equipment conductors cables ltd Auditors report

EQUIPMENT CONDUCTORS & CABLES LIMITED ANNUAL REPORT 1999-2000 AUDITORS REPORT TO THE MEMBERS OF EQUIPMENT CONDUCTORS AND CABLES LIMITED, NEW DELHI We have examined the attached Balance Sheet of M/s EQUIPMENT CONDUCTORS AND CABLE LIMITED as at 30th June 2000 and also the Profit and 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 (Auditors Report) Order, 1988 issued by the Company Law Board in terms of Section 227(4a) of the Companies Act, 1956 we enclose in the Annuxure a statement on matters specified in paragraph 4 and 5 of the said order. 2. Further to our comments in Annexure referred to in paragraph 1 above, we state 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 accounts as required by yaw have been kept by the Company, so far as it appears from our examination of such books. c) The Balance Sheet and Profit and Loss Account referred to in this report are in agreement with the books of Accounts. d) In our opinion, the Profit and Loss Account and Balance Sheet comply with the Accounting Standards referred to in sub sec. (3C) of sec. 211 of the Act, except as regards the following: i) Finished Goods, Raw Materials and Stores & Spare parts have been valued inclusive of duties and taxes, which are subsequently recoverable from the taxing authorities, to comply with the provisions of section 145A of Income Tax Act, 1961 which is contrary to the requirements of the Accounting Standard-2 given by the Institute of Chartered Accountants of India. ii) Non-Provision of Gratuity liability (Rs.8.15 Lacs) and Leave Encashment as required by the Accounting Standard - 15 given by the Institute of Chartered Accountants of India. e) In our opinion and to the best of our information and according to the explanations given to us the said accounts subject to, the valuation of finished goods as referred to in para d.1) herein above as well as under Note 1.B) of Notes to Accounts, as a result of which the profits of the company are reduced by Rs.12.22 lakhs and subject to non provision of Gratuity Liability and leave encashment as referred to in para d.ii) herein above as welt as Note 3(a) & 3(c) of Notes to Accounts 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 affairs of the company as at 30th June, 2000 and ii) in the case of the Profit & Loss Account of the loss for the year ended on that date. FOR R. KHATTAR & ASSOCIATES Chartered Accountants Date : 29.12.2000 R. Khattar Place : New Delhi Partner. ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 1 of our report of even date: 1. The company for the current year has maintained proper records to show full particulars of fixed assets. The fixed assets have been physically verified by the management and no material discrepancies between book records and the physical record were noticed. 2. None of the Fixed Assets of the company have been revalued during the year. 3. As per the information given to us, the stocks of Finished Goods, Stores, Spare Parts and Raw Materials have been physically verified by the management at the year-end. 4. The procedure of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the company and the nature of the business. 5. The discrepancies noticed on verification of stocks as compared to book records, which in our opinion were not material, have been properly dealt with in the companys books. 6. In our opinion and on the basis of our examination the valuation of stock is fair and proper and also in accordance with the accounting standard laid down by the Institute of chartered Accountants of India and is on the same basis as in the previous year subject to point 1.B) of Schedule R, of Notes forming part of the Balance Sheet as at 30" June 2000. 7. A sum of Rs. 80.85 lakhs is recoverable from the suppliers of Raw Materials as referred to at point no. 12 of the Notes to the Accounts. Apart from the above, interest free loans have been provided to the staff members which are being recovered as stipulated. 8. In our opinion there is an adequate internal control procedure Commensurate with the size of the company and the nature of the business for the purchase of stores, spares and materials including components, plant and machinery equipment and other assets and with regard to sale of goods. 9. In our opinion and according to the information and explanations given to us, the company has not entered into any transaction of purchase of goods and raw materials 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 and aggregating during the year to Rs. 50,000 or more in respect of each party. 10. As explained to us, the company has a regular procedure for the determination and provision of damaged or unserviceable Raw materials and Finished goods and Store. Further provision for the loss wherever necessary has been made in the accounts. 11. In our opinion and according to the information and explanation given to us, the company has not accepted and deposits from public under section 58A of the Companies Act, 1975 and Deposit Rules, 1975. 12. As explained to us, the Company has no by-products. However, reasonable records have been maintained for the sale and disposal of realisable scrap. 13. As per information and explanations given to us, the company is not having an independent Internal Audit system. However, in our opinion the internal controls are adequate and commensurate with the size and the nature of the business of the company. 14. According to information and explanation given to us, maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 have not been prescribed for the company. 15. The Company is not regular in depositing provident fund dues with the appropriate authorities. Such Provident Fund Dues outstanding as on 30th June 2000 amounting to Rs.2,42,186/- has been subsequently deposited. However in respect of Employees State Insurance dues the company is generally regular in making deposits with the appropriate authorities. 16. According to information and explanation given to us there was no undisputed amounts payable in respect of income tax, wealth tax, sales tax, custom duty and excise duty which have remained outstanding as at 30th June 2000 for a period of more than six months from the date they become payable. 17. According to information and explanation given to us and as certified by the management, no personal expenses have been charged to the revenue account by the company other than those payable under contractual obligation or in accordance with generally accepted business practices have been charged to the revenue accounts. 18. The company is not a Sick industrial company within the meaning of clause (O) of Sub-Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1956. FOR R.KHATTAR & ASSOCIATES Chartered Accounts Dated : 29.12.2000 (R. Khattar) Place : New Delhi Partner