ravi spinning ltd Auditors report

RAVI SPINNING LIMITED ANNUAL REPORT 2000-2001 AUDITORS REPORT TO THE MEMBERS OF RAVI SPINNING LIMITED We have audited the attached Balance Sheet of RAVI SPINNING LIMITED as at 31st March, 2001 and the Profit and Loss Account 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 Annexure a statement on the matters specified in paragraph A and 5 of the said order. (2) Further to our comments in the Annexure referred to in paragraph 1 above: (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 account as required by law have been kept by the Company so far as appears from our examination of such books. (c) The Balance Sheet and Profit & Loss Account referred to in this report are in agreement with the books of account. (d) In our opinion, the Balance Sheet and Profit & 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, to the extent applicable. (e) In our opinion, and based on information and explanations given to us, none of the directors are disqualified as on 31st March, 2001 from being appointed as directors in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and (f) In our opinion and to the best of our information and according to the explanation given to us, the said accounts subject to Note No. 3 regarding non provision of depreciation on its fixed assets for the current year amounting to Rs.12,27,389/-. Note No. 4 regarding non-provision of Interest on loans amounting to Rs.46,37,763/-, Note No.6 regarding non-provision for doubtful debts and other recoverables of Rs.2,41,627/- resulting in understatement of loss for the year by Rs.61,06,769/- and read together with the other notes thereon give the information required by the Companies Act, 1956 in the manner so required and subject to point No. 20 of the Annexure to this report regarding presentation of accounts on principles applicable to a going concern despite wiping out of net worth and company having been declared sick by BIFR 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 31/03/2001; and (ii) in the case of Profit and Loss Account of the LOSS of the company for the year ended on that date. For and on behalf of KARNAVAT & CO. CHARTERED ACCOUNTANT Place: Mumbai (NIRMAL KUMAR BURAD) Date : 30/06/2001 (PARTNER) ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 1 of our report of even date: 1. The Company has maintained the proper records showing full particulars including quantitative details and situation of Fixed Assets. We are informed that these fixed assets have been physically verified by the Management at reasonable intervals during the year. No material discrepancy was noticed on such verification. 2. None of the fixed assets have been revalued during the year. 3. As explained to us the stock of finished goods, stores and spare parts and raw materials have 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, the procedures followed by the management for such physical verification of stocks are reasonable and adequate in relation to the size of the company and nature of its business. 5. According to the records produced to us for our verification no material discrepancies were noticed on physical verification of stocks as compared to the book records. 6. In our opinion, on the basis of our examination, the valuation of these stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding years except that method of valuation of stocks has been changed from `at cost(in case of finished goods `at market value) to `lower of cost or net realisable value as required by the Accounting Standard-2 issued by the Institute of Chartered Accountants of India. However consequent to this change, there is no material impact on the profits/loss for the year. 7. According to explanation and information given to us, the company has taken interest free unsecured loan from parties listed in the register maintained under section 301 of the Companies Act, 1956. No other loans were obtained from companies under the same management as defined under sub section (1B) of Section 370 of the Companies Act, 1956. The other terms and conditions are not prima facie prejudicial to the interest of the company. 8. According to the information and explanations given to us, the company has not granted loans to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 or to companies under the same management as defined under sub section (1B) of Section 370 of the Companies Act, 1956. 9. The company has given interest free loans and advances in the nature of loans to staff members. These are not regular in repayment of principle amount. We are informed that Company is taking steps to recover the same. 10. In our opinion and according to the information and explanations given to us there are generally adequate internal control procedure commensurate with the size of the company and nature of its business with regard to purchase of stores, raw materials including components, plant and machinery equipments and other assets and for sale of goods. 11. As far as we have been able to ascertain in our opinion and according to the information and explanations given to us, the transactions of purchase and sale of goods and materials or services made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year Rs. 60,000/- or more in value in respect of each party have been made at the prices which are reasonable having regard to prevailing market price for such goods and materials or services where such market prices are available or prices at which transactions for similar goods and materials or services have been made with other parties. 12. As explained to us, the company has a regular procedure for the determination of on serviceable or damaged stores, raw materials and finished goods. Adequate provision has been made in accounts for the loss arising on the items so determined. 13. During the period under review the company has not accepted any deposits from the public which attracts the provisions of section 58A of the Companies Act, 1956. 14. In our opinion, reasonable records have been maintained by the company for the sale and disposal of the realisable by-products and scrap. 15. In our opinion, the company do not have an internal audit system, commensurate with the size and nature of its business. 16. We are informed that maintenance of cost records has not been prescribed for the company by the Central Government under section 209(1)(d) of the Companies Act, 1956. 17. According to the records of the company, provident fund dues have been generally deposited regularly during the year with appropriate authorities. 18. According to the information and explanations given to us, there were no undisputed amounts payable in respect of income-tax, wealth tax, sales tax, customs duty and excise duty outstanding as at the last day 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, and on the basis of records examined by us, on test check basis, no personal expenses have been charged to revenue account other than those payable under the contractual obligations or in accordance with generally accepted business practices. 20. 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 Provisions) Act, 1985. The Company has been declared as sick company by the Board for Industrial and Financial Reconstruction under that Act. The Central Bank of India has been appointed as operating agency for formulating a rehabilitation scheme for its revival. For and on behalf of KARNAVAT & CO. CHARTERED ACCOUNTANTS Place: Mumbai. (Nirmal Kumar Burad) Date : 30/06/2001 PARTNER