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Pasupati Haryana Woollens Ltd.

BSE: 514132 Sector: Industrials
NSE: N.A. ISIN Code: N.A.
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Pasupati Haryana Woollens Ltd. (PASUPATIHARYANA) - Auditors Report

Company auditors report

1997 PASUPATI HARYANA WOOLLENS LIMITED AUDITORS' REPORT We have audited the attached Balance Sheet of Pasupati Haryana Woollens Limited as at 31st March, 1997 and the annexed Profit and Loss Account for the year ended on that date and report that: (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) Proper Books of account as required by the law have been kept by the Company so far as appears from our examination of the 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 and to the best of our information and according to the explanations given to us, the said accounts read together with the notes forming part of the accounts, give the information required by the Companies Act,1956 in the manner so required and subject to the following remarks: (i) The Company has no provided for doubtful debts amounting to Rs. 281.56 Lacs (including Rs. 27.07 Lacs as per Note No. 5) and doubtful advances amounting to Rs. 37.21 Lacs respectively, due to which, total loss has been understated and current assets have been overstated by these amounts. (ii) The response for confirmation of balances in respect of debtors, creditors & advances recoverable in cash or in kind as at the end of the year is negligible. Therefore, we are unable to comment on the balances of debtors, creditors and such advances as at the close of the year. (iii) The company does not have a company secretary as required under the provisions of Section 383-A of the Companies Act,1956. (iv) Note No. 6 regarding non acceptance of debit note by foreign suppliers amounting to Rs. 191.33 Lacs due to which, total loss and liability towards suppliers have been understated to that extent. (v) Note No. 7 regarding non-confirmation of balances with scheduled banks lying with Bank of Baroda Rs. 0.18 Lac and City Bank Rs. 0.11 Lac. (vi) Note No. 10 regarding classification of loans under secured loans. (vii) Note No. 11 regarding non provision of compound/penal interest and liquidated damages on secured loans from Financial Institutions and Banks aggregating to Rs. 715.13 Lacs and Rs. 75.22 Lacs respectively, due to which, total loss and secured loans/interest payable thereon have been understated to that extent. (viii) Note No. 12 regarding non provision of bonus aggregating to Rs. 8.28 Lacs, thus total loss and current liabilities have been understated to that extent. (ix) Note No. 13 regarding non provision of liability on account of gratuity amounting to Rs. 21.45 Lacs and leave encashment amounting to Rs. 3.70 Lacs due to which total loss and liabilities have been understated to that extent. (x) Note No. 14 regarding accounting of interest of Rs. 2.30 Lacs or Security Deposits with HSEB. (a) In the case of Balance Sheet of the state of affairs of the Company as at 31st March, 1997; and (b) In the case of Profit & Loss Account, of the Loss of the Company for the year ended on that date. 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 and as per information and explanations given to us during the course of our audit and on the basis of such checks of books and records of the company as were considered appropriate, we further state that: 1. The Company as maintained proper records showing full particulars including quantitative details and situation of fixed assets. All the fixed assets have been physically verified by the Management at the end of the year and no material discrepancies were noticed on such verification. 2. None of the fixed assets have been revalued during,g the year. 3. The stock of work-in-progress, stores, spare parts and raw materials except goods lying with third parties have been physically verified by the Management as at the end of the year. 4. In our opinion, the frequency of verification of stocks followed by the Management is reasonable and adequate in relation to the size of the Company and the nature of its business. 5. The discrepancies noticed on such verification between the physical stock and book records were not significant and the same have been properly dealt with in the books of account. 6. In our opinion, the valuation of above mentioned stock is fair and proper and in accordance with the normally accepted accounting principles and is on the same basis as in the previous year. 7. In our opinion, the rate of interest and other terms and conditions of the loans taken by the Company from Companies, firm or other parties as entered in register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company. However, the Company has not taken any loans secured or unsecured from,the Companies under the same management within the meaning of section 370(1-B) of the Companies Act, 1956. 8. The Company has not granted any loans, secured or unsecured to Companies, firms or other parties entered in the register maintained under section 301 of the Companies Act, 1956 or the Companies under the same Management within the meaning of section 370(1-B) of the Companies Act, 1956. 9. The Company has not given any advance in the nature of loans except interest free staff advances which are being recovered as per stipulation. 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 nature of its business for the purchase of stores, raw materials, plant and machinery, work in progress, equipment and other assets and for the sale of goods and job work done. 11. In our opinion and according to the explanations given to us the transactions of sale of goods and materials made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000/- or more in respect of each party have been made at prices which are reasonable having regard to prevailing market price for such goods and materials or the price at which supplies for similar goods and materials have been made to other parties except for items stated to be of specialise nature where no comparison is possible. There were no transactions for purchase of goods and materials and sale o,f services to such parties. 12. As explained to us, there were no unserviceable or damaged stock of stores & raw materials, wherever applicable, were determined and provision for loss thereon has been made in the accounts. There were no stock of finished goods as at the close of the year. 3. According to he information and explanations. iven to us the Company has not accepted any deposit from the public and accordingly, the provisions of section 58A of the Companies Act, 1956 read together with the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company. 14. In our opinion, reasonable records have been maintained by the Company for sale and disposal of realisable waste. We are informed that no realisable by-product is generated in the manufacturing process. 15. In our opinion, the Company has an adequate internal-audit system commensurate with the size and the nature of its business. 16. We were informed that the provisions of Section 209(1)(d) of the Companies Act, 1956 with regard to maintenance of cost records do not apply to the Company. 17. We were informed that the provisions of Employees' State Insurance Scheme are not applicable to the Company. However, Employees' Provident Fund and Employees Pension Scheme dues have generally been regularly deposited with the appropriate authorities except arrears of Rs. 2,00,602/- including amount payable for March, 1997, out of which Rs. 1,99,098/- have since been paid. 18. According to the information and explanations given to us no undisputed amounts are payable in respect of Income Tax, Wealth Tax, Custom Duty. However, Excise Duty amounting to Rs. 8,89,725/- and Sales Tax amounting to Rs. 6,667/- were outstanding as at 31st March, 1997 for a period of more than six months from the date they became payable, which have since been paid. 19. 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 covered under the contractual obligation or in accordance with generally accepted business practice. 20. The Company is 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 and a .reference to that effect had already been made to the Board for Industrial & Financial Reconstruction. 21. In respect of the trading activities of the company, there were no stocks as at the close of the year. FOR N.D. KAPUR & CO. Chartered Accountants Ravinder Kapur Partner Place : New Delhi Date : 3rd September, 1997.