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Nagarjuna Finance Ltd.

BSE: 506129 Sector: Financials
NSE: NAGARJUFIN ISIN Code: N.A.
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Nagarjuna Finance Ltd. (NAGARJUFIN) - Auditors Report

Company auditors report

ANNUAL REPORT 1999-2000 NAGARJUNA FINANCE LIMITED AUDITORS REPORT To the Members of Nagarjuna Finance Limited We have audited the attached Balance Sheet of Nagarjuna Finance Ltd. as at 30th June, 2000, and the Profit and Loss Account for the year ended on that date annexed thereto and report that: As required by the Manufacturing and Other Companies (Auditor's Report) Order 1988, issued by the Company Law Board in terms of Section 227/ (4-A) of the Companies Act, 1956, we annex hereto a statement on the matter specified in paragraphs 4 and 5 of the said order Further to our comments in the Statement referred to in paragraph 1 above we state that: a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. b) 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 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, the Balance Sheet and Profit and Loss Account comply with the Accounting Standards referred to in Section 211 (3c) of the Companies Act 1956, with the exception of non-provision for diminution in the value of investments, quoted IRs. 175.36 Lakhs) and un-coted (not ascertained) refer Note No. 10 of Schedule 16) which is not in accordance with Accounting Standard t3 issued by the Institute of Chartered Accountants of India. e) Reference is invited to the following notes on Accounts under Schedule 16: i) Note No. 4 (a) Re: the accounts for the year have been drawn up on a going concern basis ii) Note No.4 (b) Re: Non-compliance of prudential norms for income recognition and provisioning for non- performing assets based on legal opinion that the Company has ceased to be a Non-Banking Finance Company. iii)* Note No. 11 (a) Re: Receivables in respect of which Legal action is initiated Rs. 1682.25 lakhs classified as considered good for recovery. * Note No. 11 (b) Re: Accounting of receivables relating to certain lease transactions which is at variance to the accounting treatment adopted for tax Purpose. * Note No. 11 (c) Re: Non-reconciliation and non-obtention of confirmations and non-provision for the likely shortfall in recoveries in respect of all receivables classified under Current Assets, Loans and Advances iv) Note No. 12 Re.: Computation of provision for Income Tax liabllity. v) Note No. 14 (b): Re: Shortfall in recoverability of overdue compensation charges as assessed and recognised by the management. vi) Note No. 15 Re.: Non-reconciliation and confirmation of balances in Bank and Business related Accounts resulting in non-determination of its effect on the accounts for the year under report. In respect of matters stated at paras (i), (ii), (iii), (iv), (v) and (Vl) above, in view of uncertainty of the final outcome on the issues involved and non-ascertainment of quantum thereof, we are unable to express an opinion on the impact of these issues on the Accounts and Loss for the year. f) Subject to what is stated at para 2 (d) and (e) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with other notes to the accounts and 'significant Accounting Policies' give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view: i) insofar as it relates to the Balance Sheet, of the state of affairs of the Company as at 30th June, 2000, and ii) insofar as it relates to the Profit and Loss Account, of the Loss of the Company for the year ended on that date. for M. Bhaskar Rao & Co. Chartered Accountants Place : Hyderabad Anil Kumar Mehta Date : 29.9.2000 Partner STATEMENT REFERRED TO IN PARAGRAPH 11) OF OUR REPORT OF EVEN DATE: 1) The Company maintains records showing particulars Including quantitative details and situation only of fixed assets other than assets leased out. These records have not been updated for the year under Report. None of the Fixed Assets (including Assets Leased out) have been physically verified by the Management during the year and therefore discrepancies have not been determined. 2) None of the fixed assets of the company has been revalued during the year. 3) No Physical verification has been conducted by the management In respect of finished goods, stores, spare parts and raw materials relating to its manufacturing activities. 4) In the absence of Physical Verification of Inventories by the Management we are unable to comment on adequacy and reasonableness of procedures relating to verification. 5) In the absence of physical verification of inventories by the Management during the year, the discrepancies between the physical stocks and book records have not been determined. 6) In our opinion and on the basis of our examination of stock records, we are satisfied that the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles. 7) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties as per entries in the register maintained under Section 301 of the Companies Act, 1956. As Section 370 of the Companies Act Re: Loans, etc., to Companies under the same management has been made inoperative on and after 31st October, 1998 by the Companies (Amendment) Act, 1999, no comments are offered. 8) 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 as per the entries in the register maintained under section 301 of the Companies Act, 1956. As Section 370 of the Companies Act Re: Loans, etc., of Companies under the same management has been made inoperative on and after 31st October, 1998 by the Companies (Amendment) Act, 1999, no comments are offered. 9) a) Interest bearing and interest free advances were given by the Company to Employees and other parties. Where principal and / or interest is overdue, based on the information and explanations and the recoveries made, the management needs to step-up its recovery proceedings and follow-up in view of long overdues. b) In respect of hire money due on stock-on-hire under hire purchase transactions entered into by the Company in the ordinary course of business, in accordance with the information and explanations given to us, where installments are overdue steps taken by the company are in adequate and requires aggressive follow-up (Refer Note No. 11(c) of Schedule 16) 10. In our opinion, as stated in our earlier report, the internal control procedures, in general, need to be strengthened in all areas and compliance ensure to commensurate with the size of the company and nature of its business for purchase of assets including assets given on lease and income related activity. 11. According to the records, information and explanations given to us, there are no contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and hence requirement or reporting regarding transactions of purchase of goods, materials and sale of goods materials and services made in pursuance of such contracts aggregating during the year to Rs. 50,0001- or more in respect of each party does not arise. 12. As explained to us, in respect of manufacturing activities the Company has a procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. As explained to us, no unserviceable or damaged stores, raw materials and finished goods have been determined during the year. 13. As explained to us and based on legal opinion, the company has ceased to be a Non-Banking Financial Company (NBFC) and that the directions of Reserve Bank of India as applicable to NBFCs are not applicable to the Company. The company has overdue deposits and the Company Law Board Southern Region, during the year, has ordered the repayment of deposits together with interest thereon in a phased manner spread over three years as provided in their Order dated 29th February, 2000. The Company has complied only with the provisions of Section 58A of the Companies Act, 1956 and Rules framed there under with regard to deposits accepted from public. 14. In our opinion, reasonable records have been maintained by the Company for the sale and disposal of scrap. The manufacturing operations do not generate any by- product. 15. In accordance with the information and explanations given to us, the Company has no internal audit system in vogue during the year. 16. The Company has not maintained cost records as prescribed by the Central Government under Section 20 (1) (d) of the Companies Act, 1956 in respect of the manufacturing division products. 17. The Company is generally regular in depositing the Provident Fund and Employees' State Insurance dues with the appropriate authorities except Rs. 3.82 Lakhs, which is subject to reconciliation. 18. There are no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty & Excise Duty has at 30th June, 2000 which are outstanding for a period of more than 6 Months form the date they became payable. 19. In our opinion and according to the information and explanations given to us, personal expenses have not been charged to revenue other than those payable under contractual obligations, or in accordance with the generally accepted business practice. 20. The company has maintained adequate records in respect of loans granted on the basis of security by way of shares, Debentures and other Securities. 21. The Company has maintained adequate records to show full particulars of transactions and contracts entered into in respect of dealings and trading in shares, securities and other investments and in the same are held by the company in its own name to the extent applicable excepting those cases stated at footnote in Schedule No. 6 investments. 22. The Company is not covered within the meaning of Clause (O) of the Sub Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. 23. Item No. 4 (d) (iii) of the said order is not applicable in the case of the company for M. Bhaskar Rao Co. Chartered Accountants Place : Hyderabad Anil Kumar Mehta Date : 29.9.2000 Partner