mikado textile industries ltd Auditors report

MIKADO TEXTILE INDUSTRIES LIMITED ANNUAL REPORT 1998-99 AUDITORS REPORT TO THE SHAREHOLDERS. TO THE SHARE HOLDERS We have audited the attached Balance Sheet of MIKADO TEXTILE INDUSTRIES LIMITED as at 31st March, 1999 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 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us we give in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order. 2. Further to our comments in the Annexure referred to in paragraph 1 above we report that: a) The financial statement of the Company is prepared on going concern assumption. In view of the substantial accumulated losses in excess of the paid up capital & reserves and the legal liabilities. the ongoing operations of the Company is dependent largely upon the scheme approved by the Board of Industrial and Financial Reconstruction. b) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes our audit: c) 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 the books; d) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of accounts; e) In our opinion and to the best of our information and according to the explanations given to us and subject to note no. 3,4,7,8,10 & 12 in part B of schedule 14 and read together with the accounting policies and notes thereon given in schedule 14 give the information required by Companys 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 31 st March. 1999 and. ii) in the case of Profit and Loss Account of Loss for the year ended on that date. For GUPTA SHYAM & CO. Chartered Accountants Sd/- Place: Mumbai SHYAM GUPTA Dated: 26th October, 1999. Proprietor ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 1 of our report of even date) 1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets subject to the update for the additions during the year (and assets given on rent). The fixed assets have been physically verified by the management at the end of the year except assets given on rent and that no material discrepancies were noticed on such verification as compared with the aforesaid records of Fixed Assets. 2. None of the Fixed Assets has been revalued during the year. 3. Physical verification of finished goods, semi finished goods stores and spare parts and raw materials have been conducted by the management during the year at reasonable intervals. In our opinion the frequency of verification is reasonable. 4) In our opinion and according to the information and explanation given to us the procedures of physical verification of stocks as followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business. 5) The discrepancies noticed on physical verification in compare to book record, which were not material and have been properly dealth with in the books of account. 6) On the basis of examination of the Stock records, we are of the opinion that the valuation of stock is fair and proper and in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. 7) As per the information given to us the company has accepted interest free unsecured loan on current account basis from the Companies listed in register maintained under Section 301 of the Companies Act, 1956. In our opinion in view of the long term association with such group companies, the terms are not prime facie prejudicial to the interest of the company 8) As per the information given and record produced before us, the company has given loans and advance on current account basis to Companies. firms or other parties listed in the register maintained under Section 301 of the Companies Act 1956. However no terms and condition are decided about interest & repayment of the same. 9). The parties including employees. to whom loan or advances in the nature of loans are given are repaying the principal amounts as stipulated subject to Note No. 12 of part B of Schedule 1 and are generally regular in payment of interest where applicable. 10. In our opinion and according to the information and explanations given to us, internal control procedure are to be strengthened commensurate with the size of the company and nature of its business for the purchase of Stores, Raw material. Job work and Sale of goods. 11. In our opinion and according to the information and explanations given to us, the transactions of purchases of goods and materials and sale of goods, materials and services made with sister concern are done without any contract and arrangement not properly entered in the register maintained u/s 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50.000/- or more in respect of each party however the transactions have been made at prices which are reasonable having regard to the prevailing market prices for such goods and materials and services or the prices at which transactions for similar goods, materials or services have been entered into with other parties or as available with the company. 12. As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods and adequate provision has been made in the accounts for the loss arising on the items so determined. 13. As per information given, the Company has not accepted any deposit from public during the year. 14. In our opinion no proper records have been maintained by the Company for sale and disposal of realisable scrap. We are informed that the Company does not generate any by- products. 15. As per the information given to us the Company did not have internal audit system during the year under review. 16. As explained to us the Company is not required to maintain cost records under Section 209 (1) (d) of the Companies Act, 1956. 17. According to the records of the Company, the Provident Fund and Employees State Insurance dues have not been regularly deposited during the year with the appropriate authorities. There were arrears of providend fund & employee state insurance amounting to Rs. 505360/- & 9322/-respectively at the end of the year. However management has informed that these arrears are subsequently paid by Company. 18. According to the information and explanations given to us, no undisputed amounts payable in respect of Income tax, Sales Tax, Custom duty and Excise duty were outstanding as at the end of the financial year for a period of more than six months from the date they became payable. 19. According to the information and explanations given to us, no personal expenses of employees or directors have been charged to Revenue Account other than those payable under contractual obligations or in accordance with generally accepted business practice. 20. As per the information and explanation given to us, 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 Provision) Act. 1985. A scheme of rehabilitation submitted by the Company to the BIFR is under consideration as informed to us by the management. 21. In relation to the trading activities, we are informed that there were no damaged goods at the end of year 22. In respect of services rendered (Job Work) we observe that system of recording, consumption & allocation of material etc. to the relative jobs are to be more strengthened. 23 . Other paras of this order are, in our opinion, not applicable to this company. For GUPTA SHYAM & Co. Chartered Accountants Sd/- Place: Mumbai. SHYAM GUPTA Date : 26th October, 1999. Proprietor