konar organics ltd Auditors report

KONAR ORGANICS LIMITED ANNUAL REPORT 2002-2003 AUDITORS REPORT To the Members of Konar Organics limited 1. We have audited the attached Balance Sheet of konar organics Limited as on 31st March 2003 and also the profit and loss Account for the year ended as on that date annexure 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. 2. We have 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 disclosure 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. 3. As required by the manufacturing and other companies (Auditors Report) Order, 1988 issued by the Central Government of India in terms of sub- section (4A) of section 227 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. Further to our comments in the Annexure reffered 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. II) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appears from our examination of those books. III) The Balance Sheet and the profit and loss account dealt with by this report are in agreement with the books of accounts. IV) In our opinion, the Balance Sheet and profit and loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. V) On the basis of written representations received from the directors, as on 31st March, 2003 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2003 from being appointed as a director in terms of clause(g) of sub-section (1) of section 274 of the Companies Act, 1956. VI) In our opinion and to the best of our information and according to the explanations given to us and subject to note No. B-11 regarding non disclosure of particulars in respect of amounts due to Small Scale Industrial undertakings as per the requirements of the schedule VI of the companies act, 1956 and subject to note no B13D regarding Gratuity the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. 1. In the case of Balance Sheet, of the state of affairs of the company as at 31st March, 2003 and 2. In the case of profit and loss account, of the loss for the year ended on that date. For VENKAT MALLI AND ASSOCIATES Chartered Accountants Sd/- V Mallikarjuna Reddy Partner Place : Hyderabad Date : 25-11-2003 ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF KONAR ORGANICS LTD. Annexure referred to in paragraph 3 of the report of the auditors to the members of Konar Organics Limited for the year ended 31st, March 2003. i) The Company is in the process of updating the records showing full particulars including quantitative details and situation of all the fixed assets. As explained and informed to us, the Fixed Assets of the Company were physically verified by the management during the financial year and no material discrepancies were noticed on physical verification. ii) None of the Fixed Assets have been revalued during the Financial Year. iii) We were informed that the stock of finished goods, stores Raw materials and goods in process have been physically verified by the management during the financial year. In our opinion, the frequency of verification is reasonable. iv) The procedures of physical verification of Block followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. v) According to the information and explanation given to us the discrepancies in stocks have been properly dealt with in the books of accounts. vi) In our opinion and on the basis of our examination, the valuation of stock is fair and proper in accordance with normally accepted accounting principles. vii) 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. viii) The rate of interest and other terms and conditions of the loans given by the company to the parties listed in the register maintained under section 301 of the companies Act 1956. ix) As per information and explanations given to us, the company has not granted any loans or advances in the nature of loans to any party except salary advance. x) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of stores, Raw materials including components, plant and machinery, equipment and other assets and with regard to the sale of goods. xi) According to the information and explanations given to us, there are no transactions of Purchase/Sale of goods and materials made in pursuance of contracts or agreements entered in the register maintained under Section 301 of the Companies Act 1956. xii) As explained to us, the company has regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goads. Adequate provision has been made in the accounts for the loss arising on the items so determined. xiii) As the company has not accepted the deposits from the public the question of complying with provision of Section 58A of the Companies Act, 1956 and the companies (Acceptance of Deposit) 1975 does not arise xiv) In our opinion and according to the information given to us reasonable records have been maintained by the company for the sale and deposal of scrap As per the information given to us Company has no by products. xv) In our opinion and as explained to us the company is having adequate internal audit system commensurate with its size and nature of business. xvi) We have broadly reviewed without making a detailed examination, the books of accounts and records maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209(1)(d) of Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been maintained. xvii) There were some delay in payments of P F. and E.S.I. to Central Government. xviii) According to the information and explanations given to us there are no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax and Excise Duty as at the last day of the financial year which are outstanding for a period of more than six months from the date they became payable except Income tax of Rs. 3,49.846/-, Excise duty Rs. 5,80,240/- and sales tax Rs. 1,68,260/- xix) According to the information and explanations given to us, no personal expenses of employees or Directors have been charged to revenue accounts, other than those payable under contracted obligations or in accordance with generally accepted business practice, xx) The company is a sick industrial company within the meaning of clause of (0) of Subsection (1) of Section (3) of the Sick Industrial Companies (Special Provision) Act, 1985. As per information given to us so far the reference was made to the board for industrial and financial reconstruction. For VENKAT MALLI AND ASSOCIATES Chartered Accountants Sd/- Y. MALLIKARJUNA REDDY Partner Place : Hyderabad Date : 25-11-2003