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Mahindra Lifespace Developers Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. Without qualifying their opinion, the Auditors draw attention to their reliance on management representation regarding realisability of construction work in progress, project advances and interest accrued thereon in the amount of Rs 8658.51 lacs carried forward from the last audited balance sheet, on account certain project, the commencement of which is delayed pending resolution of certain matters including receipt of approvals and outcome of the court cases.
2. In respect of projects under long term contracts undertaken and / or financed by the Company, the auditors have relied upon the managements estimates of the percentage of completion, costs to completion and the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profits / losses have been accounted, interest income accrued and realisability of the construction work in progress and project advances determined.
FCS Software Solutions Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. Work in Process:
The value of work in process as on the date of Balance Sheet has been considered as valued and certified by the Management.
2. Foreign Currency Transactions:
In case of sale made to clients outside India, income is accounted on the basis of the exchange rate as on the date of transaction. Adjustments are made for any variations in the sale proceeds on conversion into Indian currency upon actual receipt. Expenditure in foreign currency is accounted at the conversion rate prevalent when such expenditure is incurred. Where realizations, are deposited into, and disbursements made out of, a foreign currency Bank account, all transactions during the month are reported at a rate which approximates the actual monthly rate.
In the case of current assets and current liabilities expressed in foreign currency, the exchange rate prevalent at the end of the year is taken for the purposes of transaction, Fixed assets purchased at overseas offices are accounted on the basis of actual cost incurred at the exchange rate prevalent at the time of purchase. Depreciation is charged as per Company policy. Exchange differences are arising on foreign currency transactions are recognized as income or expenses in the year in which they arise. In the case of forward contracts, the difference between the forward rate and the exchange rate on the date of the transaction is recognized as Income or expenses over the life of the contracts.
Birla Power Solutions Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
Attention is invited to the following matters -
1. Internal controls in relation to sales, debtors, sales return, purchases, creditors, purchase returns, production, inventory, Internal audit and expenditure needs to be strengthened to make the same commensurate with the size of the company and nature of the business.
2. Due to non-availability of audit trail and absence of satisfactory cutoff procedures in respect of:
(a) Sales and sales returns, purchase and purchase returns, interest income, discounts, rebates & allowances, non-reconciliation of Excise Duty Accounts with the Excise records, non compliance of provisions of Cenvat Credit Rules in some cases and also non adjustment of Sales Tax rates differentials in case of inter depot transfers which in the opinion of the management will be appropriately reconciled / accounted, we are unable to comment on the consequential impact arising out of the same.
(b) Transactions in relation to traded goods entered into by the company and due to absence of confirmation of balance in respect thereof, the Auditors are unable to comment on the consequential impact of the same. Moreover no Sales Tax Return is submitted till date in relation to this sale.
3. As no Audit Trail was established, due to non availability of documents at the time of Capitalization of UnitII, therefore the Auditors cannot express their opinion on the depreciation charged amounting to Rs 14.36 Lacs in current quarter. Moreover Company was not able to produced sufficient records / explanation in relation to physical existence of CWIP-P&M purchased during the current quarter amounting to Rs 1725.59 Lacs.
Forbes Gokak Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. Attention in invited to Note 5 of the Statement relating to the balances to be reconciled and set off in respect of the Companys Logistic Services Segment. The Auditors could not perform limited review procedures in respect of debit balances as at September 30, 2007, amounting to Rs 730.07 lakhs (as at September 30, 2006, Rs 652.78 lakhs; as at March 31, 2007, of Rs 407.56 lakhs) which have been included in the capital employed of this segment, as the necessary information was not available and the reconciliation process had not been concluded.
2. One of the Companys branch offices has recorded revenue from one of its logistics service lines net of direct expenditure. Such revenue has consistently been recorded on a gross basis by the Company in the previous reporting periods and by other branch offices of the Companys Logistic Services segment for the half year ended 30th September, 2007. Consequently Net sales / income from operations and Other expenditure have been understated. As the necessary information has not been aggregated by the Company, the Auditors are unable to quantify the impact on income and expenditure. However, there would be no impact on the profit for the period.
3. The Auditors draw attention to note no. 5 to the Statement wherein the Management has stated that its reasons for revaluation of certain assets. In Auditors opinion, selective revaluation of fixed assets is not in accordance with the Accounting Standard (AS) 10 on Accounting for Fixed Assets notified under the Companies (Accounting Standards) Rules, 2006. The value of such fixed assets which formed a part of the capital employed of the Others Segment as at 30th September, 2006 and 31st March, 2007 is Rs 365.21 lakhs and Rs 365.19 lakhs respectively.
Khandwala Securities Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. The basic earnings per share of Rs 1.94, as disclosed in the Statement have been calculated in the manner specified in Accounting Standard AS- 20 - Earning per Share.
2. The Company has not disclosed in the statement, the impact if any, on the interim financial information, of the following qualifications made in the last audited accounts of the Company;
(a) Share application money valued at Rs 216.69 lacs advanced by the Company for the purchase of shares (Rs 216.69 lacs as on June 30, 2007), of which management confirms that it has initiated legal proceedings against the party for the recovery of Rs 216.69 lacs
(b) Rs 100.00 lacs being short term deposits taken from companies together with Interest accrued of Rs 99.41 lacs, and Rs 530.00 lacs being deposits placed by the Company together with interest thereon of Rs 135.80 which were subject to confirmation, subsequent adjustments and reconciliation, if any.
The Managements reply to the Auditors Qualification for the Limited Review for the quarter ended September 30, 2007:
Reply against Qualification under Item No. 2 (a)
- The Company had invested Rs 314 Lacs towards purchase of shares of the investee Company in the FY 2001-02. The Company has neither been allotted shares nor refunded the said amount. Out of aforesaid amount the management have received Rs 97.31 lacs. After deducting aforesaid amount balance recoverable is Rs 216.69 lacs. The Company has initiated legal proceedings against the investee company by filing criminal & civil case u/s 138 of the Negotiable Instrument Act to recover the application money.
Falcon Tyres Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1) a) Review with respect to payment of Rs 43.80 lacs for Technical aid relating totyres and capitalization of administrative and other charges aggregating to Rs 820.48 lacs as Capital Work in Progress were pending by the management. Pending this and ascertainment of amounts thereof, impact with respect to these on the financial results cannot be commented upon by us.
b) Provisions of Revised Accounting Standard 15 on Employee Benefits has not yet been implemented by the Company. Necessary adjustments in this respect will be carried out at the year-end impact with respect to this has not been ascertained and as such cannot be commented upon by the Auditors.
c) Overheads absorption for the purpose of valuation of inventory of finished goods and work in progress has been done on estimated basis. Impact with respect to this has not been ascertained and as such cannot be commented upon by the Auditors.
d) Interest and other finance charges aggregating to Rs 459.13 lacs, Rs 52.46 lacs and Rs 57.42 lacs have been treated as cost of investment prepaid and capital work in progress, respectively.
e) Impact of para (d) above (the same being not ascertained in case a, b and c above) and other variations, as noticed during the course of the said review, on being given effect to in the items mentioned in the accompanying statement of unaudited financial results, are as given below
(Rs in Lacs)
ParticularsFigures after rev- Figures as repor-iew quarter endedted quarter endedSeptember 30, 2007September 30, 2007
HFCL Infotel Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
Without qualifying their opinion, the Auditors draw attention to Note 2 of the statement, the Company has incurred a loss of Rs 3,721.97 lacs and Rs 6,732.66 lacs during the three months ended and six months period September 30, 2007 (accumulated loss of Rs 83,989.30 lacs) resulting into erosion of its net-worth, and has a net current liability of Rs 15,198.16 Lacs (after considering provision for interest amounting to Rs 8,623.98 lacs being the difference in the amount paid in comparison to the amount accrued on yield basis as per the CDR scheme) as of September 30, 2007. The Company has achieved profitability at the Earnings before interest and depreciation / amortisation level, and is also able to generate cash from operations. The ability of the Company to continue as a going concern is significantly dependent on its ability to successfully arrange the balance funding in terms of the CDR scheme and achieve financial closure to fund its operating and capital funding requirements and to substantially increase its subscriber base. The management in view of its business plans is confident of generating cash flows and to fund the operating and capital requirements of the Company in the event of any delay in the arrangement of the balance funding. Accordingly, these statements have been prepared on a going concern basis.
Attention is invited to Note 3 of the statement regarding Companys investment Rs 7,176.71 lacs (Rs 180 lacs as equity and Rs 6,996.71 Lacs as unsecured convertible OFCD) in an associate company. The Investment Trust of India Ltd (ITI), ITI has incurred a net loss of Rs 925.15 lacs and has a negative net worth of Rs 132.20 lacs as on March 31, 2007.
Saregama India Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. Attention is drawn to the following without qualifying Auditors Report :
(a) Note 4 to the accompanying statement of unaudited financial results relating to non disclosure of impact on the net results and earnings per share for the quarter and half year ended September 30, 2007 had the fair value method been used to account for the stock options granted as mentioned therein.
(b) The Company has not disclosed the reasons for not resolving / steps taken, if any, against the qualifications in Auditors Limited Review Report of August 31, 2007 for the quarter ended June 30, 2007 on the items mentioned in Paragraphs 2.a. and 2.b. below.
2. Auditors invite attention to the following :
(a) Note 3 to the accompanying statement of unaudited financial results regarding recoverability of inter corporate deposit including interest accrued thereon (book balance Rs 824 lakhs) from a body corporate. From the available information, Auditors are unable to comment on the extent of recoverability of the aforesaid deposit including accrued interest thereon and the consequential impact, if any, on the Companys financial results for the quarter and half year ended September 30, 2007.
(b) As explained by the Company, additional and / or differential employee benefits which may arise on or after April 01, 2007 in keeping with the provisions of Accounting Standard 15 (revised 2005) on Employee Benefits are yet to be ascertained / accounted for by the Company. Accordingly, auditors are unable to comment on the impact, if any, on the Companys financial results for the quarter and half year ended September 30, 2007.
Almondz Global Securities Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. Consequent to the re-identification of the segment and in view of the Auditors limited scope of review, the Auditors are not in a position to state its financial impact on the published results.
In view of such re-identification of segments, the segment results for the quarter ended September 30, 2007 are not comparable with corresponding figures for the quarter ended September 30, 2006, half year ended September 30, 2006 and for the year ended March 03, 2007.
2. Some of the expenses e.g. estimated income tax liability, depreciation and provisions for employees retirement benefits has been appropriately considered on proportionate basis.
Arshiya International Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. Audited results for the year ended March 31, 2007 included in the said Statement reflect Profit after tax of merged entity for the quarter ended March 31, 2006 under the head Exceptional items (item no. 7) as Rs 52.47 lacs (net of taxes of Rs 32.78 lacs), in the audited financial statements for the said year, Profit of the merged entity for the quarter ended March 31, 2006 is reflected before taxes at Rs 85.25 lacs and tax effect of Rs 32.78 lacs is included in current taxes. Accordingly, Profit / (loss) from ordinary activities before tax and after exceptional items for the year ended March 31, 2007 should have been Rs 676.50 lacs as against Rs 643.72 lacs reflect in the Statement and Provision for current tax should have been Rs 254.75 lacs as against Rs 221.97 lacs reflected in he Statement. This has, however no impact on the Net Profit / (loss) from ordinary activities after tax reflected in the Statement.
2. The Company has disclosed Earnings / (loss) per share before exceptional items in the Statement which is not required as per Clause 41 of the Listing Agreement. Further, the Company had issued bonus equity shares in the proportion of three fully paid equity shares of Rs 10 each for every two fully paid equity shares of Rs 10 each held in November 2006. In terms of Accounting Standard 20 on Earnings par share, upon issue of bonus shares, EPS for the corresponding previous periods should be adjusted taking in effect the number of bonus shares issued. However Earnings (loss) per share before and after exception items for the quarter and half year ended September 30, 2006 are reflected in the Statement without adjusting the effect of the subsequent issue of bonus shares.
Unimers India Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations :
1(i). The Company has not paid installments due of certain debts as per the CDR package / settlement, consequently the lenders shall have the right to revoke the package / settlement in case of non-fulfillment of commitments by the Company and they also have the right to convert entire / part of loans outstanding into equity.
1(ii). Besides pending approval of the CDR Core Group, accounting impact of the amount settled with UTI has not been given (refer note no.4 (b) of the attached financial result).
1(iii). The management has approached the CDR Group for reworking / rescheduling of the CDR package / settlement in view of the fire on October 24, 2006, which has been approved in principle by the CDR Group. However, as explained, final approval for the revised package / settlement is expected to be received shortly.
2. The Auditors are unable to express an opinion as to when and to what extent long overdue Sundry Debtors aggregating to Rs 65.90 Laos would be recovered. The management is, however, hopeful for recovery / settlement in the above cases and accordingly, as explained, provision as may be required would not be significant.
3. The Company has not yet deposited long outstanding amount of Rs 75.21 Lacs (as on March 31, 2007) to the Investor Protection Fund.
4. The accounts of certain debtors, creditors, unsecured loans, banks and loans and advances are subject to confirmations, reconciliation and consequent adjustments, if any, which are presently not ascertainable.
SI Group India Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. As pointed out in the Auditors Report for the year ended March 31, 2007:
(i) The capitalisation of Rs 990 lakhs for the Butyl Phenol Plant (the Plant) was not in accordance with the generally accepted accounting principles in India and in terms of the Expert Advisory Opinion 39 - Volume X issued by The Institute of Chartered Accountants of India, Accounting Standard (AS) 10 on Accounting for Fixed Assets and AS 26 on Intangible Assets. Accordingly as at March 31, 2007, gross fixed assets had been overstated by Rs 820 lakhs, depreciation charge had been overstated by Rs 42 lakhs. Consequently, the profit for the year had been understated by Rs 42 lakhs and reserves for the year ended March 31, 2007 had been overstated by Rs 767 lakhs. For the quarter ended September 30, 2007, depreciation charge is overstated by Rs 10 lakhs and consequently, the profit for the quarter is understated by Rs 10 lakhs; and
(ii) The Company has applied for approval to the authorities in respect of remuneration paid to the Managing Director which is in excess of the limits prescribed under The Companies Act, 1956. As at March 31, 2007, the remuneration paid in excess of the limits amounted to Rs 47 lakhs.
2. As more fully explained in note 1(iii) of the statement of un-audited financial results regarding insurance claim receivable amounting to Rs 449 lakhs, the Company has initiated arbitration proceedings. The Auditors are unable to assess adjustments, if any, which would be required on settlement of the claim with the insurance company.
Uniworth Textiles Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. The company has been declared a Sick Industrial Company by an order datedSeptember 05, 2006 of the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provision) Act 1985. The restructuring scheme of the Company is under preparation.
Further, some of the secured lenders have absolutely assigned & transferred to Assets Reconstruction Company of India Ltd (ARCIL), the facility granted by them together with all underlying security interest thereto pursuant to the necessary provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
2. Interest provision on borrowing from some of the Institutions and Bank has been made under simple interest method at the prevailing / estimated rates applicable on such loans in absence of relevant documents / confirmations. The impact of compound interest / penal charges wherever applicable could not be ascertained.
3. Investment include investment amounting to Rs 14.05 lacs and Sundry Debtors/Loans & Advances include to Rs 207.31 lacs receivable from the companies which have become sick and referred to BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985. In the absence of rehabilitation scheme of these companies, amount of provision, if any, required has not been ascertained at this stage.
4. In respect of Sundry Debtors relating to Export Sales, adjustments are pending against supplies and other liabilities etc. due to the buyers. Management is confident of recovering the balance after such adjustments pending approval of concerned regulatory authority. In respect of the same the Auditors are unable to express any opinion.
Mahanagar Telephone Nigam Ltd (MTNL) has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. The Company has adopted the basis for valuing Fixed Assets, Capital Work in Progress & Depreciation and expenditure on replacement on cables, apparatus & plants installation and rehabilitation work is capitalized as per Significant Accounting Policy of the Company, which in the auditors opinion, is not in agreement with Accounting Standard - 10 - According for Fixed Assets, and Accounting Standard - 6 - Accounting for Depreciation, issued by the Institute of Chartered Accountants of India.
2. The Company has adopted the basis of valuation of inventories (except for WLL Handsets) as per Significant Accounting Policy of the Company which is not in accordance with the Accounting Standard - 2 on Valuation of Inventories issued by the Institute of Chartered Accountants of India. Further the Company has not done compliance of AS - 28 Impairment of Assets.
3. The provision for Bonus / Ex-Gratia, Liabilities of post retirement benefits as per AS - 15, accrual income & depreciation has been made on estimated basis Pending actual determination of the liability, the impact of the same on the accounts for the quarter under review is not ascertainable.
4. The sundry debtors control account, subscriber account and interest accrued thereon unlinked receipts from subscribers balance with DOT & BSNL are subject to reconciliation and consequent adjustments.
5. To the best of our knowledge and belief and according to the explanation given to the auditors the Company is in process of giving effect of the qualifications made by the auditors in respect of previous accounting years. The impact of these qualifications on the Profit and Loss account for the quarter under report, as required under the provisions of clause 41 of the Listing Agreement is unascertainable.
Birla VXL Ltd has informed that in the limited review report of the Company for the quarter ended September 30, 2007, the Auditors of the Company have made the following observations:
1. In absence of substantial evidence regarding advances towards building aggregating to Rs 881 lac, considered good by the management, the Auditors are unable to comment upon the ultimate recoverability of the same. Necessary recognition of interest etc, if any, will be made on settlement of ongoing legal / arbitration proceedings.
2. The accounts have been drawn on going concern basis, despite negative net worth, as the Board expects that under improved market conditions, post implementation of various provisions of Scheme and continued initiatives towards operational improvements, adequate net worth and working capital will be available for sustained operations.
3. Note no. 2 of accompanying statement of unaudited financial results, which states that the effect of revised Accounting Standard 15 Employees Benefit, and provision for Taxation, including deferred tax, will be determined and dealt with at the year end.
4. Balances of debtors, creditor, loans and advance, secured and unsecured loans are subject to confirmation and / or reconciliation, impact whereof is currently not ascertained.
