SANGAM ALUMINIUM LIMITED
ANNUAL REPORT 2000-2001
We have audited the attached Balance Sheet of M/s SANGAM ALUMINIUM LIMITED,
KALUKONDAPALLI as at 31st March, 2001, and the Profit and Loss Account for
the year ended on that date annexed thereto and report that :
1. The accounts of the Company have been prepared on the basis that it is a
going Concern. However, in view of the show cause notice for winding up of
the company issued by the Board for Industrial and Financial
Reconstruction, which is kept in abeyance due to reasons referred to in
para 4(e) of this report and suspension of manufacturing and other
operations of the Company since 4th November 1998, we are unable to express
our opinion on its ability to continue as a going concern. In the event of
the same not being held to be a going concern and various assets and
liabilities being consequently adjusted with respect to their realizable
value,the impact thereof has not been ascertained and therefore cannot be
commented upon by us.
2. Attention is invited to
a) Note No.3 on provision of interest on One time settlement (OTS) dues to
Financial Institutions and Banks on simple interest rate basis:Due to the
expression of willingness by the Banks and Financial Institutions to
consider and accept 100% of unpaid, crystallized principal amount in terms
of the OTS agreed upon earlier in respect of their Term Loan and Working
Capital facilities provided to the Company,the Company has not reconciled
the accounts with the Banks and Financial Institutions and has provided
interest on simple interest rate basis suo-moto. Any variation of liability
on account of the above, could not therefore be ascertained and
consequently the impact on the Profit and Loss account and Statement of
affairs also could not be ascertained.
b) Note No.1(c)(vii) on non provision on account of obsolescence
/diminution/decrease in value of dies and stores and spares and our
inability to comment on adequacy of provision so done and ascertainment of
realizable value of stock of stores and spares and dies held by the
3. 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,1956, we enclose in the annexure a statement on the
matters specified in the paragraphs 4 and 5 of the said order.
4. Further to our comments in the annexure 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
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of such books.
(c) The Balance Sheet and the 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 referred
to in this report comply with the Accounting standards referred to in sub
section 3(c) of Section 211 of the Companies Act, 1956 to the extent
(e) The Company is a Sick Industrial Company within the meaning of clause
(o) of subsection (1) of Section 3 of the Sick Industrial Companies
(Special Provisions) Act,1985. The Board for Industrial and Financial
Reconstruction had earlier rejected the proposal received from the present
management and had served a show cause notice for winding up on the Company
during the year. On submission of a revised rehabilitation proposal by the
management, the BIFR has kept the show cause notice for winding up in
abeyance and has directed the Operating Agency to consider the revised
proposal. The Operating agency is yet to intimate the final outcome of the
consideration and in the event it decides to reject the proposal, it may
lead to winding up of the Company.
(f) On the basis of written representations received from the directors
and taken on record by the Board of Directors, we report that none of the
Directors is disqualified as on 31st March, 2001 from being appointed as a
Director in terms of clause (g) of Sub-section (1) of Section 274 of the
(g) In our opinion and to the best of our information and according to the
explanations given to us, the said Balance Sheet and the Profit and Loss
Account read together with the notes thereon give the information required
by the Companies Act, 1956,in the manner so required end subject to para 1
of this report and Note no.1 (g) relating to preparation of accounts on
going concern concept basis,para 2(a) of this report relating to non
reconciliation of the accounts with the Financial Institutions and Banks,
para 2(b) of this report regarding inadequate provisioning on valuation of
stores and spares and dies, together with the other notes thereon, give a
true and fair view:
(i) Insofar as it relates to the Balance Sheet, of the state of affairs of
the company as on 31st March, 2001,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 S.JANARDHAN & ASSOCIATES
Place: Chennai (B. ANAND)
Dated: 27th June,2001 PARTNER
Re:SANGAM ALUMINIUM LIMITED,KALUKONDAPALLI
(Referred to in Paragraph 1 of our report of even date)
01. The Company has maintained proper records showing full particulars
including quantitative details and situation of Fixed assets. The Fixed
assets have been physically verified by the Management at the end of the
year, and in our opinion the frequency of verification is reasonable. No
material discrepancies were noticed on such verification.
02. None of the fixed assets have been revalued during the year.
03. Physical verification has been conducted by the management at
reasonable intervals in respect of stores and spare parts and raw
materials. However,the company had no stock of finished goods during the
04. The procedures of physical 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.
05. The discrepancies noticed on verification between the physical stock
and the book records were not material and the same have been properly
dealt with in the books of account.
06. On the basis of our examination of stock records, we are of the
opinion that the valuation of the stocks is fair and proper in accordance
with the normally accepted accounting principles subject to note
No.1(c)(vii) on valuation of stores and spares and dies,and is on the same
basis as in the preceding year. However, the Company did not have any stock
of Raw Material and Finished goods as at the year end.
07. The Company has taken interest free unsecured loan only from Companies
listed in the registers maintained under Section 301 of the Companies Act,
1956, and the terms and conditions of such loans are not prima facie
prejudicial to the interest of the Company. In terms of sub section (6) of
Section 370 of the Companies Act, 1956, provisions of this para relating to
loans from Companies under same management as defined under Section 370 (1-
B) of the Companies Act, 1956 are not applicable.
08. The Company has not granted any loans, secured or unsecured, to
Companies, Firms or other parties listed in the registers maintained under
section 301 of the Companies Act, 1956. In terms of sub section (6) of
Section 370 of the Companies Act,1956,provisions of this para relating to
loans to Companies under same management as defined under Section 370 (1-
B) of the Companies Act,1956 are not applicable.
09. The Company has not granted any loan or advance in the nature of loan
except interest free staff advances, which are being recovered as
10. In our opinion and according to the information and explanation given
to us, the internal control procedures are inadequate in view of the
absence of any internal audit system commensurate with the size of the
company and the nature of its business,for the purchase of stores, raw
materials, including components, Plant and Machinery, equipment and other
assets and for the sale of goods. However the Company did not make any
purchases during the year.
11. According to the information and explanations given to us,the
transactions for sale of goods and materials and services, made in
pursuance of Contracts or arrangements entered in the register maintained
under Section 301 of the Companies Act, 1956 aggregating during the year to
Rs.50,000 or more in respect of each party, have been made at prices which
are reasonable. However,in the absence of similar transactions with other
parties, whether such sale of goods, materials and services have been made
at prices which are reasonable having regard to prevailing market prices
could not be ascertained.There were no transactions for purchase of goods
and materials entered with parties listed in the registers maintained under
Section 301 of the Companies Act,1956.
12. As explained to us, the Company has a regular procedure for the
determination of unserviceable or damaged stores and adequate provisions
for loss have been made for the items so determined.
13. The Company has not accepted any deposits from the public and as such
the provisions of Section 58A of the Companies Act, 1956, and the rules
framed thereunder are not applicable,
14. In our opinion, reasonable records have been maintained by the Company
for the sale and disposal of scrap. We are informed that the Company has no
15. In our opinion,the Company has no internal audit system commensurate
with the size of the Company and nature of its business.
16. In the absence of any production during the period and due to the
suspension of production by the management,the Cost Records prescribed by
the Central Government under Section 209(1)(d) of the Companies Act,1956
have not been maintained.
17. In our opinion Provident fund dues have generally been regularly
deposited with the appropriate authorities except for some minor delays in
remittances. We are informed that the Company is exempt from the provisions
of the Employees State Insurance Act.
18. According to the information and explanations given to us, no
undisputed amount payable in respect of Income-tax, Wealth-tax, Sales tax,
Customs Duty and Excise Duty were outstanding for a period of more than six
months from the date they became payable as at 31st March, 2001 except for
a sum of Rs.3.11 Lakhs which is due on account of Sales Tax.
19. According to the information and explanations given to us, no personal
expenses of employees or directors have been charged to the revenue account
other than those payable under contractual obligations or in accordance
with generally accepted business practice.
20. The Company is a Sick Industrial Company within the meaning the clause
(o) of subsection (1) of Section 3 of Sick Industrial Companies (Special
Provision) Act,1985 and is declared as such.
for S. JANARDHAN & ASSOCIATES
Place: Chennai (S. ANAND)
Dated: 27th June, 2001 PARTNER