hitkari china ltd Auditors report

HITKARI CHINA LTD. ANNUAL REPORT 2000-2001 AUDITOR REPORT The Members, Hitkari China Limited, New Delhi. We have audited the attached Balance Sheet of HITKARI CHINA LIMITED as at 31st March, 2001 and the Profit & Loss Account for the year ended on that date annexed thereto and report that:- (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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 such books. (c) The Balance Sheet and Profit & 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 Accounting Standards referred to in section 211 (3C) of the Companies Act, 1956. (e) On the basis of information and explanations given to us and representations obtained by the Company, there are no Directors of the Company who are disqualified under Section 274 (I) (g) of the Companies Act, 1956 from being appointed as Directors. (f) In our opinion and to the best of our information and according to the explanations given to us, the said Balance Sheet and Profit & Loss Account read together with the notes thereon in Schedule `K annexed to the Balance Sheet i.e., (a) Note No. (7) regarding non-confirmation and reconciliation of accounts, (b) Note No. (8) as to non provision and non quantification of the interest and (c) Note Nos. (9) and (10) as to non provision and non quantification of various liabilities upto 31st March, 2001 and their effect on loss and reserves of the company and ail other notes on accounts and schedules annexed thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view:- i) insofar as it relates to the Balance Sheet, of the state of affairs of the Company as at 31st March, 2001; and ii) insofar as it relates to the Profit & 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 further report that:- 1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. All the assets have been physically verified by the management at the end of the year which in our opinion is reasonable having regard to the size of the company acid the nature of its assets. No material discrepancies were noticed on verification. 2. None of the fixed assets have been revalued during the year. 3. The stocks of raw materials, semi finished & finished goods, stores, saggars, moulds, fuels and packing materials have been physically verified by the management at the end of the year. In our opinion, the frequency of verification is reasonable. 4. The procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the company arid the nature of its business. 5. The discrepancies noticed on verification between the physical stocks and the book records were not material. 6. On the basis of our examination of stock records, we are of the opinion that the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the the preceeding year. 7. The company has taken interest free loans from companies, firms or other parties covered under section 301 and from a company under the same management as defined cinder section 370 (1 B) of the Companies Act, 1956 and the terms and conditions are prima-facie not prejudicial to the interest of the company. 8. The company has not granted loans, secured or unsecured to companies, firms or other parties covered under section 301 or to company under the same management as defined under section 370 (1 B) of the Companies Act, 1956. 9. The company has not given loans or advances in the nature of loans with stipulation of instalments in respect of the repayment of the same and interest thereon. However, the company has given interest free advances to employees and reasonable steps have been or are being taken for recovey. 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 purchase of materials, plant and machinery, equipments and other assets and with regard to the sale of goods. 11. According to the information and explanations given to us, no transactions of purchase of goods and materials were made in pursuance of contracts or arrangements covered under section 301 of the Companies Act, 1956 and aggregating during the year to Rs.50,000.00 or more in respect of each party. However, sales have been made as per management, at prevailing market rates. 12. As explained to us, the company has a regular procedure for the determination of unserviceable or damaged stores, raw materials, semi finished and finished goods, saggars and moulds etc. and provision has been made in the accounts for the loss which has arisen. 13. In our opinion and according to the information and explanations given to us the company has not accepted any deposit covered under section 58A of the Companies Act, 1956 and the rules framed thereunder. 14. The company has neither realisable scrap nor by-product. 15. In our opinion the scope of rote-real audit reeds to be strengthened and extended in order to be commensurate with the size of the company & nature of its business. 16. The central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for the items dealt with by the company. 17. The company has not been regular in depositing dues under the Provident Fund & Employees State Insurance Schemes and the arrears as on 31st March, 2001 have not been quantified. 18. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth-tax, Customs duty and Excise duty (except for Rs.31.90 lacs being undisputed Sales Tax not paid but provided for) were outstanding as at 31st March, 2001 for a period of more than six months from the date the same 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. 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. 21. We may mention that a Partner of our firm is a relative of a Director of the Company though the said Director has no substantial interest in the Company for S R Kapur & Co. (D K Gupta) New Delhi Partner Dated: 30th August, 2001 Chartered Accountants