The Members of
We have audited the attached Balance Sheet of BSI LIMITED, as at 31st
March, 1998 and the Profit and Loss Account of the company for the year
ended on that date annexed thereto and report that:
1 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.
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 the books.
3 The Balance Sheet and Profit and Loss Account dealt with by this report
are in agreement with the books of account.
4 a) The accounts have been prepared on the basis that the Company is a
going on concern.
b) The Company has an investment of Rs.25,000 thousand in the capital of
BSI Realtors, a partnership firm in which the Company is the major partner.
BSI Realtors also owes the company Rs.18,253 thousand on debt and advance
accounts. Management is of the view that both the investment and the
amount due on debt and advance accounts are recoverable and no provision is
required (Note 9).
c) The Company has transferred the assets and liabilities of its finance
division as on 1 st April,1995, to BSI Capital 8 Finance Limited and the
balance consideration of Rs.45,503 thousands is recoverable from BSI
Capital 81 Finance Limited as on 31 st March, 1998 is insufficient to meet
its liabilities. Provision has not been made for consideration receivable,
considered doubtful of recovery y to the extent of Rs.20,000 thousands.
d) Provision has not been made for debtors and advances considered doubtful
of recovery, aggregating to Rs. 25,542 thousand and Rs. 61,436 thousand
respectively, as referred to in Note 10.
e) Provision has not been made for the interest on certain interest bearing
loans amounting to Rs.25,214 thousand (Note No 111
f) Provision has not been made for penal interest/liquidated damages on
loan from Financial lnstitution amounting to Rs 10708 thousand (See Note
g) Company has provided for differential sugarcane price for the year 96-97
amounting to Rs.17,926 thousand - extra ordinary item (Note No.13(b)).
h) Subject to the matters stated in paras (a) to (g) above, 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 give the information
required by the Companies Act,1956 in the manner so required and give a
true and far view:
(i) in the case of the Balance Sheet, of the state of affairs of the
company as 31 st March, 1998; and
(ii) in the case of the Profit and Loss Account, of the Loss for the year
ended on that date.
5 As required by the Manufacturing and Other Companies (Auditor,r s Report)
Order,1988, issued by the Company Law Board in terms of Section 227(4A) of
the Companies Act,1956, we further report that:
i) The Company has maintained proper records showing particulars including
quantitative details and situation of fixed assets, however the records
maintained do not show the written down values in respect of each asset. We
are informed that the company has a program for physical verification of
the fixed assets at periodical intervals. In our opinion, the period of
verification is reasonable having regard to the-size of the company and the
nature of its assets. We are informed that no significant discrepancies
were noticed on such verification.
ii) The fixed assets have not been revalued during the year.
iii) The Management has conducted physical verification in respect of
finished goods, stores 8 spare parts, raw materials, trading gods and work-
in-progress during the year. In our opinion, the frequency of such
verification is reasonable.
iv) The procedures of physical verification of inventories followed by the
management are reasonable and adequate in relation to the size of the
company and the nature of its business.
v) The discrepancies noticed on verification between the physical stocks
and book records were not material, having regard to the size of operations
of the company and the same have been properly dealt within the books of
vi) In our opinion, the valuation of inventories is fair and proper, in
accordance with the normally accepted accounting principles and is on the
same basis as in the preceding year.
vii) In our opinion, the rates of interest and other terms and conditions
of loans/unsecured deposits taken from companies, firms or other 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.
viii) Except for a security deposit placed with a subsidiary company, the
company has not granted any loans, secured or unsecured, to companies,
firms or other parties listed in the register maintained under Section 301
of the Companies Act, 1956 or to Companies under the same management as
defined under Section 370 (1 B) of the Companies Act, 1956.
ix) Except for the debts/advances of Rs.18,253 thousand to BSI Realtors
referred to in para 4(a) above and advances considered doubtful aggregating
to Rs. 61,436 thousand referred in para 41d) above, the parties to whom
loans and advances in the nature of loans have been given by the company,
are repaying the principal amounts as stipulated and are generally regular
in payment of interest where applicable.
x) 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 materials including components, plant and machinery,
equipment and other assets, and for the sale of goods.
xi) 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 materials and services, made in pursuance of contracts or
arrangements entered in the register maintained 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 considered
reasonable, having regard to prevailing market prices for such goods,
materials or services, where available or the prices at which transactions
for similar goods, materials or services have been made with other parties.
xii) 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 rules framed thereunder specifically in respect
of non-maintenance of liquid assets.
xiii) In our opinion, the company has maintained reasonable records for the
sale and disposal of by-products and scrap.
xiv) In our opinion, the scope of internal audit needs to be increased in
order to be commensurate with the size of the company and nature of its
xv) we have broadly reviewed the books of account maintained by the company
in respect of its sugar manufacturing operations pursuant to the Order made
by the Central Government for maintenance of cost records prescribed under
Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that
prima facie, the prescribed accounts and records have been maintained. We
have not, however, made a detailed examination of the records with a view
to determining whether they are accurate or complete.
xvi) According to the records of the company during the year company was
not regular in depositing provident fund dues with appropriate authorities.
At the close of the year Rs. 1,515 thousand was overdue pertaining to
period December,97 to March,98.
xvii) According to the information and explanations given to us, there were
no undisputed amounts payable in respect of customs duty and excise duty
out-standing except Rs. 503 thousands on account of sales tax and Rs. 413
thousand on account of Tax Deduction at Source outstanding at the year end
for a period of more than six months from the date they, became payable.
xviii) According to the information and explanations given to us and the
records examined by us no personal expenses, other than those payable under
contractual obligations or in accordance with the generally accepted
business practices, have been charged to revenue account.
xix) The Company has become a sick industrial company within the meaning of
provisions of section 3(1)(0) of the Sick Industrial Companies (Special
Provisions) Act.1985. It proposes to make a reference to the Board for
Industrial and Financial Reconstruction under Section 15 of the said Act.
However, these accounts have been prepared on the basis that the Company
continues to be a going concern.
xx) In respect of the company s trading activities, the damaged goods are
determined and provisions made in the accounts for the loss.
xxi) The Company has maintained proper records and registers of
transactions and contracts in respect of Investments purchased and sold
during the year and timely entries have been made therein. The investments
made by the Company are held by the Company in its own name except for the
shares which are in process of being transferred.
For and on behalf of
TARAPORE & Co.
Place : Bhopal P.J. Tarapore
Date : 27th May, 1998 Partner