| 1. We have audited the attached Balance Sheet of Kashipur Sugar Mills
Limited as at 30th September 2010, the Profit & Loss Account and the
Cash Flow Statement 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 from any material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
the 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 presentation of the
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
3. 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, we annex hereto a statement on the matters specified in
Paragraph 4 of the said order.
4. (a) Attention is invited to note no. 11(b) andl (c) of Schedule No.
17 regarding non provision of excise duty aggregating to Rs.3165.47
Lacs (including Rs. 150.21 Lacs for the current year) and interest
thereon (amount indeterminate) and penalty thereon amounting to Rs.
2678.57 Lacs.. As the matter is subjudice and uncertain, it is not
possible to ascertain the probability of the liability and its impact
on the accounts of the company till the matter is finally decided by
Hon'ble Court.
(b) Attention is invited to Note No. 11 of Schedule No. 17 regarding
accounting of Sugar Cane price for season 2007- 08 at Rs.110.00 per
quintal as per the interim order of the Hon'ble Supreme Court as
against the price of Rs.127per qtl. fixed by Uttarakhand Government. As
the matter is subjudice and uncertain,hence it is not possible to
ascertain the probability of the liability and impact thereof on the
accounts of the company till the matter is finally decided by Hon'ble
Court.
5. We further 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
b. In our opinion, proper books of accounts as required by law have
been kept by the company so far as appears from our examination of the
books.
c. The Balance Sheet and Profit & Loss Account dealt with by this
report are in agreement with the books of accounts.
d. In our opinion the profit & loss account and the balance sheet
comply with the Accounting Standards referred to in Section 211 (3C) of
the Companies Act, 1956.
e. On the basis of the written representation from the directors,
taken on record by the Board of Directors, none of the directors are
disqualified as on 30th September, 2010, from being appointed as a
director under section 274(1) (g) of the Companies Act, 1956.
f. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
Principal Accounting Policies and Other Notes thereon give the
information required by the Companies Act, 1956 in the manner so
required and subject to our observations in Para 4 above, the effect
whereof can not be ascertained, give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) In the case of the Balance Sheet of the State of Affairs of the
Company as at 30th September 2010 ; and
(b) In the case of the Profit & Loss Account, of the Loss for the year
ended on the date.
(c) In the case of Cash Flow Statement, of the Cash Flows for the year
ended on that date.
Annexure to the Auditor's Report
(As referred to in Paragraph - (3) of our report of even date)
(i) (a) The fixed asset records maintained by the company needs to be
updated to show full particulars including quantitative details and
situation of fixed assets.
(b) The fixed assets were not physically verified by the management
during the year and discrepancies, if any, could not in the
circumstances be known.
(c) In our opinion and as explained to us, substantial part of fixed
assets has not been disposed off by the Company during the year.
(ii) (a) The management has physically verified inventory at reasonable
intervals except stores.
(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 the nature of its business.
(c) The Company is maintaining proper records of inventory. No material
discrepancies were noticed on physical verification of inventory as
compared to book records and the same have been properly dealt with in
the books of account.
(iii) (a) 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.
(b) As the company has not granted any such loans, hence provisions of
clause (iii) (a),(iii)(b), (iii)(c) and (iii) (d) are not applicable.
(c) The Company has taken loans secured and unsecured, from Companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956. The required details are as under :
Particulars Loans and Advances taken
No. of Parties involved 5
Maximum balance at any time Rs. 2484.31 Lacs
during the year
Closing Balance Rs. 2441.63 Lacs
(d) The rate of interest and other terms and condition on which loans
have been taken by the Company, are not, prima facie, prejudicial to
the interest of the Company.
(e) The payment of principal amount and interest are regular, whenever
stipulated.
(iv) In our opinion and according to the information and explanations
given to us there are adequate internal control systems 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. Further we have not come across any continuing failure to
correct major weakness in the internal control system.
(v) (a) According to the information and explanations given to us the
particulars of contracts or arrangements referred to in Section 301 of
the Companies Act, 1956 have been entered in the register required to
be maintained under that section.
(b) In our opinion and according to information & explanations given to
us the transactions made in pursuance of such contracts or arrangements
and exceeding the value of Rs. five lacs in respect of any party during
the year have been made at prices which are reasonable having regard to
the prevailing market prices at the relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposits from the public.
(vii) The company does not have an internal audit system.
(viii) We have been informed that the cost records as have been
prescribed u/s 209 (1) (d) of the Companies Act, 1956 have been made
and maintained by the Company.
(ix) (a) According to the information and explanations given to us and
the records of the Company examined by us, the company is regular in
depositing undisputed statutory dues including Provident Fund, Investor
Education and Protection Fund, Employees' State Insurance, Income Tax,
Trade Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and
any other Statutory Dues applicable to it with the appropriate
Authorities.
(b) The details of Income Tax / Trade Tax / Central Sales Tax / Excise
Duty which have not been deposited on account of disputes as on 30th
September 2010 are as follows :
Sl. Name of Nature of Amount Period to which Forum where
No. Statue Dues (Rs. in the amount dispute is
Lacs) relates pending
1. Trade Tax Trade Tax 5.82 2002-03 Hon'ble Trade
Laws Tax, Tribunal
Haldwani
2. Trade Tax Trade Tax 211.93 1997-1998 Addl.
Laws to 2000-01 Commissioner
Appeals (Trade
Tax)
3. Trade Tax Entry Tax 18.00 2000-01 Addl.
Laws Commissioner
Appeals Trade
Tax)
4. Trade Tax Trade Tax 10.14 2001-02 to Joint
Laws 2004-05 Commissioner
Appeals (Trade
Tax) Haldwani
5. Trade Tax Trade Tax 147.20 1999-2000 to Deputy
Laws 2000-01 Commisioner
Assessment
6. Trade Tax Trade Tax 43.10 2005-06 Joint
Laws Commissioner
(Appeals)
7. Central
Excise Excise Duty 1.30 1995-96 Central Excise
Laws and Service Tax
Appellate
Tribunal
8. Central
Excise Excise
Duty 5357.14 2003 to 2008 Central Excise
Laws and Service Tax
Appellate
Tribunal
9. Central
Excise Excise
Duty 3.46 1998-99 Commissioner
Laws Appeal
(x) The accumulated losses at the end of the financial year are more
than fifty percent of its net worth. The Company has incurred cash
losses in current financial year, however the company has not incurred
cash losses in the immediately preceding financial year. The Company
is a sick Industrial Company with in the meaning of clause O of
subsection 1 of Sec 3 of the Sick Industrial Companies (Special
Provisions) Act, 1985.
(xi) The Company is making payment to bank and the financial
institutions in accordance with the agreement/settlement entered with
in Bank & Financial Institutions. However the Company has not paid the
loan taken from State Governments on due dates.
(xii) The company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities, hence the provisions of paragraph 4 (xii) of the Companies
(Auditor's Report) Order 2003 are not applicable to the Company.
(xiii) The Company is not a nidhi / mutual benefit fund /society, hence
the provisions of paragraph 4 (xiii) of the Companies (Auditor's
Report) Order 2003 are not applicable to the Co mpany.
(xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments, hence the provisions of paragraph 4
(xiv) of the Companies (Auditor's Report) Order 2003 are not applicable
to the Company.
(xv) The Company has not given any guarantee for loans taken by others
from bank or financial institutions, hence the provisions of paragraph
4 (xv) of the Companies (Auditor's Report) Order 2003 are not
applicable to the Company.
(xvi) The Term loans obtained by the Company have been applied for the
purposes for which they were obtained.
(xvii) The Company has not raised any specific short term loan funds
during the year except changes in working capital composition.
(xviii) The Company has not issued any equity share capital during the
year; hence the provisions of paragraph 4 (xviii) of the Companies
(Auditor's Report) Order 2003 are not applicable to the Company.
(xix) The Company has not issued any debenture; hence the provisions of
paragraph 4 (xix) of the Companies (Auditor's Report) Order 2003 are
not applicable to the Company.
(xx) The company has not raised any money by public issues during the
year, hence the provisions of paragraph 4 (xx) of the Companies
(Auditor's Report) Order 2003 are not applicable to the Company.
(xxi) According to the information and explanations no fraud on or by
the Company has been noticed or reported during the year.
For Mittal Gupta & Company
Chartered Accountants
(Alok Tandon)
Partner
Place : New Delhi
Dated : 29.11.2010
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