atma steels ltd Auditors report

ANNUAL REPORT 1999-2000 ATMA STEELS LIMITED AUDITORS REPORT TO THE SHAREHOLDERS OF ATMA STEELS LIMITED We have audited the attached Balance Sheet of ATMA STEELS LIMITED as at 31st March,2000 and also the Profit and Loss Account for the year ending on the even date annexed thereto. 1. As required by the Manufacturing and other Companies (Auditors Report) order,1988 issued by the Company Law Board in terms of Section 227 4A) of the Companies Act,1956 and on the basis of such checks and examination of the books and records of the Company as are considered appropriate, and the information and explanations given to us during the course of audit, we report that. i) As informed to us, the company has been maintaining proper records showing full particulars including quantitative details and situation of its fixed assets. However, these records have not been made available to us for our verification. We are informed that no physical verification of the fixed assets could be carried out during the year by the management. In view of this, question of noticing by the management of any discrepancy between book records and physical verification, does not arise. ii) None of the fixed assets of the company have been revalued during the year. iii) As informed to us, physical verification in respect of finished goods, good-in-process, stores, spare parts and raw material could not be conducted during the year by the management. iv) In view of the fact inventory could not be physically verified during the year by the management, our comments on Paragraphs 4 A (iv) and 4 A (v) of the order regarding reasonableness and the adequacy of procedures and discrepancy in physical verification as compared to books records respectively, are not required. v) On the basis of our examination, 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. vi) The Company has taken interest free unsecured loans from companies in which directors are interested. In our opinion the terms and conditions of such loans, prima facie are not prejudicial to the interest of the Company. Except above, no other secured or unsecured loans have been taken by the Company from firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. As informed to us by the management, there is no Company under the same Management, as defined under section 370 (IB) of the Companies Act. 1956. vii) The Company has granted interest free unsecured loans having maximum balance at any time during the accounting year at Rs.19.05 Lakhs to a Company in which directors are interested. In our opinion the terms and conditions of such loans, except these are interest free, are not prima facie prejudicial to the interest of the Company. No secured or unsecured loans, other than as stated above, have been granted by the Company to firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. As informed to us by the management, there is no Company under the same Management, as defined under section 370 (IB) of the Companies Act, 1956 viii) Interest free loans or advances in the nature of loans, have been given by the Company to certain parties as well as to its employees There are no stipulations for the time being as regards to their repayrnent ix) Except purchase of assets for nominal amount, there is no other transaction for purchase and sale of goods, and purchase of material including components, plant and machinery, equipment and other assets, therefore, no comment is required to be made under paragraph 4 A (x) and 4 (xi) of the order. However, during the course of our audit, we observed that company has maintained large cash balances in hand far in excess of its normal business requirement. x) Since no physical verification of inventories could be conducted during the year by the management, unserviceable or damaged stores, raw materials, spares, goods-in-process and finished goods could not be determined. However, management has made provisions for diminution in the value due to possible deterioration in quantity of the inventories lying with the company. It being a technical matter, we are unable to comment on the adequacy of such provisions. xi) On the basis of information given and records produced to us, no deposit has been accepted by the Company. xii) In our opinion, reasonable records have been maintained by the Company for the sale and disposal of realisable scrap. The Company has no by- product. xiii) There was no internal audit during the year xiv) As informed to us, the Central Government, has not prescribed maintenance ot cost records under Section 209 (1) (d) of the Companies Act,1956 for any of the products of the company. xv) According to the records of the company Provident Fund and Employee State Insurance dues have not been deposited during the year with appropriate authority. There were arrears of such dues as at 31st March,2000 at Rs.10.17 Lakhs. xvi) On the basis of information and explanation given to us,except Sales Tax & Excise duty there were no undisputed amounts payable in respect of Income tax, wealth tax, Custom duty as at 31st March, 2000, which was outstanding for the period of more than six months from the date they became payable. However, undisputed liability in respect of Sales Tax & Excise duty for the aggregate sum of Rs.55.89 Lakhs outstanding for more than six months, have remained unpaid. xvii) According to information and explanation given to us and based on our examination of the records, no personal expenses have been charged to the revenue account other than those payable under contractual obligation or generally accepted business practices. xviii) The Company has become 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. Further reference has also been made to Board for Industrial Reconstruction (BIFR) under Section 15 of SICA,1985. xix) There was no trading activities during the year. 2. Further 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 purpose of our audit. However, the supporting details in respect of contingent liabilities have not been made available to us as such we are not in a position to comment on the correctness of the said liability. ii) 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 such books. iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of Accounts. iv) Attention is drawn to the Significant Accounting Policy A(1) regarding presentation of accounts on the principles, applicable to going Concern basis, despite full erosion of net worth of the company and closure of operations. We are unable to express our opinion on the applicability of the going concern concept in this situation as it depends on the outcome of Revival/Rehabilitation Scheme pending with BIFR. v) Attention is further invited to the following observations/notes to accounts as referred to in Schedule 16 :- a) Non- creation of the security in respect of non-Convertible Debenture shown under Secured Loans b) Note No. 16, regarding non-furnishing of information in respect of dues of small scale Industrial Undertaking (SSI) as required under Schedule Vl to the Companies Act,1956. c) Note No.19, regarding interest-free inter-corporate loan made to a company which in our opinion contravenes the provision of section 372-A of the Companies Act,1956 in respect of not charging of interest thereon from 31st October.1998. vi) In our opinion, the profit and Loss Account and the Balance Sheet comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. vii) Subject to following notes referred to in Schedule 16 :- a) Note No.A (ii) of Significant Accounting Policy whereby the Company on the basis of opinion of technical expert has treated its production process as continuous process within the meaning of Foot Note No. 7 of Schedule XIV of the Companies Act, 1956 and accordingly provided the Depreciation on Plant and Machinery at the rate meant for continuous process. It being a technical matter we are not in a position to comment thereon. b) Note No.B (3) regarding non-provision of interest aggregating to Rs.990.84 lakhs accrued for earlier years on the loans of financial institutions, Bank and debenture-holders which has resulted in understatement of liabilities and accumulated losses to the same extent. Further accrued liability towards interest on the outstanding loans for the financial year 1998-99 and 1999-2000 under report have also not been provided and ascertained as the management is of the opinion that no such provision is required as the existing provision for interest and liabilities otherwise ascertained but not provided for, is sufficient enough to over the total liabilities on this account. As the revival/ rehabilitation Scheme submitted by the Company to BIFR has not been finalised, therefore, we are not in a position to comment thereon. c) Note No. B (5) regarding provisions for doubtful debtors, loans and advances. In the absence of confirmation/reconciliation of accounts from the parties concerned, we are unable to comment on the adequacy of such provision for doubtful of recovery. d) Note No. B (6) regarding provision for diminution in the value of stocks which being purely technical matter as such we are not in a position to comment on its adequacy. e) Note No. B (7) regarding non-provision for full liability towards power and electricity which is not ascertainable In our opinion and to the best of our information and explanation given to us, the said accounts read together with other Accounting Policies and Notes thereon give the information as 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 the Company as at 31st March, 2000 and ii) In case of the Profit and Loss Account of the Loss of the Company for the year ended on that date. for B.K.KAPUR AND COMPANY Chartered Accountants (B.K.KAPUR) F.C.A. Partner Ghaziabad, August 28, 2000