INDIA RADIATORS LIMITED
ANNUAL REPORT 2007-2008
THE SHAREHOLDERS OF
INDIA RADIATORS LIMITED
We have audited the attached Balance Sheet of INDIA RADIATORS LIMITED as at
30th September 2008 and the Profit and Loss Account for the year ended on
that date. These financial statements are the responsibility of the
Management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the 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 the Management, as well as evaluating the
overall financial statement presentation, We believe that our audit
provides reasonable basis for our opinion.
1. On the basis that there has been suspension of activities in the
factories viz Puzhal unit from November 1999 and Pondicherry Unit from
April 2003 and hence erosion of net worth leading to a reference by the
company to the Board for Industrial and Financial Reconstruction. The
Company had been declared sick by Board for industrial and Financial
Reconstruction (BIFR) and has issued order for winding up. On appeal the
AAIFR has remanded the matter to BIFR in July, 2008 and the matter is
pending before BIFR and hence it is not possible to express an opinion on
the same. Consequently, there are entries in the accounts relating to
consumption of material, bank charges, other write off and provisions.
2. As required by the Companies Auditor's Report Order, 2003 issued by the
Central Government in terms of Section 227 (4A) of the Companies Act, 1956,
and on the basis of such checks of the books and records of the Company as
we considered appropriate and the information and explanations given to us
during the course of the audit, we enclose in the annexure, a statement on
the matters specified in paragraph 4 and 5 of the said order.
3. Subject to our comments in paragraphs 1, 2 & 3 above and further to our
comments in the Annexure referred to the paragraph 4 above, we state 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, except as stated below.
b) Subject to paragraphs 1 above, due to suspension of work, books of
accounts as required by law have been kept only in the factory so far as it
appears from our examination of such books at Head Office alone and not at
c) The Company's Balance Sheet and Profit and Loss Account dealt with by
this Report are in agreement with the books of accounts at Head Office.
d) In our opinion the Profit & Loss A/c and Balance Sheet comply with
Accounting Standards referred to in Sub-section (3C) of Section 211 of the
Companies Act, 1956 subject to.
i. Accounting Standard-2 on Valuation of Inventories with regard to
valuation of stock held at factory. Further, attention is invited to note
no. V (7) of notes on accounts.
ii. The company has not provided for any employment/ retirement benefits as
required by Accounting Standard-15 on Employee Benefits (revised). Further,
attention is invited to note no. V (4) of notes on accounts.
iii. The company has neither impaired nor identified the assets to be
impaired in accordance with the provisions of Accounting Standard -28 on
Impairment of Assets.
iv. The company has provided for Rs. 413 lakhs in lieu of principal and
interest payable' to Bankers for the Cash Credit facility extended on a
consortium basis by State Bank of India, Indian Bank and Catholic Syrian
Bank with State Bank of India as Consortium Leader. The company has
received a notice u/s 13(2) of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 from the
banks on 23.11.2007 demanding it to pay Rs. 967 lakhs as on 30.09.2007
comprising of principal and interest. The company has not provided for the
difference amounting to Rs. 554 Lakhs as on 30.09.2008. The same is not in
line with Accounting Standard-29 on Provisions, Contingent Liabilities and
v. The company has received notices u/s 13(2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 from Industrial Development Bank of India Limited (IDBI) and
Pondicherry Industrial Promotion Development and Investment Corporation
Limited (PIPDIC) demanding it to pay a sum of Rs. 387 lakhs and Rs. 285
lakhs as on 13.11.2006 and 30,06 2004 respectively aggregating a sum of
Rs.672 lakhs. The demand comprises of principal and interest payable by the
company. The company has provided for Rs. 505 lakhs as on 30.09.2007. The
company has not provided for the difference amounting to Rs. 167 lakhs as
on 30.09.2008. The same is not in line with Accounting Standard-29 on
Provisions, Contingent Liabilities and Contingent Assets.
vi. There is a balance of Rs. 39,175.50 in Unclaimed Dividend, which is
outstanding from the period 1995-96 & 1996-97; hence such amount has to be
transferred to Central Government 'INVESTORS EDUCATION & PROTECTION FUND'
We are unable to comment on the effect of the items mentioned in the
paragraphs (i) to (ii) on the loss of the company due to suspension.
e) The directors of the company attract disqualification u/s 274 (I) (g)
as on 30.09.2008.
f) Due to suspension of operations of Puzhal factory at Chennai, the
accounts have been prepared with the available information. Statements of
account or certificate on confirmation of balances in inoperative bank
accounts balances amounting to Rs. 27,695 are not available.
g) Balances in the accounts of Sundry Debtors, Creditors and Loans &
Advances of the respective parties are as per books of account are taken
subject to confirmation and reconciliation.
h) Attention is invited to the following matters:
i) Non reconciliation of the balance with excise authorities of Rs.3,57,904
of Puzal Unit [vide Note V (8) (a)].
ii) Non provision of interest on inter corporate deposits and unsecured
loans [Vide Note No. V (12)].
4. Subject to our remarks in foregoing paragraphs, the effect of which is
not ascertainable except to the extent of figures mentioned in para 5 d, f
and g and consequently the effect on the loss for the year is not
ascertainable, the accounts read with the accounting policies and notes
thereon 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.
i) In the case of the Balance Sheet, of the state of the affairs of the
Company at 30th September, 2008.
ii) In the case of the Profit and Loss Account, of the Loss for the year
ended on that date.
ANNEXURE TO AUDITORS' REPORT
REFERRED TO IN PARAGRAPH OF OUR REPORT OF EVEN DATE:
1. The Company has maintained proper records showing full particulars
including quantitative details and situation affixed assets, which has in
general not been updated for many years. In some cases quantitative
particulars and location of Fixed Asset has not been mentioned. We are
informed that the management has a reasonable system of physical
verification at periodic intervals. If the absence of physical verification
of assets at Puzhal plant, we are unable to comment on discrepancies, if
any, that may arise on physical verification.
2. None of the fixed assets have been revalued during the year.
3. We are informed that the stock of finished goods, spare parts and raw
materials have been physically verified by the management during the year.
4. The procedures for physical verification of stocks followed by the
management are adequate in relation to the size of the unit and the nature
of its business.
5. We are unable to comment up on the discrepancies if any noticed on
physical verification of stocks as compared to the book records.
6. During the year, the company has not granted any loans, secured or
unsecured, to companies firms or other parties listed in the Register
maintained U/s 301 which are prima facie prejudicial to the interest of the
company We are informed that there are no companies under the same
management as defined in Section 370 (1B) [Section 370 (1B) has since,
7. Loans or advances in the nature of loans have been given by the company,
free of interest to.
a) Puzhal panchayat amounting to Rs. 22,500 without any terms of repayment.
b) Employees as Salary advance amounting to Rs. 37,99,130 which is pending
8. The company has neither carried out commercial production during the
year nor entered into transactions involving purchase of stores, raw
materials including components, plant and machinery, equipment and other
assets and with regard to sale of goods. Hence, we are unable to comment on
the effectiveness of the internal control procedures.
9. According to the information and explanations given to us, there were no
purchase of goods, materials and services and sale of goods and materials
made in pursuance of contracts of arrangements to be entered in the
register maintained under Section 301 of the Companies Act, 1956.
10. As explained to us, at Pondicherry unit unserviceable or damaged
stores, raw materials and finished goods and trading stocks are determined
at the close of the year and adequate amounts are being written off in the
accounts, after review.
11. The Company has not accepted deposits during the year. According to the
information and explanations given to us, in respect of deposits accepted
in earlier years, the company has borrowed deposits aggregating to Rs 20
lacs which was in excess of the limits prescribed in the Companies
(Acceptance of Deposits) Rules 1975 and the Company has not complied with
the provisions of Section 58A in respect of.
(i) Non-Payment of matured deposits of Rs. 62,53,000 and interest accrued
and due of Rs.38,38,718.
(ii) Return of deposits has not been filed with Registrar of Companies.
(iii) Non Maintenance of Liquid assets as per Rule 3A of the Companies
(Acceptance of Deposits) Rules 1975.
12. As explained to us, the Company's operations do not generate any by
products and in our opinion, reasonable records have been maintained at
Pondicherry for the sale of scrap.
13. According to the information and explanations given to us and based on
the verification of books of accounts, there are no transactions. Hence,
the company has not appointed any external audit firm or any staff to carry
out the Internal Audit.
14. We are informed that the Central Government has not prescribed
maintenance of Cost records under Section 209 (1) (d) of the Companies Act,
1956 for any of the products of the Company.
15. Provident Fund, Employees Pension Fund and Employees State Insurance
dues have not been regularly deposited on due dates with the appropriate
16. According to the information and explanations given to us, and the
books and records examined by us, no undisputed amounts payable in respect
of Income Tax, Wealth Tax, Excise Duty, Customs Duty and Sales Tax were
outstanding as at 30.09.2008 for a period of more than six months from the
date they became payable excepting Rs. 21,38,649. in respect of Sales Tax
and tax deducted at source on salaries, contractors and interest.
17. According to the information and explanations given to us, no personal
expenses of employees or directors have been charged to revenue account
other than those payable under contractual obligations and in accordance
with generally accepted business practice.
18. The Company is a Sick Industrial Company within the meaning of clause
(o) of Sub Section (I) of Section 3 of the Sick Industrial Companies
(Special Provisions) Act, 1985 and on a reference the Board for Industrial
and Financial Reconstruction had declared the Company as a Sick company.
Place: Chennai For P.B. Vijayaraghavan & Co
Date : 31-12-2008 Charatered Accountants
Membership No.: 020309