sol pharmaceuticals ltd Auditors report

SOL PHARMACEUTICALS LIMITED ANNUAL REPORT 1999-2000 AUDITORSREPORT TO The Members of SOL Pharmaceuticals Limited We have audited the attached Balance Sheet of SOL Pharamaceuticals Limited as at 31st March, 2000. and Profit & Loss Account 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 enclose in the annexure a statement on matters specified in paragraph 4 and 5 of the said order. 2. Further to our comments in the Annexure referred to in paragraph 1 above, a. 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. b. In our opinion subject to non provision of certain expenses / liabilities as mentioned in paragraph 3 below, proper books of accounts as required by law have been kept by the company so far as it appears from our examination of such books. c. The Balance sheet and the Profit & Loss Account referred to in the report are in agreement with the books of accounts. d. In our opinion the Profit and Loss Account and Balance sheet complying with the mandatory Accounting Standards referred to in sub-section (3C) of section 211 of the companies Act, 1956. e. In our opinion and to the best of our information and according to the explanations given to us the accounts read with the notes thereon given the information required by the companies Act, 1956 in the manner so required. 3. Attention is invited to the following notes in the Notes to Accounts in Schedule P. 3.1 Note 1.1 regarding preparation of accounts on principles applicable to a going concern. 3.2 Extent of Non-recoverability of certain debts/ advances included under sundry Debtors loans and advance and other Currents assets as indicated in Note 6 and 7 not ascertained and provided for. 3.3 Certain debit and credit balances under reconciliation and subject to confirmations in respect of which consequential adjustments if any are not ascertainable (Note No.8) 3.4 Note No.9 regarding non provision of compensation payable to certain employees of Dexo unit of the company under the VRS scheme. 3.5 Note No.10 regarding non-provision of the financial liabilities if any (currently not ascertainable) that may arise on account of non-fulfilment of certain export obligations within the stipulated / extended time. 3.6 Non provision of present estimated liability of future payments of gratuity to employees (Note No.21) 4. Subject to our remarks in paragraphs 3 above and possible impact on the loss, assets and liabilities of the company the accounts give a true and fair view: i) In case of Balance sheet the state of affairs of the company as at 31st March, 2000 and ii) In case of Profit and Loss Account of the Loss for the year ended on that date. for.J.B.REDDY & CO., Chartered Accountants Place : Hyderabad A.V.REDDY Date : 25th August,2000 Partner ANNEXURE TO 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 of Fixed assets. The fixed assets have been physically verified by the management at the year end and no discrepancies have been noticed on such verification. 2. None of the fixed assets has been revalued during the period under Audit. 3. The stocks of finished goods, stores & spares, raw materials and packing materials have been physically verified by the management year end. 4. In our opinion the procedures followed by the management for physical verification of the stocks are reasonable and adequate in relation to the size of the company and the nature of its business. 5. The discrepancies, to the extent ascertained between the physical stocks and the book stocks have been properly dealt with the books of account. 6. In our opinion 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 earlier year. 7. In our opinion. the rate of interest and terms and conditions on which loans have been obtained (including those obtained in the earlier years) from the parties as listed in the register maintained under section 301 of the companies Act, 1956, are not prima-facie prejudicial to the interest of the company. There are no companies under the same management as defined under sub-section(1-B) of section 370 of the said Act. 8. No loans or advances in the nature of Loans were given by the company during the year to companies / Firms and parties as listed in the register maintained under section 301 of the companies Act 1956. There are no companies under the same management as defined under sub-section (1-B) of section 370 of the said Act. 9. Subject to Note 7 in Notes to account in respect of Loans and Advances in the nature of loans given to the parties including employees, the interest wherever fixed had been received or accounted on accrual basis and repayment of principal amount is regular wherever stipulated. 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 the purchase of stores, raw materials, including components plant & Machinery equipment other assets and for the sale of goods. 11. During the year under audit there were no transactions of purchase of goods or materials and sale of goods, materials and service, made in pursuance of the contracts or arrangements entered in the register maintained under section 301 of the companies Act, 1956 where the aggregate value of such transaction was Rs.50,000 or more in respect of each party. 12. As explained to us, the company has regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. The loss arising on the items so determined has been adequately provided for in the accounts. 13. Consequent to total erosion of net worth, in our opinion, and according to the information and explanations given to us, the company has not complied with the provisions of section 58A of the companies Act, 1956 and the companies (Acceptance of Deposits) Rules 1975, in connection with the deposits accepted from the public in the earlier years with regard to the limits, repayment maintenance of liquid assets and filing of return of deposits. 14. In our opinion, reasonable records have been maintained by the company for the sale and disposal of realisable scrap. The company has no by- products. 15. In our opinion the company has an Internal Audit system commensurate with its size and nature of business. 16. We have broadly reviewed without making a detailed examination the books of account and records maintained by the company pursuant to the Rules made by the Central Government for maintenance of cost records under section 209(1) (d) of companies Act, 1956 and are of the opinion that prima-faci the prescribed accounts and records have been maintained. 17. The Provident Fund dues and Employee state Insurance dues have not been regularly deposited with the appropriate authorities. The arrears of PF and ESI dues as on 31st March,2000 are Rs.107.53 lakhs. 18. As on 31st March 2000 excepting an amount of Rs.69.13 lacs representing income tax and sales tax dues there were no other undisputed statutory dues outstanding for a period of more than six months from the day they became payable. 19. During the course of our examination of books of account of the company carried out in accordance with the generally accepted accounting practices we have not come across any personal expenses which have been charged to revenue account other than those payable to employees or in accordance with the 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 and it was declared as sick company by the Board for industrial and Financial Reconstruction (BIFR) for J.B.REDDY & CO., Chartered Accountants Place : Hyderabad A.V.REDDY Date : 25th August,2000 Partner