CANVAY CHEMICALS LIMITED
ANNUAL REPORT 1998-99
THE MEMBER OF
CANVAY CHEMICALS LIMITED
We have audited the attached Balance sheet of the Profit and Loss Account
for the year ended on that date, annexed thereto, and report that:
1. As required by the Manufacturing and Other Companies (Auditor's 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 the
matters specified in the paragraph 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 purpose of our
(b) In our opinion, proper books of account as required by the law, have
been kept by the Company so far as it appears from our examination of the
(c) The Balance Sheet and Profit and Loss account referred to in this
report are in agreement with the books of account.
(d) In our opinion, the Profit & Loss account and Balance Sheet comply with
the accounting standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956.
(e) Further to our comments above, your attention is invited to:
(i) Point 11 of the Director's Report regarding the steps taken by the
Company to be Y2K compliant. It is the management's responsibility to
ensure that the Company is prepared for the year 2000 date change and
accordingly our audit is not intended, designed nor performed to identify
or detect the problems that may result from computer hardware, software or
other automated process' inability to properly process date which includes
issues, internal and/ or external, related to the year 2000. In the opinion
of the management, the year 2000 issues will not vitiate the assumption of
(f) Subject to para (e) above, in our opinion and to the best of our
information and according to the explanations given to us, the said Balance
Sheet and the Profit and Loss Account read together with the notes thereon
give the information required by the Companies Act 1956, in the manner so
required and give a true and fair view:
(i) in so far as it relates to the Balance sheet, of the state of affairs
of the Company as at 31st March, 1999.
(ii) in so far as it relates to the Profit and Loss Account of the Loss for
the year ended on that date.
FOR, KAKARIA & ASSOCIATES
(KAKARIA UJWAL K.)
DATE: 29/07/1999 PROPRIETOR.
ANNEXURE TO THE AUDITOR'S REPORT.
(Referred to in the paragraph (1) of our Report of even date)
1. The company has maintained proper records showing full particulars,
including quantitative details and situation of all its fixed assets. The
management has carried out a physical verification of the major items of
fixed assets and as explained to us, no serious discrepancies have been
noticed on such verification. In our opinion, the frequency of verification
2. The fixed assets have not been revalued during the year.
3. The stocks of finished goods, stores, spare parts and raw materials and
major items of stores have been physically verified during the year by the
management. In our opinion, the frequency of verification is reasonable.
4. The procedures of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the
Company and nature of its business.
5. The discrepancies noticed on verification between physical stocks and
book records were not material in relation to the operations the company.
6. On the basis of our examination of the stock records, and on the basis
of valuation adopted, we are of the opinion that the valuation of stocks is
fair and proper.
7. The Company has not taken unsecured loans during the year from
companies, firms listed in the register maintained under Section 301 of the
Companies Act,1956. We are also informed that there were no companies under
the same management as defined under sub-section (1B) is not applicable.
8. The Company has not taken unsecured loans during the year from
companies, firms listed in the register maintained under section 301 of the
Companies Act, 1956. We are also informed that there are no companies under
the same management as defined under sub-section (1B' of Section 370 of the
Companies Act, 1956 during the period from April 1st, 1998 to October 30,
1998. With effect from October 31,1998 Section 370 (1 B) is not applicable.
9. In respect of loans and advances in the nature of loans given by the
company, parties have been repaying and/or adjusting the principal amounts
and interest, wherever applicable, as 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 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 and according to the information and explanations given
to us, the transactions of purchase of goods and materials, and sales of
goods, materials and services, made in pursuance of contracts or
arrangements entered in the Registers maintained under Section 301 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 the
prevailing market prices of such goods, materials or services, or the
prices at which transactions for similar goods or service have been made
with other parties. In respect of intermediate goods and/or other products
for which comparable data are not available, we are unable to express our
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 not accepted any deposits from the Public within the
meaning of Section 58A of the Companies Act, 1956 and the rules framed
14. In our opinion, reasonable records have been maintained by the Company
for the sale and disposal of scrap and by-products.
15. In our opinion the company has an adequate internal audit system
commensurate with the size and the nature of its business.
16. We have been informed that the Central Government has not prescribed
the maintenance of cost records under Section 209 (1)(d) of the Companies
Act, 1956, for any of the products of the Company.
17. The Company has not paid Provident fund and the employees contribution
to P.F. amounting to Rs. 95295/- & E.S.I.C. amounting to Rs. 14628.68. We
have been informed that the Company did not pay the amount as the P.F.
Registration No. was not alloted to it despite repeated inquiries at P.F.
18. According to the information and explanation given to us, no undisputed
amounts payable in respect of Income Tax, Sales Tax, Customs Duty and
Excise Duty were outstanding as at 31 st March, 1999, for a period of more
than six months from the date they become payable.
19. On the basis of the examination of the books of account carried out by
us in accordance with generally accepted auditing practices and according
to the information and explanations given to us, no personal expenses of
employees or directors have been charged to the Profit and Loss Account,
other than those payable under contractual obligation or in accordance with
generally accepted business practice.
20. The company is not a sick industrial company within the meaning of
Section 3(1) of the Sick Industrial Companies (Special Provisions) Act,
21. The company is not a service company within the meaning of clause 4(b)
of the order.
22. In respect of the Company's trading activities, we have been informed
by the management that there were no damaged goods during the year under
FOR, KAKARIA & ASSOCIATES
(KAKARIA UJWAL K.)
DATE : 29/07/1999. PROPRIETOR.
PLACE : VAPI.