malhotra steel industries ltd Auditors report

MALHOTRA STEEL INDUSTRIES LIMITED AUDITORS REPORT To The Shareholders. We have audited the attached Balance Sheet as at 31st March, 1998 and also the annexed Profit & Loss Account of the company for the year ended on that date in which audited returns received from the branch at Bombay are incorporated and we 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 account as required by law have been kept by the company so far as appears from our examination of those books. 3) The Companys Balance Sheet and Profit & Loss account referred to in this report are in agreement with the books of account. 4) 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 schedules and in Particular Note No.(2) regarding (a) possible diminution in investment of Rs.1,54,87,500/- in Shares of Malhotra Steels (Bombay) Limited, a Company under the same Management, and (b) investment of Rs.10,65,200/- in Shares of Malhotra Inducto Cast Limited, a Company under the same Management, which have closed their operations, Note No.(3) regarding possible diminution in the value of other investment in Shares and Debentures of other Companies of Rs.3,94,88,170/-, Note No.(5) regarding capitalisation of interest of Rs.20,35,995/- on plant & Machinery acquired under hire purchase agreement and not put to use, gives the information required by the Companies Act, 1956 in the manner so required and gives a true and fair view :- 1. In the case of Balance Sheet of state of affairs of the company as at 31st March, 1998. and 2. In the case of 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 and on the basis of such checks of the Books and records of the company as we considered appropriate and as per the information and explanations given to us during the course of audit, we report that in our opinion: 1. The company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. The Fixed Assets have been physically verified by the management and no material discrepancies were noticed on such verification. 2. None of the fixed assets have been revalued during the year. 3. The stock of finished goods, spare parts and raw materials have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. 4. The procedure of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. 5. The material discrepancies noticed on physical verification of stocks as compared to book records in so far as it appears from our examination of books are adjusted in the books of accounts. 6. On the basis of our examinations of records, we are of the opinion that the valuation of stocks is fair and proper and in accordance with the normally accepted accounting principles and is on the same basis as in the preceding years. 7. In our opinion, rate of interest and terms and conditions on which loans have been obtained from the Companies, Directors and parties listed in the register maintained under section 301 of the Companies Act, 1956, are not prima-facie prejudicial to the interest of the Company. 8. The Company has granted loans to Companies, Firms or Other Parties listed in the register maintained under Section 301 of the Companies Act, 1956, without any stipulation. 9. The company has granted Loans & Advances in the nature of advance and loans to other parties without any stipulations as to interest and repayment. 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 purchases of stores, raw material including components, plant and machinery, equipments and other assets and with regard to sale of goods. 11. In our opinion and according to the information and explanations given to us, the transactions of purchase of goods and materials and sale of goods and materials made in pursuance of contracts or arrangements entered in the register maintained under Section 301 and aggregating during the year to Rs.50,000/- or more in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods or materials or the prices of which transactions for similar goods or materials have been made with other parties. 12. As explained to us, the company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. 13. In our opinion, the company has complied with the provisions of section 58A of the Companies Act, 1956 and the companies (Acceptance of deposit) rule 1975 with regard to the deposits accepted by it from public. 14. In our opinion, reasonable records have been maintained by the company for the sale and disposal of realisable by- products. 15. The company has appointed a firm of Chartered Accountants for internal audit purpose and the same is commensurate with the size and nature of its business. 16. As explained to us, the Central Government has not prescribed the maintenance of cost records by the company under Section 209(1)(d) of the Companies Act, 1956. 17. In our opinion, the company is generally regular in depositing Provident Fund and Employees State Insurance Fund dues with the appropriate authorities. 18. According to the information and explanations given to us, no undisputed amount payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty and Excise Duty were outstanding as at 31st March, 1998 for a period of more than 6 months from the date they, become 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 Provision) Act, 1985. For WADHAWAN PANDYA & COMPANY Chartered Accountants Place: AHMEDABAD (KAILASH G. MOONDRA) Date: 5-10-98 Partner