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Raunaq Finance Ltd.

BSE: 511599 Sector: Financials
NSE: N.A. ISIN Code: INE329B01013
BSE 05:30 | 01 Jan Raunaq Finance Ltd
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Raunaq Finance Ltd. (RAUNAQFINANCE) - Auditors Report

Company auditors report

RAUNAQ FINANCE LIMITED ANNUAL REPORT 2004-2005 AUDITORS' REPORT To The Members, RAUNAQ FINANCE LIMITED 1. We have audited the attached Balance Sheet of Raunaq Finance Limited, as at 31st March, 2005, and also the Profit and Loss Account 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 overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors' 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. Further to our comments in Annexure referred to in paragraph 3 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 opinion, proper books of accounts as required by law have been kept by the Company, so far as it appears from our examination of the books. c. The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the books of accounts; d. In our opinion, the Balance Sheet and Profit and Loss account dealt with by this report comply with the mandatory Accounting Standards referred in sub-section (3C) of section 211 of the Companies Act, 1956. e. On the basis of the written representation received from the Directors and taken on record by Board of Directors, we report that none of the Directors is disqualified as on 31st March 2005 from being appointed as a Director in 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 explanations given to us, the said accounts read together with the Significant Accounting Policies and Notes thereon, give the information required by the Companies Act, 1956 in the manner so required and subject to Note B-3 (a) regarding decrees obtained by the various bankers against the company for recovery of their dues and non-provision of the shortfall of Rs. 218 lacs in the interest liability and additional liabilities, if any (amount not ascertainable) due to non-confirmation / non-reconciliation of their balances with various banks; Note B 3 (b) regarding non-payment of dues on due dates and non-provision of additional liability, if any (amount not ascertainable) due to non-confirmation / non-reconciliation of balances with IDBI and IREDA; Note B-3 (c) regarding non-payment of Debentures amounting to Rs.54.16 lacs already matured for redemption on 6.1.1999 together with interest of Rs.10.70 lacs accrued and due thereon upto 6.1.1999 and non provision of interest amounting to Rs.42.53 lacs on overdue balances; Note B-4 regarding non payment of fixed deposits on due dates and non provision of interest amounting to Rs.221.21 lacs for the year; Note B 5 regarding non-physical verification of leased assets by the management and accordingly non-ascertainment of their physical existence/condition and non-adjustment of certain heads of account given in Note B-5(b) for want of completion of certain legal formalities including formal transfer of its legal title / ownership; Note B-6(a) regarding non provision of Rs. 54.91 lacs being shortfall in the market value of quoted investments and non availability of 80,000 shares of Leo Industries Ltd., 40,000 shares of Paloma Knitwear International Ltd. and 18,000 shares of Pentium Finance & Investment Pvt. Ltd. for our verification, Note B7(b) regarding non provision for shortfall in the value of unquoted shares aggregating to Rs.179999/-; Note B-7 regarding most of the securities held as stock in trade not in the name of the company; Note B-8(b) regarding Loans and Advances (others) of Rs.61.06 lacs (net of provisions), though unsecured, unrealized and unconfirmed in many cases still considered good for recovery by the management and accordingly no provision for doubtful advances, if any, has been made (amounts not ascertained); Note 8(c) regarding advances of 95.63 lacs against equity investments, though neither adjusted / confirmed nor realised, shown as good for recovery by the management; Note B-9 regarding non-provision of additional liability, if any (amount not ascertainable) due to non-confirmation/ non-reconciliation in some cases of debit/credit balances appearing in Sundry Debtors, Bills Purchased, balances with schedule banks in current accounts, Loans and Advances and Current Liabilities; Note B 11 regarding Income-Tax liabilities; Note B 12 regarding non-compliance of RBI directives for NBFCs which resulted in (a) cancellation of registration certificate for carrying by RBI, (b) non payment of fixed deposits of Rs.150.80 lacs already matured and filing of complaint by RBI in the Court of Chief Judicial Magistrate, Jaipur for non payment of deposits amounting to Rs. 8.80 lacs, (c) non- maintenance of SLR requirements give a true and fair view in conformity with the accounting principles generally accepted in India: (i) In so far as it relates to Balance, of the state of affairs of the company as on 31st March, 2005; (ii) In so far as it relates to the Profit and Loss Account, of the loss of the Company for the year ended on that dates: and (iii) In so far as it relates to the Cash Flow Statement, of the cash flows of the company for the year ended on the date. For SMRN & ASSOCIATES CHARTERED ACCOUNTANTS PLACE: NEW DELHI MANOJ BANSAL DATED: 24/08/2005 PARTNER ANNEXURE TO AUDITOR'S REPORT (REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE) 1. In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars but excluding quantitative details and situation of fixed assets on the basis of available information (b) As explained to us, the fixed assets has not been physically verified by the management since 1999 and as such we are not in a position to state their physical / condition and the discrepancies if any, between the book and physical balances. (c) In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the company is not affected. 2. In respect of its inventories: (a) As explained to us, inventories have been physically verified by the management at regular intervals during the year. (b) In our opinion and according to the information and explanation given to us, 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 maintained proper records of inventories. As explained to us; there were no material discrepancies noticed on physical verification of inventory as compared to the book records. 3. In respect of loans, secured or unsecured, granted or taken by the Company/ to / from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (a) The Company has not granted any loans and has not taken any loan during the year. (b) In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable and other terms and conditions are not prima-facie prejudicial to the interest of the Company. 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 for the purchase of inventory, fixed assets and also for the sale of goods. During the course of our audit, we have not observed any major weaknesses in internal controls. 5. In respect of transactions covered under section 301 of the Companies Act, 1956. (a) In our opinion and according to the information and explanations given to us, the transactions made in purchase of contracts or arrangements, that needed to be entered into 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 in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act. 1956 aggregating to Rs. 5,00,000/- (Rupees five lacs only) or more in respect of any party during the year. 6. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India in the form of Non Banking Financial Companies (Reserve Bank) Directions, 1977 and the provisions of section 58A of the companies Act, 1956 and the rules made thereunder, with regard to deposits accepted from the public and NRIs subject to non repayment of overdue deposits, non maintenance of SLR requirements, repayment of unsecured loans (interest free) from Directors in earlier years and non submission of half yearly/ annual returns. Also refer to Note no. B4 & B12 of schedule 14. 7. Internal audit of the Company has not been conducted for the last several financial years. This should be done atleast during the year by an independent firm of Chartered Accountants keeping in view the sizes and nature of the operations of the Company. 8. As the Company is not involved in manufacturing activities hence maintenance of Cost Records prescribed by the Central government under section 209(1) (d) of the Companies Act 1956 is not applicable to the company. 9. In respect of statutory dues: (a) According to the records of the Company, undisputed statutory dues including Provided Fund, Income Tax, Wealth Tax and other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March 2005 for a period more than six months from the date of becoming payable. (b) The disputed statutory dues aggregating to Rs. 169.86 that have not been deposited on account of matters pending before appropriate authorities are as under: S.No. Name of the Nature of Forum where Amount (Rs Stature the dues dispute is pending in lacs) 1. Income Tax Income Tax High Court, Jaipur 169.86 Act 1956 (Case heard & order awaited However the case received back by the High Jaipur. 10. The Company has accumulated losses and has incurred cash losses during the financial year covered by our audit or in the immediately preceding financial year. 11. Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the company has defaulted in repayment of dues to financial institutions, banks or debenture holders. Refer notes on accounts No. B-3&4. 12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, clause 4 (xiii) of the Companies (Auditor's Report Order 2003 is not applicable to the Company. 14. The Company has maintained proper records of transactions and contracts In respect of trading in securities, debentures and other investments and timely entries have been made therein. All shares, debentures and other investments have been held by the Company in its own name except for certain shares. 15. The Company has not given any guarantee for loan taken by others from banks or financial institutions. 16. The Company has not raised any new term loans during the year. 17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that during the year the Company has not utilised any amount from short term sources towards acquisition of fixed assets. 18. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act 1956. 19. The Company has not raised any money by way of public issue during the year. 20. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year, that causes the financial statements to be materially misstated. For SMRN & ASSOCIATES CHARTERED ACCOUNTANTS PLACE: NEW DELHI MANOJ BANSAL DATED: 24/08/2005 PARTNER