AVS INDUSTRIES LIMITED
THE MEMBERS OF
AVS INDUSTRIES LIMITED
We have audited the attached Balance Sheet of M/S. AVS INDUSTRIES LIMITED
as at 31st March 1999 and the Profit & Loss Account of the company for the
year ended on that date annexed there to and report that:
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 and as per the information and explanation
furnished to us and the books of records examined by us in the normal
course of audit, we enclose in a annexure a statement on the matter
specified in paragraph 4 and 5 of the said order.
2. We have obtained all the information and explanation which to the best
of our knowledge and belief were necessary for the purpose of our Audit.
3. In our opinion proper books of accounts as required by law have been
kept by the Company so far as it appears from our examination of such
4. The Balance sheet and profit & Loss Account are in agreement with the
Books of Account.
5. Further, we report that:
(a) Provision for gratuity is accounted on estimated basis instead of
actual valuation, which is not in consonance with the AS -15 'Accounting
for Retirement Benefits', issued by The Institute of Chartered Accountants
of India, (refer Note No. 3 of Schedule T).
(b) Some Balances of Sundry debtors, sundry creditors, Deposites and Loan &
advances are subject to confirmation and reconciliation (refer Note No. 8
of Schedule T).
(c) Interest on loan and advances given and taken has been provided,
wherever stipulation to that effect is there (refer Note No. 9 of Schedule
(d) No provision has been made for doubtful debts in respect of sundry
debtors for Rs. 21,49,092/- (Previous year Rs. NIL). As a result of which
the loss for the year and accumulated losses are understated, to the extent
of Rs. 21,49,092 (refer Note No. 15 of Schedule T).
(e) No Provision has been made for Rs. 1,15,64,000 on account of fall in
market value of Long term Investments. As a result of which the loss for
the year and accumulated losses are understated to the extent of Rs.
1,15,64,000/- (refer Note No. 16 of Schedule T).
6. In our opinion and according to the information and explanations given
to us, the said Accounts, (which are prepared on a going concern basis in
spite of the Balance of the accumulated losses exceeding the Company's paid
up Share Capital and Reserves) subject to Paragraph 5 stated above and read
together with the Notes and Statement of Significant Accounting Policies,
give the information required by the Companies Act, 1956 in the manner so
required and present a true and fair view.
a) In the case of Balance Sheet, of the state of affairs of the Company as
at 31st March, 1999 and
b) In the case of Profit & Loss Accounts of the Loss for the year ended on
For KHANDELWAL JAIN & CO
PLACE: MUMBAI (MAHENDRA MUNDRA)
DATE : 20th April, 1999 PARTNER
ANNEXURE TO THE AUDITOR' REPORT
Statement referred to in paragraph 1 of our Report of even date to the
Members of AVS INDUSTRIES LIMITED on the accounts for the year ended on
1. The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets for this
purpose except additions of the year 1998-99 which are in the process of
updation. As per the information and explanation given to us, the company
has carried out physical verification of fixed assets. In our opinion, the
frequency of verification is reasonable having regard to the size of
company and nature of its business. To the best of our knowledge, no
material discrepancies were noticed on verification.
2. None of the fixed assets have been revalued during the year.
3. The stock of finished goods, stores, raw material,components and spare
parts have been physically verified during the year by the management. In
our opinion, having regard to the nature and location of stock, the
frequency of the verification is reasonable.
4. In our opinion and according to the information and explanations given
to us procedure of physical verification of stock followed by the
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
5. In our opinion, discrepancies noticed on verification between physical
stock and book records were not material in relation to operations of the
Company and the same have been properly dealt with in the books of account.
6. In our opinion, valuation of the above mentioned stock is fair and
proper and is in accordance with the normally accepted accounting
principles and is on the same basis as in the preceding year.
7. The Company has not taken any loan, secured or unsecured from Companies,
firms or other parties listed in the Register maintained under Section 301
of the companies Act, 1956 and from the Companies under the same management
as defined under section 370(1B) of the Companies Act,1956.
8. The Company has not granted any loans, secured or unsecured to
Companies; firm or other parties listed in the register maintained under
section 301 of the Companies Act, 1956 and to companies under the same
management as defined under section 370(1B) of the Companies Act, 1956.
9. In respect of loans and advances in the nature of loans given by the
Company, where stipulations have been made, the parties are generally
repaying the principal amounts as stipulated and have also been regular in
payment of interest wherever applicable.
10. In our opinion, and according to information and explanations given to
us, there are adequate internal control procedure commensurate with the
size of the Company and the nature of its business with regard to purchase
of stores, raw materials including components, plant & machinery,
equipments and Other assets and for the sale of goods.
11. There were no transaction of purchase of goods and materials and sale
of goods, materials, services made in pursuance of contracts or
arrangements entered in the register maintained u/s 301 of Companies
Act,1956 and aggregating during the year to Rs.50,000/- or more in respect
of each party.
12. As informed to us, the company has regular procedure for determination
of unserviceable or damaged stores, raw material and finished goods.
Adequate provision has been made in the accounts for the loss arising on
the items so determined.
13. According to the information and explanations given to us the Company
has not accepted any deposits during the year from the public within the
meaning of the provisions of Sec. 58(A) of the Companies Act, 1956 and
rules made thereunder.
14. In our opinion, reasonable records have been maintained by the Company
for the sale and disposal of realisable scrap. We are informed that the
Company does not have any disposable by products.
15. In our opinion, the Company has an internal audit system commensurate
with the size and nature of its business.
16. As explained to us, the maintenance of cost records has not been
prescribed by the Central Government under section 209(1) (d) Companies
17. The company has been regular in depositing Provident Fund dues with the
appropriate authorities except on certain occasion, were delay have been
occured. We are informed that the Company is not required to make any
contribution under the Employees State Insurance Scheme.
18. In our opinion, and according to the information and explanations given
to us, there are no undisputed and outstanding amounts payable in respects
of Income tax, Wealth tax, Sales tax, Customs duty and Excise duty as on
31st March, 1999 for a period of more than six months from the date they
became payable, except sales tax of Rs. 1,37,000/-.
19. According to the information and explanations given to us, and records
examined by us, no personal expenses have been charged to revenue account,
other than those payable under contractual business practice.
20. The Company has become a Sick Industrial Company within the meaning of
the Clause (o)-of sub-section (1) of Section 3 of the Sick Industrial
Companies (Special Provisions) Act, 1985. We are informed that the company
is in the process of making necessary reference to the board for Industrial
& Financial Reconstruction.
21. In our opinion and according to the information and explanations given
to us the Company has a reasonable system of recording receipts, issues and
consumption of materials and stores and allocating material consumed to the
relative jobs commensurates with ItS size and nature of its business.
22. In our opinion and according to the information and explanations given
to us the Company has a reasonable system of authorisation at proper levels
and an adequate system of internal control commensurate with the size of
the Company and nature of its business on issue of stores to jobs.
For KHANDELWAL JAIN & CO.
Place: MUMBAI (MAHENDRA MUNDRA)
Date : 20th April, 1999 PARTNER