sun earth ceramics ltd Auditors report

ANNUAL REPORT 2000-2001 SUN EARTH CERAMICS LIMITED AUDITORS REPORT TO The Shareholders SUN EARTH CERAMICS LIMITED We have audited the attached Balance Sheet of SUN EARTH CERAMICS LIMITED as on 30th June 2001 and also the 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 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, during the course of our audit, we annex hereto a statement on the matters specified in paragraphs 4 & 5 of the said order. 2. The Books of Account of erstwhile Savana Ceramics Limited which was a wholly owned subsidiary company of Sun Earth Ceramics Limited and which was merged with Sun Earth Ceramics Limited with Sun Earth Ceramics Limited with effect from 01st July, 1999 have not been audited by us for the year ended 30th June, 2001. While presenting this report we have relied upon the report of the other auditors of erstwhile Savana Ceramics Limited. 3. 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 purpose of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company in so far as appears from our examination of the said books. c) The Balance Sheet and the Profit and Loss Account dealt with by this report are 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(3C) of section 211 of the Companies Act, 1956. e) 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, and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 30th June 2001 from being appointed as directors in terms of clause(g) of sub-section (1) of Section 274 of the Companies Act, 1956. f) In our opinion and to the best of our information and according to the explanations given to us, the said balance sheet and the said profit and loss account read with the accounting policies and the notes n thereon as per Schedules XVII and XVIII, 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 the Balance Sheet, of the state of affairs of the company as at 30th June 2001. ii. In the case of the Profit and Loss Account, of the Profit for the year ended on that date. ANNEXURE TO THE AUDITORS REPORT (REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE) 1) The Fixed Assets register showing full particulars quantitative details and situation of fixed assets is being updated. Further we are informed that the physical verification of these fixed assets will be carried out only after the completion of the fixed assets register and the discrepancy, if any, will be adjusted thereafter. 2) None of the Fixed Assets have been revalued during the year. 3) Inventories of finished goods, stores, spare parts and raw materials except goods in transit and stocks with third parties have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. 4) In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to size of the Company and nature of its business. 5) In respect of stock physically verified by the management there was no material discrepancy between the physical stock and the book stock and the same has been properly dealt with books of account. 6) On the basis of our examination of stock records, we are of the opinion that the valuation of stocks of finished goods, raw materials, work-in- process, stores, spares and consumables is fair and proper and in accordance with the prescribed accounting standard and is on the same basis as in the preceding year. 7) The company has taken unsecured loans from Companies firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. The terms & conditions of these loans are prima facie not prejudicial to the interest of the Company. 8) The company has granted unsecured loans to Companies firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956. The terms & conditions of these loans are prima facie not prejudicial to the interest of the Company. 9) The parties (including staff) to whom loans and advances in the nature of loans have been given by the Company are generally repaying the principal amount as stipulated and have been regular in the payment of interest wherever applicable. 10) In our opinion and according to the information and explanations give to us, there is an adequate internal control in general 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 also with regard to sale of goods through the personal supervision of the management. 11) In our opinion and according to the information and explanations give to us, the transactions for purchase of goods and materials and for the sale of goods, materials and services in pursuance of contracts or arrangements entered in register under section 301 of the Companies Act, 1956 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 and materials. 12) As explained to us the company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. Adequate provision has been made in the accounts for the loss arising on the items so determined. 13) The Company has accepted deposits within the meaning of section 58A of the Companies Act, 1956 based on the information and explanations given to us and based on the certificate of the Company Secretary we state that the Company has generally complied with the provisions of the said section and the Rules made there under. 14) We are informed that there is no significant scrap generated. The Company does not have any by- products. 15) In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business. 16) We are informed that the Central Government has not prescribed the maintenance of the cost records by the company under section 209(1) (d) of the Companies Act, 1956 for any of its products. 17) The Company is regular in depositing Provident Fund and Employees state insurance dues with the appropriate authorities. 18) As per the information and explanations given to us, except custom duty of Rs. 32.66 lacs, sales tax of Rs. 30.29 lacs and income-tax of Rs. 53.00 lacs there were no other undisputed amounts payable in respect of income- tax, sales-tax, customs duty, excise duty, and wealth tax as at the last day of the financial year for a period of more than six months from the date they became payable. 19) According to the information and explanation given to us, no personal expenses of the employees or directors have been charged to the 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 section 3(1) (0) of the Sick Industrial Companies (Special Provisions) Act, 1985. 21) In respect of the Companys trading activities, damaged goods which are insignificant have been determined and necessary provisions for the loss have been made in the accounts. K.P. Kapadia & Co. Chartered Accountants Place : Mumbai