SWOJAS ENERGY FOODS LIMITED
To The Members of
Swojas Energy Foods Limited
1. We report that we have audited the Balance Sheet of Swojas Energy Foods
Limited as at December 31, 1998 and the relative Profit and Loss Account
for the Period April 1, 1998 to December 31, 1998, both of which we have
signed under reference to this report.
2. The Accounts of the Company for the year ended March 31, 1998 were
audited by other independent Accountants, who issued an unqualified opinion
on those Accounts vide their report dated June 29,1998. The balances as on
April 1,1998, have been considered as opening balances for the purpose of
3. In our opinion and to the best of our information and according to the
explanations given to us, the Balance Sheet and Profit and Loss Account,
together with the Notes thereon and attached thereto, comply with the
Accounting Standards referred to in Section 211 (3C) of the Companies Act,
1956, give in the prescribed manner, subject to Note 9 on Schedule T,
regarding non-disclosure of indebtedness to Small Scale Industrial
Undertakings, the information required by the Companies Act,1956 and also
give, respectively, read in particular with Note 11 on Schedule T,
regarding change in the method of providing depreciation on Plant and
Machinery resulting in a lower depreciation charge for the period by Rs.
3,962,548 and subject to paragraphs 3.1 below and the related Note with
consequential effect on the loss for the period and period - end net
assets, a true and fair view of the state of the Company's affairs as at
December 31, 1998 and its loss for the period ended on that date.
3.1 Note 4 on Schedule T, regarding excess share application money of Rs.
3,256,145 received from Parmalat S.P.A, Italy considered repartiable, in
the absence of the necessary approval of the Reserve Bank of India.
4. We draw attention to Note 3 on Schedule T with regard to the Year 2000
problem. In the opinion of the Management, the problem of Year 2000 will
not vitiate the assumption of going concern in view of the plans to make
the organisation Year 2000 compliant, as per the plans being drawn by the
Management. It may be noted in this connection that our audit is not
intended, designed or performed to provide and accordingly does not provide
any assurance that the Company's internal systems or those of its external
dependencies are / or will be Year 2000 compliant. Further, we have no
responsibility with regard to the Company's efforts to make its systems, or
any other systems, such as those of the Company's vendors, service
providers or any other third parties capable of property processing dates
including the year 2000 or provide assurance on whether the Company has
addressed or will be able to address all of the affected systems on a
timely basis. These are the responsibilities of the Management of the
5. We have obtained all the information and explanations which, to the best
of our knowledge and belief, were necessary for our audit. In our opinion,
subject to paragraph 3.1 above, proper books of account have been kept as
required by law so far as appears from our examination of the books and the
above mentioned Accounts are in agreement therewith.
6. As required by the Manufacturing and Other Companies (Auditor's Report)
Order,1988, dated 7th September, 1988 and issued by the Central Government
and on the basis of such checks as we considered appropriate and according
to the information and explanations given to us.
we further report that:
(i) (a) The Company has maintained proper records to show full particulars,
including quantitative details and situation of its fixed assets.
(b) The fixed assets of the Company have not been physically verified by
the Management during the period.
(ii) The fixed assets of the Company have not been revalued during the
(iii) The stocks of finished goods, stores, spare parts, raw materials and
work-in-progress of the Company have been physically verified by the
Management during the period.
(iv) 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.
(v) The discrepancies between the physical stock and the book stock, which
have been properly dealt with, were not material.
(vi) In our opinion, the valuation of stocks of finished goods, stores,
spare parts, raw materials and work-in-progress has been fair and proper in
accordance with the normally accepted accounting principles and is on the
same basis as in the earlier years.
(vii) The Company has not taken any loans, secured or unsecured, from
companies, firms and other parties listed in the register maintained under
Section 301 of the Companies Act, 1956. As informed by the management,their
are no companies under the same management, as defined under subsection (1
B) of Section 370 the Companies Act,1956.
(viii) In our opinion the rates of interest and other terms and conditions
of loans, secured or unsecured, granted by the Company to companies, firms
or other parties listed in the register maintained under Section 301 of
the-Companies Act, 1956 are prima facie prejudicial to the interest of the
Company to the extent of a deposit of Rs. 2,000,000 with a party listed in
the register maintained under Section 301 of the Companies Act,1956 as no
interest has been charged on the deposit. As informed by the Management,
there are no companies under the same management as defined under Sub-
section (1 B) of Section 370 of the Companies Act,1956.
(ix) The parties to whom loans or advances in the nature of loans have been
given by the Company are repaying the principal amounts as stipulated and
are also regular in payment of interest, where applicable, except, in case
of a deposit of Rs.2,000,000 as mentioned in paragraph (viii) above which
has not been recovered as per the terms of the agreement with the party.
(x) In our opinion, and having regard to the explanation that in a few
cases as the items are of a special nature for which no alternative
quotations are available, there is an adequate internal control procedure
commensurate with the size of the Company and the nature of its business,
for purchase of stores, raw materials including components, plant and
machinery, equipment and similar assets and for the sale of goods.
(xi) The Company has not purchased goods and materials and sold goods,
materials and services aggregating during the period Rs. 50,000/- or more
in value from / to any of the parties listed in the register maintained
under Section 301 of the Companies Act,1956.
(xii) The Company has a system of determining unserviceable or damaged
stores, raw materials and finished goods. Based on technical evaluations
carried out by the Management during the year, adequate provision has been
made for such stock in the Accounts.
(xiii) The Company has not accepted any deposits from the public.
(xiv) In our opinion, reasonable records have been maintained for the sale
and disposal of realisable by - products and scrap, where applicable and
(xv) In our opinion, the Company's present internal audit system, which
needs strengthening in terms of the area of coverage, is generally
commensurate with its size and nature of business.
(xvi) As informed by the Management, the Central Government has not
prescribed the maintenance of cost records by the Company under Section
209(1) (d) of the Companies Act, 1956 for anY of its products.
(xvii) The Company has been regular in depositing during the period
Provident Fund dues with the appropriate authorities. As informed by the
Company, it is yet to receive registration under the Employee State
Insurance Act and accordingly, a sum of Rs.43,668 outstanding towards this
end at the period end, has not been deposited with the appropriate
(xviii) At the last day of the financial period, there were no amount
outstanding in respect of undisputed income tax, wealth tax, sales tax,
customs duty and excise duty which were due for more than six months from
the date they became payable.
(xix) During the course of our examination of the books of account carried
out in accordance with the generally accepted auditing practices, we have
not come across any personal expenses which have been charged to the Profit
and Loss Account, other than those payable under contractual obligations
and accepted business practices nor have we been informed of any such case
by the Management.
(xx) The Company is not a sick industrial company within the meaning of
Clause (o) of Section 3(1) of the Sick Industrial Companies (Special
(xxi) In respect of services rendered, in our opinion, the nature of the
services rendered by the Company is such that it does not involve
consumption of materials and allocation of man-hours utilised to relative
(xxii) The other provisions of the Manufacturing and Other Companies
(Auditor's Report) Order, 1988 dated September 7,1988 and issued by the
Central Government are not applicable to the Company during the period
covered by the aforesaid Accounts.
P. N. Ghatalia
For and on behalf of
Place: Pune Price Waterhouse & Co.
Date: August 4, 1999 Chartered Accountants.