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SHREE VALLABH GLASS WORKS LIMITED
ANNUAL REPORT 2000-2001
AUDITORS' REPORT
To
The Shareholder
We have audited the attached Balance Sheet of Shree Vallabh Glass Works
Limited as at 31st March, 2001 and also the Profit & Loss Account of the
Company for the year ended on that date annexed thereto and report that:
1. As, required by the Manufacturing and Other Companies (Auditor's Report)
Order 1998 issued by the Central Government in terms of Section 227 (4A) of
the Companies Act, 1956 we give in the annexure a statement on the maters
specified in paragraphs 4 & 5 of the said order.
2. Further to our comments in the Annexure referred to in paragraph 1
above, we report that:
A. We have obtained all the information and explanation which to the best
of our knowledge and belief were necessary for the purpose of our audit.
B. Subject to item No.5 regarding accounting of Gratuity on cash basis in
Schedule 'Q' "Significant Accounting Policies", 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 the books.
C. The Balance Sheet and Profit & Loss Account dealt with by this report
are in agreement with the books of account.
D. In our opinion, the Balance Sheet and Profit & Loss Account comply with
Accounting Standards referred to in sub-section (3c) of section 211 of the
Companies Act, 1956 (expect) Accounting Standard 2 - Valuation of
Inventories, Accounting Standard 11 - Accounting of the effects of change
in Foreign Exchange rates and Accounting Standard 15 - Accounting for
Retirement Benefits) that have been made mandatory by the Institute of the
Chartered Accountants of India.
E. The Company has been declared a Sick Industrial Company on 27-8-1987
under Sick Industrial Companies (Special Provision) Act, 1985. The
rehabilitation scheme prepared by Operating Agency ICICI Ltd. was
sanctioned on 21-1-1992 by the Board of Industrial and Financial
Reconstruction (BIFR) and was under implementation. The BIFR has further
directed to ICICI Ltd., the Operating Agency to submit the revised
rehabilitation scheme the company submitted the revised rehabilitation
scheme which was not accepted by the Operating Agency and BIFR. The opinion
formed by BIFR has been forwarded to High Court of Gujarat and registered
as winding up Company Petition. The Company has filed an appeal against the
same with the Appellate Authority. However on 25-4-2001, the Appellate
board Finally dismissed the appeal against order of BIFR and the orders if
BIFR are restored and consequently winding up proceedings are now being
taken up by Gujarat High Court. The Appellate Authority passed the order
dismissing the appeal only after expiry of financial year, in view of this
Company is not a going concern. However the accounts have been prepared on
going concern basis and the Balance Sheet and Profit & Loss Accounts do not
include any adjustment relating to recoverability and classification of
recorded assets amount or to the amounts and classification of liabilities.
F. (i) No provision is made in respect of the following-Schedule 'R':
a) Interest payable on borrowings from Financial Institutions and Banks
suggested in the Scheme. The actual liability of interest as on 31-3-2001
is not determined {Note No.1 (iii)}
b) Disputed Sales-Tax liability of Rs.126.26 lacs (Note No.6)
c) Disputed Excise Duty liability of Rs.203.93 lacs for earlier year {Note
No.7 (ii)}
d) Differential Custom Duty of Rs.105.62 lacs for earlier year (Note No.8)
e) Gratuity of Rs.312.42 lacs (including interest) in respect of employees
who have left the services of the Company upto 31-3-2001 {Note No.10 (a) &
(b)}
f) Rs.0.32 lacs payable to workers of Limkheda awarded by the Labour Court
{Note No.10 (c)}
g) Property Tax of Rs.19.20 lacs of Salwad Gram Panchyat for the period
1983-84 to 1990-91 {Note No.10 (d)}
h) Lease rent of land at Anand in GIDC Estate amounting to Rs.0.97 lacs
{Note No.10 (e)}
i) Bonus payable to employees amounting to Rs.20.41 lacs as on 31st March,
2001 {Note 10 (f)}
j) Loans and Advances of Rs.36.51 lacs considered doubtful of recovery
{Note No.11}
k) Salary, Wages and other relevant payments payable to employees of Boisar
Unit for the period 01-01-1993 to 31-30-1993 and for employees of Anand
Unit for the period 01-03-1993 to 31-03-1993. Amount unascertained {Note
No.12}
(ii) No adjustment is made in the accounts for accured liability consequent
on change in the rate of Foreign Exchange as on 31-3-2001. Amount not
determined {Note No.2}
Without considering Item No.F (i) (a) (k) and F(ii) above, the effect of
which could not be determined, the loss carried to Balance Sheet and
Current Liabilities as on 31-3-2000 would have been higher by Rs.825.67
lacs and Reserve and Surplus would have been lower to that extent had the
provisions for other items of (A) been made.
(iii) Attention is invited to the following notes in Schedule 'R' regarding
a) Non-redemption of Debentures amounting to Rs.24.62 lacs and non-payment
of interest thereon of Rs.26.55 lacs as decided in the meeting of
Debentureholders held on 30-09-95 (Note No.3)
b) The factory at Anand being remained closed, physical verification of
Stock not done by the management and closing stocks of all items considered
as per stock records for the purpose of valuation as on 31-3-2001 {Note
No.13 (ii)}
c) Valuation of stock on 31-3-2001 not done in accordance with the revised
Accounting Standard (AS-2) valuation of Inventories issued by The Institute
of Chartered Accountants of India {Note No.13 (ii)}
d) Arrears of depreciation on assets to the extent of Rs.1762.75 lacs under
section 205 of the Companies Act 1956 to be set of first against future
profit before declaration of dividend {Note No.14}.
e) Non-receipt of confirmations from parties to whom Loans & Advance were
mate Creditors and from banks and Financial Institution for loans {Note
No.15}
f) Non-receipt of confirmation from the Banks for Bank Balances aggregating
to Rs.37.61 lacs {Note No.16}
g) Non-adjustment of fixed deposit amount of Rs.26.01 lacs with Bank of
Baroda, Anand as the same has been disputed by the Company {Note No.17}
h) Reference is also invited to our observation under paragraph (13) of
our report under Manufacturing & Other Companies (Auditors Report) Order,
1998 which is set out hereafter {Note No.9}
G. The Company has failed to repay its deposits or interest thereon on due
date or redeem its debentures on due date and the failure exceeds one year
as at 31st March 2001. However, as per legal opinion obtained by the
Company, disqualification is not attracted before 13th December, 2001 and
on the directors for re-appointment in the Company in terms of clause (g)
of sub-section (1) of Section 274 of the Companies Act, 1956.
Subject to the foregoing, in our opinion and to the best of our information
and according to the explanation given to us the said accounts together
with other 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 the case of the Balance Sheet, of the state of the affairs of the
company as at 31st March, 2001 and
(ii) In the case of Profit & Loss Account of the loss for the year ended on
that date.
For C.C. Chokshi & Co.
Ahmedabad Chartered Accountants
Date: 27th July 2001 Partner
ANNEXURE TO THE AUDITOR'S REPORT
(Referred to in paragraph 1 of our report of even date of the accounts for
the year ended on 31st march, 2001 if Shree Vallabh Glass Work Limited)
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 not been physically verified by the management
during the year.
2. None of the fixed assets have been revalued during the year.
3. The factory at Anand being remained Closed, Physical verification has
not been conducted by the management during the year in respect of the
stock of finished goods, stores, spares, raw materials and packing
materials.
4. As the physical verification of the stock could not be carried out, the
question of examining the reasonableness and adequacy of the procedures of
physical verification of stocks does not arise and we are unable to express
our opinion.
5. Since physical verification of stocks has not been done, the discrepancy
as compared to book records could not be ascertained and we are unable to
express our opinion.
6. On the basis of our examination of the stock records, we are of the
opinion that the valuation of stocks is fair and proper in accordance with
the normally accepted accounting principles and is on the same basis as in
the preceding year except non-compliance of Accounting Standard-2,
Valuation of Inventories (Refer Note 13 (ii), Schedule 'Q').
7. The Company has not taken any loans from Companies. firms or other
parties listed in the register maintained under section 301 of the
Companies Act, 1956. there is no Company under the same management within
the meaning Section 370(1B) of the Companies Act, 1956.
8. The Company has not granted any loans to Companies, firms or other
parties listed in the register maintained under Section 301 of the
Companies Act, 1956. There is no Company under the same management within
the meaning Section 370 (1B) of the companies Act, 1956.
9. In past the Company has given advance salary aggregating to Rs.9.14 lacs
to employees who have now left the service of the Company. The said amount
has been considered as doubtful of recovery and shown under loans and
advances as on 31-3-2001. The Company has not given any loans to anyone
during the year.
10. In our opinion and according to the information and explanations given
to us, there are adequate internal control procedure commensurate with the
size of the Company and the nature of its business with regard to sale of
goods. There were no purchase of any items during the year.
11. There are no transactions during the year of purchase of goods and
materials and sale of goods, materials and service made in pursuance of
contracts or arrangements entered in the Register maintained under Section
301 of the Companies Act, 1956.
12. As explained to us the Company has a procedure for the determination of
unserviceable or damage stores, spare parts, packing materials and raw
materials and finished goods. No such items were determined during the
year.
13. During the year Company has:
a) retained deposits of Rs.0.47 lacs renewed during the year 1983-84
without issue of an advertisement or delivering the statement in lieu of
advertisement to the Registrar of Companies.
b) failed to repay deposits which matured upto 31-3-2001 Rs.112.73 lacs
according to the scheme sanctioned by the BIFR.
c) not deposited or invested an amount of Rs.16.91 lacs as required under
Rule 3 A.
14. The Company did not have any manufacturing activity during the year
and we are informed that the Company's manufacturing process does not
generate any realisable by-products. The Company has not maintained
reasonable records for scrap sold during the year.
15. There is no internal audit system in the Company for the year under
review.
16. The maintenance of cost records has not been prescribed by the Central
Government under Section 209 (1) (d) of the Companies Act, 1956 for the
products of the Company for the year under review.
17. According to the information and explanations given to us except
undisputed Sales-Tax of Rs.342.52 lacs and no other undisputed Income-Tax,
Wealth Tax, Customs Duty and Excise Duty were outstanding as at 31st March,
2001 for a period of more than six months from the date they became
payable.
18. According to the information and explanations given to us, no personal
expenses of employees or directors have been charged to revenue account,
other than those payable under contractual obligations or in accordance
with generally accepted business practice.
19. The Company is a Sick Industrial Company within the meaning of Clause
(O) of sub-section (1) of Section 3 of the Sick Industrial Companies
(Special Provisions) Act, 1985 and a reference has been made to the Board
for Industrial and Financial Reconstruction under Section 15 of that Act.
For C.C. Chokshi & Co.
Ahmedabad Chartered Accountants
Date: 27th July 2001 Partner
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