kongarar integrated fibres ltd Auditors report

KONGARAR INTEGRATED FIBRES LIMITED Annual Report 1999 - 2000 AUDITORS REPORT To the members, Ladies and Gentlemen, 1. We have audited the Balance Sheet of M/s. KONGARAR INTEGRATED FIBRES LIMITED, Kalayamputhur Post, Palani TK as at 31st March 2000 and the relative Profit and Loss Account for the year ended on the date, both signed by us under reference to this report and report that: 1.1 In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Balance Sheet and the Profit and Loss account read with statement on significant Accounting Policies and the Notes to the Accounts, give the information required by the Companies Act, 1956 in the manner so required. Subject to: a) Regarding non provision of sales tax for prior years amounting to Rs. 42.99 lacs (Refer Note No.11) b) Regarding non reconciliation / confirmation of balances of parties of Sundry Debtors, Sundry Creditors Loans and Advances and Financial Institutions the provision there of for Bad and Doubtful/Debts/Advances if any required Amount non quantifiable (Refer Note No. 13) c) Regarding charging of Management Fees and Public issue expenses amounting to Rs. 3.71 lacs. (Refer Note No. 15) d) Regarding non provision of Interest on Interest, Penal Interest and other charges if any for Financial Institutions. (Refer Note No. 18) As referred to in "Notes on Accounts" and the consequent effect of the deviation as disclosed in the notes, the Balance Sheet gives a true and fair view of the state of affairs as at 31.3.2000 and the Profit and Loss account gives a true and fair view of the Loss of the company for the year ended on that date. 1.2 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. 1.3 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 those books. 1.4 The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the books of account. 1.5 In our opinion the Balance Sheet and profit and loss account comply in all materials respect with the Accounting Standards referred to in section 211 of (3C) of the Companies Act 1956 to the extent applicable. 2. As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by the Company Law Board and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we further report that: 2.1 The Company has maintained proper records to show full particulars including quantitative details and situation of fixed assets. The fixed assets of the company have been physically verified by the management during the year and no serious discrepancies between the book records and the physical inventory have been noticed. 2.2 The fixed assets of the Company have not been revalued during the year. 2.3 The stock-in trade (including raw materials) and stock of stores and spare parts of the Company at all its location have been physically verified by the management during the year. In our opinion, the procedures 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 its business. The discrepancies between the physical stocks and the book stocks which have been property dealt with in the books of account, were not material. In our opinion and on the basis of our examination the valuation of stocks is fair and proper and in accordance with the normally accepted accounting principles and is on the same basis as in the previous year except as stated in No. 12 to Notes forming Part of accounts. 2.4 No loans secured or unsecured have been taken by the company, the terms and conditions of which are prima facie prejudicial to the interest of the company from companies firms and other parties listed in the register maintained under section 301 and from companies under the same management as defined under section 370 (1-B) of the Companies Act 1956. 2.5 The company has not granted any loan secured on unsecured to companies, firms or other parties listed in the register maintained under section 301 and to companies under the same management as defined under section 370 (1- B) of the Companies Act, 1956. 2.6 Employees to whom loans and advances in the nature of the loans have been given by the company are repaying the principal amounts as stipulated or as scheduled. The loans are interest free. 2.7 In our opinion, there is adequate interregnal control, procedures commensurate with the size of the company and the nature of its business for the purchase of stores, raw materials including components, plant and machinery equipment and other assists and for safe of goods. 2.8 In our opinion, the transactions of purchase of goods and materials and sale of goods made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregrating during the year to Rs. 50,000/- or more in respect of each party were reasonable having regard to relevant market prices for such goods or materials are the prices at which transactions for similar goods of raw materials were made with other parties. As explained to us, the company has not sold any services during the year. 2.9 As explained to us, unservicable are damaged stores, finished goods and raw materials and determined by the company. Adequate provisions have been made in the accounts for the loss arising on the items so determined. 2.10 In the case of public deposits received by the company, the provisions of section 58A of the Companies Act, 1956 and the applicable rules framed thereunder have been complied with. 2.11 In our opinion, reasonable records have been maintained by the company for the sale and disposal of realisable scrap/ by-products where applicable and significant. 2.12 In our opinion, the companys present internal audit system commensurate with the size and nature of its business. 2.13 On the basis of the records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the central government under section 209 (1)(d) of the companies act 1956, have been maintained by the company However, we are not required to carry out and have not carried out any detailed examination of such accounts and records. 2.14 According to the records maintained by the company, Provident fund dues is not regularly deposited with appropriate authorities amounting to Rs. 363914/- for the year from April `99 to March `2000. 2.15 According to the books and records examined by us and information and explanation given to us there was no undisputed amounts payable in respect of Income Tax, Wealth Tax, Customs Duty, Excise Duty, Sales Tax which have remained outstanding as at 31st March, 2000 for a period exceeding six months from the date they become payable. 2.16 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 accepting business practice. 2.17 The company is a Sick Industrial Company within the meaning of section 3(1)(O) of the Sick Industrial Companies (Special provisions) Act, 1985. For M. S. Jagannathan & Visvanathan Chartered Accountants Place: Coimbatore (Sd.) M. J. Vijayaraaghavan Date: 17.08.2000 Partner