sajjan textiles mills ltd Auditors report

SAJJAN TEXTILES MILLS LIMITED ANNUAL REPORT 2000-2001 AUDITORS REPORT TO THE SHAREHOLDERS We have audited the attached Balance Sheet of M/s. SAJJAN TEXTILES MILLS LIMITED as at 31st March, 2001, and Profit and Loss Account of the Company for the year ended on that date annexed thereto and report that : 1. 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, we give in the Annexure hereto 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 state 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 accounts, 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 and Loss Account referred to in this report are in agreement with the books of accounts; (d) In our opinion, The Balance Sheet and the Profit & Loss Account comply with the mandatory Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (e) Attention is invited to Point No. 20 of anexure to Auditors Reports with regard to Order passed by the BIFR declaring the Company as Sick Unit. (f) Attention is also invited to Note No. 4 of Notes to the Accounts with regard to provision of simple interest on loans from Financial Institutions instead of providing compound interest rests with quarterly rests. The impact of compound interest with quarterly rests for the year is unascertainable. (g) Attention is also invited to Note No. 6 of Notes to the Accounts with regard to Sundry debtors due from a company under the same management Rs. 472.92 lacs which is over due since long period. However the company has not made any provision for the same. (h) Attention is also invited to Note No. 11 of Notes to the Accounts with regard to Inventories of Rs. 16,04,641/- are held for more than three years at the same value as it is appearing in earlier balance sheets. The company has not made provision for diminution in the value of the stock. (i) Attention is also invited to Note No. 13 of Notes to the Accounts with regard to disposal of fixed assets, having written down value of Rs. 5,44,027/-, which is subject to approval of the BIFR. (j) On the basis of the written representations received from the directors, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 20001 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. (k) In our opinion and to the best of our information and according to the explanations given to us, the accounts Subject to Note No.1(a) regarding certain transactions are accounted for on cash basis, Note No.1 (f) regarding non-provision of gratuity liability amount being unascertained and read with the other notes given in Schedule "N" annexed to this report, 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 Balance Sheet, the State of affairs the company as at 31st March, 2001. and (ii) In the case of the Profit and Loss Account of the Loss for the year ended 31st March, 2001. For S.C. MEHRA & ASSOCIATES CHARTERED ACCOUNTANTS Place: MUMBAI (S. C. MEHRA) Date : 3rd September, 2001. PROPRIETOR ANNEXURE TO THE AUDITORS REPORT OF SAJJAN TEXTILES MILLS LIMITED FOR THE YEAR ENDING 31ST MARCH, 2001 (REFERRED TO IN PARAGRAPH 1 THEREOF) 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 report that :- 1. The company has maintained records showing particulars including quantitative details and situation of Fixed Assets but the same requires to be completed & updated. We are informed that Fixed Assets were verified by the management, at the end of the year, but discrepancies, if any, will be determined only after the Fixed Assets register is updated. 2. None of the Fixed Assets has been revalued during the year. 3. As informed to us, the stocks of finished goods, stores & spare 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 discrepancies noticed on verification between physical stock and book stock, have been properly dealt with in the books of accounts, were not significant. 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 except inventories of Rs. 16,04,641/- are held for more than three years and are valued at the same value as appearing in earlier balance sheet (refer to note 11 of notes to accounts - Schedule N). 7. As per information and explanation given to us, the Company has not taken loans except loan from Directors of Rs. 63,41,478/-, from the parties listed in the registers maintained under Section 301 of the Companies Act, 1956. The Company has not taken any loan from the companies under same management. 8. As per information and explanation given to us, the Company has not granted any loan to the Companies, firms or other parties listed in the registers, maintained under Section 301 or to the companies under the same management as defined under section 370 (1 B) of the Companies Act, 1956. 9. The parties including employees to whom loans, or advances in the nature of loans have been given by the Company, wherever as applicable, are generally repaying the principal amounts as stipulated and are also regular in the payment of interest. 10. As per information 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 stores, raw materials including components, plant and machinery, equipment and other assets and with regard to the sale of goods. 11. In our opinion & according to the information and explanations given to us, there are no transactions of purchase of goods and materials and sale of goods and materials, made in pursuance of contracts or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000/- or more in respect of any party. 12. As explained to us, and subject to Note no. 11 to schedule-N unserviceable or damaged raw material, stores & spares etc. noticed during the year, have been properly provided in the accounts. 13. As informed to us, the Company has not accepted deposits from the public. 14. As per explanation and information given to us, by-products or realisable scrap has been properly dealt in the books of accounts. 15. The company has no system of Internal Audit but in our opinion it needs to be implemented. 16. We are informed that the books of account to be maintained by the Company pursuant to the order made by central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 are not maintained. 17. We are informed that provisions of Employees State Insurance Scheme are not applicable to the Company. There has been delay in depositing provident fund dues with appropriate authorities. 18. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth tax & Customs duty were outstanding, as at 31st March, 2001 for a period of more than six months from the date they became payable except sales tax of Rs.7,31,378/- & Income tax deducted at source of Rs. 6,62,492/-. 19. According to the information and explanations given to us, no personal expenses of employees or directors have been charged to revenue accounts, other than those payable under contractual obligations or in accordance with generally accepted business practices. 20. The company is a sick industrial company within the meaning of clause (O) of sub-section 3 of the Sick Industrial Companies (Special Provision) Act, 1985. The Company has made reference to the Board for Industrial and Financial Reconstruction Under Section 15 of the Act and the Board has declared the unit as Sick Industrial Unit under Section 3(1)(O) of sick Industrial Companies Act, 1985 vide its Order dated 6th August, 1998. 21. As per information & explanation given to us, loss on damaged goods if any, has been determined and properly provided in the books, in respect of trading activities. For S.C. MEHRA & ASSOCIATES CHARTERED ACCOUNTANTS Place: MUMBAI (S. C. MEHRA) Date : 3rd September, 2001. PROPRIETOR