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Saurashtra Paper & Board Mills Ltd.

BSE: 516088 Sector: Industrials
NSE: SAURASTPPR ISIN Code: N.A.
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Saurashtra Paper & Board Mills Ltd. (SAURASTPPR) - Auditors Report

Company auditors report

SAURASHTRA PAPER & BOARD MILLS LIMITED ANNUAL REPORT 2000-2001 AUDITORS' REPORT To The Members of Saurashtra Paper & Board Mills Limited We have audited the attached Balance Sheet of SAURASHTRA PAPER & BOARD MILLS LIMITED a at 30th September 2001 and also the Profit & Loss Account of the company for the year ended on that date annexed thereto and report that: 1. 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, we enclose in the annexure a statement on the matters specified in paragraphs 4 & 5 of the said order. 2. Further to our comments in the annexure referred to in paragraph (1) above: (i) 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; (ii) In our opinion, proper books of accounts as required by the law have been kept by the company so far as appears from our examination of the books; (iii) The Balance Sheet and Profit & Loss Account dealt with by the report are in agreement with the books of accounts; (iv) In our opinion, the Profit & Loss account and the Balance Sheet comply with the Accounting Standards referred to in sub section (3C) of section 211 except for Accounting Standard (AS) 2 in so far as it relates to valuation of finished goods as referred in Note No. 3 and Accounting Standard (AS) 15 in so far as it relates to leave encashment benefits to the employees as referred to in Note No. 9; (v) Attention is invited to: a. Note no. 11 regarding damage and deterioration to the raw materials and consequent write-off of Rs. 293.08 lacs; b. Note no. 2 regarding closure of one of the plant of the company and default in the repayment of loans; and (vi) In our opinion, all the directors of the company are disqualified from being appointed. as directors in terms of clause (g) of sub-section (1) of section 274; (vii) In our opinion and to the best of our information and according to the explanations given to us, the accounts subject to : - Note no. 2 regarding going concern basis of accounting; - Note no. 4 regarding quality claims for imported waste papers; and - Note no. 7 regarding balance confirmations and subject to and read with all the notes thereon give the information required by the Companies Act, 1956 in the .manner so required and give a true and fair view: (a) In the case of Balance Sheet of the State of affairs of the company as at 30th September, 2001; and (b) In the case of Profit & Loss Account of LOSS of the company for the year ended on that date. For SANGHAVI & COMPANY Chartered Accountants Rajkot MANOJ GANATRA 28th December 2001. Partner ANNEXURE TO AUDITORS' REPORT Annexure referred to in paragraph 1 of the report of even date of the Auditors to the members of SAURASHTRA PAPER & BOARD MILLS LIMITED on the accounts for the period end 30th September 2001. On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that: 1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets except that the fixed asset register for the year is under compilation. As explained to us, fixed assets were physically verified by the management at reasonable intervals during the year in accordance with a programme of physical verification. According to information and explanations given to us, no material discrepancies were noticed on physical verification. 2. None of the fixed assets have been revalued during the year. 3. The stocks of finished and semi finished goods, raw materials and stores and spares have been verified by the management during the period. In our opinion, the frequency of verification needs to be strengthened at plant II of the company. 4. The procedure of physical 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. As informed to us, the discrepancies noticed on verification between the physical stock and book stock were not material except for damage and deterioration to raw materials to the extent of Rs. 293.08 lacs at one of the plant of the company as stated in note no. 11 and the same have been properly dealt with in the books of accounts. 6. In our opinion, the valuation of stocks is fair and proper and in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year except that the valuation of finished goods is made at market price as against the method as prescribed by the Accounting Standard (AS)-2 on valuation of inventories to value the finished goods at the lower of the cost or net realizable value. 7. The company has taken unsecured loan from companies, firms or other parties listed in the register maintained under section 301 of the companies Act, 1956 The rate of interest and other terms and conditions of such loans are prima face not prejudicial to .the interest of the company. The provisions of section 370 are not applicable w.e.f. 31st October, 1998. 8. The company has granted unsecured loans to companies, firms or other parties listed in the register maintained under section 303 of the Companies Act, 1956. However, since the terms and conditions of such loans are not finalized, we are unable to offer any comments. The provisions of Section 370 are not applicable w.e.f. 31st October, 1998. 9. The parties to whom loans or advances in the nature of loans are given by the company are generally repaying the principal amount and are also regular in the payment of interest, wherever stipulated. However, wherever there is no stipulation as to the repayment of principal amount or the payment of interest we cannot offer any comments. 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 the nature of its business with regard to purchase of stores, raw materials including components, plant and machinery, equipment and other assets and with regard to the sale of goods. 11. According to information and explanations given to us, the transactions of purchase of goods and materials and sale of goods, materials and services made in pursuance to contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the period to Rs 50,000 or more in respect of each party are reasonable as compared to the prevailing market prices of the similar goods, materials and services, or at the prices at which transactions for similar goods or services made with other parties and the company's business needs and exigencies, wherever such comparison is possible. 12. As explained to us, the company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods and the same has been properly dealt with in the accounts. 13. In our opinion and according to the information and explanation given to us, the company has complied with the provisions of section 58-A of the Companies Act, 1956 and the Companies (Acceptance. of Deposits) Rules, 1975 with regard to the deposits accepted from the public except that: (i) the provision of Rule 3A of the Companies (Acceptance of Deposits) Rules are not complied with. (ii) The company has failed to make the repayment of deposits in accordance with sub-section (3A) of section 58-A. 14. The company has maintained reasonable records for the sale and disposal of scrap. There are-no by-products. 15. In our opinion, the company has an internal audit system commensurate with its size and the nature of its business. 16. We have broadly reviewed without carrying out a detailed examination, cost accounts and records maintained by the company in respect of such products as prescribed by the, Central Government under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the same have been maintained. 17. According to the records of the company, Provident Fund dues and Employees' State Insurance dues have not been deposited with the appropriate authorities. 18. According to information and explanations given to us, no undisputed amount payable in respect of Income Tax, Sales Tax, Custom Duty and Excise Duty were outstanding as on 30th September 2001 for a period of six months from the date they became payable except for the followings: (i) Excise Duty payable Rs. 7,85,000; (ii) TDS payable Rs. 6,01,570; and (iii) Sales Tax Rs. 13,23,375 which are outstanding for more than six months. 19. On the basis of (i) the examination of the books of accounts of the company, (ii) the vouchers examined by us on test check basis and (iii) the explanations given to us against our inquiries and to the best of our knowledge and belief, no personal expenses were charged to revenue account other than those payable under contractual obligations or which were incurred in accordance with the normally accepted business practices. 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. BIER has declared the company as a sick industrial unit vide order dated 7th September 2001 and IDBI has been appointed as the operating agency. For SANGHAVI & COMPANY Chartered Accountants Rajkot MANOJ GANATRA 28th December 2001 Partner