To the Members of:
20th Century Finance Corporation Limited
We have audited the attached Balance Sheet of 20th Century Finance
Corporation Limited as at 31st December, 1997 and also the annexed Profit
and Loss Accounts of the Company for the year ended on that date and report
1. 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;
2. In our opinion, proper books of account as required by law have been
kept by the Company so far as appears from our examination of the books;
3. The Balance Sheet and the Profit and Loss Account dealt with by this
report are in agreement with the books of account;
4. In our opinion and to the best of our information and according to the
explanations given to us, the said accounts subject to Note No. 15(i)
regarding amount utilised from the Contingency Reserve amounting to
Rs.791.97 lacs, Note No. 15(i) regarding excess provision for depreciation
of Rs. 1881.78 lacs and Note No. 5(iii) regarding non provision of
depreciation. Rs.873.90 lacs on Non Performing (NPA) on the grounds of non
accrual of income and the consequent impact on the profits of the year and
the other 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 the Balance Sheet of the state of affairs of the Company
as at 31st December, 1997; and
(b) in the case of Profit and Loss Account of the profit of the Company for
the year ended 31st December, 1997.
5. As required by the Manufacturing and Other Companies (Auditor's 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
we further report on the matters specified in paragraphs 4 and 5 of the
said Order that:
(i) The Company is maintaining proper records showing full particulars
including quantitative details and situation of fixed assets. The fixed
assets other than the assets given on lease have been physically verified
by the management during the year and no material discrepancies have been
noticed on such verification as compared with the records of fixed assets
maintained by the Company.
In respect of assets given on lease, confirmations are being obtained from
(ii) None of the fixed assets have been revalued during the year.
(iii) The Company has taken loans from companies listed in the register
maintained under Section 301 and/or from companies under the same
management as defined under sub-section (1B) of Section 370 of the
Companies Act, 1956. The rate of interest and the other terms and
conditions of such loans are prima facie not prejudicial to the interest of
(iv) The Company has granted unsecured loans to companies listed in the
register maintained under Section 301 of the Companies Act 1956, and/or
companies under the same management as defined under sub-section (1B) of
Section 370 of the Companies Act, 1956. The rate of interest and the other
terms and conditions of such loans are prima facie not prejudicial to the
interest of the Company.
(v) Loans and advances have been given to employees and other parties who
are repaying the principal amount as stipulated and are also regular in
payment of interest where applicable. In other cases, where the repayment
has not been stipulated reasonable steps are being taken by the Company for
recovery of the amounts.
(vi) 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
purchases of plant and machinery, equipment and other assets.
(vii) There are no transactions for providing consultancy services made by
the Company in pursuance of contracts or arrangements entered in the
register maintained under Section 301 of the Companies Act, 1956,
aggregating during the year to Rs.50,000/- or more in respect of each
(viii) In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by the
Reserve Bank of India and the provisions of Section 58A of the Companies
Act, 1956 with regard to the deposits accepted from the public.
(ix) In our opinion, the Company has internal system commensurate with the
size and nature its business.
(x) According to the records of the Company, the Provident Fund and
Employees Insurance dues have bean regularly deposited, during the year
with the appropriate authorities.
(xii) On the basis of our examination of (i) the books of account, (ii)
other records and (iii) the explanations gives to us on our enquiries, no
personal expenses other than expenses under service contract obligation
with the Company's employees and/or accepted business practices have been
charged to revenue account.
xiii) In respect of consultancy services rendered, the Company has a
reasonable system of allocating manhours utilised to the relative jobs,
commensurate with the size and nature of its business.
(xiv) In our opinion, adequate documents and records are maintained by the
Company for loans and advances granted on the basis of security by way of
pledge of shares, debentures and other securities.
(xv) We are informed that the provisions of any special statute applicable
to Chit Funds, Nidhi or Mutual Benefit Society do not apply to the Company.
(xvi) The Company has maintained proper records of transactions and
contracts in respect of trading in shares, debentures and other securities
and that timely entries have been made therein. All shares, debentures and
other securities have been held by the Company in its own name except to
the extent of the exemption granted under Section 49 of the Companies Act,
1956, and save for certain other shares as detailed in schedule of
As per the information and explanations given to us and taking into
consideration the nature of business of the Company Clauses (iii), (iv),
(v), (vi), (xii), (xiv) and (xx) of the Paragraph 4 (B) and Clauses (ii)
and (iv) of Paragraph 4(B) of the Manufacturing and other Companies
(Auditor's Report) 1988 are not applicable.
For Lakhani & Co.
D. V. Lakhani
Place : Mumbai
Date : April 29, 1998