asian bearing ltd Auditors report

ASIAN BEARING LIMITED ANNUAL REPORT 2001-2002 AUDITORS REPORT To the Members of Asian Bearing Ltd 1. We have audited the attached Balance Sheet of Asian Bearing Ltd at 30th June 2002 and also the annexed Profit & Loss Account for the year ended on that date annexed thereto. Our responsibility is to express an opinion on these Financial Statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence of supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as were as evaluating the overall financial statement presentation. We believe that audit provides a reasonable basis for our opinion. 3. As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of Sec.227 (4A) of the Companies Act 1956, we give in annexure a statement on the matters specified in paragraphs 4 & 5 of the said order. 4. Further to our comments in the Annexure referred to above, we 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) 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 these books; c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account; d) On the basis of written representations received from Directors as on 30th June 2002 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30th June, 2002 from being appointed as a Director in terms of clause (g) of Sub-Section (I) of Sec.274 of the Companies Act 1956. e) In our opinion, the Balance Sheet & Profit & Loss Account dealt with by this report comply with the Accounting Standards referred to in Sub-Section (3C) of Sec.211 of the Companies Act 1956, to the extent applicable except the following: f) Interest on term loans, amounting to Rs.465.44 lacs (previous year Rs.620.59 lacs)pertaining to the period after fixed assets are commissioned has been capitalized instead of charging to revenue account which is not in accordance with the accounting standard recommended by the Institute of Chartered Accountants of India in the earlier year accounts. The company has also not provided depreciation on fixed assets for the earlier years amounting to Rs.367.66 lacs (previous year Rs.490.21 lacs). Consequent to the above, the loss carried over to the balance sheet is less by Rs.833.10 lacs (previous year Rs.1110.80 lacs) and gross block of fixed assets is more by Rs.833.10 lacs (previous year Rs.1110.80 lacs) g) Subject to the forgoing in our opinion and to the best of our information, and according to the explanations given to us, the said accounts statements read with the notes and schedules give the information required by the Companies Act 1956, in the manner so required and give a true and fair view in confirmity with the accounting principles generally accepted in India. i) in case of the Balance Sheet, of the state of affairs of the company as at 30th June, 2002, and ii) in the case of Profit & Loss Account, of the Loss for the year ended on that date. For ITTA PARTHASARATHY & CO. ITTA PARTHASARATHY Partner Place: Chennai Date : 22.11.2002 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph (3) of our report of even date.) 1. The Company has maintained proper records to show full particulars including quantitative details and situation of Fixed Assets. The Company has a policy of verifying Fixed Assets according to phased programme designated to cover all the items over a period of three years. Pursuant to the programme a physical verification was carried over during the year by the management and no material discrepancies have been noticed on such verification. 2. The Fixed Assets of the Company have not been revalued during the year. 3. The stock of finished goods, stores, spare parts and raw materials excluding materials in transit and lying with third parties, have been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of the verification is reasonable. 4. In our opinion and according to the information and explanations given to us, 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. 5. The discrepancies between the physical stocks and book records, which are not significant, have been properly dealt within the books of account. 6. In our opinion and on the basis of our examination of the stock records, the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles and is on the basis as in the previous year. 7. Except for interest free unsecured loan from the promoters, the company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Sec.301 of the Companies Act 1956, or from Companies under the same management within the meaning of Sec.370 (1B) of the Companies Act 1956, where the rate of interest and other terms and conditions are in our opinion, not prima facie prejudicial to the interest of the company. 8. The Parties to whom loans or advances in the nature of loans have been given by the company are repaying the amount as stipulated. 9. There are adequate internal control procedures commemorate with the size of the company and the nature of its business for the purchase of stores, raw materials, components, plant & machinery, equipment and other assets and for the sale of goods. 10. According to the information and the explanations given to us, the transactions of purchase of goods and materials, and sale 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, and aggregating during the year to Rs.50000/- or more in respect of the each party, have been made at prices, which in our opinion, are reasonable having regard to prevailing market prices for such goods, materials or services the prices at which similar transactions have been made with other parties, and the Companys business needs and exigencies. 11. Unserviceable or damaged stores, raw materials or finished goods, are determined by the Company and provisions for loss wherever necessary, has been made in the accounts. 12. The Company has not accepted deposits from the Public, hence the compliance of Reserve Bank of India directives and provisions of Sec.58-A of the Companies Act, 1956 does not arise. 13. In our opinion, reasonable records have been maintained by the Company for the sale and disposal of scraps. The Company has no by-products. 14. The company has an internal audit system commemorate with its size and the nature of its business. 15. We have reviewed the Books of Account maintained by the Company pursuant to the rules prescribed by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956, in respect of manufacture of the products of the company and are of the opinion that prescribed Accounts and Records have been made and maintained. 16. There was a delay in the remittance of Provident Fund and Employees State Insurance dues to the authorities concerned. The company has not remitted Provident Fund dues of Rs. 48.82 lacs, ESI dues of Rs. 7.44 lacs and TDS dues of Rs.10.90 lacs to the respective authorities as on 30th June 2002. 17. According to the information and explanations given to us and the Books and Records examined by us, there are no undisputed amounts, payable in respect of Income Tax, Sales Tax, Customs duty and Excise duty outstanding as at 30th June 2002 for a period exceeding six months from the date they become payable. 18. According to the information and explanations given to us and on the basis of books of account 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 accepted business practice. 19. The company is a Sick Industrial Company within the meaning of section 3(1) (O) of Sick Industrial companies (Special Provisions) Act 1985. The earlier sanctioned scheme of BIFR vide its order dated 11.6.97 offering OTS could not be compiled with by the company. As a result, the BIFR in its hearing held on 15th April, 2002 has directed the company that if Financial institutions and promoters agree then revised comprehensive revival proposal based on OTS of FIs dues with means of finance fully tied up may be submitted to the operating agency for consideration. We are informed that the company is working out the modalities in this direction and would soon submit a revival proposal to the Operating Agency. For ITTA PARATHASARATHY & Co Place: Chennai Date : 22.11.2002 ITTA PARTHASARATHY Partner