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SRH Synthetics Ltd.

BSE: 530981 Sector: Industrials
NSE: N.A. ISIN Code: INE416C01016
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SRH Synthetics Ltd. (SRHSYNTHETICS) - Auditors Report

Company auditors report

SRH SYNTHETICS LTD. ANNUAL REPORT 2000-2001 AUDITORS' REPORT To the Members of SRH Synthetics Ltd. 1) We report that we have audited the Balance Sheet of SRH Synthetics Ltd, having its Regd. Office at Plot No. 988, Kadipur Nathupura, Delhi-36 and its factory at 164, H.S.I.D.C., Phase-II, Kundli (Distt. Sonepat) as at 31st March 2001 and the relative Profit & Loss Account for the period ended on that date, both of which we have signed under reference to this report. 2) 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, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of Audit, we enclose in the Annexure a statement on the matter specified in paragraph 4 & 5 of the said order. 3) Further to our Comments in the Annexure referred to in the paragraph 1 & 2 above A) 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. B) In our opinion, proper books of accounts as required by law have been, kept by the Company so far as appears from our examination of those books. C) The Balance Sheet and the Profit & Loss Account dealt with the report are in agreement with the As of accounts as submitted to us. In our opinion, these accounts have been prepared in compliance with the Accounting Standard issued by the institute of Chartered Accountants of India referred to in Section 211(3C) of the Act to the extent applicable except provision of Gratuity Act have not been observed and balances stood in the accounts of Canara Bank & IDBI could not be verified & talled due to non availability of information from the said Institutions. D) In our opinion, subject to para C and certain discrepancies as pointed cut in the annexed audit report to the best of our information and according to the explanations given to us, the said accounts give the informations required by the Companies Act 1956, in the manner so required and given a true and fair view : i) In the case of the Balance Sheet of the state of affairs at the Company as at 31st March, 2001 ii) In the case of the Profit & Loss Account of the Profit of the Company for the year ended on that date. for M.M.Babbar & Co. Chartered Accountants Place: Delhi (M.M. Babbar) Dated: 29th June, 2001 F.C.A. ANNEXURR TO THE AUDITOR'S REPORT (Referred to in paragraph 2 of our Report of even date) 1. The company has maintained proper records to show full particulars including quantitative details and situation of its fixed assets has been physically verified by the management at reasonable intervals and the reconciliation of quantities with records has been done. The difference arising out of reconciliation have been adjusted in the accounts as reported to us by the management. No material discrepancies between the book records and the physical inventory have been reported by the management. The Company has prepared the financial account as per the norm & standards set by Institute of Chartered Accountants of India. 2. No asset of the company has been revalued during the year. 3. The stocks of finished goods, raw materials and packing materials have been physically verified by the management at reasonable intervals during the year and their costs being duly certified by the management. 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 the physical stock and book records were not material in relation to the operations of the company and the same have been properly dealt with in the books of account. 6. The method of valuation stock adopted by the company is on the actual cost (excise duty) or the market price which ever is Less. 7. The company has taken secured Loan against plant & machinery & all other assets being on first charge from IDBI and on second charge of Canara Bank, Shakti Nagar, Delhi for its working capital limit and financed its cars from finance companies. 8. In our opinion and according to the informations and explanations given to us, there are adequate internal control procedures, commensurate with the size of the company and the nature of its business, for the purpose of raw materials, stores, plant and machinery, equipment and other assets and sale of goods. 9. The company has not granted/taken any loans from /to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 and/or from the Companies under the same management under Sec.370 (1B) of the Companies Act 1956. 10. No loans or advances in the nature of loans have been given by the company to any one during the year. 11. In our opinion and according to the informations and explanations given to us, the transactions at purchase of goods and material and sale of goods, material and services made in pursuance of contract or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rs.50000 or more in respect of each party have been made at prices which are reasonable having regard to the prevailing market prices for such goods, materials or services or the price at which transaction for similar goods or services have been made with other parties. 12. As explained to us, the company has a regular procedure for the determination of unserviceable or damaged raw materials and finished goods. Adequate provision has been made to account for the loss arising on the items so determined. 13. The company has not accepted any deposits from the public to which provisions of section 58A of the Company Act, 1956 apply. 14. The company has been irregular in general in depositing provident fund and ESI dues with the appropriate authorities. However a sum of Rs.1423.10 & 4508 towards ESI & Provident Fund for the month of July 2000, of was not deposited as on the date of signing of report. 15. There are no disputed amounts payable in respect of Income Tax, Sales Tax, and Excise Duty as at 31st March, 2001 which are cutstanding for a period of more than six months from the date they become payable. The amount of additional Income Tax demand amounting to Rs.6,65,632.00 including interest for the assessment year 1997-98 is still pending and no further interest is being provided thereon and further Income Tax dues for A.Y. 1998-1999 which amounts to Rs.6.00 lacs was also not paid. The Company totally failed to make payment of Income Tax liabilities. 16. The Company enjoyed the C.C. Limit of Rs. 4.70 crore from Canara Bank, Shakti Nagar, Delhi, but totally failed to provide security to the said Banker in the form of Stock, since stock in hand as reported by the Company is much lower than the required limit as per the said Bank. Further interest charged by the Company could not be talled with Canara Bank as the said Bank has not supplied any statement after September, 2000 as stated by the management. However in case of Canara Bank, interest is provided @ 21% from 1.10.2000 to 31.3.2001 & IDBI @ 21% for the year. The Company enjoyed cash credit limit of Rs.3.70 crores against stock and Rs. 1 crore against sundry debtors from Canara Bank, Shakti Nagar, Delhi, however the company has over enjoyed the limit with the said bank to the total amount of Rs.54787802.00 as on 31.3.2001. The Company also fails to make the payment of interest on long term loans and instalment of principal to IDBI. 17. Regarding Sales Tax : The company has been regular in depositing taxes due under Haryana General Sales Tax Act & Central Sales Tax Act on its sales made by factory. The company delayed in depositing sales tax of Delhi head office. There is no outstanding of sales tax liabilities for the year ended 31.3.2000 as on the date of signing of the Audit report. 18. In our opinion, the internal Audit system of the company is commensurate with the size of the company and the nature of its business. 19. On the basis of our examination of the books of account and according to the informations and explanations given to us, no personal expensed of directors or employees have been charged to revenue account, other than those covered by contractual obligations or incurred in the normal course of business. 20. The company is not a sick industrial company within the meaning of clause (o) of sub-section(1) of section 3 of the Sick Industrial company (Special Provisions) Act, 1985. 21. In respect of the trading activities of the company, we are informed:- (a) Regarding Stock: - That the Company had to sell its damaged stock at much lower prices & had cleared its complete stock from head office. However some damaged stock still lied at factory & its valuation is made accordingly by the management. (b) Regarding sales & debtors:- That though the company had completely cleared its damaged and slow moving stock at the lowest price but company still failed to recover the full sale price of goods sold. Sundry Debtor's balances are subject to confirmation for determination as to their correctness and realisability. However total Sundry Debtors outstanding as on 31.3.2000 are Rs.59066430, out of these debtors Rs.99,52,878/- were also outstanding as on 31.3.2000. 22. According to explanations given to us by directors, there is no by product of significant scrap. 23. The Company has not maintained the cost records as prescribed under section 209 (1)(d) of the Act. 24. The Company has not appointed Company Secretary as per the provisions of the Companies Act, 1956. for M.M. Babbar & Co Chartered Accountants Place : Delhi (M.M. Babbar) Dated : 29th June, 2001 F.C.A