arihant threads ltd Auditors report

Annual Report 1999-2000 ARIHANT THREADS LTD. AUDITORS REPORT The Members, ARIHANT THREADS LIMITED, We have audited the attached Balance Sheet of Arihant Threads Limited as on 31st March, 2000 and the Profit & Loss Account for the year ended on that date annexed thereto both signed by us under reference to this report and 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) Proper Books of Accounts, as required by law, have been kept by the Company so far as appears from our examination of such books. c) The Balance Sheet referred to in this report are in agreement with the Books of Accounts. d) In our opinion the Balance Sheet & Profit & Loss A/C comply with Accounting Standards referred to subsection 3(c) of Section 211 of the Companies Act, 1956, to the extent applicable subject to Note no. A(10) in respect of Method of Accounting. e) We report that - i) Note No. 7 regarding Depreciation on Plant & Machinery has been provided as rates prescribed for Continuous Process Plant. Had the Depreciation been provided as the General Plant & Machinery, the Depreciation would have been Rs. 367.40 lacs instead of Rs.204.22 lacs. ii) Note No. 11 regarding Capitalisation of Interest of Rs. 35.20 lacs for the period 1999-2000 during which assets were used in commercial production. Depreciation on said increase in the value of Plant & Machinery has been provided amounting to Rs. 1.82 lacs. iii) Note No. A(10) regarding non provision, of Gratuity Rs. 2.07 lacs and leave with wages Rs. 4.14 lacs, interest on overdue bills Rs. 0.11 lacs, non provision of interest and lease rental in case of leasehold land Rs. 10.59 lacs and Rs. 0.001 lacs respectively, commission on Export sale Rs. 16.81 lacs, being accounted for on cash basis. iv) Note No. 10 regarding balances with scheduled bank in current/deposit accounts and cash credit A/c. We further Report that had the observations made by us in (i), (ii) and (iii) above has been considered, the loss would have been Rs. 176.39 lacs (as against reported figure of Profit Rs. 53.90 lacs). Reserve & Surplus would have been Rs. 815.55, lacs as against the reported figure of Rs. 991.94 lacs The total gross block of Fixed Assets would have been Rs. 4336.29 lacs (as against the reported figure of Rs. 4371.50 lacs). In our opinion and to the best of our information and according to the explanation given to us the said account subject to above and read together with significant accounting policies and notes on accounts (as per Schedule S) gives the information required by the Companies Act, 1956 in the manner so required and give true & fair view. i) In so far as it relates to Balance Sheet of the State of affairs of the Company as at 31st March, 2000, and ii) In so far as it relates to Profit and Loss Account of the Profit for the year ended on that date. As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by the Central Government and on the basis of such checks as we considered appropriate and according to information and explanations given to us, we further state that: 1. The Company has maintained proper records to show full particulars including quantitative details and situation of fixed assets. These fixed assets were physically verified by the Management at the year end and no material discrepancies were noticed between the Books records and the physical inventory. 2. The Fixed Assets of the Company have not been revalued during the year. 3. The stocks of Raw Materials have been physically verified during the year by the management. In our opinion the frequency of verification is reasonable. 4. The procedures of physical verification of stock followed by the Management are reasonable and adequate to the size of the Company and its nature. 5. No discrepancies were found during the physical verifications of stock. 6. On the basis of our examination of stock records, we are of the opinion that the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles. 7. 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 (1 of 1956) and defined under Sub- Section (1B) of Section 370 of the Companies Act, 1956 (1 of 1956) . 8. The Company has granted loans/ advances unsecured free of interest to Companies, listed in the register maintained under Section 301 of the Companies Act, 1956 (1 of 1956) and also to the Companies under the same management as defined under sub-section (1B) of the Section 370 of the Companies Act, 1956 (1 of 1956). 9. In respect of loans or advances in the nature of loans given to employees, the principal amount are recovered as stipulated but no interest is being charged. In respect of other loans/ advances given by the Company, there is no stipulation in respect of interest and principal are repayable on demand. 10. 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 & machinery, equipment and other assets, and also with regard to the sale of goods. 11. In our opinion and according to information and explanations given to us, the transactions of purchase of goods and materials and sales of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 as aggregating during the year amounting to Rs. 50,000/- or more in respect of each party, have been made at prices which are reasonable having regard to prevailing market prices for such goods, materials or services or the prices at which transactions for similar goods, materials or services have been made with other parties. 12. During the year under review, no part of the stores, raw materials and other goods was determined as unserviceable or damaged by the Management. 13. The Company has not accepted any deposits from the public under the Companies (Acceptance of Deposits) Rules, 1975. 14. In our opinion, reasonable records have been maintained by the Company for the sale and disposal of its realisable by-products and scraps. 15. In our opinion, the Company has internal Audit system commensurate with its size and the nature of the business. 16. We have broadly reviewed the books of accounts maintained by the Company pursuant to the order by the Central Government for the maintenance of cost records u/s 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts & records have been maintained. 17. According to the records of the Company, provident fund and employees state insurance dues have been regularly deposited during the year with the appropriate authorities. 18. According to information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty was outstanding as at 31st March, 1999 for a period of more than six months from the date it becomes payable. 19. According to information and explanations given to us no personal expenses of employees or Directors have been charged to revenue account except those payable under contractual obligations. 20. The Company is not a sick industrial company within the meaning of Clause (o) Sub Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. 21. In respect of trading activities of the Company, there are no stocks of damaged goods. for Dass Khanna & Co. Chartered Accountants Place: CHANDIGARH (RAKESH SONI) Dated: 4th August, 2000 PARTNER