Jalpac India Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2010

We have audited the attached Balance Sheet of Jalpac India Limited, as at 31 st March 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys 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 misstatements. 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.

1. As required by the Companies (Auditors Report) Order, 2003 (The Order) (As Amended) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (The Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in Paragraph 1 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 read with our comments in para 2(f) below;

(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, read with our comments in para 2(a) above;

(c) The Balance Sheet, Profit & 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 & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

(e) On the basis of written representations received from the directors of the company and information and explanations given to us, we report that none of the directors is disqualified as on 31 st March 2010 from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the companies act, 1956.

(f) Attention is invited to the following notes of Schedule 19A:

i. As stated in Note no. 14 regarding preparation of accounts of the company on a going concern basis (impact unascertainable) for the reason as stated in said note. However, its accumulated losses is in excess of net worth of the company and the company

has become sick industrial company within the meaning of section 3(1 )(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 by Honble BIFRs Order dated 05.09.2006.

ii. As stated in Note No.4 regarding non provision against custom duty saved on raw material consumed under advance license, pending fulfillment of export obligation and non provision of interest thereon (amount unascertained) as stated in the said note.

iii. As stated in Note No. 11 (a) & (b) regarding non- provision for shortfall in recovery against debtors and loans & advances for which recovery action has been initiated (amount unascertainable) as stated in the said note.

iv. As stated in Note No.12 in respect of non confirmation/ reconciliation of balances of sundry debtors, sundry creditors, current liabilities (including statutory dues) & provisions (read with Note no. 5 & 24), loans & advances, secured loans, unsecured loans, certain bank balances(including Fixed Deposits & Margin Money), contingent liabilities considered as ascertained by the management, consequential impact whereof presently cannot be ascertained.

v. As stated in Note No. 15(b) In respect of non payment of certain statutory dues and non-filing of certain statutory returns/forms w.r.t. Employee State Insurance, Provident Fund, Tax Deducted at source, Service Tax and other taxes (includeing accounting of Penalty, Interest, etc.) (amount unascertainable) and our inability to comment thereon.

vi. As stated in Note No.10 regarding non-provision of Rs. 4.32 lacs for diminution in value of an unquoted long-term investment.

vii. As stated in Note No. 13 regarding non-provision of losses (impact unascertainable) on account of impairment of assets in use for the reason stated in the said note and in the absence of supportive audit evidence our inability to comment thereon.

viii. As stated in Note No. 15(a) regarding the non- provision of interest of Rs.127013 thousands (as estimated, including for the current year Rs. 36300 thousands) and penal interest etc. (amount unascertained).

ix. As stated in Note No. 16(a) regarding pending appointment of Company Secretary, compilation/ updation of secretarial records and other non- compliance as stated in the said note.

x. The internal control system needs to be further strengthened to be made {read with note no. 12,15 and 16(b) and 16 (c)) commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

xi. As stated in Note No. 19 regarding appointment w.e.f. 26th Oct.,2009 and remuneration paid to an Executive Director is subject to requisite approval and also approval of the Central Government.

We further report that the loss for the year, balance in profit & loss account, current liabilities and Provisions, current assets and secured loans are without considering the impact of items mentioned in Para "(f)" above, the impact of which could not be determined.

Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together the note no. 3 of schedule 19A and other Notes thereon, give the information required by the Act 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 Balance Sheet, of the state of affairs of the Company as at 31 st March 2010;

ii) in the case of the Profit & Loss Account, of the Loss for the year ended on that date; and

iii) in the case of Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph (1) of our Report of even date of JALPAC INDIA LIMITED for the year ended 31st March 2010)

1. (a) The Company has maintained proper records in respect of its fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain assets where these records are in the process of updation in respect of identification, quantitative details and location/ situation.

(b) As per information and explanations given to us, certain fixed assets have been physically verified by the Management (read with note no. 16 (b) of schedule 19A) according to the programme of physical verification once in every three years in phased manner, which in our opinion, is reasonable having regard to the size of the Company and the nature of its Fixed Assets. The discrepancies noticed on such physical verification were not material.

(c) As per the records and information and explanations given to us, no Fixed Asset has been disposed off during the year except Motor Car.

2. (a) As per the records and information and explanations

given to us, the inventory of the company (except stocks lying with the third parties) has been physically verified by the management during the year.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business (read with note no. 16(b) of schedule 19A).

(c) In our opinion and according to the information and explanations given to us, the company has maintained proper records of inventory excluding work in progress where stocks are updated as and when physical verification has been carried out (read with note no. 16(b) of schedule 19A). The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured/

unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (b) to (d) of the Order are not applicable to the Company.

(b) During the year Company has taken unsecured loan from one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance involved during the year and the year-end balance of loan was Rs 26184 thousands and 26184 thousands respectively.

(c) The terms and conditions on which loan has been taken by the company are not, prima facie prejudicial to the interest of the Company.

(d) In respect of aforesaid loan, the principal is repayable on demand and Company is regular in repaying the same as and when demanded.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations or where user department has shown specific preference. The internal control system needs to be further strengthened to be made the same {read with note no. 12,15 and 16(b) and 16 (c)} commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. According to the information and explanations provided by the management and based upon audit procedures performed, there are no contracts or arrangements that needs to be entered in the register maintained under section 301 of the Companies Act 1956 (read with note no. 16(a) of schedule, 19A). Accordingly, the provisions of clause 4 (v)(b) of the Order are not applicable.

6. The Company has not accepted any deposits from public within the meaning of section 58A and 58AA and the rules framed there under and any other relevant provisions of the Act with regard to deposits accepted from the public. We have been informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

7. The Company has an internal audit system, which needs to be further strengthened to make it commensurate with the size of the Company and nature of its business.

8 The Central Government haps not prescribed maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 in respect of the products of the Company.

9. (a) According to the records and information and explanation given to us, undisputed statutory dues including Service Tax, Custom Duty, and Excise Duty, have generally been regularly deposited by the company except Provident fund, Employee state insurance, T.D.S, T.C.S, Sales Tax and Fringe benefit tax amounting to Rs. 2353 thousands, 74 thousands, 3350 thousands, 26 thousands, 483 thousands and 505 thousands respectively, which as on 31st March, 2010 are outstanding for more then six months from the date they become payable (read with note no. 15 (b)of Schedule 19A).

(b) According to the records and information and explanation given to us, there are no dues in respect of Income Tax, Service Tax, Custom Duty, Cess and Wealth Tax that have not been deposited with the appropriate authorities on account of any dispute and the dues in respect of Sales Tax, Entry Tax and Excise Duty that have not been deposited with the appropriate authorities on account of dispute and the forum where the dispute is pending are given below (read with note no.1 of schedule 19A): -

Name Nature of Period Amt. Forum where dispute of the Statute the dues (Rs. in is pending 000)

Central Sales Interest on 1999-00 to 77 Supreme Court

Tax Act Tax 2001-02

Disallowance 2000-01, O1-01-O2 4197 Joint Commissioner

of Exempt ions 03-04, 04-05 (Appeals), Trade Tax Noida

Dlsallowance 2002-O3 517 Commercial Tax Tribunal,

of Exemptions Noida

Non-submission 2002-O3 210 Deputy Commissioner Trade

of C Forms Tax,Noida

Non-submission 2003-04 358 Jt Commissioner Trade Tax,

of C Forms Noida

Central Sales Tax 2003-O4 & 980 Deputy Commissioner. 2004-05 Haldwani

Central Sales Tax 2004-O5, 2141 Jt. Commissioner (Appeals) 2005-06 & Trade Tax Noida 2006-07

Uttara khand Trade Tax on 1997-98 8161 Trade Tax Tribunal,

Sales Tax Act Stock Transfer Dehradun

U.P Sal es Tax Non-submission 2002-03 & 360 Deputy Commissioner Trade Act of 3-BForms 2003-04 Tax Noida

Sales Tax 20O5-O6 & 100 Jt. Commissioner (Appeals) 2006-07 Trade Tax Noida

Uttarak hand Entry tax 2003-04 664 Jt. Commissioner (Appeals)

Entry Tax Trade Tax Noida

Central Excise Related to 1995 810 CESTAT

Act valuation

Evaporation Boat 1998 717 High Court

Related to Valuation 1997- 2000 5380 Commissioner Excise

10. The companys accumulated losses at the end of the year are more than fifty percent of its net worth and it has also incurred cash losses during the current financial year (read with our comments in para 2(f) above) and in the immediately preceding financial year.

11. On the basis of records made available and the information and explanation given to us the company has defaulted in repayment of dues to financial institution and banks. The amount overdue on account of principal is Rs.272947 thousands (Rs. 263201 thousands up to 31-03-2009) consisting delays of 1 day to 1325 days and on account of interest Rs. 127013 thousands (90713 thousands up to 31-03- 2009) consisting delays of 14 days to 1325 days. Further, this is to be read with Note no 12,14 and 15(a) of schedule 19A.

12. According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of

- shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi /mutual benefit fund /society, therefore, the provisions of clause 4(xiii) of the said Order are not applicable to the company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. During the year no term loans were received by company, accordingly the provisions of clause 16 of the Order are not applicable to the Company.

17. On the basis of information and explanations given to us and on an overall examination of financial statements of the company, no funds raised during the year in short term basis have been used for long term investment.

18. According to information and explanations given to us, the Company has not made any preferential allotment of shares to any parties or companies covered in the register maintained under section 301 of Companies Act 1956.

19. No debentures have been issued/ outstanding during the year hence; the question of security/ charges thereof does not arise.

20. The company has not raised any money through a public issue during the year.

21. Based on audit procedure performed and on the basis of information and explanations provided by the management and to the best of our Knowledge and belief, no material (read with Note no 12 of Schedule 19A and our comments in para (f) (x) above) fraud on or by the company has been noticed or reported during the curse of our audit, nor we have been informed of any such case by the management.

For LODHA & CO.

Chartered Accountants

Firm Registration No-301051 E

(N. K. LODHA)

New Delhi Partner

Date: 19 August, 2010 Membership No.: - 85155