BANKA (INDIA) LIMITED
THE MEMBERS OF BANKA (INDIA) LIMITED
We have audited the attached Balance Sheet of BANKA (INDIA) LIMITED as at
31st March,1998 and also the annexed Profit and Loss Account OF the Company
for the year ended on that date 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 annex 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 report 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 accounts 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 the Report
are in agreement with the books of account and returns;
(d) In our opinion and to the best of our information and according to the
explanations given to us, the accounts read together with the notes forming
part thereof subject to:
a. Note No.7, Part (ii), (v), (viii), (ix), no provision has been made for
interest payable totaling to Rs. 1,26,33,032/- on secured loan, amounting
to Rs. 93,47,014/- on fixed deposits Rs. 3,86,018/- and on unsecured
intercorporate deposit amounting to Rs.29,00,000/- (approximately). The
same shall be provided for in the year of actual payment.
h Note No.7, part (x), the Bank Balances of Rs.14,66,65a/- and Bank
overdraft of Rs. 2,02,12,000/- are subject to reconciliation.
c. Note No.7, part (xi) the amount of Rs.2,31,00,000/- included in work in
progress in respect of work done at Mandleshwar and Tawi sites which are
disputed and are pending in arbitration.
d. note No. 7, Part (xii), inter Branch Account of Rs. 22,85,804/-
represents unreconciled balances, pending reconciliation.
e. Note No.7, part (xiii), non provision of Rs.1,01,500/- towards Employee
Group Gratuity Scheme with L.I.C. for current year.
give the information required by 1the 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 31st March, 1998 and
(ii) in the case of the Profit and Loss Account of the LOSS of the Company
for the year ended on that date.
For VORA & ASSOCIATES
MUMBAI: (MAYUR A. VORA)
DATE: 30TH NOV., 1998. PARTNER
ANNEXURE TO THE AUDITORS REPORT
(REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE)
1. We have been informed that the fixed assets register showing full
particular including quantitative details and situation is not updated
during that year. According to the information given to us, the fixed
assets of the Company have been physically verified by the management
during the year and no material discrepancies have been noticed on
2. None of the fixed assets have been revalued during the year.
3. As explained to us, the stocks of finished and raw materials at Sites
have been physically verified during the year by the Management at
reasonable intervals. However in our opinion, having regard to the nature
and location of stocks, the frequency of verification is not reasonable.
4 In our opinion and according to the information and explanations given to
us, the procedures of verification of stocks followed by the Management are
not reasonable and adequate in relation to the size of the company and the
nature of its business and needs to be strengthened.
5. The discrepancies noticed on physical verification, between physical
stocks and book records, could not be determined in absence of the proper
updation of stock records being made by the Company at various sites and we
are not in a position to report whether the same have been properly dealt
with in the books of account.
6. In our opinion the valuation of the stocks is fair and proper in
accordance with the normally accepted accounting principles and is on the
same basis as in the preceding years. However, the valuation of work in
progress has been taken as certified by the management and has been relied
7. The entries in register maintained u/s.301 of the Companies Act, 1956
are not updated during the year. However we were informed that the company
has not taken any loans from companies firms or other parties listed in the
register maintained under Section 301 of the Companies Act, 1956 or form
the companies under the same management as defined under Section 370(1 -B)
of the Companies Act, 1956.
8. The Company has not granted any unsecured loans, to the firms listed in
the register maintained under Section 301, of the companies Act,1956 (1 of
1956) or to the companies under the same management as defined under
Section 370(1 -B) of the Companies Act, 1956.
9. We have been informed by the Management that the parties to whom loans
and advances in the nature of loans are given by the company are generally
repaying the principal amount and interest as stipulated. The staff members
to whom interest free loans are given are repaying the principal amount as
10. In our opinion and according to the information and explanation given
to us and based on our observations the internal control procedures are
weak and needs to be strengthened to make it commensurate with the size of
the Company and the nature of the business for the purchase of stores, raw
materials including components, plant and machinery, equipment and other
11. According to the information and explanations given to us there are no
purchase of store, raw materials and components during the year in excess
of Rs.50,000/- in value of each type from Firms or other parties in which
the directors are interested as listed in the register maintained under
12. As per the information and explanations given to us, the Company has a
regular procedure for the determination of unserviceable or damaged stores
and raw materials and finished goods. In valuing the inventory, due
consideration has been given to the sale ability of the stores and raw
13. As explained to us the Company does not have any by-product or
manufacturing scrap as per the nature of industry. Therefore no records are
14. The Company has accepted deposits from public and there is a
contravention of Section 58A of the Companies Act, 1956 and the rules
framed thereunder as regards updation of Registers and other records and
there is a delay in repayments of deposits and interest thereon
15. We are informed that because of the nature of the industry, no
significant saleable scrap is generated, therefore no records are
16. There is no formal internal audit system is operation. Inspite of
weaker internal control procedures in operation, the company has not
introduced an internal audit system.
17. As explained to us and to the best of our knowledge maintenance of cost
records has not been prescribed by the Central Government under Section 209
(1) (d) of the Companies Act, 1956 (1 of 1956) for any of the products of
18. According to the information given by the Management, the Provident
Fund dues have not been regularly deposited by the Company with appropriate
authority. We were informed that the Company is not covered by the
Employees State Insurance Act.
19. In absence of adequate records being received from the various sites in
respect of in respect of various statutory dues payable by them, we are
unable to report as to whether there were any undisputed amounts payable in
respect of Income-tax, Wealth Tax, Sales-tax, Custom Duty and Excise Duty
have remained outstanding as at 31 st March, 1998 for a period of more than
six months from the date they became payable. However TDS amounting to Rs.
4,47,234/- is yet to be paid by the Company.
20. According to information and explanations given to us no personal
expenses have been charged to revenue account, other than those payable
under contractual obligation or in accordance with generally accepted
21. In view of non provisions of various expenses in regard to interest
dues to the financial institutions and other lenders, we are unable to
express whether 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 Section (1) of section 3 of the Sick Industrial Companies
(Special Provisions) Act, 1985.
For VORA & ASSOCIATES
MUMBAI: (MAYUR A. VORA)
DATE: 30TH NOV., 1998. PARTNER