MV COTSPIN LIMITED
MV COTSPIN LTD.
We have Audited the attached Balance Sheet of MV COTSPIN LIMITED as at 31
st March, 1999 and the Profit & Loss Account for the year ended on that
date and report as follows:
As required by the Manufacturing and Other Companies (Auditor's Report)
Order, 1988, issued by the Company Law Board in terms of Section Z27 (4A)
of the Companies Act,1956 we enclose in the annexure 'A' Statement on the
matters as specified in paragraphs 4 & 5 of the said order, to the extent
applicable to the Company.
Further to our comments in the Annexure referred to in Paragraph 1 above:
(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 had been kept
by the Company, so far as it appears from our examination of the books of
(c) The Balance Sheet and Profit & Loss Account dealt within the report are
in agreement with the books of accounts of the Company.
(d) In our opinion, the Balance sheet and profit and loss account comply
with the Accounting standard referred to in sub-section 3(c) of section 211
of the Companies Act,1956 except for accounting of certain expenses on cash
basis and treatment of interest on foreign currency loan as per Schedule
(e) In our opinion and to the best of our information and according to the
explanations given to us the said accounts subject to note no. B(2)(a)
regarding change in accounting treatment relating to interest on foreign
currency loan which resulted into profit being overstated by Rs. 2264504/-
(after writing off one fifth Rs. 566126/-) and interest on secured loan
being understated by the same amount and note no B(2)(b) regarding change
in accounting treatment relating to commission on sales the amount of which
is not determined and note no. A(9) and A(10)(b) regarding treatment of
certain items on cash basis read together with the other notes as appearing
in Schedule "R" thereon give the information required by the Companies Act,
1956 in the manner so required and also give a true and fair view:
i) In the case of the Balance Sheet, of the state of affairs of the Company
as on 31st March 1999.
ii) In the case of Profit & Loss Account, of the Profit of the Company for
the year ended on that date.
For P.K.AJITSARIA & CO.
Date : June 18,1999.
(Referred to in Paragraph 1 of our report of even date on the accounts of
MV COTSPIN LIMITED for the year ended 31 st March, 1999.)
1. The Company has maintained reasonable records to show full particulars,
including quantitative details and location of fixed assets which have been
physically verified by the Management at reasonable interval & no material
discrepancies were noticed on such verification as compared to the book
2. None of the fixed assets has been revalued during the year.
3. According to the explanations and information given to us, the procedure
of physical verification of stock followed by Management are reasonable and
adequate in relation to the size of the company and the nature of its
4. No material discrepancies were noticed on such verification between the
physical stocks and the books records.
5. On the basis of the examination of books and records, we are of the
opinion that valuation of stocks is fair and proper and is in accordance
with the generally accepted accounting principles.
6. The Company has not granted any loan to or taken any loan (secured or
unsecured) from companies, firms or other parties listed in the register
required to be maintained under section 301 of the Companies Act 1956, or
from companies under the same management as defined under section 370 (IB)
of the Companies Act 1956, the rate of interest and other terms and
conditions of which are prejudicial to the interest of the company.
7. In respect of the loans and advances in the nature of loans given by the
company, where stipulations have been made, the parties are generally
repaying the principal amounts as stipulated and have also been regular in
the payment of interest where applicable.
8. The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act,1956.
9. According to the information and explanations given to us, and the
records examined by us, no undisputed amounts payable in respect of Income
Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty were outstanding
as at the end of the year for a period of more than six months from the
date they became payable except TDS payable of Rs. 625 and Rajasthan sales
tax of Rs. 960/-.
10. There are adequate internal control procedure commensurate with the
size of the company and the nature of its business for the purchase of raw
materials, plant and machineries, equipments, stores and sale of goods and
11. The Company is in process of establishing an internal audit system.
12. According to the information and explanations given to us and the
records of the Company examined by us, no personal expenses have been
charged to the Profit & Loss Account other than those payable under
contractual obligations or in accordance with generally accepted business
13. There are no transactions of purchase and sale of products made in
pursuance of contracts or arrangements entered in the Register required to
be maintained under section 301 and aggregating during the year to Rs.
50,000/- or more in respect of each party.
14. As explained to us the Company has a regular procedure for the
determining of unserviceable or damaged stores and raw materials and
finished goods on the basis of technical evaluation and adequate amounts
have been written off on such stocks in the accounts.
15. The Company is maintaining reasonable records for the sale and
disposable of realisable scraps/cotton waste.
16. The Company is generally regular in depositing the provident fund dues
for its unit at Neemrana but no deduction has been made at its offices in
Delhi Calcutta. As explained to us, ESI act is not applicable to the
Company during the year under report.
17. We have broadly reviewed the books of accounts maintained by the
company pursuant to the rules by the Central Government for the maintenance
of cost records under section 209(i)(d) of the Companies Act,1956 in regard
to the production of cotton yarn and we are of the opinion that prima facie
the prescribed records have been maintained. We have not however, made a
detailed examination of the records.
18. 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.
19. Other provisions of the said order, in our opinion are not applicable
to the Company for the year under Report.
For P.K.AJITSARIA & CO
Date : June 18,1999.