ANNUAL REPORT 1998-99
INCORPORATED ENGINEERS LIMITED
AUDITORS' REPORT TO TH MEMBERS
We have audited the attached Balance Sheet of INCORPORATED ENGINEERS
LIMITED as at 31st March, 1999 and also the Profit and Loss Account of the
Company for the year ending 31st, March 1999 annexed thereto, and report
1. As required by the Manufacturing and other Companies (Auditors' 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 of the
matters specified in paragraphs 4 and of the said Order.
2. Further to our comments in the Annexure referred to in paragraph 1.
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 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 those books
except for the Jamnagar site where the record of the company are destroyed
by the cyclone. We have relied on the statement submitted by the cite
engineer. We express no opinion thereof.
c) The Balance Sheet and the Profit and Loss Account dealt with by this
report are in agreement with books of the act
d) In our opinion, the Profit Loss Account and the Balance Sheet comply
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956 to the extent applicable.
e) In our opinion and to the best of our information and according to the
explanations given to us, the said accounts read together with the
significant accounting policies in Schedule 18 and the other notes
appearing thereon, subject to Note No.4(a) & 4(b) as regards valuation of
work-in-progress and realisable value of debtors respectively on which we
are unable to express opinion, and note no 5,6 & 7 regarding non provision
of interest on secured loans, to the best of our information and
explanation given to us, the said accounts give the information required by
the Companies Act, 156 in the manner so required and give a true and fair
(i) in the case of the Balance Sheet, of the state of affirs of the Company
as at 31st March, 1999 and
(ii) in the case of the Profit & Loss A/c, the Loss for the year ended on
For J.G.DALAL & COMPANY
DATE : 10.08.1999.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in Paragraph 1 of our Report of even date)
01. The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. A substantial
portion of the fixed assets has been physically verified by the management
during the year which in our opinion is reasonable. No material
discrepancies were noticed on such physical verification.
02. Factory shed, building, land and plant & machinery have been revalued
in 1989 and 1994 as per Chartered Valuer's report.
03. The stocks of finished goods, stores, spare parts and raw materials
have been physically verified during the period by the Management. In our
opinion, the frequency of verification is reasonable.
04. The procedures 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.
05. The discrepancies noticed on verification between the physical stocks
and the book records were not material and have been properly dealt with in
the books of account.
06. On the basis of our examination of stock records, we are of the opinion
that the valuation of stocks is fair and proper in accordance with the
normally accepted accounting principles and is on the same basis as in the
preceding year. However we express no opinion on the valuation of work-in-
07. In our opinion and according to the information and explanations given
to us, the company has taken interest free loans from companies, firms or
other parties listed in the register maintained under Section 301 of the
Companies Act, 1956.
08. In our opinion and according to the information and explanations given
to us, 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 Companies Act, 1956.
09. The parties to whom loans and advances in the nature of loans have been
given by the company are generally repaying the principal amounts as
stipulated and have also been regular in the payment of interest, wherever
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 for the 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 prices in respect of the transactions of purchase of goods,
materials and services and for sale of goods, materials and the registers
maintained under Section 301 and aggregating during the period to
Rs.50,000/- or more in respect of each party are not comparable having
regard to the special nature of the equipment and technical knowhow
involved in the transactions. The company has purchased Plant and Machinery
of Rs.32,01,013/- and Engineering services of Rs.9,69,000/- from a company
where some of the Directors are interested as Director
12. As explained to us, the company has a regular procedure for
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. In our opinion and according to the information and explanations given
to us, the company has not accepted any deposits from the public.
14. In our opinion, reasonable records have been maintained by the company
for the sale and disposal of realisable scrap. The company does not have
any realisable by-products.
15. In our opinion the company's internal audit system requires to be
16. The Central Government has not prescribed under Section 209(1) (d) of
the Companies Act, 1956, the maintenance of cost records in respect of the
products of the Company.
17. According to the records of the company there were defaults in
depositing of Provident Fund and Employee's State Insurance dues as
prescribed under the respective laws.
18. According to the records of the company Rs.85,70,864/- on account of
Central Sales Tax, Gujarat Sales Tax & Turnover tax is outstanding as at
31.03.1999 for a period of more than six months from the date they became
19. There are no undisputed amounts payable in respect of custom duty and
excise duty as at 31.03.1999. However in case of PT on salary of
Rs.27,256/- and TDS on various payment of Rs.8,70,864/- which were
outstanding for a period of more than six months from the date they became
20. 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.
21. 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, 985.
22. In respect of the service activities, in our opinion and according to
the information and explanations given to us :
(i) the company has a reasonable system of recording receipts, issues and
consumption of materials and stores commensurate with the size and the
nature of its service activities and the system provides for a reasonable
allocation of the materials and labour consumed to the relative jobs; and
(ii) there is a reasonable system and authorisation at proper levels with
necessary control on the issue of stores and allocation of stores and
labour to jobs and there is system of internal control commensurate with
the size of the company and the nature of its service activities.
For J.G. DALAL & COMPANY
DATE : 10TH AUGUST,1999.