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SFL Industries Ltd.

BSE: 507725 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: N.A.
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SFL Industries Ltd. (SFLINDS) - Auditors Report

Company auditors report

SFL INDUSTRIES LIMITED AUDITOR'S REPORT TO, THE SHARE HOLDERS OF SFL INDUSTRIES LIMITED We have audited the annexed Balance Sheet of M/s. SFL INDUSTRIES LIMITED as at 30th June, 1999 and the Profit & Loss Account for the year ended on that date annexed thereto, and report that:- 1. As required by the Manufacturing and other companies (Auditor's Report) Order 1988 issed by the Company Law Board in terms of section 227(4A) of the Companies Act,1956 and on the basis of such checks and examination of the books and records of the company as are considered appropriate, and the information and explanations given to us during the course of our audit, we report that:- The company has maintained proper records showing full particulars including quantitative details and srtuation of fixed assets. The fixed assets of the company have been physically verfied by the management during the year and no serious discrepencies have been noticed on such verfication. ii. None of the fixed assets have been revalued during the year. iii The stocks of finished goods, stores, spare parts and raw materials have been physically verified during the year by the management. In respect of the stocks Iying with third parties, these have been confirmed in some cases by them In our opinion, the frequency of verification is reasonable. iv. In our opinion and according to the information and explanations given to us, 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. v. (a) The opening stock included (i) sub-standard SSP 25654.60 MT valued at Rs. 52.59 lacs which was meant for Exports to Bangladesh. (ii) Unusable stock of Paper of Rs. 2.07 Lacs. These materials have been destroyed/scrapped by the managefflent due to obsoience factor after seeking legal advice and the same has been accounted for in the books accordingly GFL.lNDlJSTRlES LIMITED (b) Value of Inventories (finished goods) include a sum of Rs. 34.76 lacs on account of stocks pledged with the Bank. These stocks have not been physically verified since long as such no assessment could be made about its quality & quantity and as such no provision for any loss, if any on this account has been made in the accounts. vi. In our opinion, the valuaUon of stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the previous years. vii. The company has not taken any loans, secured and unsecured from companies, firms or other parties listed in the register maintained under section 301 of the companies Act, 1956 or from Companies under the same management within the meaning of subsection 370 (I-B) of the said Act,where the rate of interest and the terms and conditions are pnma facie prejudicial to the interest of the company. viii. The company has not granted loans,secured or unsecured to companies,firms or other parties listed in the register maintained under secUon 301 of the companies Act,1956,or to the companies under the same management within the meaning of section 370 (1-B) of the Companies Act, 1956. ix. Loans or advances in the nature of loans are given by the Company to employees who are repaying the principal amount as stipulated.These are non-interest bearing. However the company has granted unsecured loans amounUng to Rs.161.59 lacs to Companies who are neither repaying principal nor interest and as such to that extent these are prejudicial to the interest of the company x. In our opinion and according to the information and explanaUons 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 including components,plant and machinery,equipment and other assets and for sale of goods. However,Company has not been able to make in time recovery from its customers and/or periodically reconcile their accounts and/or obtain confirmations. xi. In our opinion and according to information and explanations given to us, the compoany has not made purchases of stores, raw materials or components and sale of goods ,material and SeNiCeS exceeding Rs.50,000 in value for each type thereGf from firms,companies or other parties in which Directors are interested, as listed in the register maintained under section 301 of the Companies Act,1956. xii. As explained to us, unserviceable or damaged stores and raw materials are determined by the management and on such basis in our opinion, adequate amounts have been written ofl from such stocks in the accounts. xiii. The company has no public deposit at the end of the year. xiv. The company has maintained reasonable records for the sale and disposal of by- products and scrap. xv. The company did not have Internal Audit during the year. xvi. We have broadly reviewed the books of account maintained by the company in respect of products where pursuant to the Rules made by the Central Government, the maintenance of Cost records has been prescribed under Section 209 (1) (d) of the companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of records with a view to determining whether they are accurate or complete. xvii. According to the records of the company, Employees State Insurance dues have been regularly deposrted during the year with the appropriate authorities. However, in case of Provident Fund there are some instances where they have been deposited xviii. The company is having no undisputed amounts in respect of Income Tax, Sales Tax and Excise Duty which are outstanding as on the last date of the hnancial year and were outstanding for a period of nlore than 6 months from the date they became payable. xix. According to the information and explanations given to us and the records examined by us, no personal expenses have been charged to the revenue account. xx. The company is a Sick Industrial Company within tne meaning of clause (0) of sub-section (1) of secbon 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 and a reference has been made to the BIFR. Further to above, we report: a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of Audit. b) In our opinion, proper books of accounts as required by law have been kept by the company so far as appears from examination of those books. c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts. d) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet and Profit & Loss account subject to: (i) Note No. 4 regarding advances amounting to Rs. 357.91 Iacs for which no provision has been made, (ii) Note No. 5 regarding non- provision of interest amounting to Rs. 315.92 lacs, (iii) Note No. 10 regarding the wrrte off of deteriorated finished goods valued Rs. 54.66 lacs during the year which have been considered adequate by the management and relied upon by us, (iv) Note No. 11 regarding non-provision of loss, if any, in the value of stocks of Rs. 34.76 lacs pledged with the bank, (v) Note No. 16 regarding non-provision of compound and penal interest of Rs. 98 lacs to the financial institutions/mutual funds and of Rs. 0.84 lacs on unsecured loans and Note No. 19 regarding non-provision of loss of building of Paper Plant Rs. 132.52 lacs (WDV), which non-provisions, have resulted in understatement of loss during the year to that extent and also subject to other notes on Accounts as per schedule xii, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view. i) In the case of the Balance Sheet, of the state of affairs of the Company as at 30th June, 1999; ii) In the case of Profit & Loss account of the loss of the Company for the year ended on that date. For RAJENDRAK.GOEL&CO. CHARTERED ACCOUNTANTS, R K OOFI PARTNER PALACE: CAMP: RAILMAJRA DATED: 12.02 2000 ,