charminar granites exports ltd Auditors report

CHARMINAR GRANITES EXPORTS LIMITED ANNUAL REPORT 2001-2002 AUDITORS REPORT TO THE MEMBERS OF CHARMINAR GRANITES EXPORTS LIMITED We have audited the attached Balance Sheet of CHARMINAR GRANITES EXPORTS LIMITED, a at 31st Match, 2002 and the Profit and Loss Account of the Company 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. 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. 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 in terms of the information and explanations given to us and on the basis of such checks as we considered appropriate, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2. Further to our comments in the annexure referred to in para one above we report that: 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 account as required by law have been kept by the Company so far as appears from our examination of such books except for accounting of leave salary on payment basis. c) The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the books of account; d) In our opinion subject to non-provision of leave salary and interest on term loan and working capital loans and to the best of our Information and according to the explanations given to us, the profit and loss account and balance sheet comply with accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. e) On the basis of the information and explanations given to us and representations received from the Company, we report that none of the Directors is disqualified from being appointed as a Director of the Company under clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. f) We invited the attention of members to : i) as stated in Note No. 11 (5) letters of confirmation of balances have not been obtained for sundry debtors, sundry creditors and advances. ii) as stated in Note No. 11 (4a) interest on term loan and working capital has not been provided. iii) as stated in Note No. 1 (7) no provision has been made towards leave salary, In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the accounting policies and 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 Balance Sheet of the state of affairs of the Company as at 31st March, 2002; and ii) in the case of Profit and Loss Account of the LOSS for year ended on that date. For NATARAJA IYER & CO., CHARTERED ACCOUNTANTS HYDERABAD, DATE : 02.09.2002 PARTNER ANNENURE TO AUDITORS REPORT Referred to to paragraph I of our Report of even data: 1. The Company has maintained the fixed assets register which needs to be updated. We are informed that the Management has not carried out physical verification and hence discrepancies between physical and book balances could not be ascertained. 2. None of the Fixed Assets has been revalued during the year. 3. As Informed the stocks of raw materials, finished goods, stores and spares have been physically verified by the management as at the end of the year. 4. In our opinion, the company should have procedures of periodical physical verification of stocks keeping in view to the size of the Company and the nature of its business. 5. No material discrepancies have been noticed on physical verification of stocks as compared to book balances in so far as appears from our examination of the books. 6. In our opinion, the valuation of stocks is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as in earlier year. 7. The Company has not taken any loans secured or unsecured from companies, firms or other parties listed in the register maintained under. Section 301 of the Companies Act, 1956 or to the companies under the same management as defined under Sun-section (1-B) of Section 370 of the Companies Act, 1956. 8. The Company has not granted any 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 the Companies under the same management as defined under Sub-section (1-B) of Section 370 of the Companies Act, 1956. 9. The company has not given loans to any party. 10. In our opinion, internal control procedures need to be strengthened to make them commensurate with the size of the Company and nature of its business for purchase of stores, raw materials including components, plant and machinery, equipment and other assets and for the sale of goods. 11. there are no transactions of purchase of goods, materials and services and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the companies act, 1956. 12. We are informed that closing stock of finished goods include defective damaged granite tiles of 79,663 Sq. Ft. and no value assigned to the said stock while determining the value of closing stock. 13. The Company has not accepted any deposit from the Public. 14. We are informed that the company accounts for scrap as and when sold and no other quantity records are maintained. The Companys manufacturing activities do not generate any by-products. 15. The Company is yet to establish an internal audit system. 16. 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. 17. The Company during the year is not regular in depositing the Provident Fund and Employees State insurance dues with the appropriate authorities. The outstanding dues as at the end of the year is Rs. 54,008 towards PF and Rs. 12,517 towards ESI. 18. In our opinion and according to the information and explanations given to us, there are no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty as at the last day of the accounting year outstanding for a period of more than six months from the date they became payable. 19. According to the information and explanations given to us and the records of the Company examined by us, no personal expenses have been charged to revenue account other than those payable under contractual obligations or in accordance with generally accepted business practice. 20. 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 necessary reference to BIFR as required under the act has been made. For NATARAJA IYER & CO., CHARTERED ACCOUNTANTS HYDERABAD, DATE : 02.09.2002 PARTNER