ghanshyam steel works ltd Auditors report

GHANSHYAM STEEL WORKS LIMITED ANNUAL REPORT 2001-2002 AUDITORS REPORT To, The Shareholders of GHANSHYAM STEEL WORKS LIMITED We have audited the attached Balance Sheet of M/s. GHANSHYAM STEEL WORKS LTD. as at 31st March, 2002 and the Profit and Loss Account of the company for the year ended on that. date annexed thereto and report that : 1. 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. 2. In our opinion, proper books of accounts as required by the law have been kept by the company so far as it appears from our examination of those books. 3. The Balance Sheet and Profit and Loss Account dealt within this report are in agreement with the books of accounts. 4. Subject to remarks in para 6 below, in our opinion, the Balance Sheet & the Profit & Loss Account complied with the accounting standards referred to in Sub Section (3c) of the Section 211 of the Companies Act, 1956 to the extent applicable except AS-9 as the provision for Gratuity is not made. 5. On the basis of written representations received from Directors we report that none of the Director is disqualified as on 31/03/2002 from being appointed as director under clause (g) of sub-section 1 of section 274 of the Companies Act, 1956. 6. a) Interest Receivable on Fixed Deposits with Punjab National Bank., The Baroda Peoples Co. Op. Bank Ltd., The Swaminarayan Co. Op. Bank Ltd., IDBI Bank and Bajaj Auto and interest provision on outstanding amount of SSI units are not accounted for in the Books of Accounts of the Company. Loss is overstated and current assets are under stated to that extent. In absence of the necessary details, amount of interest receivable can not be quantified. b) IDBI Penal Interest of Rs.4956277/- and Liquidated damages of Rs.816797/- payable on 31/03/2002 are not provided for in the Books of Accounts of the Company. As explained to us, the same are not provided since their charge ability is under negotiation. Loss and secured Loans are under stated to that extent. c) Interest on Public Deposits payable on 31/03/2002 is not provided for in the books of accounts of the company. Loss and unsecured loans are under stated to that extent. In absence of the necessary details amount of interest payable is not quantified. d) Various perquisites paid to the Directors are not seperately shown under the heading of the Directors Remuneration. The same however, does not affect the loss of the company. e) The Company has filed application for BIFR which is primary accepted in the month of February, 2002. However, necessary procedure has not been started till date from BIFR. 7. Subject to remarks in para No. 6 above, in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read in conjunction with the Schedule 1 to 19 give the information required by the Companies Act, 1956 in the manner so required to give a true and fair view. (a) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2002 and, (b) In the case of Profit and Loss Account, of the Loss of the company for the year ended on that date. 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 on the basis of such checks as we considered appropriate, we enclose in an annexure hereto a statement on the matter specified in paragraph 4 and 5 of the said order to the extent applicable. For C. Patel & Co, Chartered Accountants PLACE: AHMEDABAD (M.D. POLARA) DATE : 26TH AUGUST, 2002 PARTNER Annexure referred to in paragraph (1) of the Auditors Report of the even date on the accounts of GHANSHYAM STEEL WORKS LIMITED for the year ended 31st March, 2002. i) The Company has maintained proper records to show full particulars including quantitative details and situation of its Fixed Assets. The Fixed Assets have been physically verified by the Management wherever possible at the close of the year as confirmed by the Management. No material discrepancies have come to notice on such physical verification. ii) No revaluation has been made during the year. iii) The stock of work in progress and other goods, spare parts and raw material of the Company have been physically verified by the Management at the close of the year. iv) The procedures of physical verification of stock followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business. v) The valuation of stock of finished and other goods, stores, spare parts and raw-material has been fair and proper in accordance with the normally accepted principles. There are certain stock of Raw Material, WIP and Finished Goods which is obsolesce and for that value taken as market realizable. In order to comply with Accounting Standards (AS-2) issued by the Institute of Chartered Accountants of India. The company has changed the method of valuation of closing stock of Raw materials and semi-finished goods from "Cost" to "lower of cost or net realisable value". vi) The Company has taken unsecured loans from Companies, Firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 and not taken from Companies under the same management. The interest rates and other terms and conditions of such loans are prima facie not prejudicial to the interest of the company. vii) Except interest free loan to the employees of the Company the Company has not granted any loan to Companies firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. viii) Interest free loan/advances are given to the employees of the Company and they are repaying the installment as stipulated. ix) On the basis of checks carried out during the course of audit and as per explanations given to us, there is adequate internal control procedure commensurate with the size of the, Company and the nature of its business for the purchase of stores, raw-materials, goods, plant and machinery equipment and other assets and for the sale of goods. x) The Company has purchased the goods and sales of goods and 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 to Rs. 50,000 or more in respect of each party. The prices paid and or received are reasonable having regard to prevailing market prices for such goods, materials or services or other price at which transaction for similar goods materials or services have been made with other parties. xi) According to the information and explanation given to us the company has no unserviceable or damaged stores, item for the year under review. xii) The company has not accepted any deposits from the public during the year and the directives of the Reserve Bank of India and the provision of section 58(A) of the Companies Act, 1956 and the rules made there under have been complied with. However, matured deposit as on 31.03.2002 and amount of interest due thereon are still unpaid. Moreover, deposit returns are not submitted to the appropriate authorities. Also company has applied with Company Law Board for extention of time limit for repayment of deposit. xiii) The Company has maintained reasonable records for sales and disposal of scraps during the year. However the company has no bye-product during the year under audit. xiv) In our opinion, the company has an adequate internal audit system commensurate with the size of the company and nature of its business. xv) The maintenance of cost records has not been prescribed by the Central Government under section 209 (i) (d) of the Companies act, 1956 in respect of any product of the company for the year under review. xvi) During the year under audit, the company was irregular in depositing the provident fund dues with the appropriate authority. Outstanding amount as on 31.03.2002 is Rs.1242624/-. xvii) There is no undisputed amounts payable in respect of Wealth-tax, Sales-tax, Customs Duty and Excise Duty as at 31st March, 2002 which are outstanding for a period of more than six months from the date they become payable except undisputed Sales-Tax liabilities payable Rs.3322314/-. xviii) In our opinion and according to the information and explanations given to us and as certified by the Directors, Personal expenses have not been charged to revenue account. xix) 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 Provisions) Act, 1985 (1 of 1986). For that Company has been made reference u/s 15 of the Act to the Board of Industrial and Financial Reconstruction. xx) In respect of the Trading activities of the company there were no damaged goods. For C. Patel & Co. Chartered Accountants PLACE: AHMEDABAD, (M.D. POLARA) DATE : 26TH AUGUST, 2002 PARTNER