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Dupont Sportswear Ltd.

BSE: 523824 Sector: Industrials
NSE: N.A. ISIN Code: N.A.
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Dupont Sportswear Ltd. (DUPONTSPORTS) - Auditors Report

Company auditors report

DUPONT SPORTSWEAR LIMITED ANNUAL REPORT 2000-2001 AUDITORS' REPORT TO THE MEMBERS OF DUPONT SPORTSWEAR LIMITED We have audited the attached Balance Sheet of DUPONT SPORTSWEAR LIMITED as at March 31, 2001 and the Profit and Loss Account of the Company for the year ended on that date, annexed thereto, and report that: I. 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 (hereinafter referred to as the 'Act'), 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 enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said order. Il. Further to our comments in the Annexure referred to in paragraph I above: 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 except as stated in paragraphs 5 (a) (i) and (c) below. 2. In our opinion. except as stated in paragraph 5(b) below, 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. 3. The Balance Sheet and the Profit and Loss Account referred to in this report are in agreement with the books of account. 4. In our opinion. subject to our comments in paragraphs 5(b) below; the Balance Sheet and Profit & Loss Account comply with the Accounting Standards as referred to in Section 211(3C) of the Act, to the extent applicable. 5. a) (i) Loans and advances (considered good by the management) include overdue intercorporate and other deposits of Rs.209.20 lacs, overdue interest thereon of Rs.188.95 lacs. In our opinion, inter-alia, considering the non-availability of information regarding the prospects of recovery in the foreseeable further, the same are doubtful of recovery and should have been provided for. However. no provision for the same has been made by the management as explained in note No. B-4 in Schedule 16. (ii) Advances recoverables in cash or in kind include Rs. 79.91 lacs being amounts paid during the year from time to time on behalf of M/s. Webrands.Com Limited (a Company under the same management) and considered as advance towards share capital of the said Company pursuant to the communication in this regard. However, in view of uncertainty in the investee Company's business operations/sector, we are unable to express our opinion with regard to realisability of the amount invested Refer Note no. B-7 in Schedule 16. b) As explained to in Note No. B-5 in Schedule 16. the Company has not accounted for interest liability of Rs.73.50 lacs payable to a Company under liquidation, which in our opinion, should have been provided for. c) Balances of certain Sundry Debtors, Sundry Creditors and Loans and Advances are subject to confirmation/reconciliation and consequential adjustments, if any, as referred to in Note No. B-3 in Schedule 16. 6. The accumulated losses of the Company read together with our comments in paragraph 5 above have far exceeded the entire net worth of the Company. The accounts have, however, been prepared by he management on the going concern basis, as explained in Note No. B-2 in Schedule 16. This being a matter involving future projections/plans, we are unable to express our opinion as to whether the Company can operate as a going concern. Should the Company be unable to continue as a going concern, the extent of the effect of the resultant adjustment on the net worth of the company as at the year end and loss for the year is not ascertainable. 7. We further report that without considering our observations in paragraphs 5(a) (ii), 5(c) and 6 above the effect of which is presently not ascertainable. had the observations made by us in paragraphs 5(a) (i) and (b) been considered, the Loss for the year would have been Rs. 892.99 lacs as against reported figure of Rs. 481.34 lacs), accumulated losses would have been Rs.1,561.09 lacs, (as against reported figure of Rs.1,149.44 lacs), loans and advances considered good would have been Rs.196.41 lacs (as against reported figure of Rs.594.56 lacs) and Current Liabilities would have been Rs. 170.36 lacs (as against reported figure of Rs.156.86 lacs). 8. The Company has not yet complied with the mandatory requirement of an Audit Committee to be constituted as provided under Section 292 A of the Act. 9. On the basis of written representations received from the Directors as on 31st March. 2001, and taken on record by the Board of Directors, we report that none of the Directors is disqualified from being appointed as a director under Section 274(1)(g) of the Act. 10. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Significant Accounting Policies and Notes appearing in the Schedule 16 and elsewhere in the accounts, give the information required by the Act, in the manner so required, and in view of what is stated in para 7 above, the Balance Sheet does not show a true and fair view of the state of affairs of the Company as at 31st March, 2001 and the Profit and Loss Account does not reflect the true and fair view of the loss of the Company for the year ended on that date. For LODHA & COMPANY Chartered Accountants N. KISHORE BAFNA Mumbai, Dated: May 11, 2001. Partner ANNEXURE TO THE AUDITORS' REPORT Referred to in paragraph (I) of our report of even date i) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. Pursuant to the programme of physical verification of fixed assets in a phased manner, designed to cover all items over a period of three to four years, which is considered reasonable, physical verification of fixed assets was carried out during the year by the management. As explained, no material discrepancies were noticed on such verification. ii) None of the fixed assets of the Company have been revalued during the year. iii) The stocks of finished goods, stores and raw materials have been physically verified by the management at reasonable intervals during the year. iv) In our opinion and according to the information and explanations given to us, the procedures of physical verification of the above referred stocks 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 of physical stocks as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account. vi) On the basis of our examination of stock records, 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 year. vii) In our opinion, the rate of interest and other terms and conditions of an unsecured loan taken from a Director of the Company are, prima facie, not prejudicial to the interest of the Company. The Company has not taken any loans, secured or unsecured, from companies, firms or other parties listed in the register maintained under Section 301 of the Act. In terms of sub-section (6) of Section 370 of the Act, provisions of the Section 370 are not applicable to a Company on or after 31st October, 1998. viii) 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 Act. In terms of sub-section (6) of Section 370 of the Act, provisions of Section 370 are not applicable to a Company on or after 31st October, 1998. ix) Parties, including employees, to whom loans or advances in the nature of loans have been given by the Company are generally repaying the principal amount wherever stipulated and interest, wherever applicable. except in cases involving principal amounts of Rs.209.20 lacs and overdue interest thereon of Rs.188.95 lacs (after excluding provisions for doubtful advances during the year aggregating to Rs.72.09 lacs and conservative non- accounting of interest receivable for the year from parties on the overdue principal and interest outstanding). In our opinion, concerted efforts in this direction are needed. x) In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of finished goods, raw materials, stores including components, plant and machinery, equipment and other assets, and for sale of goods. However, the system of making advances for purchase of material and stores needs to be strengthened in view of frequent cancellation of orders and consequential refund/provisions of advances for non fulfillment in supply of contracted goods/services by the parties to whom advances have been made. xi) According to the information and explanations given to us, transactions of purchase of goods and materials aggregating during the year to Rs.50,000 or more in respect of a party, made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Act, have been made at prices which are reasonable having regard to prevailing market prices of such materials. There are no transactions of sale of goods or materials to such parties. The Company does not render any service. xii) As explained to us, the Company has a regular procedure for determination of unserviceable or damaged raw materials and finished goods and adequate provision has been made in the accounts for the loss arising on such items. xiii) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from public to which provisions of Section 58A of the Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975 are applicable. xiv) The Company has maintained reasonable records for the sale and disposal of realisable scrap. As explained to us, the manufacturing process of the Company does not generate any by-product. xv) In our opinion, the internal audit system of the Company needs to be strengthened to make it commensurate with the size of the Company and nature of its business. xvi) As explained to us, the maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Act, for any of the products of the Company. xvii) According to the records of the Company, Provident fund and Employees' State Insurances dues of Rs.8.00 lacs and Rs.1.30 lacs respectively have not been deposited during the year with the appropriate authorities. xviii) According to the information and explanations given to us, there were no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty which have remained outstanding as at March 31, 2001 for a period of more than six months from the date they became payable. xix) During the course of our audit of the books of account carried out in accordance with generally accepted auditing practices and according to the information and explanations given to us, we have not come across any personal expenses of employees or directors, other than those payable under contractual obligations or in accordance with prevailing business practices, which have been charged to the revenue account. xx) As explained to us the Company w.e.f. 30th March, 2001, is no more covered within the definition of Small Scale Industrial Undertaking and accordingly the Company has become a Sick Industrial Company within the meaning of clause (o) of sub section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. As explained, a reference will be made to the Board of Industrial an Financial Reconstruction under section 15 of the said Act. xxi) In respect of the service activities of the Company, the Company undertakes processing jobs which are carried out together with the overall process of manufacture of the Company's own products and considering the nature of jobs undertaken by the Company, specific authorisation and allocation of man hours utilized and materials consumed to individual jobs is not considered practicable. However, the Company has a reasonable system of recording receipts, issues and consumption of customers' materials and stores. The Company has an adequate system of internal control commensurate with the size of the Company and the nature of its business on issue of stores. For LODHA & COMPANY Chartered Accountants N. KISHORE BAFNA Mumbai, Dated: May 11, 2001. Partner