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Datar Switchgear Ltd.

BSE: 517516 Sector: Engineering
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Datar Switchgear Ltd. (DATARSWICH) - Auditors Report

Company auditors report

DATAR SWITCHGEAR LIMITED ANNUAL REPORT 2001-2002 AUDITORS' REPORT I have audited the attached Balance Sheet of Datar Switchgear Limited, as on 31st March 2002 and also the profit & Loss Account for the year ended on that date, annexed thereto. These financial Statements are the responsibility of the Company's Management. My responsibility is to express an opinion on these Financial Statements based on my audit. I conducted my audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also estimates made by the management, as well as evaluating the overall financial statements presentation, i believe that my audit provides a reasonable basis for my opinion. As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, I enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to my comments in the Annexure referred to above, I report that; (i) I have obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purpose of my audit. (ii) In my opinion, proper books of accounts as required by law have been kept by the company so far as it appears from my examination of the books. (iii) The balance sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts. (iv) In my opinion the Balance Sheet and the Profit & Loss Account, dealt with by this report comply with Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956; (v) On the basis of written representations received from the directors as on 31st March, 2002 and taken on record by the Board of Directors, I report that none of the directors is disqualified as on 31st March, 2002 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; In my opinion and to the best of my information and according to the explanations given to me, and subject to the comments and qualification made as under:- a) As on 31.03.2002, the company has accumulated balance of Rs. 123.37 crores under the head "LTLMS" project capitalised" classified under fixed assets schedule. The said project / contract with Maharashtra state Electricity Board is in dispute and subjudice and the profit / loss if any arising on these projects has not been considered by the company for its profit & Loss Account. b) Company has failed to pay dividend to some shareholders for the year 1996-97 and 1997-98 Rs. 21.79 lacs and Rs. 25.43 lacs respectively. However this does not affect the profitability of the company. c) Company has failed to pay interest on OFCD of IFCI Ltd. and interest to Bankers / Financial Institutions of Rs. 40.01 Crores during the financial year 2001-2002. However, sufficient provision for the above interest has been made in the profitability of the company. The Company has also not provided for Dividend during the year on preference Shares, otherwise loss would have been higher by Rs. 22 lacs. Subject to above said accounts read together with the significant accounting policies and notes to accounts as per schedule "O" give the information required and give a true and fair view, in conformity with the accounting principles generally accepted in India: a) In the case of Balance Sheet of the state of affairs of the company as at 31st March 2002; and b) In the case of the Profit & Loss Account of the Loss for the year ended on that date. Place : Nasik S.S. Dharde Date : 29-08-2002 Chartered Accountant Membership No. 35954 ANNEXURE TO THE AUDITORS REPORT ON THE ACCOUNTS OF SWITCHGEAR LIMITED FOR THE YEAR ENDED MARCH 31ST 2002 REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE: As required by the Manufacturing and other Companies (Auditors Report) order 1988 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and to the best of my knowledge and belief and on the basis of such checks as considered appropriate I state as under; 1) The company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets. I am informed that the Company has formulated a programme of physical verification of all the fixed assets, over a period of one year, which in my opinion is reasonable Accordingly the physical verification of the fixed assets has been carried out by the management during the year and no material discrepancies were noticed on such verification. 2. None of the Fixed Assets have been revalued during the year. 3) Physical verification have been conducted twice during the year by the Management in respect of Finished Goods, Raw Materials and Stores and Spares. No serious discrepancies were reported on such verification, except while checking the stock physically out of total stock, Raw material worth Rs. 39,56,954/- and Finished Goods of Rs. 19,58,700/- were found totally unusable / unsaleable due to expiry of shelf life. After considering scrap value of 5% the Balance amount is written off from the stock as on 31.03.2002 totaling to Rs. 56,19,871/-. This is not attributable to the current years consumption I have totally relied on the management for cirtieria of usable shelf life. 4) In my examination of stocks the valuation of stock of finished goods, raw materials stores and spares has been fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the previous year. 5)In my opinion the internal control procedure followed by the Management is adequate and commensurate with size of the company and the nature of its business with regards of the purchase of stores, raw materials including components. Plant and Machinery Equipment and other assets and for the sale of the goods. 6) There are unserviceable or damaged stocks which are properly dealt with in the books of accounts as referred in clause (3) 7. The company has taken loan/(s) secured or unsecured from companies, firms or other parties listed in the register maintained under, Section 301 of the Companies Act, 1956 and/or from the Companies under the same Management as defined under sub-section (1B) of Section 370 of the Companies therefore, prima facie the terms and conditions are not prejudicial to the interest of the Company. 8. The company has not granted loans and advances secured or unsecured to companies Firms or other parties in the register maintained under Section 301 and/or to the Companies under the same Management as defined under sub- section (1B) of Section 370 of the Companies Act, 1956. 9. The Company has given advances in the nature of temporary loans. These short term loans are in the nature of regular advances. 10. In my opinion, according to the information and explanations given to me and having regard to the explanations that certain items purchased are of a special nature for which alternative quotations are not available, the transactions of purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating to Rs. 50,000/- or more per annum in respect of each party have been made at prices for such goods, materials or services or the prices at which transactions for similar or services or the prices at which transactions for similar goods or services have been made with other parties. 11. In my opinion the Companies present internal audit system is commensurate with its size and nature of business. However for Balance transactions, internal audit system needs to be strengthened. 12. The company has not accepted any deposits from public. 13. There are no realizable by-products however scrap has been sold during the year and the receipts are properly accounted for. 14. The central government has not prescribed maintained of cost accounting records under section 209(i)(d) of the Companies, act, 1956 for any the products of the Company. 15. The Company has not been regular during the year in depositing provided fund and Employees State insurance dues with the appropriate authorities wherever applicable. 16. Following undisputed amounts were payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Tax, Custom duty and Excise Duty as at the last date of financial year concerned. Income Tax amount of Rs. 11,73,569/- Sales Tax Rs. 33,32,005/- Deferred Sales Tax Rs. 34,38,416/- Professional Tax Rs. 9,32,171 which were unpaid as on the date of Balance Sheet. The Income Tax Assessment Demand of Rs. 10,18,75,986/- for Demand of Rs. 17,92,224/- for the financial year 1998-99 on the last date of the financial year concerned are disputed by the Company and the appeals have been filed with the respective authorities. 17. According to the information and explanations given to me, and the records of the Company examined by me, no personal expenses have been charged to revenue account other than those payable under contractual obligations or in accordance with the generally accepted business practices. 18. As per the meaning of the clause (O) of sub-section (1) of the section 3 of the sick Industrial Companies (Special provision) Act, 1985, the company is a sick Industrial company. The company has not referred to the Honorable Register of Board for Industrial and Financial Reconstruction (BIFR) and the same is registered under. case number 260/2001 w.e.f. 03-07- 2001. 19. In respect of service trading activities there are no damaged goods in the procession of the company as at March 31st 2002. 20. The SSI undertakings to whom amount outstanding for more than 30 days:- The management has not supplied the required information regarding the SSI Undertakings. S.S. Dharde Place : Nasik Chartered Accountant Date : 20-08-02 Membership No. 35954