| 1. We have audited the attached Balance Sheet of ATHENA FINANCIAL
SERVICES LIMITED, (the Company) as at 31st March, 2005, the Profit and
Loss Account and also 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.
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 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956 and on the basis of such checks
of the books and records of the Company as we considered appropriate
and according to the information and explanations given to us, we
enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4. Attention is invited to:
a Sundry debtors amounting to Rs.205.56 crores are not fully supported.
During the year the Company has made attempts to reconcile stock on
hire, unmatured finance charges, repossessed stock, sundry debtors,
security deposit, advance EMI, individual hirer account in
institutional finance business, control account etc. but has not been
able to reconcile all items. In view of the above, we are unable to
express an opinion on the realisibility of the sundry debtors.
5. Attention is invited to the following Notes in the schedule Q:
a. Note No.4 regarding amount due to VTl Bank Ltd., in relation to
arrangement entered into with the bank. In the absence of adequate
information and reconciliation of account, we are unable to express an
opinion about the extent of liability and its consequential effect on
loss/or the year and accumulated loss as stated in the balance sheet.
b. Note No.8 regarding non provision ofinterest. We are unable to
express an opinion on the loss for the year and liabilities and
accumulated loss as stated in the balance sheet.
c. Note No. 4 regarding Tie-up debtors account which is under
reconciliation. We are unable to express an opinion on the loss for the
year, assets and accumulated loss as stated in the balance sheet.
d. Note No. 24 regarding bank accounts which are under reconciliation.
We are unable to express an opinion on the loss for the year,
liabilities, assets and accumulated loss as stated in the balance
sheet.
e. Note No. 19 regarding non availability of balance confirmation in
respect of sundry debtors, sundry creditors, loans and advances given
and taken, balance with bank and assets under hire purchase and lease.
We are unable to express an opinion on the loss for the year.
liabilities, assets and accumulated loss as stated in the balance
sheet.
6. The Company incurred a net toss of Rs.l22.42 crores during the year
ended March 31, 2005 and, as of that date, the Companys total
liabilities exceeded its total assets. Further considering our comments
in paragraph 4 & 5 above with consequential aggregate effects on the
loss for the year and accumulated loss, there is total erosion of
networth of the Company. Some of the lenders have initiated legal steps
for recovery as well as issued notices for winding up of the Company.
The Company does not have means to discharge the liability fully. These
facts raise substantial doubt that the Company will be able to continue
as a going concern. Consequently, adjustments may be required to the
recorded assets and classification of liabilities.
7. Subject to our comments in paras 4, 5 and 6 above, and farther to
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 account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) in our opinion, the Balance Sheet, the Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956;.
(v) On the basis of written representation received from the directors,
as on 31st March, 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) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
notes thereon give the information required by the Companies Act, 1956.
in the manner so required.
8. In view of our comments in paras 4, 5 and 6 above, the
consequential aggregate effect could not be determined on the loss for
the year, accumulated losses, reserve and surplus, assets and
liabilities as at the Balance Sheet date Subject to above and notes
thereon 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 31st March, 2005
b. in the case of the Profit and Loss Account, of the loss of the
Company for the year ended on that date; and
i. in case of Cash Flaw statement, of the cashflows for the year ended
on that date.
For Pawan Jain & Associates
Chartered Accountants
Pawan Jain
Place : Pune M. No32900
Date : 15.10.2005
Annexure referred to in paragraph 3 of our report of even date on the
accounts of ATHENA FINANCIAL SERVICES LIMITED for the year ended 31st
March, 2005.
(i) (a) The Company is in the process of updating records showing
particulars including quantitative details and situation of fixed
assets.
(b) Majority of the fixed assets other than the assets given on lease
have been physically verified by the management during the year and no
material discrepancies have been noticed on such verification.
According to the information and explanations given to us, there is a
regular program of verification which, in our opinion, is reasonable
having regard to the size of the Company and the nature of its assets.
(c) In our opinion, a substantial part of fixed assets has not been
disposed off by the Company during the year.
(ii) The Company is in the business of financing and hence it does not
hold any finished goods, stores, spare parts and raw materials.
Accordingly, clause 4(il) of the Companies (Auditors Report), Order
2003 is not applicable.
(iii) (a) The Company has taken unsecured loans from the companies
covered in the register maintained under section 301 of the Companies
Act, 1956. The maximum amount involved during the year was Rs.
10,97,56,495/- and the year-end balance of loans taken from such
companies was Rs.10,97,56,495/-. The Company has not given any loans to
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956.
(b) In our opinion, the rate of interest, wherever applicable and other
terms and conditions of such loans taken are not, prima facie,
prejudicial to the Interest of the Company.
(c) The Company is irregular in making the payment of interest. There
is no stipulation for repayment of the loans taken.
(d) As informed to us, there is no overdue amount of unsecured loans
taken from the companies taken u/s 301 of the Companies Act, 1956 as on
31st March, 2005 since there is no repayment stipulation.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchases of fixed assets. Further, on the
basis of our examination of the books and records of the Company, and
according to the information and explanations given to us, we have
neither come across nor have been informed of any continuing failure to
correct major weaknesses in the aforesaid internal control procedures.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered into
the register maintained under section 301 of the Companies Act, 1956
have been so entered.
(b) In our opinion and according to the information and explanations
given to us, there are no transactions made in pursuance of contracts
or arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lakhs in
respect of each party during the year.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance
of Deposits) Rule, 1975 with regard to the deposits accepted by the
public.
(vii) In our opinion, the Company does not have an internal audit
system commensurate with the size and nature of its business.
(viii) According to the information and explanations given to us,
maintenance of cost records has not been prescribed by the Central
Government under section 209(1)(d) of the Companies Act, 1956 with
regard to the nature of the business of the Company. Therefore the
provisions of clause 4(viii) of the Companies (Auditors Report), Order
2003 is not applicable.
(ix) (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the
undisputed statutory dues including provident fund, employees state
insurance, income tax, sales tax, wealth tax, custom duty, excise duty,
cess and other material statutory dues as applicable have generally
been regularly deposited with Appropriate Authorities though there has
been delay in few cases. The Company has not regularly deposited the
service tax and there has been delay in a large number of cases. The
Company has not deposited service tax for the period July, 2003 to
March, 2005. The Company has not deposited amount due for transfer to
Investor Education and Protection Fund.
(b) According to the information and explanations given to us, no
undisputed dues payable in respect of income tax, wealth tax, sales
tax, customs duty, excise duty and cess were in arrears, as at 31st
March, 2005 for a period of more than six months from the date they
became payable except in case of Service Tax as mentioned below:
Name of the Nature of Amount Period to which Due date Date of
statute dues (Rs.) the amount relates payment
Central Service Tax 1,20,000 July 03 25/08/03 Not paid
Excise Act 1,00,000 August 03 25/09/03 Not paid
Income tax 2,09,453 July 2004 to 24/3/2005
TDS Act. September 2004 12/7/2005
respectively
(c) According to the records of the Company and information and
explanations given to us, dues of sales tax which has not been
deposited on account of dispute and the forum where it is pending is as
under:
Name of statute Nature of dues Amount Period to which Forum where
(Rs.) amount relates dispute
is pending
Sales Tax Act Assessment Dues 3,66,000/- 1997-98 First Appeal
Level
decided in favor of the Company.
(x) The accumulated losses at the end of the financial year is more
than 50% of its networth. The Company has not incurred cash losses
during the financial year covered by our audit.
xi) (a) The Company has defaulted in repayment of dues to financial
institutions, banks and debenture holders. The default is made in
respect of Rs 190.39 crores The duration of such default is based on
the dates on which the amount has become due. The default starts from
3rd July, 2003 being the first due date on which the amount has become
due and payable but not paid. In respect of all defaults there are
various due dates on which the installments have became due and payable
and default continues from the due dates to the year end.
(b) The Company has made repayment of dues of Rs. 14,69,02,940/- to
financial institutions, banks and debenture holders with certain delay
during the year.
(xii) Based on our examination and according to the information and
explanations given to us, the Company has not granted loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities. Therefore, the provisions of clause
4(xii) of the Companies (Auditors Report) Order, 2003 are not
applicable to the Company.
(xiii) In our opinion, the Company is not a chit fund or a nidhi mutual
benefit fund/society. Therefore, the provisions of clause 4(xiii) of
the Companies (Auditors Report) Order, 2003 are not applicable to the
Company
(xiv) The Company is not engaged in dealing or trading in shares,
securities, debentures and other investments. All the investments are
held as long term investments. Therefore, the provisions of clause
4(xiv) of the Companies (Auditors Report) Order, 2003 are not
applicable to the Company.
(xv) According to the information and explanation given to us, the
Company has not given any guarantee for loans taken by others, from
banks or financial institutions during the year. Accordingly, the
provisions of clause 4(xv) of the Companies (Auditors Report) Order,
2003 are not applicable to the Company.
(xvi) To the best of our knowledge and belief and according to the
information and explanations given to us, no term loan was availed by
the Company during the year.
(xvii) According to the information and explanations given to us and on
the basis of our examination of the cash flow statement and overall
examination of the balance sheet of the Company, in our opinion no
funds raised on short term basis have, prima facie, been used during
the year for long term investment. The Company has not raised any funds
during the year on long term basis.
(xviii) The Company has not made any preferential allotment of shares
to parties and companies covered in the register maintained under
section 301 of the Companies Act 1956. Accordingly, the provisions of
clause 4(xviii) of the Companies (Auditors Report) Order, 2003 are not
applicable to the Company.
(xix) The Company has created securities in respect of debentures, as
mentioned in the Note No 5(f) of Schedule Q to the Balance Sheet.
(xx) The Company has not raised any money by public issues during the
year. Accordingly, the provisions of clause 4(xx) of the Companies
(Auditors Report) Order, 2003 are not applicable to the Company.
(xxi) Based upon the audit procedures performed and according to the
information and explanation given and representations made by the
management, we report that no fraud on or by the Company had been
noticed or reported during the year.
For Pawan Jain & Associates
Chartered Accountants
Place: Pune Pawan Jain
15-10-2005 M. No 32900. | 