gleitlager india ltd Auditors report

GLEITLAGER (INDIA) LIMITED ANNUAL REPORT 2001-2002 AUDITORS REPORT We have audited the attached Balance Sheet of GLEITLAGER (INDIA) LIMITED. as at 31st March, 2002 and also the annexed Profit and Loss Account of the Company for the year ended on that date. These financial statements are the responsibility of the Comanys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We further 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 law, have been kept by the Company, so far as it appears from our examination of the books; 3) The Balance Sheet and Profit and Loss Account dealt with by the Report are in agreement with the books of account. 4) In our opinion, the Profit and Loss Account and the Balance Sheet, subject to Note No. 9 (a) and (b) relating to non provision for leave encashment benefit and gratuity,comply with the Accounting Standards referred to in Section 211 (3c) of the Companies Act, 1956, to the extent applicable. 5) On the basis of written representations received from the Directors of the company and taken on record by the Board of Directors, we report that none of the directors of the company is disqualified from being appointed as a director of the company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. 6) Attention is invited to the following ; a) Despite continued losses resulting in erosion of the Net Worth of the company, the accounts for the year have bean prepared on the assumption of going concern basis in view of the ongoing efforts being made by the company in financial and asset restructuring. (Refer Note No. 10) b) No provision has been made for incremental Leave encashment liability (not actuarially determined) amounting to Rs.0.24 lacs. (Refer Note No. 9 (a)) c) No provision has been made in respect of estimated accrued incremental Gratuity liability as per actuarial valuation amounting to Rs.5.17 lacs. (Refer Note No. 9 (b)) We further report that had the observations made by us in paragraph 6 above been considered the loss for the year would have been higher by Rs. 5.41 lacs and the debit balance of the Profit and Loss Account and the liabilities higher to that extent. Subject to the above, in our opinion and to the best of our information and according to the explanations given to us, the said statements of Account read together with the other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view: i) in the case of the Balance Sheet of the State of affairs of the Company as at 31st March, 2002. and ii) in the case of the Profit and Loss Account, of the Loss for the year ended on that date. 7) 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 our examination as we considered appropriate, and the information and explanations given to us, we state that: i) The Company has maintained proper records of Fixed Assets to show full particulars, including quantitative details and location of all Fixed Assets. We are informed that these Fixed Assets have been physically verified by the Management at reasonable intervals during the year and no material discrepancies have been noticed on such verification. ii) None of the Fixed Assets of the Company have been revalued during the year. iii) Physical Verification of finished goods, stores, spare parts and raw materials has been conducted by the Management at the year-end and at reasonable intervals during the year. iv) As explained to us, the procedures of physical verification of finished goods, stores, spare parts and raw materials, followed by the Management are, in our opinion reasonable and adequate in relation to the size of the Company and the nature of its business and on the basis of test checks carried out by us. v) According to the records produced before us for our verification there were no material discrepancies noticed on physical verification of finished goods, stores, spare parts and raw materials, as compared to the book records and the same have been properly dealt with in the books of account. vi) In our opinion and on the basis of our examination the valuation of stocks as determined by the management and based on the technical opinion, read with Note No. 12 regarding provision for obsolete stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. vii) The company has not taken any loans from Companies, Firms, or Other parties listed in the register maintained under Section 301 of the Companies Act, 1956, or from Companies under the same Management within the meaning of Section 370 (1-B) (Non-operative) of the Companies Act, 1956, except for unsecured loans and fixed deposits from directors and their relatives. In our opinion the rate of interest and the terms and conditions of such deposits are not Prima Facie Prejudicial to the interest of the Company. viii) The Company has not granted any loans, secured or unsecured, to Companies, Firms or Other parties listed in the register maintained under Section 301 of the Companies Act, 1956, and/or to the Companies under the same Management as defined under Section 370 (1-B) (Non-operative) of the Companies Act, 1956. ix) Loans or advances in the nature of loans given to employees, free of interest, are generally being repaid as stipulated. x) In our opinion, 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 and machinery, equipment and other assets and also for the sale of goods. xi) According to the information and explanations given to us there are no transactions of purchase of goods, materials and sale of goods, materials and services aggregating during the year to Rs. 50,000/- or more in respect of each party made in pursuance of contracts or arrangement entered in the Register maintained under Section 301 of the Companies Act, 1956. xii) According to the information and explanations given to us, unserviceable or damaged stores, raw materials or finished goods are determined during the course of physical verification conducted by the management. In our opinion, adequate amounts have been written off in respect of such items. xiii) The Company has complied with the provisions of Section 58A of the Companies Act, 1956, and rules framed thereunder in respect of Deposits accepted by it from public except that the company has retained deposits,amounting to Rs. 8.04 Lacs and Rs. 37.98 Lacs, which is in excess of the limits laid down under Rule 3(2)(i) and 3(2)(ii) respectively of the said rules. We are informed that out of these Deposits a sum of Rs. 27.93 Lacs have been accepted at a point of time when they were within the prescribed limits. However, these deposits have exceeded the prescribed limits due to subsequent losses. The Deposits amounting to Rs. 27.93 lacs referred to above has not been repaid by the Company since they have not matured. xiv) In our opinion, reasonable records have been maintained by the Company for the sale and disposal of scraps. The Company has no by-products. xv) Although the Company does not have a formal internal audit system, in our opinion, its internal control procedures involve reasonable internal checking of its financial transactions. xvi) Maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956, in respect of the Companys business. xvii) The Company has been irregular in depositing the Provident Fund and Employees State Insurance dues with the appropriate authorities. The arrears as at 31st March, 2002 amounting to Rs.18,90,746/- has since been paid. xviii) According to the records of the Company, no undisputed amounts payable in respect of Income-Tax, Wealth-Tax, Custom Duty and Excise-Duty were outstanding as at the last day of the financial year, for a period of more than six months from date they became payable. xix) During the course of our examination ui the books of accounts, carried out in accordance with generally accepted accounting practices, we have not come across any expenses charged to Revenue Account which in our opinion and judgement and to the best of our knowledge and belief, could be recorded as personal expenses. xx) The Company is a sick industrial company within the meaning of clause (0) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special provisions)Act, 1985. No reference has been made by the company to the Board for Industrial and Financial Reconstruction (BIFR) under section 15 of the said Act. FOR M.M. NISSIM AND COMPANY CHARTERED ACCOUNTANTS (N. KASHINATH) Partner MUMBAI Date : 10th October, 2002