idi ltd share price Auditors report

IDI LIMITED ANNUAL REPORT 1999-2000 AUDITORS REPORT TO THE SHAREHOLDERS We have audited the attached Balance Sheet of IDI Limited (formerly known as Indian Dyestuff Industries Limited) as at 30th June, 1999 and the Profit and Loss Account for the period 1st April, 1998 to 30th June, 1999, annexed thereto and report that: 1. As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, we give 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 report that: a. We have obtained all the information and explanations which to the best of our knowledge and belief wee 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 the books; c. The Balance Sheet and Profit and Loss Account dealt with by this report ae in agreement with the books of account; d. IN our opinion, the Profit and Loss Account and the Balance Sheet comply with the accounting standards referred to in sub-section 3(C) of section 211 of the Companies Act, 1956. e. Attention is invited to following notes in schedule 18: i. Note B-5 regarding non-provision in the accounts for multiple shift allowance of Rs. 196.17 lakhs in respect of the years 1985-86 and 1986-87 which would have reduced the reserves had it been provided; ii. Note B-7 regarding capitalisation of interest amounting to Rs. 464.61 lakhs for the entire period of credit allowed by the vendor in respect of purchase consideration of fixed assets of the Vadodara unit acquired in the year 1984-85, as per agreement dated 1st October, 1984. This is contrary to Accounting Standard (AS) 10, `Accounting for Fixed Assets issued by the Institute of Chartered Accountants of India. Consequently, loss for the year is lower by Rs. 21.33 lakhs (Previous year Rs. 20.96 lakhs, aggregate to date Rs. 26.69 lakhs) and Reserves and surplus are higher by Rs. 26.69 lakhs, as compared to the position which would have prevailed, if the Company had complied with requirements of AS 10; iii. Note B-9 regarding loan (fixed deposit) with Matulya Mills Ltd. (MML) aggregating to Rs. 127.91 lakhs (including interest accrued Rs. 27.91 lakhs). We are unable to comment on the recoverability or otherwise of Rs. 127.91 lakhs due from MML as the said Company has become a sick industrial Company within the meaning of section 3 (1) (o) of Sick Industrial Companies (Special Provisions) Act, 1985; iv. Note B-11 regarding non-provision in the accounts for diminution in the value of quoted investments of Rs. 451.29 lakhs (pervious year, Rs. 442.03 lakhs) and in the value of unquoted investment for the reasons explained in the note. Subject to the foregoing, in our opinion, and to the best of our information and according to the explanations given to us, the said accounts read with the significant accounting policies and 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 case of the Balance Sheet, of the state of affairs of the Company as at 30th June, 1999, and ii. In case of the Profit and Loss Account, of the loss for the period 1st April, 1998 to 30th June, 1999. For C.C.CHOKSHI & CO. Chartered Accountants Mumbai, dated 25th August, 1999 P.R. BARPANDE Partner Annexure to the Auditors Report 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 are fixed assets, except at the Head Office, which are updated till 31st March, 1998. The fixed assets have been physically verified by the management during the period. We are informed that no material discrepancies were noticed on such verification. 2. None of the fixed assets have been revalued during the period. 3. The stocks of finished goods, stores, spare parts and raw materials have been physically verified during the period on the management. In our opinion the frequency of verification is reasonable. 4. The procedures for physical verification of stocks followed by the management are reasonable and adequate to the size of the Company and the nature of its business. 5. The discrepancies noticed on physical verification of stocks as compared to book records are to material. 6. On the basis or our examination of stock records, we are of the opinion that the valuation of stocks is fair and proper accordance with normally accepted accounting principles, and is on the same basis as in the preceding year. 7. In our opinion, the rate of interest and other terms and conditions on which loans have been obtained from companies listed in the register maintained under section 301 of the Companies Act, 1956, are not prima prejudicial to the interest of the Company. We are informed that there is no Company under the same management as this Companies as defined under section 370 (1B) of the Companies Act, 1956. 8. In our opinion, the rate of interest and other terms and conditions on which loans/fixed deposits have been granted companies, including subsidiary companies, listed in the register maintained under section 301 of the Companies Act, 1956, are not prima facie prejudicial to the interest of the Company. However, as explained in note B-9 of schedule fixed deposit with Matulya Mills Ltd. has been agreed to be kept free of interest effective from 1st April, 1991. We are informed that there is no company under the same management as this Company as defined under section 370 (1B) of the Companies Act, 1956. 9. The parties, including employees, to whom loans have been given by the Company are repaying the principal amounts as stipulated, except in case of employees who have left the Companys service, in respect of whom, reasonable have been taken by the Company for recovery of the principal amounts and interest. The recovery of interest on loans to demand placed by the Company, there has been a delay in payment of interest. We are informed that the Companies constantly perusing the matter for recovery of such interest to date. In relation to a party to whom loan was given and recovered in an earlier year, there has been a delay in payment of interest aggregating to Rs. 17.50 lakhs accrued and due as on 30th June, 1999. We are informed that the Company is constantly pursuing the matter for recovery of interest accrued to date. In view of note B-9 of schedule 18 there are no regular payments of interest and the period of repayment of principal amount of the loan (fixed deposit) has been renewed for a further period of one year. 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 for purchase of stores, raw materials including components, plant and machinery, equipment and other assets, and for sale of goods. 11. In our opinion, the according to the information and explanations given to us, the transactions for purchase of goods and arterials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in are register maintained under section 301 and aggregating during the period to Rs. 50,000/- or more in respect of each party have been made at prices which are reasonable have in regard to the prevailing market prices for such goods materials or services, or prices at which transactions for similar goods or services have been made with other parties as available with the Company. 12. As explained to us, the Company has a regular procedure for determination of unserviceable or damaged stores,raw materials and finished goods. Adequate provision has been made in the accounts for loss arising on items determined. 13. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of section 58A of the Companies Act, 1956, and the rules framed thereunder, with regard to deposits accepted from the public. On the legal advice, the Company has increased rate of interest from 14% to 15% with effect from 1st January, 1996 on all outstanding deposits. 14. In our opinion, reasonable records have been maintained by the Company for sale and disposal of realisable by products and scrap. 15. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. 16. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in regard to dyes (dyestuff), intermediates and sulphuric acid manufactured by the Company. We are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records. 17. According to the records of the Company, Provident Fund and Employees, State Insurance dues have generally been regularly deposited during the period with the appropriate authorities. 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 30th June, 1999 for a period of more that 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. 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. 21. In relation to the trading activity of the Company we are informed that there were no damaged goods. For C.C.CHOKSHI & CO. Chartered Accountants Mumbai, dated 25th August, 1999 P.R. BARPANDE Partner