GOODEARTH INDUSTRIES LTD
AUDITORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2002.
1. We have audited the attached Balance Sheet of WEIGHBIRD (INDIA) LIMITED
as at 31st March, 2002 and the relative Profit and Loss Account for the
year ended on that date both of which we have signed under reference to
this report. These financial statements are the responsibility of the
management of the Company. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. 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 presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.
3. As required by the Manufacturing and Other Companies (Auditors' Report)
Order, 1988 issued by the Central Government under section 227 (4A) of the
Companies Act, 1956 of India (the Act) and on the basis of such checks as
we considered appropriate and according to the information and explanations
given to us, we set out in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that :
a) In view of the permission obtained from Govt. of India u/s.25.0 of
Industrial dispute Act, 1947 vide letter no. F.No.L-42024/10/200-IR(Misc)
Dated 27/12/2000. to close Weighbird (India) Ltd., Going concern assumption
is no more valid. Consequently, adjustments may be required to the recorded
Assets amounts & classification of Liabilities.
b) 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;
c) 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 these books;
d) The Balance Sheet and Profit and loss Account dealt with by this report
are in agreement with the books of account;
e) In our opinion, these financial statements have been prepared in
compliance with the applicable accounting standards referred to in Section
211 (3C) of the Act.
f) Based on the representations made by all the Directors of the company as
on March 31, 2002 and taken on record by the Board of Directors of the
Company and in accordance with the information and explanations as made
available, the Directors of the Company do not, prima facie, have any
disqualification as referred to in Clause(g) of subsection (1) to Section
274 of the Act.
g) In our opinion and to the best of our information and according to the
explanations given to us, the Balance Sheet and Profit and Loss Account
subject to our observation No. 1 to 9 attached herewith, read together with
the Notes thereon give in the prescribed manner the information required by
the 'Act' and also give respectively, a true and fair view in conformity
with the accounting principles generally accepted in India :
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2002; and
(ii) in the case of the Profit and Loss Account, of the loss for the year
ended on that date.
ANNEXURE TO THE AUDITOR'S REPORT :
1. The Company has maintained proper records to show full particulars
including quantitative details and situation of fixed assets. Those Assets
have been physically verified by management, during the last year. However,
the assets are under the close supervision of the Holding Company.
2. The fixed Assets of the company have not been revalued during the year.
3. The stock of finished goods, spare parts, loose tools, components and
raw material of the company have not been physically verified at the end of
the year by the management, since the unit is closed. The physical
verticiation has been carried out during the last year. However the stocks
are under the close supervision of the holding Company.
4. The entire value of the stock has been provided due to obsolescence
during the Current year.
5. Provision for obsolesces has been made for entire stocks.
6. The Company has raised in their books an interest bearing loan Rs. 4.65
lakhs from its holding company by removing a non-interest bearing
outstanding of the same value by merely affecting a book entry in an
earlier year and thereby Company has been subjected to an interest
liability of Rs.8.38 lakhs in its books of accounts in our opinion the
aforesaid loan is prejudicial to the interest of the company.
7. The company has not given any loans secured or unsecured to companies,
firms or Other parties listed in the register maintained u/s 301 of the
Companies ACT 1956.
8. The Company has not given loans except for the cases referred to in Note
No.9 of Schedule 26.
9. The transactions of the Company are monitored by the Holding Company and
as such the internal Control is viewed as adequate in commensurate with the
present scenario of the company.
10. No transaction of purchase or sale of goods, materials and service
aggregating to Rs. 50,000/- or more in value have been made with parties
listed in the register maintained under Section 301 of the Companies Act,
1956 except for the consideration for services (Rent etc.) booked by the
Company against which comparable prices were not available for our
11. The unservicable and damaged stores, raw materials and components had
been written off.
12. The Company has not received any deposit from the Public under Section
58A of the Companies Act, 1956 and rules framed there under.
13. There is no question of records for the sale and disposal of scrap and
by product, since the unit is closed.
14. The Company has an in built system of internal audit as transactions
are closely monitored by Holding Company.
15. The Central Government has not prescribed the maintenance of cost
records by the Company under section 209(i)(d) of the Companies Act, 1956
for any of its products.
16. Provident Fund and other related dues have been deposited. However the
accumulated arrears of Provident and Employees State Insurance dues as on
31st March, 2002 were Rs. 51,95,003/-and Rs.7,79,020/- respectively.
17. The undisputed amount in respect of Sales Tax, Income Tax and
Professional Tax, which remained outstanding as on 31st March, 2002 Rs.
2,72,734/-, Rs. 46,913/- and Rs. 1,37,310/- respectively.
18. On the basis of checks out by us in accordance with generally accepted
auditing procedures and as per explanations given to us no personal
expenses have been charged to the Profit and Loss Account.
19. The Company is a sick Company within the meaning of clause (o) of
sub-section (1) of section 3 of the Sick, Industrial Companies (Special
Provisions) Act 1985 (1 of 1986) and registered with B.I.F.R., B.I.F.R.
Bench confirmed winding up under Section 20(1) of the Act vide order dated
17.2.97. Workers union submitted an appeal to AAIFR., AAIFR after two
hearings rejected the appeal vide order dated 15.9.97. Govt. of India has
granted permission for closure of Weighbird (India) Ltd. u/s. 25.o of I.D.
Act, 1947, vide letter no. F.No.L-42024/10/2000-IR(Misc) Dated 27/12/2000.
However this is subject to orders/directions of the High Court in the
matter and also the out come of any of the court cases relevant to the
subject pending in any court.