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Motorol Speciality Oils Ltd.

BSE: 506954 Sector: Industrials
NSE: N.A. ISIN Code: INE642B01019
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Motorol Speciality Oils Ltd. (MOTOROLSPECOIL) - Auditors Report

Company auditors report

ANNUAL REPORT 1999-2000 MOTOROL SPECIALITY OILS LIMITED AUDITORS' REPORT The Members Motorol Speciality Oils Ltd. Baroda. We have audited attached Balance Sheet of Motorol Speciality Oils Limited, Baroda as at 31st March, 2000 and also the annexed Profit and Loss Account for the year ended on that date and we report that: 1. We have obtained all the information and explanations which to be best of our knowledge and belief were necessary for the purpose of our audit except, the necessary documentary in respect of the transactions and documentation in respect of quantitative information as stated in notes forming part of account and the particulars referred to in separate qualifications given hereunder. 2. In our opinion, 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 said Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account. 4. In our opinion and to the best of our information and according to the explanations given to us and read with the notes thereon and in particular the notes referred to hereunder, namely. a. Note No. 1: Balances of debit & credit parties are subject to confirmations and reconciliation. b. Note No. 2: During the search & seizer operations by sale tax department on 16.02.2000 certain records have been seized by the sales tax department. Hence the same could not be verified by us. c. Note No. 5: Reference is invited to non payment of Non Convertible Debentures and creations its charge. d. Note No. 8, 19 & 15: No provision has been made in the books of accounts for certain unascertained liabilities as follows. i) The Company has not made any provisions for doubtful debtors Amount of such doubtful debtors are not determined. (refer not no 8) ii) No provision has been made for demunation on investment in quoted shares Rs. 36.01 lakhs. The amount of demunation in unquoted shares is also not determined and remain unprovided. (refer note no 15) iii) Statutory dues of employees who have. left the employment with the Company remains unprovided. The amount of such liability is not determined. (refer note no 19) e. Note No. 10: Reconciliation of certain accounts related to share premium, unclaimed dividend are in progress. f. Note No. 13: Pending documentation an advance of Rs. 4.87 crores paid for acquisition of immovable properties. We are informed that the company has taken legal action against the party for recovery of dues and / or specific performance. g. Note No. 14: The Company has received an amount Rs. 7.32 lakhs as advance towards sale of land and an amount of Rs. 1.80 lakhs against sale of residential quarters which amount has been shown under the head current liabilities in the books of accounts. though fixed assets of the Company have been transferred. h. Note No. 24: It is noticed that the company has outstanding from Motorol (India) Ltd. which has been wound up and order have been passed by Gujarat High Court appointing liquidator who has stated to have taken charge during the year. Details in respect of transaction with them during the year could not be confirmed. No provision is made for amount due from them as the company is pursuing the matter. In view of the circumstances & legal position involved we are unable to express our opinion on the said transaction. i. Note No.16: The Company has discontinued the Group Gratuity Scheme for its employees and discontinued the Master Policy held with the Life Insurance Corporation of India. The present liability for the future payment of gratuity to employees therefore stands uncovered. The amount of additional liability on account of future gratuity has not been determined and no provision has been made for the incremental liability for the year and up to previous year on this account. j. Note No. 18: The Company is yet to complete the formalities Prescribed under the Companies Act in respect of increasing authorised and paid up capital in earlier years. k. Note No. 20: Reference is invited to Depreciation not provided Rs. 20.21 lakhs. l. Note No. 22 & 28: No provision has been made for interest on NCD, ICD, deposits & bank credits (estimated at Rs.23 lakhs) in view of its operational status and hopeful of getting it waived under the circumstances. m. Note No. 23: In contradiction to the Company's policy on Deferred Revenue Expenditure stated in item 5 of statement of accounting policy, the Company has not written off an amount of Rs.19.99 lakhs being the amount in respect of public issue, corporate image development and other deferred revenue expenditure. n. Note No. 27: The company has paid Flexpack India Ltd. Rs.4.5 crores towards share application money for which shares are to be received. o. Note No. 29: The company has undertaken petro project for Rs. 572.27 lakhs and product development know how for Rs. 275 lakhs. In absence of availability of details to us we could not verify the same and therefore unable to express out opinion on same. p. Note No. 31: Reference is invited to dues and loans & Advances from concerns / parties in which directors have shown their interest as director. q. Note No. 32: The accounts books are audited from the computer screen. Printed copies of the same are yet to be taken. 5. Subject to the above, In or opinion the Balance Sheet and Profit & Loss Account comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act,1956. 6. Subject to matters reffered to in para 1 & 4, in our opinion and to the best of our information and according to the explanations given t,o us, the said accounts, read together with the notes thereon, give the information required by the companies Act,1956 in the manner so required and give a true and fair view. A. In the case of Balance Sheet of the state of affairs of the Company as at 31st March, 2000 AND B. In the case of Profit and Lass Accounts of the profit for the year ended on that date. As required by the Manufacturing and Other Companies (Auditor's Report order, 1988 issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate we further report that: 1. The updated records showing particulars including quantitative details and situation of the Fixed Assets are stated to be under compilation & reconciliation. Physical verification of Fixed Assets of the company is yet to be made & discrepancies of any needs to be accounted. 2. None of the fixed assets has been revalued during the year. 3. The stock in trade has been stated to be physically verified by the management at the end of period. In our opinion, the frequency of the verification needs to be increased. 4. In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the company needs to be more frequent and in relation to the size of the company and the nature of its business. 5. We are informed that there are no material discrepancies noticed on physical verification of stocks as compared to the book records and the same has been properly dealt with in the books of account. 6. in our opinion, the valuation of stocks is in the same basis as in preceding year and in accordance with the normally accepted accounting principles. 7.- Company has taken loans,,secured or unsecured from Companies as listed in the Register maintained by the Company under section 301 of the Companies Act, 1956 or from the Companies under the same management as defined under Sub Section (1B) of Section 370 of the Companies Act, 1956, no stipulations are made as regards the interest or other conditions in respect of the same 8. According to the information and explanations given to us, the Company has granted loans, secured or unsecured to Companies, firms or other parties listed in the Register maintained under section 301 of the Companies Act,1956, no stipulations are stated to be made as regards the interest or other conditions in respect of the same., 9. The parties to whom loans or advances in the nature of loans have been given by the Company are generally repaying the principal amount. As stated there is no stipulation for repayment and interest. In absence of full details made available extent of its prejudicalness could not be verified. 10. In our opinion and according to information and explanations given to us, internal control procedure need to be strengthened commensurate with the size of the company and the nature of its business with regard to the purchases of plant and machinery, equipment and other assets. The companies internal control procedure for purchase and sale of goods needs to be strengthened so as to commensurate with the size of the Company and the nature of its business. Proper documents and supporting records of transactions also needs to be obtained. 11. The Company has entered in to transaction for the purchase/sale of goods provision of services to and availing services from the companies in which some of the. Directors are interested for amounts aggregating Rs. 50,000/- or more in respect of each party during the year. We are not in position to comment as to whether the prices/rates charged or paid are reasonable or otherwise in view of technical nature of the services rendered and comparable prices of similar goods not being available with the Company. - 12. The Company has procedures for determining unserviceable or damaged stores, raw materials and finished goods and the necessary adjustments for the loss, where occurred has been made in the Accounts. 13. The Company h,,as not accepted fixed deposits from the public during the year and therefore the provisions under Section 58A of the Companies Act,1956, or the directives of the Reserve Bank of India are not applicable. 14. We are informed that the Company has no realisable scrap and no by- products arise in the manufacturing process of the Company. 15. The Company avails of the services of the Internal Audit Department of the group companies and this internal audit system is found inadequate and required to be strengthened. 16. The Central Government has not prescribed maintenance of cost records in respect of the products manufactured by the Company under Section 209 (1) (d) of the Companies Act,1956. 17. The Company has deposited the Provident Fund and Employees State Insurance dues with the appropriate authorities during the year except the delay in such payments. 18. According to the information and explanation 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 31.3.2000 for a period of more than six months from the date they became payable. 19. According to the information and explanations given to us and as appears from the available records of the Company examined by us, no personal expenses have been charged to revenue account except out of commercial, expediency, custom or discharge of contractual liability. 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 Provision) Act,1985. For AMBALAL M. SHAH & CO. Chartered Accountants Place: Baroda ASHOK JAIN Date : 02/12/2000 Partner