Chhabra Spinners Limited, Annual Report 1998-99 AUDITOR'S REPORT The Shareholders, Chhabra Spinners Limited, Dhamnod Dist.Dhar (M.P). We have audited the attached Balance Sheet of CHHABRA SPINNERS LIMITED, as at 31st March,1999 and also the Annexed Profit & Loss Account of the Company for the year ended on that date and we report that: A) 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, we enclose in the annexure, a statement on the matters specified in paragraph 4 and 5 of the said order B) Further to our comments in annexure referred to in paragraph (A) above, we also report that: 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 account 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 Profit & Loss Account dealt with by this report are in agreement with the books of account D) In our opinion, the Balance Sheet and the Profit & Loss account complies with the mandatory Accounting Standards referred in Section 211(3C) of the Companies Act,1956. E) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with other notes thereon given in Schedule 20, gives 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 31st March,1999. and ii) In the case of the Profit & Loss Account, of the Profit of the Company for the year ended on that date. for RAJENDRA S. GOYAL & CO. CHARTERED ACCOUNTANTS Place: Indore Date : 25th August, 1999 (RAJENDRA GOYAL) Proprietor ANNEXURE TO THE AUDITOR'S REPORT Referred to in paragraph (A) of the even dated Auditor's Report to the shareholders of CHHABRA SPINNERS LIMITED on the Accounts for the year ended on 31st March, 1999. On the basis of such checks as we considered appropriate and in terms of information and explanations given to us, we state that :- 1. The Company has maintained proper records showing full particulars including quantitative details and situation, in respect of Fixed Assets. All the assets have been physically verified by the Management at reasonable intervals during the year. According to the information and explanations given to us, no material discrepancies were noticed on such physical verification as compared to the book records. 2. None of the fixed assets have been revalued during the year. 3. As explained to us, stocks of Raw materials, Finished Goods, Stores & Spares has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. 4. According to the information and explanations given to us, 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 the nature of it's business. 5. As per the explanations given to us, no material discrepancies have been noticed on verification between the physical stocks and the book records. 6 On the basis of our examination of stock records, we are of the opinion that the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the previous year. 7 The Company has not taken any loan, secured or unsecured from companies, firms or other parties listed in the register maintained U/S 301 of the Companies Act,1956 and/ or to the companies under same management as defined under Section 370(1B) of the Companies Act,1956. 8 The Company has not granted any loan, secured or unsecured to companies, firms or other parties listed in the register maintained U/S 301 of the Companies Act, 1956 and/ or to the companies under same management as defined under Section 370(1B) of the Companies Act,1956. 9 The parties including employees to whom loans and advances in the nature of loans have been given by the Company are repaying the principal amount as stipulated and are regular in payment of interest where applicable 10 In our opinion and according to the information and explanations given to us general/y there are adequate internal control procedure commensurate with the size of the Company and the nature of it's business with regard to purchase of stores, Raw Materials including components, plant & machinery, equipments, other assets and with regard to sale of goods. 11. In our opinion and according to the information and explanations given to us, the transactions of purchases and sale of goods and materials and rendering services made in pursuance of contracts or agreements 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 party have been made at prices which are reasonable having regard to prevailing market prices for such materials where such market prices are available with the Company or the prices at which transactions 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 stores and raw materials. Adequate provision has been made in the Accounts for the Loss arising on the items so determined. 13 According to the information and explanations give to us, the Company has not accepted any deposit from public. 14 In our opinion, reasonable records have been maintained by the Company for the sale of scrap 15 In our opinion, the Internal Audit system is generally adequate and commensurate with the sire of the Company We are informed that steps are being taken to make internal audit more effective by gearing it to the concurrent needs and nature of the business of the Company 16 The Central Government has prescribed maintenance of cost records under section 20911?(d) of the Companies Act,1956 for the products of the Company. We are unable to review such records of the Company since certain prescribed record are yet to be prepared 17. According to the records of the Company, provident fund dues, have been regularly deposited with appropriate authorities with slight delay during the year. The Arrears as at 31st March,1999 amounting to Rs.1,396/- in respect of Provident Fund dues have been deposited on 18/06/1999 As per the information and explanations given to us, Employees State Insurance Act was not applicable to the Company during the year. 18 According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Customs Duty and Excise Duty were outstanding as at 31st March, 1999, for a year of more than six months from the date they become payable 19 According to information and explanations given to us, no personal expenses of employees or directors have been charged to Revenue account, other than those payable under contractual obligation or n accordance with generally accepted business practice. 20 The Company is not a Sick Industrial Company within the meaning of clause (0) of sub-section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. for RAJENDRA S. GOYAL & CO. CHARTERED ACCOUNTANTS Place: Indore (RAJENDRA GOYAL) Date : 25th August, 1999 Proprietor