elb schliff india ltd Auditors report

ELB SCHLIFF (INDIA) LIMITED ANNUAL REPORT 2001-2002 AUDITORS REPORT TO THE SHAREHOLDERS To, The Members ELB SCHLIFF (INDIA) LTD. We have audited the attached Balance Sheet of ELB SCHLIFF (INDIA) LTD, as at 31st March,2002 and also the Profit and Loss Account of the Company for the year ended on that date. Preparation of these financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 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 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 well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion: 1. As required by the Manufacturing and other Companies (Auditors Report) Order,1988 issued by the Company Law Board in terms of Section 227 (4-A) of the Companies Act,1956. we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2. Further to our comments in the Annexure referred to in paragraph 1 above, we state that: a) We have obtained all 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 Accounts as required by law have been kept by the Company, so far as appears from our examination of the books of the Company. c) The Balance Sheet and Profit and 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 complies with the mandatory Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956. e) On the basis of written representation received from the Directors other than nominees of Financial Institutions and taken on record by the Board of Directors, we report that none of the said Directors are disqualified as on 31st March, 2002 from being appointed as directors in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act,1956. f) Although the Company has become a sick company as referred in clause (20) of the annexure to the report herein after, the accounts are prepared on a going concern basis in view of the Companys long term plans. Subject to the above, in our opinion and to the best of our information and according to the explanation given to us, the said Balance Sheet and Profit & Loss Account read together with the notes thereon give the information required by the Companies Act,1956, in the manner so required and present a true and fair view: i) in so far as it relates to the Balance Sheet of the state of affairs of the Company as at 31st March,2002 and, ii) in so far as it relates to the Profit and Loss Account of the "loss" of the Company for the year ended on that date. For: RAJENDRA & CO, Chartered Accountants. Mumbai R.J. SHAH Dated: 10th October,2002. Partner ANNEXURE TO THE AUDITORS REPORT RE: ELB SCHLIFF (INDIA) LIMITED REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE 1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets and the same is in the process of being updated. As explained to us, all the fixed assets have been physically verified by the Management at the end of the accounting year and no material discrepancies were noticed on such physical verification as compared to the book records. In our opinion, the frequency of such verification is reasonable, having regard to the size of the Company and nature of its assets. 2. None of the Fixed Assets have been revalued during the year. 3. Physical verification has been conducted by the management at reasonable intervals in respect of the stock of raw materials, components, stores, spares and finished goods, except for Stock lying with the outsiders in respect whereof, the Company has obtained necessary Confirmations. In our opinion, the frequency of such verification is reasonable having regard to the size of the Company and nature of its business. 4. In our opinion and according to the information and explanations given to us, the procedures 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. The discrepancies noticed on physical verifications of the stocks as compared to book records were not material and have been properly dealt with in the Books of Account. 6. According to the information and explanations given to us, we are of the opinion that the valuation of stocks 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 from Companies, firms or other parties as listed in the register maintained under section 301 of the Companies Act, 1956, except interest free loan taken from a Director. In our opinion, other terms and conditions of the said loans are not prima facie prejudicial to the interest of the Company. We are informed that there are no companies under the same management, as defined under sub- section (1-B) of section 370 of the Companies Act, 1956. 8. The Company has not granted any loans or advances in the nature of loans to Companies, firms or other parties as listed in the register maintained under Section 301 and we are informed that there are no companies under same management as defined under Sub-section (1-B) of Section 370 of the Companies Act, 1956. 9. The Company has given interest free loans or advances in the nature of loans to its employees in respect whereof of the principal amount is being repaid regularly, wherever applicable. 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 the purchase of stores, raw materials, including components, equipments and other assets and also for the sale of goods. 11. In our opinion and according to the information and explanations given to us, there are no 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. 50,000/- (Rupees Fifty thousand only) or more in respect of any party. 12. As explained to us, the Company does not have any unserviceable or damaged raw materials or stores. 13. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public, as defined under the provision of section 58-A of the Companies Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975. 14. According to the information and explanations given to us, the company has no realizable byproducts. 15. In our opinion the company has an adequate internal audit system commensurate with the size and nature of its business. 16. The Central Government has not prescribed maintenance of cost records under Section 209 (1)(d) of the Companies Act, 1956 in respect of manufacturing activities of the company. 17. According to the records of the Company, Provident Fund dues have not been regularly deposited with the appropriate authorities and outstanding dues as at 31st March, 2002 were amounting to Rs. 96,344/- As informed to us, the provision of Employees State Insurance Scheme is not applicable to the Company. 18. 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 31st March, 2002 for a period of more than six months from the date they became payable. 19. According to the information and explanations given to us, no personal expenses of employees or Directors have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice. 20. According to the information and explanation given to us, 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. For: RAJENDRA & CO, Chartered Accountants. Mumbai R.J. SHAH Dated: 10th October,2002. Partner