XLO MACHINE TOOLS LTD
REPORT ON THE FINANCIAL STATEMENTS
1. We have audited the accompanying financial statements of XLO MACHINE TOOLS LTD. whichcomprises the Balance Sheet as at 31.03.2014 and the statement of Profit & Loss forthe year ended as on 31.03.2014.
MANAGEMENT'S RESPONSIBILITYFORTHE FINANCIALSTATEMENTS
2. The Company's Management is responsible for the preparation of these financialstatements that give a true and fair view of the financial position and financialperformance of the Company in accordance with the Accounting Standards referred to insub-section (3C) of section 211 of the Companies Act 1956 of India. This responsibilityincludes the design implementation and maintenance of internal control relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based onour audit. We conducted our audit in accordance with accounting standards issued by theInstitute of Chartered Accountants of India. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.
4. Anaudit involves performing procedures to obtain audit evidence about the amountsand disclosures in the financial statements. The procedures selected depend on theauditors'judgement including assessment of the risks of material misstatement of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and reasonableness of the accounting estimates made by the Management aswell as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
Subject to the following:
a. No provision has been made in respect of certain court cases filed by few employeesfor recovery of unpaid salary/reinstatement etc. (Refer Note no. U (B) (8&9)of theNotes to the accounts)
b. In the absence of required information and explanation we are unable to expressour opinion in respect of the recoverability of un-provided sundry debtors and loans andadvances and accuracy of their balances. (Refer Note no. U (B) (5) of the Notes to theaccounts)
c Non provision for penalty and interest that may be levied on the company fordelay/default in remitting money to the various authorities. (Refer Note no. U (B) (10) ofthe Notes to the accounts).
d. No provision has been madefor doubtful debts amounting to Rs. 6552964/-.
e. Provision for liability in respect of unencashed privileged leave is made oncash basis contrary to the mandatory Accounting Standard prescribed by the Institute ofChartered Accountants of India. (Refer Note No. U (A) (9) contained in Notes to theAccounts).
f. The valuation of Work-in-Progress as well as the issues from Stores to Shop floormade on estimated basis which is not in conjunction with the Accounting Standard (AS-2)issued by the Institute of Chartered Accountant of India. (Refer Note No. U (A) (3)inNotes to the Accounts)
In our opinien and to the best of our information and according to the explanationsgiven to us the accompanying financial statements give the information required by theCompanies Act 1956 in the manner so required and give true and fair view in conformitywith the accounting principles generally accepted in India:
i) In the case of the Balance Sheet of the state of affairs of the Company as at31.03.2014.
ii) In the case of the Statement of Profit & Loss Account of the profit for theyear ended on that date.
7. As required by the Companies (Auditor's Report) Order 2003 as amended by theCompanies (Auditor's Report) (Amendment) Order 2004 issued by the Central Government ofIndia in terms of Subsection 4 A of Section 227 of the Companies Act 1956 ('Order') weenclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of thesaid order.
8. Asrequiredbysection227(3)oftheAct we report that:
a. We have obtained all the information and explanations to the best of our knowledgeand belief were necessary for the purpose of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of such books.
c. The Balance Sheet and the Statement of Profit & Loss dealt with by this reportare in agreement with the books of account.
d. In our opinion & to the best of our information the Balance Sheet and theStatement of Profit & Loss dealt by this report comply with the accounting standardsprescribed under Section 211 (3C) of the Companies Act 1956.
e. On the basis of written representations received from the Directors as on 31 stMarch 2014 and taken on record by the Board of Directors we report that none of thedirectors is disqualified as on 31st March 2014 from being appointed as a director interms of clause (g) of sub section (1) of section 274 of the Companies Act 1956
For H.V. DEODHAR & Co.
ANNEXURE TO THE AUDITOR'S REPORT
(AS REFERRED TO IN PARA I OF OUR REPORT TO THE MEMBERS OF XLO MACHINE TOOLS LIMITED)
1. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. The process of updating the said fixedassets register was completed during the financial year 2007-08 which continues to beconsidered as base record on the subject.
b) The management during the year has not physically verified the fixed assets.
c) No fixed assets were disposed off during the year.
2. In respect of inventory:-
a) We were informed that the company has not conducted physical verification ofinventory as at year end as there is no major change in the inventory.
b) Since no physical verification is carried out we are unable to comment on procedurefollowed for verification of inventory is reasonable & adequate.
c) The inventory records are not updated. In our opinion the said records must beupdated to incorporate the physical inventory as on year end date. Since the inventoryrecords have not been updated since August 2000 comparison of book and the physical stockfor material discrepancies is not possible.
3. From the .examination of the books of accounts and other records the company hasneither granted nor taken loans secured or unsecured to/from companies firms or otherparties covered in the register maintained under S.301 of the Act excepting loantransactions with its promoter viz. XLO Machine Tools Employees' Industrial Co-operativeSociety Limited. A sum of Rs 2079650/- is due on Current Account to ECS as at the end ofthe year on which no interest has been provided during the year 2013-14.
4. In Our opinion and according to the information and explanations given to ushaving regard to the explanations that certain items purchased are of a special nature inrespect of which suitable alternative sources do not exist for obtaining comparativequotations there are adequate internal control procedures commensurate with the size ofthe Company and the nature of its business for the purchase of inventory and fixed assetsand for the sale of goods and services. In our opinion there is no continuing failure tocorrect major weaknesses in the internal control.
5. In respect of transactions entered in the register maintained pursuance of Section301 of the Companies Act 1956:
a) To the best of our knowledge and belief and according.to the information andexplanations given to us transactions that needed to be entered into the register havebeen entered.
b) According to the information and explanations given to us there were notransactions exceeding Rs. 5 lacs during the year and hence we have nothing to report onthe reasonability of the rates in comparison to prevailing market rates.
6. The company has not accepted any deposits from the general public. However thecompany has obtained unsecured Loans from concerns wherein the company has not followedthe directives issued by the Reserve Bank of India and the provisions of Section 58 A.
7. For the year under report a firm of Chartered Accountants has been appointed tocarry Internal Audit. Based on our review the internal audit is commensurate with the sizeand nature of companies business.
8. According to the information and explanations given to us the Central Governmenthas not prescribed the maintenance of cost records under clause (d) of sub-section ofS.209 of the Companies Act 1956 in respect of the services carried out by the company.
9. According to the information and explanations given to us and on the basis of ourexamination of the books of accounts:
a) The Company has been generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund Investor Education and ProtectionFund Employees State Insurance Income Tax Wealth-Tax Service-tax Custom Duty. ExciseDuty Cess and any other material statutory dues applicable to it. The details ofundisputed statutory dues remaining unpaid as on 31.03.2014 are as follows:
|Nature of Dues ||Amount ||Period |
|Profession Tax ||Rs. 1.65 lacs ||01.07.1999 to 31.12.1999 |
|TDS ||Rs. 17.47 lacs ||Before closure in 1993 |
|MVAT ||Rs. 7.20 lacs ||01.04.2013 to 31.03.2014 |
b) As at 31.03.2014 according to the records of the company the summary of statutorydues in dispute is as follows:
|Nature of Dues ||Amount ||Period ||Forum Where dispute is pending |
|Contribution to Welfare Fund ||Rs. 0.12 lacs ||01.06.1999 to 31.12.1999 ||Recovery notice received |
|Provident Fund Damage Charges ||Rs. 10.01 lacs ||1993 - 1994 ||Recovery notice received from PF commissioner |
10 The Company has accumulated losses at the end of the period. But its networth ispositive. It incurred cash losses during the period under audit as well as in theimmediately preceding financial year.
11 According to the information and explanations given to us and according to therecords available no amount is due to financial institution or banks or debentureholders.
12 The Company has not granted loans and advances on the basis of security by way ofpledge of shares debentures and other securities. Accordingly clause 4 (xii) of the Orderis not applicable.
13 The company is not a nidhi / mutual benefit society and the provisions of thespecial statute applicable to chit fund are not applicable to the company.
14 The company does not deal or trade in shares securities debentures and otherinvestments and hence clause 4(xiv) is not applicable.
15 According to the information and explanations given to us the Company has not givenany guarantee for loans taken by others from banks or financial institutions. Accordinglyclause 4 (xv) of the Order is not applicable. -
16 The Company has not taken any term loan excepting working capital loan & thesame has been utilized forthe purpose availed.
17 According to the information and explanation given to us and on an overallexamination of the Balance Sheet of the Company we report that no funds raised on shortterm basis have been used for long term investment by the company.
18 According to the information and explanations given to us the Company has madepreferential allotment of shares to parties covered in the Register maintained undersection 301 of the Companies Act 1956 during the period and the price at which shareshave been issued is not prejudicial to the interest of the Company.
19 The Company has not issued any Debentures. Accordingly clause 4(xix) of the Order isnot applicable.
20 The Company has not raised monies by public issues during the year.
21 In our opinion & according to the information and explanations given to us nofraud on or by the Company was noticed or reported during the year.
For H.V. DEODHAR & Co.
M. No. 125625