CHOKSI TUBE COMPANY LIMITED
ANNUAL REPORT 2001-2002
REPORT OF THE AUDITORS TO THE SHAREHOLDERS
1. We have audited the attached Balance Sheet of CHOKSI TUBE COMPANY
LIMITED as at 31st March, 2002 and the annexed Profit & Loss Account for
the year ended on that date.
2. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
3. We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the,
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
4. As required by the Manufacturing and Other Companies (Auditors' Report)
Order, 1988 (MAOCARO) issued by the Company Law Board in terms of Section
227(4A) of the Companies Act, 1956 and as per the information and
explanations furnished to us and the books and records examined by us in
the normal course of audit, we report that:
4.1. The company is maintaining proper records showing full particulars,
including quantitative details and situation of the fixed assets. We are
informed that in terms of the decision taken by the management of
conducting physical verification of the fixed assets in a phased manner,
some of the fixed assets have been physically verified at the year end. In
our opinion, having regard to the size of the company and nature of its
business, the frequency of verification is reasonable. No material
discrepancies have been noticed in respect of the assets physically
4.2. None of the fixed assets have been revalued during the year.
4.3.1. The stocks of finished goods, stores, spare parts and raw materials
have been physically verified by the management / a firm of Chartered
Accountant (external agency) at the year end except for the stocks lying
with the third parties at the year end, which have been confirmed by them.
In our opinion, the frequency of verification is requires to be increased.
4.3.2. In our opinion, having regard to the size of the company and nature
of its business, the procedures of physical verification of stocks followed
by the management and the external agency requires to be strengthened.
4.3.3. The discrepancies noticed on physical verification of stocks as
compared to book records were not material in relation to the operations of
the company and have been properly dealt with in the books of account.
4.3.4. On the basis of our examination of stocks, we are satisfied that the
valuation is fair and proper in accordance with the normally accepted
accounting principles and is on the same basis as in the preceding year.
4.4. The other terms and conditions of interest free unsecured loans
obtained from a company and a party listed in the register maintained under
section 301 of the Companies Act, 1956, in our opinion are not prima facie
prejudicial to the interest of the company. We are informed that there are
no companies under the same management as defined under sub-section 370(1B)
of the Companies Act, 1956.
4.5. The company has not granted loans, secured or unsecured, to companies,
firms or other parties listed in the register maintained under section 301
of the Companies Act, 1956.
4.5.1. In respect of loans and advances in the nature of loans given by the
company, the parties are repaying the principal amounts as stipulated or as
rescheduled and have also been regular in the payment of interest, wherever
4.6. In our opinion, and according to the information and explanations
given to us, having regard to the explanation that certain grades/quality
of raw materials purchased are specific to the company's technical
requirements and for sale of trading goods for which suitable alternative
sources are not available to obtain comparable quotations, there are
adequate internal control procedures commensurate with the size of the
company and nature of its business with regard to purchase of stores, raw
materials, including components, plant and machinery, equipments and other
assets and for the sale of goods.
4.7. There are no 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, as aggregating during the year to Rs.50,000/- or more
in respect of each party.
4.8. We are informed, the company has a regular procedure for the
determination of unserviceable or damaged stores, raw materials and
finished goods and the stocks of stores, raw materials and finished goods
held at the year end are not unserviceable or damaged.
4.9. The company has complied with the provisions of Section 58A of the
Companies Act, 1956 and the rules made thereunder with regard to deposits
accepted by it.
4.10. In our opinion, reasonable records have been maintained by the
company for the sale and disposal of realisable scrap generated in the
manufacturing process. The company's operations do not generate any by-
4.11. The company does not have formal internal audit system. In the
opinion of the management, the existing internal control procedures are
adequate and hence, separate internal audit system is not called for.
4.12. In our opinion, the company has prima facie maintained accounts and
records as prescribed by the Central Government under section 209(1)(d) of
the Companies Act, 1956, which have not been examined by us.
4.13. During the year, the company has been regular in depositing the
Provident Fund and the Employees' State Insurance dues with the appropriate
authorities except for delayed payments relating to few months. As of year
end, these are arrears of Rs.8,98,185/-.
4.14. As of year end, there were no amounts outstanding in respect of
undisputed income tax, wealth tax, sales tax, custom duty and excise duty,
which were due for more than six months from the date they became payable,
other than corporate income tax on dividend of Rs.12,23,543/-.
4.15. In the course of our examination of the books of account, carried out
in accordance with the generally accepted auditing practices and as
informed by the management, we have not come across any personal
expenses which have been charged to revenue account, other expenses on
employees, including Directors, under contractual obligations/accepted
4.16. On the basis of the accounts prepared by the management for the year
pending accounting of impact on the matters as referred to in Note Nos. 8,
9 and 10 in Schedule 17-B, 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.
4.17. We are informed that the stocks of trading goods held at the year end
are not damaged goods.
5. In terms of and further to above, we report that:
5.1. We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purpose of our
5.2. In our opinion, proper books of account, as required by law have been
kept by the Company so far as it appears from our examination of the books.
5.3. The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the book of account.
5.4. In our opinion, the Profit and Loss Account and Balance Sheet
materially comply with the mandatory accounting standards referred to in
sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent
applicable, subject to basis of assigning value to certain inventories as
referred to in Note 9 of Schedule 17-B forming part of the audited
5.5. On the basis of our review of the confirmations received from the
public companies in which the Directors of the company are directors, which
has been taken on record by the Board of Directors and as per the
information and explanations given to us, none of the Directors of the
company are disqualified from being appointed as directors of the company
under clause (g) of sub-section (1) of Section 274 of the Companies Act,
5.6. Attention of the members is invited specifically to the notes referred
to hereunder of Schedule 17-B para (e) regarding proposed dividend on
preference shares and our report on MAOCARO vide para No. 4.16.
a. Note No.8 regarding classification of outstanding claims, pending
acceptance, as good for recovery.
b. Note No.9 regarding the opinion of the Board of Directors of the Company
relating to matters referred to therein, having the impact on the affairs
of the Company.
c. Note No.10 (a) and (b) regarding non provision of fall in value of
investment in equity shares of Rs.39,55,803 and of debts classified as
doubtful of recovery Rs.9,36,323.
d. Note No. 13.2 regarding provision made for proposed dividend on the part
of preference capital not redeemed during the year.
e. In the event finally there is short recovery / realisation against / of
certain assets as referred to in Note No. 9(d) of Schedule 17-B and the
aggregate of such short recovery / realisation exceeds the balance in the
profit and loss account, then, the proposed dividend of Rs.70 lacs on
preference shares, in our opinion, may amount as declared out of profit
transferred to reserves, without compliance of rules made in this regard
and or out of capital.
6. Subject to the foregoing, in our opinion and to the best of our
information and according to the explanations given to us, the said
accounts read in conjunction with other notes thereon, give the information
required by the Companies Act, 1956 in the manner so required and give a
true and fair view in conformity with the accounting principles generally
accepted in India :
(a) In the case of the Balance Sheet of the state of affairs of the Company
as at 31st March, 2002; and
(b) In the case of the Profit and Loss Account of the profit for the year
ended on that date.
For M.A. Parikh & Co.,
MANUBHAI A. PARIKH
Mumbai, Date : 31st July, 2002 PARTNER