solarson industries ltd Auditors report

SOLARSON INDUSTRIES LIMITED AUDITORS REPORT To The Members of Solarson Industries Ltd. 1. We have audited the attached Balance Sheet of Solarson Industries Limited as at 31st March, 1997 and also the Profit & Loss Account of the Company for the year ended on that date. 2. As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Central Government under Section 227 (4A) of the Companies Act, 1956 and on the basis of such examination of the books and records of the Company as we consider appropriate and the information and explanations given to us during the course of our audit, we report that, in our opinion: i) Fixed Assets Register needs to be updated. Certain fixed assets of the Company have been physically verified by the Management at reasonable intervals as per companys programme of physical verification and no material discrepancy between book records and physical inventory have been noticed on such verifications. ii) None of the fixed assets of the Company have been revalued during the year. iii) Physical verification of stock of stores, spare parts, raw materials and finished goods (except in-transit and lying with other parties) have been conducted by the Management during the year at reasonable intervals. In our opinion the frequency of physical verification is reasonable. iv) The procedure of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business. v) The discrepancies noticed on physical verification of stock as compared to book records were not material and have been properly dealt with in the books of account. vi) The valuation of stocks (read with Note No.5 of Schedule 18 regarding valuation of finished goods not cleared from factory as at the end of the year) is fair and proper and in accordance with the normally accepted accounting principles excepting finished goods which have been valued at Realisable Value. Valuation of stocks is on the same basis as in the preceding year. vii) The terms and conditions of (wherever stipulated) unsecured demand loans taken by the Company from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company. As informed, there is no Company under the same management as defined under section 370(1B) of the Companies Act, 1956. viii) The Company has not granted any loan to Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. As informed, there are no Companies under the same management as defined under section 370 (1B) of the Companies Act, 1956. ix) In respect of interest free loans and/or advances in the nature of loans to employees and others principal amount and interest wherever applicable have been recovered generally regularly as stipulated. x) In our opinion and having regard to the information and explanations given that some of the items purchased are of special nature and comparative quotations with regard to these are not available. The internal control procedures are being strengthened to be commensurate with the size of the company and nature of its business with regard to purchase of stores and spares, raw material including components, plant and machinery, equipments and other assets and for sale of goods. xi) In our opinion and according to the information and explanations given to us, there is no purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained u/s 301 of Companies Act, 1956 and aggregating during the year to Rs. 50,000/- or more in respect of each of the party. xii) As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. Adequate provision has been made in the accounts for the loss arising on items so determined. xiii) The Company has not accepted any deposits within the meaning of section 58A of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975. xiv) In our opinion, reasonable records have been maintained by the Company for the sale and disposal of realisable scrap. The Company did not have any realisable by-product. xv) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. xvi) As explained to us the Company is not required to maintain cost records for any of its product under Section 209(1)(d) of the Companies Act, 1956. xvii) As per the records of the Company, Provident Fund dues except Rs. 807,447 (since deposited Rs.721,137) have generally been regularly deposited with the appropriate authorities. As explained, provisions of Employees State Insurance Act are not applicable to the Company. xviii) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise duty were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable except for Sales Tax amounting to Rs. 2,602,746. xix) During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices, we have not come across any personal/expenses other than expenses under contractual obligations and/or generally accepted business practices, which have been charged to revenue account. xx) Subject to our observations herein below in paragraph (d), the Company is not 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. xxi) In respect of purchases for resale, we are informed that there are no damaged stocks. We further report that: 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) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of accounts. c) In our opinion, proper books of account as required by law have been kept by the Company in so, far as appears from our examination of such books subject to Note No. 17 referred to herein below. d) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to Note No.17 regarding non-provision of liability for gratuity and leave encashment amounting to Rs.5.08 lacs and Rs. 6.95 lacs (previous year amount Rs.3 08 lacs and Rs.5.03 lacs) respectively, Note No.8 regarding non-provision of interest on Term Loans from financial institutions and banks (amount unascertained) and resultant impact thereof, Note No. 7 (i) regarding non-reconciliation of accounts of interest payable to certain body corporates, banks with their resultant impact on appropriateness of provision of interest liability, Note No.7(ii) and 7(iii) regarding pending reconciliations of the Debtors and our inability to comment on realisability of some of the debtors and advances as stated in said note, Note No. 14 regarding reconstructed books and non-availability of certain records, impact of the aforesaid notes on the profit for the year and the year end net assets of the Company are currently not ascertainable, and read together with other notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view: i) in so far as it relates to the Balance Sheet, the state of affairs of the Company as at 31st March, 1997, and ii) in so far as it relates to the Profit Loss Account, of the Loss of the Company for the year ended on that date. Place: New Delhi Date : 14th October, 1997 For LODHA & CO. Chartered Accountants (N. K. Lodha) Partner