| We have audited the attached Balance Sheet of M/s Enchante Jewellery
Ltd. as at 31st March 2005 and also the Profit & Loss Account 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 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 a reasonable
basis of our opinion.
As required by the Companies (Auditors Report) order, 2003 issued by
the Central Government 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 and 5 of the said order.
Furtherto our comments in the annexure referred to above, 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 purposes 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 ourexamination of
those books.
iii) The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account.
iv) In our opinion, the Balance Sheet, the Profit & Loss Account and
Cash Flow Statement dealt with by this report, comply with the
Accounting Standards referred to in sub-section 3(C) of section 211 of
the Companies Act, 1956 to the extent applicable to the company.
v) On the basis of the written representations received from the
directors as on 31.3.2005 and taken on record by the 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.
vi) Attention is invited to:
a) The preparation of accounts going on concern basis, despite the
company being a sick industrial company, and incurring operational
losses continuously.
vii) a) Note no. 6 of part B of schedule K regarding writing back of Rs
624.65 lakhs in the Profit & Loss Account during the financial year
2002-03 and non provision of interest on amount payable to SBI (amount
unascertained), in respect of Loan of State Bank of India. The bank has
denied for the OTS proposal as not being acceptable by the banks
appropriate authority, in view of the sacrifice involved on the part of
the bank.
b) Note no. 14 of part B of Schedule K regarding accounting of
liability for bonus on payment basis. (amount unascertained).
We further report that the profit for the year and balance in the
Profit and Loss Account are without considering the impact of terms
mentioned in (vi) and (vii) (b) above, the impact of which could not be
determined. Had the effect of item mentioned in para 2 (vii) (a) above
been given, the secured loans in the balance sheet would have been Rs.
1031.89 Lakhs (as against the reported figure of Rs. 407.24 lakhs), and
the debit balance in the Profit & Loss Account would have been Rs.
1284.77 lakhs (as against the reported figure of Rs 660.12 lakhs).
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, 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 2005; and
b. in the case of Profit & Loss account, of the profit for the year
ended on that date.
For Anuj Kumar Gupta & Co.
Chartered Accountants
Place : Gurgaon (Anuj Kumar)
Date : 23rd August, 2005 Proprietor
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE REPORT OF EVEN DATE OF THE
AUDITORS TO THE MEMBERS OF M/S ENCHANTE JEWELLERY LIMITED ON THE
ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2005.
1. a) As informed to us, the company is in the process of compiling
the Fixed Assets Records showing full particulars including
quantitative details and situation of fixed assets.
b) The company has a program of physical verification of fixed assets
over a period of three years which is, in our opinion, reasonable
having regard to the size of the company and the nature of the assets.
However no fixed assets have been physically verified by the management
during the year.
c) In our opinion, the company has not disposed off a substantial part
of the fixed assets during the year and therefore paragraph 4 (i) (c)
of the Companies (Auditors Report) order, 2003 (hereinafter referred
to as the Order) is not applicable.
2. a) Physical verification of inventory has been conducted by the
management during the year and, in our opinion, the frequency of
verification is reasonable.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate, in relation to the size of
the company and nature of its business.
c) The company is maintaining proper records of inventories and no
material discrepancies have been noticed on physical verification of
inventories as compared to the book records.
3. According to the information and explanation given to us the
company has not granted any loans, secured or unsecured, to companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956, and therefore paragraph 4(iii) of the
said order is not applicable.
4. In our opinion and according to information and explanations given
to us, there are adequate internal control procedures commensurate with
the size of the Company and the nature of the business, for the
purchase of inventories and fixed assets and for the sale of goods. We
have neither come across nor have we been informed of any major
weakness in the internal control procedures.
5. a) To the best of our knowledge and belief and according to the
information and explanations given to us, we are of the opinion that
the transactions that need to be entered in the Register in pursuance
of Section 301 of the Companies Act, 1956 have been so entered.
b) In our opinion and according to the information and explanation
given to us, transactions during the year exceeding the value of five
lakhs rupees in respect of any party which required to be entered in
the register u/s 301 of the Companies Act, 1956 have been made at
prices which are reasonable having regard to prevailing market prices
at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the company has not accepted deposit from the public to
which the provisions of section 58A ana 58AA of the Companies Act, 1956
and the rules framed there under are applicable, and therefore
paragraph 4 (vi) of the order is not applicable.
7. In our opinion, the Company has an internal audit system which is
commensurate with its size and nature of business.
8. It has been informed to us that the central Governments has not
prescribed maintenance of cost records under section 209 (1) (d) of the
Companies Act.1956 for the products of the company.
9. (a) In our opinion and according to the information and
explanations given to us, the company, due to its financial sickness,
is on occasion irregular in depositing undisputed statutory dues
including provident fund, employees state insurance, and income tax
deducted at source with the appropriate authorities. However, all of
the undisputed statutory dues as on 31.03.2005 have been paid and
therefore the delay does not appear to be wilful or intentional. As on
31st March 2005, according to the records of the company, the following
are the particulars of undisputed dues on account of provident fund,
employees state insurance, sales tax and income tax deducted at source,
on which the company was irregular and the dates on with the said
payments were made.
Name of Nature of dues Amount Rs. Due Date
the statue
Provident Employer contribution 76932/- 15th of the
Fund and PF charges for the following
period from September 04 month of the
to March 05 month in
which amount
is deducted.
Provident Employee contribution 10139/- 15th of April 05
Fund for the month of March 2004
is Errplcysrs
contribution for March, 4164/-
21st April, 2004 Rs 1675/-
deposited on Gurgaon 05 Rs.1675/-,
and OT and 15/4/05 and balance on
trial staff for 2002-03 20-6-2005
ESI Payabletowards Employers 119402/- 21st of following
Gurgaon contribution from October month of the
2002 to Sept 05 and March 05, month in which
payment made for
Contractors.
ESI Delhi For the month of 318/- 21.04.2005 16.04.2005
March 05
Tax Deducted on 20.9.04 12830/- 7th of following month
deducted Rs.472/-Deducted on of the month in which
at source 31.3.2005 Rs 11698/-, amount is deducted.
Interest for the year Amount deducted on
2004-05 Rs 660/- the last day of the
year can be deposited
in two months from
the end of the year
Name of Date of payment
the statue
Provident Rs. 67129/-pertaining to the
Fund period from Sept 04 to Feb 05
has been paid during the
month of May 05 and June 05.
However the companyis still
to pay the employer
contribution and PF charges
for the month of March 05
amounting to Rs 9803/-.
Provident 27-04-2005
Fund 15/4/05 and balance on
20-6-2005
ESI deposited from 30.04.05
Gurgaon to 23.06.05
month in which
payment made for
amount is deducted.
Overtime and Staff on trial,
relating to the financial
year 2002-03.
ESI Delhi 21.04.2005 16.04.2005
March 05
Tax depositedon20.5.05.
depositedon 30.6.05
depositedon20.5.05
deposited on 30.6.05
10. The companys accumulated losses at the end of the financial year
are more than fifty percent of its net worth and it has incurred cash
losses in such financial year. The company has been declared a sick
industrial company during the year 1999-2000, within the meaning of
clause (0) of Sub section (1) of Section (3) of Sick Industrial
companies, (Special Provisions) Amendment Act, 1992 vide BIFR letter
dated 25-10-2002.
11. In view of the note number 6 of Part B of Schedule K, we are unable
to comment to determine whether there is a default in repayment of
loans due to the State Bank of India.
12. The company has not granted any loans or advances on the basis of
security by way of pledge of shares, debentures and other securities
and therefore paragraph 4(XII) of the order is not applicable.
13. The provisions of any special statute applicable to chit fund and
nidhi/mutual benefit fund/society are not applicable to the company
and therefore paragraph 4(XIII) of the Order is not applicable.
14. The company is not dealing or trading in shares, securities,
debentures and other investments and therefore paragraph 4(XIV) of the
Order is not applicable.
15. According to the information and explanations given to us, during
the year the company has not given any guarantee for loans taken by
others from banks or .financial institutions and therefore paragraph
4(XV) of the Order is not applicable.
16. According to the information and explanations given to us the
company has not availed any term loans during the year and therefore
paragraph 4(XVI) of the Order is not applicable.
17. According to the information and explanations given to us and on an
overall examination of the balance sheet of the company, in our
opinion, there are no funds raised on short term basis which has been
used for long term investments and vice versa.
18. The company has not made any preferential allotment of shares
during the year and therefore paragraph 4(XVIII) of the Order is not
applicable.
19. The company has not issued any debentures during the year and
therefore paragraph 4 (XIX) of the Order is not applicable.
20. The company has not raised any money by way of public issues during
the year and therefore paragraph 4 (XX) of the Order is not applicable.
21. Based upon the audit procedures performed and as per the
information and explanations given to us by the management, we report
that no fraud on or by the company has been noticed during the year.
For Anuj Kumar Gupta & Co.
Chartered Accountants
Place : Gurgaon (Anuj Kumar)
Date : 23rd August, 2005 Proprietor |