MLG INDUSTRIES LIMITED
To THE MEMBERS OF
MLG INDUSTRIES LIMITED
We report that we have audited the attached Balance Sheet of MLG Industries
Limited as at 31st March, 1998 and also the Profit and Loss Account of the
Company for the year ended on that date, both of which we have signed under
reference of this report.
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, 1 g56, we enclose in the Annexure 'A' a statement on the
matters specified in paragraphs 4 and 5 of the said order. Further to our
comments in the Annexure referred to in paragraph above, we report that:
i) 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:
ii) In our opinion, proper books of account as required by law have been
kept by the company so for as appears from our examination of the books:
iii) The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account:
iv) In our opinion and to the best of our information and according to the
explanations given to us, the said statements of accounts subject to Notes
Nos. 3 to 7 of Schedule 15 regarding non-provision of interest and other
payments due and impact of these on the loss of the company and read
together with other notes in schedule 15 give information required by the
Companies Act, 1g56 in the manner so required and give a true and fair
a) in the case of the Balance Sheet, of the state of affairs of the Company
as at 31st March. 1998, and
b) in the case of the Profit and Loss Account, of the loss of the company
for the period ended on that date.
For Deepak Bansal & Associates
Place: Delhi. Deepak Bansal
Date : 2nd April, 1998 Partner
ANNEXURE 'A' REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS' REPORT TO THE
MEMBERS OF MLG INDUSTRIES LIMITED ON THE ACCOUNTS FOR THE PERIOD ENDED ON
31ST MARCH, 1998.
(a) The Company is generally maintaining proper records showing full
particulars including quantitative details and situation of fixed assets.
All fixed assets have been physically verified by the management at
reasonable intervals and no material discrepancies were noticed on such
(b) None of the fixed assets have been revalued during the year.
(c) The finished goods, raw materials components, stores and spares have
been physically verified by the Management at reasonable intervals.
(d) The procedure of 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
(e) The discrepancies noticed on physical verification of stocks as
compared to book records were not material and have been properly dealt
with in the books of account
(f) On the basis of our examination of stocks records, we are of the
opinion that 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 preceeding year.
(g) The company has not taken any loans, secured or unsecured, from
companies, firms or persons listed in the register maintained under section
301 of the Companies, Act, 1956 and/ or from bodies corporate under the
same management as defined under sub section (1 B) of section 370 of the
Companies Act. 1956.
(h) The company has not granted any loans, secured or unsecured, to
companies, firms, or other parties listed in the register maintained under
section 301 and/or to the companies under the same managements defined
under sub section (1B) of Section 370 of the Companies Act, 1956.
(i) The parties to whom loans or advances in the nature of loans have been
given by the company are generally regular in repayment of the principal
amount and interest thereon as per stipulations.
j) In our opinion and according to the explanations given to us, there are
adequate internal control procedures commensurate with the size of the
company and the nature of its business of purchase of stores, raw material
including components, plant and machinery, equipment and other assets and
for the sale of goods. In respect of raw material purchases, the Company is
not inviting quotations from other parties as according to the explanation
given to us, the material are of a specialized nature.
(k) According to the information and explanations given to us, there is no
contract or arrangement of purchase or sale of goods, materials and
services entered in the registers maintained under section 301 of the
Companies Act, 1956, however, purchase, sale of goods and services were
rendered to such parties which have been made at prices which are
reasonable having regard to the prices at which transactions for similar
goods, material or services have been made with other parties, except in
the cases where a comparison could not be made as, according to the
information given to us, there were no transaction for similar goods with
(I) As explained to us, unserviceable or damaged stores, raw materials and
finished goods have been determined by the management and adequate
provisions for the loss has been made in the accounts.
(m) The company has not accepted any deposits form the public within the
meaning of section 58A of the Companies Act, 1956.
(n) Reasonable records have been maintained by the company for the sale and
disposal of production and scraps. The Company has no by-product.
(o) In our opinion and according to the information and explanations given
to us, there are adequate internal control procedures commensurate with the
size 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.
(p) The Central Government has not prescribed maintenance of cost records
under section 209 (1 ) (d) of the Companies Act, 1956 for any of the
products of the company.
(q) Employees State Insurance and Provident Fund dues have generally been
regularly deposited with the appropriate authorities.
(r) As on the last day of the financial year, 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
date they become payable.
(s) The company has a policy of authorizing expenditure based on reasonable
checks and controls. This policy is intended to ensure that expenses are
authorized on the basis of contractural obligations or accepted business
needs and requirements. In terms of these information and explanations
given to us, we have not come across any expenses charged, to the best of
our knowledge and belief, could be personal expenses.
(t) That if provision of expenses are made as stated in Notes no. 3 to 7 of
Schedule 15 of the Balance Sheet, the Company shall become a stick
industrial company within the meaning of clause (o) of sub section (1 ) of
section 3 of the Sick Industrial Companies (Special Provisions) Act. 1985.
(u) In respect of the Company's service activity, in our opinion the
Company has a reasonable system of recording receipts, issues and
consumption of materials and stores commensurate with the size and nature
of its business The allocation of materials consumed and manhours utilised
to the relative jobs has not been considered necessary by the Company,
since the services rendered are billed to customers at predetermined
prices. In our opinion and according to the information and explanations
given to us, there is reasonable system of authorization at proper levels,
and an adequate system of internal control commensurate with the size of
the Company and the nature of its business, on issue of stores and
allocation of stores to jobs.
(v) In respect of Company's trading activity, as explained to us, damaged
goods have been determined and adequate provision for the loss, which is
not significant, has been made in the accounts.
For Deepak Bansal & Associate
Place: Delhi. Deepak Bansal
Date : 2nd April, 1998 Partner