HYDROFLEX EQUIPMENTS LIMITED
We have audited the attached Balance Sheet of Hydroflex Equipments Limited
as at 31st March 1997 and the Profit and Loss Account for the year ended
31st March 1997 annexed thereto and report that:
1. As required by the Manufacturing and other Companies (Auditors' Report)
Order 1988 issued by the Central Government in terms Of Section 227(4-A) of
the Companies Act, 1956 we enclose in the Annexure statement of the said
matter specified in paragraph and the said Order.
2. Further to our Comments in the Annexure referred to in paragraph 1 above
(a) We have obtained all the information and explanation which to the best
of our knowledge and belief were necessary for the purpose of our audit.
(b) In our opinion proper books of accounts as required by law have been
kept by the Company so far as appears from our examination of such books.
(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 and to the best of our information and according to the
explanation given to us the said Balance Sheet and the Profit and Loss
Account read together with and subject to the notes thereon give the
information required by the Companies Act, 1956, in he manner so required
and subject to the following observations.
I) As per note no. 10, in Schedule "18" quantity details in respect of the
purchases, Sales and Stock of raw material and finished goods were not
II) Finished goods is exclusive of excise duty, as explained in item No.2,
of Schedule 18, which however does not have any effect on the profit of the
Give a true and fair view:
I) In so far as it relates to Balance Sheet of the state of affairs of the
Company as at 31st March, 1997.
II) In so far it relates to profit and loss account of the Profit of the
Company for the year ended on that date.
Referred to in paragraph 1 of our report of Even date for the year ended
31st March 1997.
1. The Company has maintained proper record showing full particulars
including quantitative details and situation of fixed assets which need to
be updated for the transaction during the year under review. We have been
informed that the assets have been physically verified by the management
during the year and there is a regular programme of verification which in
our opinion is reasonable having regard to the size of the company and the
nature of its assets. No material discrepancies were noticed on
2. None of the fixed assets have been revalued during the year.
3. The stocks of finished goods, spare parts and raw materials have been
physically verified during the year by the management. In our opinion, the
frequency of verification is reasonable.
4. The procedure of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
5. The discrepancies noticed on verification of stocks followed by the
management are reasonable and adequate in relation to the sic of the
Company and the nature of its business.
6. On the basis of our examination of stock records subject to note no. 10
in Schedule "18", we are of the opinion that the valuation of stocks is
fair and proper in accordance with the normally accepted accounting
7. In our opinion the terms and conditions on which loans have been taken
from a firm or other parties listed in the registers maintained under
Section 301 are not prima-facie, prejudicial to the interest of the
8. In respect of loans to the tune of Rs 7.32 crore granted to subsidiary
Companies, to a firm Rs. 0.04 crore, listed in the register maintained
under Section 301 and Rs 0.01 crore to a Company, we are unable to express
an opinion on the same as same are interest free and without any terms &
9. In respect of loans and advances in the nature of interest free loans,
to the employees are regular regular in the repayment of Principal amount.
10. In our opinion and according to the information and explanations given
for us and subject to our observations in main report 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, materials.
11. In our opinion and according to the information and explanations given
to us, there are no transactions of purchases of goods and materials and
sale of goods, materials and services made in pursuance of contract or
agreement entered in the registered under Section 301 of the Companies Act,
1956 aggregating during he year to Rs 50,000/- or more in respect of each
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 Provisions of Section 58 (A) are not applicable to the Company
during the year under review.
14. In our opinion and according to the information and explanation given
to us the Company has reasonable records for the sale and disposal of
realisable scrap. The Company's product does not generate any by-product.
15. The company did not have an internal audit system commensurate with the
size and nature of its business as in the opinion of management the
existing internal control procedures are adequate.
16. As far as we are aware, the Central Government has not prescribed for
maintenance of cost records under Section 209 d) of the Companies Act,
17. According to the records of the Company Employees' State Insurance and
Provident Fund dues have been generally regularly deposited during the year
with the appropriate authorities.
18. According to the information and explanation given to us, no undisputed
amounts payable in respect of Income Tax, Wealth Tax, Custom Duty, Excise
Duty except Sales Tax to the tune of Rs 0.23 Lacs was outstanding, as at
31-03-97, for a period of more than six months from the date they became
19. According to the information and explanations given to us, no personal
expenses of employees or directors have been charged to revenue account,
other than those payable under contractual obligations or in accordance
with generally accepted business practice.
20. The Company is not 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.
For H.K. APARANJI
MOHAN B. PYATI
Place : Margao, Goa.
Dated : 30th August, 1997.