the date they became payable.
b) According to the information and explanation given to us, no disputed
dues of sales tax, income tax, customs duty, wealth tax, excise duty and
cess were outstanding as at 31st March 2004.
x) The accumulated losses of the company are not more than fifty per cent
of its net-worth at the end of the financial year. The company has incurred
cash losses during the financial year covered by our audit as well as in
the financial year immediated preceding such financial year.
xi) The company has defaulted in repayment of dues (both principal and
interest) to IDBI during the year, which were as under.
Nature of payment Due date Amount
Interest 01 July 2003 1,85,062.58
Interest 01 October 2003 17,14,215.00
Interest 01 January 2004 17,38,858.00
Principal 01 October 2003 16,11,000.00
Principal 01 January 2004 16,11,000.00
As explained in note (xii) of Schedule-15, the IDBI has restructured the
liabilities including the above over dues, under Debt Restructuring Package
for textile units.
Further to above, the company has defaulted in repayment of dues of
devolved LC liability of bank as working capital under:
12 March 2004 9,53,680.85
17 March 2004 4,26,839.92
27 March 2004 15,13,525.94
xii) In our opinion, the company has not granted any loans and advances on
the basis of security by way of pledge of share debentures and other
xiii) As per the information and explanations given to us, the provisions
of any special statute applicable to a chit fund do not apply to the
company. The company is also not a nidhi/ mutual benefit fund/ society.
xiv) In our opinion, the company is not dealing in or trading in shares,
securities, debentures and other investments.
xv) As per the information and explanations given to us, the company has
not given any guarantee for loans taken by other from banks or other
xvi) According to the information. and explanations given to us, during the
year, the company has obtained no term loan the repayment period beyond 36
xvii) According to the information and explanations given to us and on an
overall examination of the balance sheet and cash flow statement of the
company, we report that as at 31st March 2004, long term funds to the tune
of Rs. 114 lakhs (approved and short-term funds to the tune of Rs. 38 lakhs
(approx.) (without considering permanent working capital) have been
primarily used to finance the cash losses of the company.
xviii) The company has not made any preferential allotment of shares during
xix) The company has not issued any debentures.
xx) The company has not raised any money by way of public issue during the
xxi) According to the information and explanation given to us, no fraud on
or, by the company has been noticed or report during the year.
FOR S. BHANDARI & CO.
Place: Bhiwadi (P.D.BAID)
Date : 30 June 2004 PARTNER
(M. No. 72625)