KUMAR'S COTEX LIMITED ANNUAL REPORT 1999-2000 AUDITORS' REPORT To The Members of KUMAR'S COTEX LIMITED We have audited the attached Balance Sheet of KUMAR'S COTEX LIMITED, as at 31st March 2000 and statement of Incidental Expenditure during construction period pending capitalisation for the year ended on that date annexed thereto and report that: 01) 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 the paragraphs 4 and 5 of the said order. 02) Further to our comments in the Annexure referred to in paragraph (1) above: 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 it appears from our examination of those books; c) The Balance Sheet dealt with this report is in agreement with the books of Account. d) In our opinion and to the best of information and according to the explanations given to us, the said accounts read together with notes thereon give the information required by the Companies Act, 1956 in the manner so required and the Balance Sheet gives a true and fair view of the state of the affairs of the company as at 31st March, 2000. for T.RAGHAVENDRA & ASSOCIATES Chartered Accountants Place: SECUNDERABAD T. RAGHAVENDRA Date : 17.06.2000. Partner ANNEXURE REFERRED TO IN PARAGRAPH 1, OF THE AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF KUMAR'S COTEX LIMITED ON THE ACCOUNTS FOR THE YEAR ENDING 31ST MARCH, 2000. As required by the Manufacturing and Other Companies (Auditors' 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 cheeks, as we considered appropriate, we report hereunder on the matters specified in paragraphs 4 and 5 of the said order; 1. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets. The Fixed Assets of the Company have been physically verified by the management at reasonable intervals. Which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been noticed on such verification. 2. None of the Fixed Assets have been revalued during the year. 3. During the year under review the Company has not made commercial operations. 4. The stocks of finished goods, stores, spare parts and raw materials have been physically verified during the year by the management. In our opinion, the frequency of the verification is reasonable. 5. 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 its business. 6. The Company has taken loans, secured or unsecured from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956 or from the Companies under the same management as defined under Sub-section (IB) of Section 370 of the Companies Act, 1956, which are prima facie not prejudicial to the interests of the Company. The Company is availed interest free unsecured loans. 7. In our opinion the terms and conditions on which loans and advances in the nature of loans given to companies and other parties as listed in the register maintained U/s.301 of the Companies Act, 1956 are not prima- facie prejudicial to the interests of the Company. 8. 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. 9. In our opinion and according to the information and explanations given to us, there are no purchases or sales made by the Company with Companies or parties listed in the register maintained U/s.301 of the Companies Act,1956 and aggregating during the period to Rs.50000/- or more. 10. As explained to us, there were no unserviceable and damaged stores, raw materials and finished products held by the Company at the close of the year. Hence, no provision is required be made for the same. 11. As explained to us, the Company has not accepted any deposits from the public within the meaning of Section 58A of the Companies Act, 1956. 12. As explained to us, during the year there have been no generation or sale of realisable by - products and scrap. 13. As explained to us, the company has maintained the books pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act,1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. 14. The Employees' Provident Fund and Miscellaneous Provisions Act and Employees State Insurance Act are not applicable to the Company for the year under review. 15. As explained to us, there are no undisputed amounts, payable in respect of Income-tax, Wealth-Tax, Sales-Tax, Customs Duty and Excise Duty as at 31st March,2000, which are outstanding for a period of more than six months from the date they became payable. 16. According to the information and explanations given to us and the books and records examined by us, no personal expenses have been charged to revenue account. 17. The Company is not a sick industrial Company within the meaning of clause (10) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act,1985. 18. The Company has not provided Depreciation during the year as the Company could not carry out its operations. for T. RAGHAVENDRA & ASSOCIATES Chartered Accountants Place: SECUNDERABAD T. RAGHAVENDRA Date : 17.06.2000 Partner