The Members of
NAYAGARA PAPER PRODUCTS (INDIA) LIMITED, Report on the Accounts for the Year
ended 31st March, 2003 in Compliance with Section 227 (2) of the Companies Act, 1956.
We have audited the attached Balance Sheet of M/S NAYAGARA PAPER PRODUCTS
(INDIA) LIMITED as at 31st March 2003 and the Profit & Loss Account for the
year ended 31st March 2003 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. 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.
A. We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit.
B. In our opinion proper Books of Accounts as required by Law have been kept by the
Company so far as it appears from our examination of such books.
C. The Balance Sheet and the Profit & Loss Account referred to in this Report are
in agreement with the Books of Accounts.
D. In our opinion the Balance Sheet and Profit & Loss Account comply with the
requirement of Accounting standards refferred to in Section 211 (3C) of the Companies Act,
E. As per the information and explanation given to us, none of the Directors of the
Company are disqualified from being appointed as a Director under Clause (g) of
sub-section (1) of section 274 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 subject to notes thereon give the information required by
the Companies Act, 1956 in the manner so required and give a true and fair view:
I. In case of Balance Sheet, of the State of affairs of Company as at 31st March 2003
II. In case of the Profit & Loss Account, of the Loss of the Company for the year
ended on that date.
As required by the Manufacturing and Other Companies (Auditor's Report) Order, 1988
issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956,
and in terms of the information and explanations given to us and the Books and records
examined by us in the normal course of audit and to the best of our knowledge and belief,
we further report that:
1. The Company has maintained proper records showing full particulars including
quantitative details and situation of fixed assets. The fixed assets of the Company have
been physically verified by the Management during the current year and no serious
discrepancies between the book and physical inventory have been noticed.
2. The fixed assets of the Company have not been revalued during the year.
3. The stocks of finished goods, stores, spares and raw material of the Company were
verified by the management at reasonable intervals during the period.
4. The procedure of physical verification of stocks followed by the management during
the period are reasonable and adequate in relation to the size of the Company and the
nature of its business.
5. The discrepancies noticed on physical verification of stocks, compared to books
records, and have been properly dealt with in the books of account.
6. On the basis of examination of stocks, in our opinion the valuation of these stocks
is fair and proper in accordance with the normally accecpted accounting principles.
7. The Company has taken unsecured loans from Companies under the same management as
defined under sub-section (1B) of section 370 of the Companies Act, 1956. How ever the
terms and conditions of such loan are not prima - fade prejudicial to the interests of the
8. The Company has granted loans, secured or unsecured to companies, firms or other
parties listed in the Register maintained under section 301 of the Companies Act, 1956 or
to Companies under the same management within the meaning of Section 370 (1B) of the
Companies Act, 1956. How ever the terms and conditions of such loans, are not prima - fade
prejudicial to the interests of the Company.
9. In respect of loans and advances in the nature of loans given by the Company,
parties are not repaying the Principal Amounts as stipulated and have also been irregular
in payment of interest where applicable.
10. 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.
11. According to the information and explanations given to us, the transactions of
purchase and sale of materials made in pursuance of contracts or arrangements entered in
the Register maintained under Section 301 of the Companies Act, 1956 and aggregating
during the period to Rs.50,000 or more in respect of each party have been made at prices
which are reasonable having regard to prevailing market prices for such goods and
materials of the prices at which transactions have been made with other parties.
12. As explained to us, the company has a regular procedure for the determination of
unservicable or damaged stores and finished goods.
13. The Company has not accepted any deposits from the public within the meaning of
Section 58A of the Companies Act, 1956.
14. In our opinion reasonable records have been maintained by the Company for the sale,
disposal of realisable Scrap and by products.
15. The Company has no internal audit system commensurate with the size and nature
of its business.
16. We have been informed that cost records have not been prescribed by the Central
Government for the products of the Company under section 209 (1) (d) of the Companies Act,
17. The Provisions of Provident fund and Employees States Insurance Act are
applicable to the company which are not compiled with.
18. There are disputed amounts payable in respect of Income Tax amounting to Rs.297
lakhs during the year, which are outstanding for a period of more than six months from the
date of they become payable.
19. On the basis of test checks carried out during the course of Audit and according to
the information and explanations given to us, no personal expenses (other than those
payable under contractual obligation or in accordance with generally accepted business
practices) appear to have been charged to revenue
20. The Company is a sick industrial company within the meaning of Section 3(1) (o)
of the Sick Industrial Companies (Special Provisions) Act, 1985.
||for M. G. RAO & CO.,
|Place : Hyderabad
|Date : 30-07-2003