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Continental Construction Ltd.

BSE: 507956 Sector: Infrastructure
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Continental Construction Ltd. (CONTNLCONS) - Auditors Report

Company auditors report

CONTINENTAL CONSTRUCTION LIMITED ANNUAL REPORT 2001-2002 AUDITORS' REPORT TO THE SHAREHOLDERS OF CONTINENTAL CONSTRUCTION LIMITED, NEW DELHI 1. We have audited the attached Balance Sheet of Continental Construction Ltd., New Delhi, as at 31st March, 2002 and also the annexed Profit & Loss Account of the Company for the year ended on that date. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted the audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Manufacturing and Other Companies (Auditors' Report) Order, 1983 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 paragraphs 4 & 5 of the said Order on the basis of information and explanations obtained and such checks as we considered necessary. 4. Further to our comments in the annexures referred to above, we report that: (i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (ii) 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 books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us; (iii) The Balance Sheet and Profit & Loss Account dealt with by the report are in agreement with the books of accounts and returns. (iv) In our opinion, the Balance Sheet and the Profit and Loss account comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, except to the extent referred to in Schedule-"L" - Accounting Policy A(i) & (v). (v) On the basis of information obtained, none of the Directors are prima facie, disqualified under Section 274(1)(g) of the Companies Act, from being appointed as a Director of the Company. (vi) Attention is drawn to: (a) Note 2(A) regarding the debits of Rs.45.00 millions in the overdraft account for commission payable to ECGC and SBI and the consequential interest for Rs.53.79 millions, pending resolution; Note 2(B)(i) to (iv) regarding interest claims of Rs.694.09 millions by State Bank of India/Export Import Bank of India, not accepted by the Company; and Note 2B(v) regarding stamp duty and guarantee fee of Rs.16.78 millions charged by SBI and Exim Bank, not accepted by the Company. (b) In respect of current assets held in Iraq in local currency or equivalent thereof, referred to in Note 3(b), we are unable to comment on the repatriability of the same to India and consequently the effect thereof. (c) Note 4 regarding interest accrued of Rs.574.48 millions till 31.03.2002 on deferred receivables: we are not in a position to state about its recoverability in the near future consequent to the UN trade sanctions in force on Iraq. Subject to the foregoing, in our opinion, and to the best of our information and according to the explanations given to us, the accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2002 and (ii) in the case of the Profit & Loss Account, of the Profit for the year ended on the date. for V. Sankar Aiyar & Co. Chartered Accountants Place: New Delhi R. RAGHURAMAN Dated: 05.08.2002 Partner ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR REPORT TO THE SHAREHOLDERS OF CONTINENTAL CONSTRUCTION LIMITED FOR THE YEAR ENDED 31ST MARCH, 2002 1. The Company has maintained proper records showing full particulars, including quantitative details and situation of its Fixed Assets. We are informed that the fixed assets were physically verified by the management of the Company during the year and that no material discrepancies were noticed on such verification. 2. None of the Fixed Assets has been revalued during the year. 3.(a) The stocks of stores, spares and construction materials were physically verified at reasonable intervals by the management. (b) The procedures of physical verification followed by management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) We are further informed that the discrepancies noticed on verification between the physical stock and the book records were not material. (d) In our opinion, the valuation of the above mentioned stock is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the previous year. 4. In respect of interest free loans from Companies, Firms or parties listed in the Register maintained under Section 301 of the Companies Act 1956, the terms & conditions are not prima-facie prejudicial to the interest of the Company. 5. In regard to the loan of Rs.33.50 millions to Continental Textile Mills Ltd., treated as doubtful of recovery, it has been provided for. Advance ire the nature of loans also includes Rs.168,840 (interest free) to Continental Power Corporation Ltd. There are no stipulation regarding repayment of principal & interest of these advances. Excepting this, the company has not given loans, secured or unsecured, to Companies, Firms or parties listed in the Register maintained under Section 301 of the Companies Act, 1956 or to companies under the same management as defined under Section 370(1-B) of the Companies Act. 6. Advances in the nature of loans amounting to Rs.44.22 millions during the year and interest outstanding of Rs.9.29 millions of earlier years due from a subsidiary are also considered doubtful for recovery. In respect of other loans and advances in the nature of loans, parties have generally repaid the principal amount as stipulated and have also been regular in the payment of interest, where applicable. 7. In our opinion arid according to the information and explanations given to us, there are reasonably adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of stores, construction materials including components, plant and machinery & equipment and other assets. 8. According to the information and explanations given to us, there are no transactions of purchase of goods and materials and sale of goods, materials and services made by the Company in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act 1956. 9. As explained to us, the Company determines unserviceable or damaged stores and construction materials at the time of physical verification. Adequate provision has been made in the accounts for the loss arising on the items so determined. 10. The Company has not accepted any deposits from the public. 11. The Company has no by-products. In our opinion, reasonable records have been maintained for sale and disposal of scrap arising during construction. 12. A firm of Chartered Accountants have carried out internal audit of the accounts of main units and head office. In our opinion, it is commensurate with the size and nature of business of the company. 13. The Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act 1956. 14. According to the records of the Company, there were delays during the year in the deposit of provident fund dues with the appropriate authorities. However, there were no arrears as on the balance sheet date. Employees State Insurance dues have been paid regularly. 15. According to the records of the Company, there was no undisputed amount payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty as at 31st March, 2002. which are outstanding for a period of more than six months from the date they become payable. 16. According to the information and explanations given to us and the records of the Company examined by us, no personal expenses have been charged to revenue account other than those payable under contractual obligations or in accordance with the generally accepted business practice. 17. The provisions of Sick Industrial Companies (Special Provisions) Act, 1985 do not apply to the Company as the Company is not an industrial undertaking specified in the first Schedule of the Industries (Development and Regulation) Act, 1951. for V. Sankar Aiyar & Co. Chartered Accountants Place: New Delhi R. RAGHURAMAN Dated: 05.08.2002 Partner AUDITORS' CERTIFICATE We have examined the above Cash Flow Statement of Continental Construction Limited, for the year ended 31st March, 2002. The statement has been prepared by the Company in accordance with the requirements of Listing Agreements Clause 32 with Stock Exchanges and is based on and in agreement with the corresponding Profit and Loss Account and Balance Sheet of the Company covered by our report of 05.08.2002 to the members of the Company. for V. Sankar Aiyar & Co. Chartered Accountants Place: New Delhi R. RAGHURAMAN Dated: 05.08.2002 Partner