MUNAK CHEMICALS LIMITED
ANNUAL REPORT 2001-2002
We have, audited the attached Balance Sheet of M/s. Munak Chemicals Limited
as at 30th June, 2002 and the Profit and Loss account for the year ended on
that date, both annexed thereto. These financial statements are the
responsibility of the Company's Management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the auditing standards generally
accepted in India. Those standards requires that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement: An audit includes examining, on a test
basis, evidences supporting the amounts and disclosures In the financial
statements. An audit includes assessing the Accounting Principles used and
significant estimates made by the management; as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis of our opinion.
1. As required by the Manufacturing & other Companies (Auditors Report)
Order, 1988 issued by the Company Law Board in Terms of Section 227 (4A) of
the Companies Act, 1956, we enclose in Annexure a Statement on the matters
specified in paragraph 4 & 5 of the said order.
2. Further to our comments in the Annexure referred to above, we state
1. 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.
2. In our opinion, proper books of accounts required law have been kept by
the Company so far as it appears from our examination of the books.
3. The Balance Sheet and the Profit and Loss Account dealt with by this
report are in agreement with the books of accounts.
4. In our opinion, the Balance Sheet and the Profit & Loss Account comply
with the mandatory Accounting Standards referred to in Section 211 (3C) of
the Companies Act, 1956.
5. On the basis of the written representations from the Directors, taken on
record by the Board of Directors, none of the Directors is disqualified as
an 30th June, 2002 from being appointed as a Director under Section 274(I)
(g) of the Companies Act, 1956.
6. In our opinion, and to the best of our information and accounting to the
explanations given to us, the said Balance Sheet and the Profit & Loss
Account subject to that the Interest free loan from Govt. of Punjab through
Director of Industries is secured against the charge on all immovable
assets of the Co., however during the year under Audit the company has sold
Plant & Mach. except to the extent of Rs.3412862/- for which neither
permission from the Punjab State Govt. nor vocation of charge from ROC has
been shown to us, although Co. holds immovable assets in the shape of
Factory Land & Building & Plant & Mach. to the Tune of Rs.10654010/-against
a secured loan to Rs.5600000/-, Note No. 1 (iii) recording Non-Provision of
Depreciation on Factory Building & Plant & Mach., Note No. 7A & 7B
regarding change in accounting year, Note no. 9 regarding unconfirmed an
unreconciled debit and credit balances of Customers and suppliers, Note No.
12 regarding non-provision of write off in respect of leasehold land, in
Schedule 'P' of Notes on Accounts and read together with the other Notes on
Accounts and Significant Accounting Policies forming part thereof, give the
information required by the Companies Act, 1956 in the manner so required
and give a two and fair view :-
i. In so far as it relates to the Balance Sheet of the state of affairs of
the company as it 30th June, 2002 and
ii) In so far it relates to the profits and loss account of the company for
the year ended on the date.
For S.C. Dewan & Co.
Place: Panchkula (S.C. Dewan)
Dated: 14th October 2002 Partner
ANNEXURE TO THE AUDITOR'S REPORT
Referred to in Paragraph 1 of our report of even date
1. The company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. All the
assets have not been physically verified by the management during the year
but there is a regular programme of verification which, in our opinion, is
reasonable having regard to the size of the Company and the nature of its
business. No material discrepancies have been noticed in such verification.
2. (a) None of the fixed assets have been revalued during the year.
However, the depreciation on the revalued assets, which were revalued as on
30th September, 1992, has been directly charged to Revaluation Reserve. As
a result of this, the Revaluation Reserve stands at Rs.10,16,640.00 as on
30th June 2002.
(b) During the year under audit, the Company disposed of its plant & mach,
for Rs.1,11,74,507/ and incurred a loss of Rs.2,46.62,719/-. Out of the
above mentioned loss, an amount of Rs.1,17,78,558/- has been charged to
Capital Revaluation Reserve, which was lying in the credit of Capital
Revaluation Reserve Account in respect of the sail plant & mach. as on
1.04.2001, and the balance amount of Rs.1,28,84161/- has been charged to
Profit & Loss A/C. The shareholders of the Company in their meeting held on
11.09.2001 authorised the Managing Director of the Company to affect the
3. There are no stocks of finished goods and spare parts. The stocks of raw
materials has been physically verified by the management during the year.
4. In our opinion, the procedures of physical verification of stocks
followed by the management are reasonable and adequate in relation to the
size of the company and nature of its business.
5. The discrepancies noticed on verification between physical stocks and
the book records by the management were not material and have been properly
dealt with in the book of accounts.
6. On the basis of our examination of the stock records, we are of the
opinion, that the valuation of stocks is fair and proper in accordance with
the normally accepted accounting principles and is the same basis as in
7. The Company has taken interest free loans during the year from
companies, firms or other parties listed in the registers maintained under
Section 301 and from the companies under the same management. In our
opinion, as no payment of interest is involved, so the terms are not
prejudicial to the interests of the members of the Company,
8. According to information and explanations given to us, no loans have
been granted to the companies, firms or other parties listed in the
register maintained under section 301 and from companies under the same
management. The debit balances of these Companies are in the nature of
Advances Recoverable and according to the explanations received, they are
not, prima facie, prejudical to the interest of the Company.
9. The Company has given interest free loans and advance in the nature of
loans to its employees and the principal amounts are being repaid as
10. Since the company had already closed it's operation, the sales and the
stock of raw material lying at the close of the year are out of the opening
stock of the raw material and hence the requirement of internal control
procedure with regard to purchases of stores, raw materials including
components, plant and machinery, equipment and other assets and sale of
goods are not applicable.
11. In our opinion and according to the information and explanation given
to us, transactions for purchase of goods and materials and sale of goods,
materials and services, made in pursuance of contracts or arrangements
entered in the registers maintained under Section 301 and aggregating
during the year to Rs.50000/-or more in respect of each party are at real
prices keeping in view the market rate.
12. The provision for determination of unserviceable or damaged stores and
raw materials and finished goods are not applicable, in view of the fact
that the company had already closed down it's operation and as a result
there was no production during the year.
13. The Provisions of Section 58-A of Companies (Acceptance of Deposits)
Rules, 1975, are not applicable to the Company.
14. The Company has maintained reasonable records for the sale and disposal
of realisable scrap. However, there are no by products.
15. In our opinion, the company has an internal audit system commensurate
with the size and nature of its business.
16. As the company has closed it's operation in the previous year, so as,
such in our opinion the provision of maintainence of cost records, as
prescribed by the Central Government under section 209(1) (d) of the
Companies Act, 1956, are not applicable.
17. According to the information and explanation given to us, no personal
expenses of employees or directors have been charged to revenue account,
other than those payable under contractual obligations or in accordance
with generally accepted business practices.
18. According to the information and explanations given to us, no
undisputed amounts payable in respect of income tax, wealth tax, sales tax,
customs duty and excise duty were outstanding as at 30.6.2002 for a period
of more than six months from the date they became payable.
19. The Company has not been regular in depositing the Provident Fund and
Employee's State Insurance dues with the appropriate authorities. As on
30th June, 2002, Provident Fund amounting to Rs.68,836/-and Employee's
State Insurance amounting in Rs.34,702/- are in arrears.
20. The company is not a Sick Industrial Company within the meaning of
clause (o) of sub-section (1) of section 3 of Sick Industrial Companies
(Special Provisions) Act, 1985.
For S.C. Dewan & Co.,
Place: Panchkula (S.C. Dawan)
Dated: 14th October, 2002 Partner