ANNUAL REPORT 1999-2000
TO THE SHAREHOLDERS
We have audited the attached Balance Sheet of IDI Limited (formerly known
as Indian Dyestuff Industries Limited) as at 30th June, 1999 and the Profit
and Loss Account for the period 1st April, 1998 to 30th June, 1999, annexed
thereto and report that:
1. 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, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
2. Further to our comments in the Annexure referred to in paragraph 1
above, we report that:
a. We have obtained all the information and explanations which to the best
of our knowledge and belief wee necessary for the purposes 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 the books;
c. The Balance Sheet and Profit and Loss Account dealt with by this report
ae in agreement with the books of account;
d. IN our opinion, the Profit and Loss Account and the Balance Sheet comply
with the accounting standards referred to in sub-section 3(C) of section
211 of the Companies Act, 1956.
e. Attention is invited to following notes in schedule 18:
i. Note B-5 regarding non-provision in the accounts for multiple shift
allowance of Rs. 196.17 lakhs in respect of the years 1985-86 and 1986-87
which would have reduced the reserves had it been provided;
ii. Note B-7 regarding capitalisation of interest amounting to Rs. 464.61
lakhs for the entire period of credit allowed by the vendor in respect of
purchase consideration of fixed assets of the Vadodara unit acquired in the
year 1984-85, as per agreement dated 1st October, 1984. This is contrary to
Accounting Standard (AS) 10, `Accounting for Fixed Assets' issued by the
Institute of Chartered Accountants of India. Consequently, loss for the
year is lower by Rs. 21.33 lakhs (Previous year Rs. 20.96 lakhs, aggregate
to date Rs. 26.69 lakhs) and Reserves and surplus are higher by Rs. 26.69
lakhs, as compared to the position which would have prevailed, if the
Company had complied with requirements of AS 10;
iii. Note B-9 regarding loan (fixed deposit) with Matulya Mills Ltd. (MML)
aggregating to Rs. 127.91 lakhs (including interest accrued Rs. 27.91
lakhs). We are unable to comment on the recoverability or otherwise of Rs.
127.91 lakhs due from MML as the said Company has become a sick industrial
Company within the meaning of section 3 (1) (o) of Sick Industrial
Companies (Special Provisions) Act, 1985;
iv. Note B-11 regarding non-provision in the accounts for diminution in the
value of quoted investments of Rs. 451.29 lakhs (pervious year, Rs. 442.03
lakhs) and in the value of unquoted investment for the reasons explained in
Subject to the foregoing, in our opinion, and to the best of our
information and according to the explanations given to us, the said
accounts read with the significant accounting policies and other notes
thereon, give the information required by the Companies Act, 1956, in the
manner so required, and give a true and fair view:
i. In case of the Balance Sheet, of the state of affairs of the Company as
at 30th June, 1999, and
ii. In case of the Profit and Loss Account, of the loss for the period 1st
April, 1998 to 30th June, 1999.
For C.C.CHOKSHI & CO.
Mumbai, dated 25th August, 1999 P.R. BARPANDE
Annexure to the Auditors' Report
Referred to in paragraph 1 of our report of even date.
1. The Company has maintained proper records showing full particulars
including quantitative details and situation are fixed assets, except at
the Head Office, which are updated till 31st March, 1998. The fixed assets
have been physically verified by the management during the period. We are
informed that no material discrepancies were noticed on such verification.
2. None of the fixed assets have been revalued during the period.
3. The stocks of finished goods, stores, spare parts and raw materials have
been physically verified during the period on the management. In our
opinion the frequency of verification is reasonable.
4. The procedures for physical verification of stocks followed by the
management are reasonable and adequate to the size of the Company and the
nature of its business.
5. The discrepancies noticed on physical verification of stocks as compared
to book records are to material.
6. On the basis or our examination of stock records, we are of the opinion
that the valuation of stocks is fair and proper accordance with normally
accepted accounting principles, and is on the same basis as in the
7. In our opinion, the rate of interest and other terms and conditions on
which loans have been obtained from companies listed in the register
maintained under section 301 of the Companies Act, 1956, are not prima
prejudicial to the interest of the Company. We are informed that there is
no Company under the same management as this Companies as defined under
section 370 (1B) of the Companies Act, 1956.
8. In our opinion, the rate of interest and other terms and conditions on
which loans/fixed deposits have been granted companies, including
subsidiary companies, listed in the register maintained under section 301
of the Companies Act, 1956, are not prima facie prejudicial to the interest
of the Company. However, as explained in note B-9 of schedule fixed deposit
with Matulya Mills Ltd. has been agreed to be kept free of interest
effective from 1st April, 1991. We are informed that there is no company
under the same management as this Company as defined under section 370
(1B) of the Companies Act, 1956.
9. The parties, including employees, to whom loans have been given by the
Company are repaying the principal amounts as stipulated, except in case of
employees who have left the Company's service, in respect of whom,
reasonable have been taken by the Company for recovery of the principal
amounts and interest. The recovery of interest on loans to demand placed by
the Company, there has been a delay in payment of interest. We are informed
that the Companies constantly perusing the matter for recovery of such
interest to date. In relation to a party to whom loan was given and
recovered in an earlier year, there has been a delay in payment of interest
aggregating to Rs. 17.50 lakhs accrued and due as on 30th June, 1999. We
are informed that the Company is constantly pursuing the matter for
recovery of interest accrued to date. In view of note B-9 of schedule 18
there are no regular payments of interest and the period of repayment of
principal amount of the loan (fixed deposit) has been renewed for a further
period of one year.
10. 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 for purchase of stores,
raw materials including components, plant and machinery, equipment and
other assets, and for sale of goods.
11. In our opinion, the according to the information and explanations given
to us, the transactions for purchase of goods and arterials and sale of
goods, materials and services made in pursuance of contracts or
arrangements entered in are register maintained under section 301 and
aggregating during the period to Rs. 50,000/- or more in respect of each
party have been made at prices which are reasonable have in regard to the
prevailing market prices for such goods materials or services, or prices at
which transactions for similar goods or services have been made with other
parties as available with the Company.
12. As explained to us, the Company has a regular procedure for
determination of unserviceable or damaged stores,raw materials and finished
goods. Adequate provision has been made in the accounts for loss arising on
13. In our opinion, and according to the information and explanations given
to us, the Company has complied with the provisions of section 58A of the
Companies Act, 1956, and the rules framed thereunder, with regard to
deposits accepted from the public. On the legal advice, the Company has
increased rate of interest from 14% to 15% with effect from 1st January,
1996 on all outstanding deposits.
14. In our opinion, reasonable records have been maintained by the Company
for sale and disposal of realisable by products and scrap.
15. In our opinion, the Company has an internal audit system commensurate
with its size and nature of its business.
16. We have broadly reviewed the books of account maintained by the Company
pursuant to the rules made by the Central Government for maintenance of
cost records under section 209 (1) (d) of the Companies Act, 1956 in regard
to dyes (dyestuff), intermediates and sulphuric acid manufactured by the
Company. We are of the opinion that prima facie the prescribed accounts and
records have been made and maintained. We have not, however, made a
detailed examination of the records.
17. According to the records of the Company, Provident Fund and Employees,
State Insurance dues have generally been regularly deposited during the
period with the appropriate authorities.
18. According to the information and explanations given to us, no
undisputed amounts payable in respect of income tax, wealth tax, sales tax
customs duty and excise duty were outstanding as at 30th June, 1999 for a
period of more that six months from the date they became payable.
19. According to the 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 obligations or in accordance
with generally accepted business practice.
20. The Company is not a sick industrial Company within the meaning of
clause (o) of sub-section (1) of section 3 of the Sick Industrial Companies
(Special Provisions) Act, 1985.
21. In relation to the trading activity of the Company we are informed that
there were no damaged goods.
For C.C.CHOKSHI & CO.
Mumbai, dated 25th August, 1999 P.R. BARPANDE