gandhinagar electronics ltd Auditors report

GANDHI NAGAR ELECTRONICS LIMITED AUDITORS REPORT We have audited the attached Balance Sheet of GANDHI NAGAR ELECTRONICS LIMITED (Formerly SHAW WALLACE ELECTRONICS LIMITED) as at 30th June,1998 together with the Profit & loss Account of the Company for the year ended on that date annexed thereto. We 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 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 paragraph 1 above we report that: (a) We have obtained all the information and explanations which to our 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 appears from our examination of the books. (c) The Balance sheet and profit and loss account dealt with by this report are in agreement with the Books of Accounts. (d)(i) As stated in note no 12 the company has invested in a partnership firm M/s Silvan Roche Electronics Rs 180.98 lakhs in which it is a partner. The Firm has negative networth. We are therefore not in a position to comment on the recoverability of this amount. (ii) As stated in note no 16 of non provision of liability of gratuity and leave salary. (iii) As stated in note no 8 balances under heads Sundry Debtors,Sundry Creditors,Loans and Advances and banks are taken at book figures due to non-availability of confirmation from the parties. (iv) Subject to the above observation, in our opinion and to the best of our confirmation and according to explanations given to us the said 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 as at 30th June,1998. and (ii) in the case of the profit and loss Account of the loss for the year ended on that date. FOR S.A.Pradhan & Co Chartered Accountants S.A. Pradhan partner Place: Mumbai Date : 16th Sept,1998 ANNEXURE TO THE AUDITORS REPORT (Referred to in pare1 of our report of even date) 1.The company has maintained proper records to show full particulars including quantitative and situation of fixed assets. The Fixed assets have been physically verified by the management at reasonable intervals except for machinery of C.I.F value of Rs23.58 lakhs in bond for which confirmation is not obtained.No serious discrepancies were noticed on such verification. 2. None of the fixed assets have been revalued during the year. 3. The stocks of finished goods, stores, spares parts and raw material has not been physically verified by the management at reasonable intervals during the year. 4. In our opinion and according to the information and explanations given to us their procedure of physical verification of stocks followed by management are reasonable and adequate in relations to the size of the com- pany and the nature of the business 5. The discrepancies noticed on physical verification of stocks as compared to the books of accounts. 6. In our opinion and on the basis of our examination of the valuation of stock such valuation is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. As per past practice certain items of raw materials have been valued at latest price. 7. According to the information and explanation given to us the company has taken loan from parties listed in the registers maintained under section 301 and 370(1-B) of Companies Act,1956. There are no stipulations regarding interest and repayment of loans. 8.In respect of loans secured or unsecured to companies, firms or other parties in register maintained under section 301 of the Companies Act,1956. No stipulations have been made for such loans. 9.In respect of loans or advances in the nature of loans giver, by the company the repayment of principal and the payment of interest have not been stipulated. 10.In our opinion and according to information and explanations there have been no adequate control procedures commensurate with the size of the company and the nature of its business with regard to purchase of stores raw materials including the components ,plant & machinery equipment and other assets and for the sale of our goods. 11. In our opinion and according to information and explanations given to us there have been no purchase of goods and materials and sale of goods, materials and services made in pursuance of contract or arrangements entered in the register maintained under section301 of the company Act,1956 aggregating during the year to Rs50000/- or more in respect of each party. 12.As explained to us the company has a system of determining unserviceable and damaged stores and raw materials and the provisions has been made in the accounts for the loss arising on the item so determined. 13.As explained to us the company has not accepted any deposit from public to which the provisions of section 58A of the Companies Act,1956 and the Companies (Acceptance of deposits) Rules 1975 applies. 14.In our opinion reasonable records have been maintained by the company for the sale and disposals of scraps. According to the information and explanations given to us the Companies operations do not generate any by products. 15.The company has no internal audit system. 16.As informed to us the central government has not prescribed maintenance of cost record under section 209(1)(d) of the Companies Act,1956 in respect of the activities of the Company. 17. According to the record of the Company, Provident Fund, and Employee State Insurance dues have been generally regularly deposited during the year with few arrears of payment with appropriate authorities. 18. In respect of the undisputed Income-tax,Wealth tax,custom-duty there were no amount outstanding as on 30th June,1998 which have remained unpaid upto six months from the date on which they become payable. The Company has a policy of authorising expenditure based on reasonable checks and controls. The policy is intended to ensure that the expenses are authorised on the basis of contractual obligations or accepted business practices having regard to the companies business need and exigencies.In terms of this observation, we have not come across any expenses charged to revenue accounts which in pour opinion and judgement and to the best of our knowledge and belief could be charged as regarded as personal expenses. 20. The company is sick industrial company within the meaning of clause(O)sub section(1) of section3 of the Sick industrial Companies(special provisions) Act,1985 as per attached Balance Sheet. 21. As explained to us in respect of goods purchased for resale, the company has a reasonable system for the determination of damaged and provide for loss thereof. FOR S.A.PRADHAN CHARTERED ACCOUNTANT S.A.PRADHAN PARTNER PLACE:MUMBAI DATE : 16th Sept,1998