avs industries ltd Auditors report

AVS INDUSTRIES LIMITED AUDITORS REPORT THE MEMBERS OF AVS INDUSTRIES LIMITED We have audited the attached Balance Sheet of M/S. AVS INDUSTRIES LIMITED as at 31st March 1999 and the Profit & Loss Account of the company for the year ended on that date annexed there to 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 as per the information and explanation furnished to us and the books of records examined by us in the normal course of audit, we enclose in a annexure a statement on the matter specified in paragraph 4 and 5 of the said order. 2. We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our Audit. 3. In our opinion proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of such books. 4. The Balance sheet and profit & Loss Account are in agreement with the Books of Account. 5. Further, we report that: (a) Provision for gratuity is accounted on estimated basis instead of actual valuation, which is not in consonance with the AS -15 Accounting for Retirement Benefits, issued by The Institute of Chartered Accountants of India, (refer Note No. 3 of Schedule T). (b) Some Balances of Sundry debtors, sundry creditors, Deposites and Loan & advances are subject to confirmation and reconciliation (refer Note No. 8 of Schedule T). (c) Interest on loan and advances given and taken has been provided, wherever stipulation to that effect is there (refer Note No. 9 of Schedule T). (d) No provision has been made for doubtful debts in respect of sundry debtors for Rs. 21,49,092/- (Previous year Rs. NIL). As a result of which the loss for the year and accumulated losses are understated, to the extent of Rs. 21,49,092 (refer Note No. 15 of Schedule T). (e) No Provision has been made for Rs. 1,15,64,000 on account of fall in market value of Long term Investments. As a result of which the loss for the year and accumulated losses are understated to the extent of Rs. 1,15,64,000/- (refer Note No. 16 of Schedule T). 6. In our opinion and according to the information and explanations given to us, the said Accounts, (which are prepared on a going concern basis in spite of the Balance of the accumulated losses exceeding the Companys paid up Share Capital and Reserves) subject to Paragraph 5 stated above and read together with the Notes and Statement of Significant Accounting Policies, give the information required by the Companies Act, 1956 in the manner so required and present a true and fair view. a) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 1999 and b) In the case of Profit & Loss Accounts of the Loss for the year ended on that date. For KHANDELWAL JAIN & CO Chartered Accountants PLACE: MUMBAI (MAHENDRA MUNDRA) DATE : 20th April, 1999 PARTNER ANNEXURE TO THE AUDITOR REPORT Statement referred to in paragraph 1 of our Report of even date to the Members of AVS INDUSTRIES LIMITED on the accounts for the year ended on 31st March,1999. 1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets for this purpose except additions of the year 1998-99 which are in the process of updation. As per the information and explanation given to us, the company has carried out physical verification of fixed assets. In our opinion, the frequency of verification is reasonable having regard to the size of company and nature of its business. To the best of our knowledge, no material discrepancies were noticed on verification. 2. None of the fixed assets have been revalued during the year. 3. The stock of finished goods, stores, raw material,components and spare parts have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stock, the frequency of the verification is reasonable. 4. In our opinion and according to the information and explanations given to us procedure of physical verification of stock followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. 5. In our opinion, discrepancies noticed on verification between physical stock and book records were not material in relation to operations of the Company and the same have been properly dealt with in the books of account. 6. In our opinion, valuation of the above mentioned stock is fair and proper and is in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. 7. The Company has not taken any loan, secured or unsecured from Companies, firms or other parties listed in the Register maintained under Section 301 of the companies Act, 1956 and from the Companies under the same management as defined under section 370(1B) of the Companies Act,1956. 8. The Company has not granted any loans, secured or unsecured to Companies; firm or other parties listed in the register maintained under section 301 of the Companies Act, 1956 and to companies under the same management as defined under section 370(1B) of the Companies Act, 1956. 9. In respect of loans and advances in the nature of loans given by the Company, where stipulations have been made, the parties are generally repaying the principal amounts as stipulated and have also been regular in payment of interest wherever applicable. 10. In our opinion, and according to information and explanations given to us, there are adequate internal control procedure 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, equipments and Other assets and for the sale of goods. 11. There were no transaction of purchase of goods and materials and sale of goods, materials, 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 party. 12. As informed to us, the company has regular procedure for determination of unserviceable or damaged stores, raw material and finished goods. Adequate provision has been made in the accounts for the loss arising on the items so determined. 13. According to the information and explanations given to us the Company has not accepted any deposits during the year from the public within the meaning of the provisions of Sec. 58(A) of the Companies Act, 1956 and rules made thereunder. 14. In our opinion, reasonable records have been maintained by the Company for the sale and disposal of realisable scrap. We are informed that the Company does not have any disposable by products. 15. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. 16. As explained to us, the maintenance of cost records has not been prescribed by the Central Government under section 209(1) (d) Companies Act, 1956. 17. The company has been regular in depositing Provident Fund dues with the appropriate authorities except on certain occasion, were delay have been occured. We are informed that the Company is not required to make any contribution under the Employees State Insurance Scheme. 18. In our opinion, and according to the information and explanations given to us, there are no undisputed and outstanding amounts payable in respects of Income tax, Wealth tax, Sales tax, Customs duty and Excise duty as on 31st March, 1999 for a period of more than six months from the date they became payable, except sales tax of Rs. 1,37,000/-. 19. According to the information and explanations given to us, and records examined by us, no personal expenses have been charged to revenue account, other than those payable under contractual business practice. 20. The Company has become a Sick Industrial Company within the meaning of the Clause (o)-of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. We are informed that the company is in the process of making necessary reference to the board for Industrial & Financial Reconstruction. 21. In our opinion and according to the information and explanations given to us the Company has a reasonable system of recording receipts, issues and consumption of materials and stores and allocating material consumed to the relative jobs commensurates with ItS size and nature of its business. 22. In our opinion and according to the information and explanations given to us the Company has a reasonable system of authorisation at proper levels and an adequate system of internal control commensurate with the size of the Company and nature of its business on issue of stores to jobs. For KHANDELWAL JAIN & CO. Chartered Accountants Place: MUMBAI (MAHENDRA MUNDRA) Date : 20th April, 1999 PARTNER