KARNAUATI SPINNERS LTD.
The Members of
KARNAUTI SPINNERS LTD.,
We have audited the attached Balance Sheet of KARNAVATI SPINNERS LIMITED as
at 31st March, 1998 and also the annexed Profit & Loss Account of the
Company for the year ended on that date.
1. 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.
2. 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 the books of
3. The Balance Sheet and Profit & Loss account dealt with by this report
are in agreement with the books of accounts.
4. In our opinion and to the best of our information and according to the
explanations given to us, the said accounts read together with the 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 the case of Balance Sheet, of the state of affairs of the company as
at 31st March, 1998 and
ii) in the case of the profit & Loss Account, of the loss for the year
ended on that date.
5. 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 and on the basis of such checks of books and
records of the company as we considered appropriate and according, we
further state on the Matters specified in paragraphs 4 and 5 of the said
1. The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets. The fixed
assets have been physically verified by the management during the year
which in our opinion is reasonable having regard to the size of the company
and nature of its assets. No material discrepancies were noticed on such
verification as compared to the book records.
2. None of the fixed assets have been revalued during the year.
3. The stocks of finished goods, stores, spare parts and raw materials have
been physically verified by the management at reasonable intervals during
4. In our opinion and according to the information and explanations given
to us, 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 its business.
5. No material discrepancies have been noticed on physical verification of
stocks as compared to the book records.
6. In our opinion and on the basis of our examination on the valuation of
stocks, such vision is fair and proper in accordance with the normally
accepted accounting principles and is on the same basis as in the previous
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.
8. In respect of loans to Companies, firms and other parties listed in the
register maintained under section 301 (I-C) of the Companies Act,1956, the
rate of interest and terms and conditions of such loans are not prima facie
prejudicial to the interest of the Company.
9. The principal amounts and interest wherever applicable thereon in
respect of loans and/or advances in the nature of loans given by the
company to parties have been recovered regularly as stipulated.
10. In our opinion, there are adequate internal control procedures
commensurate with the size of the company and the nature of its business
with regard to the purchase of stores, raw materials including components,
plants and machinery, equipment and other assets and with regard to the
sale of goods.
11. According to the information and explanation given to us, the company
has not purchased goods and materials and sold goods, materials and
services aggregating Rs.50,000/- or more in value from/to any of the
parties listed in the register maintained under section 301 of the
12. In our opinion and according to the information and explanations given
to us, the Company has complied with the provisions of section 58 A of the
Companies Act, 1956 and the Companies. (Acceptance of : deposits) Rule,
13. As explained to us, The Company has a regular procedure for the
determination of unserviceable or damaged stores and finished goods.
Adequate provisions have been made in the accounts for the loss arising on
the items so determined.
14. In our opinion, reasonable records have been maintained by the company
for the sale and disposal of realizable by-products and scraps.
15. In our opinion the company has an internal audit system commensurate
with the size and nature of its business.
16. We are informed that Central Government has not prescribed the
maintenance of cost records under section 209 (1) (d) of the Companies Act,
1956 for any product of the company.
17. According to the records of the company, Providend Fund dues have not
been regularly deposited during the Financial year with the appropriate
authorities. Employees State Insurance Act is not applicable to the
18. According to the information and explanations given to us and records
of the company examined by us. there were no undisputed amounts payable in
respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty
which have remained outstanding as at 31 st March,1998 for a period of more
the Six Months from the date they became payable.
19. According to the information and explanation given to us and records of
the Company examined by us, personal expenses of employees or directors
have not been charged to revenue account, other than those payable under
contractual obligations in accordance with generally accepted business
20. The company is not a Sick Industrial Company with in the meaning of
clause (o) of Sub-Section (I) of section 3 of the Sick Industrial Companies
(Special Provision) Act, 1985.
DATE : 31.10.98 FOR ASHOK DHARIWAL & CO.
PLACE: AHMEDABAD Chartered Accountants.
M. No. 36452