SAURASHTRA PAPER & BOARD MILLS LIMITED
ANNUAL REPORT 2000-2001
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
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)
(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
(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
(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
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
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
Rajkot MANOJ GANATRA
28th December 2001 Partner