ANNUAL REPORT 1998-99
MADRAS HI-TECH CIRCUITS LIMITED
We have audited the attached Balance Sheet of the MADRAS HI-TECH CIRCUITS
LIMITED as at 30th June 1999 and also the Profit and loss Account for the
period ended on that date. We report that:
1. We have obtained all the information and explanations which to the best
of our knowledge and belief were necessary for the purpose of audit.
2. In our opinion, proper books of accounts as required by law have been
kept by the Company so far as it appears from our examination of the books.
3. The Balance Sheet and the Profit and Loss Account referred to in this
report are drawn up in accordance with sub-section (3C) of section 211 of
the Companies Act,1956.
4. The Balance Sheet and the Profit and Loss Account dealt with by the
report are in agreement with the books of accounts.
Attention is drawn to the significant loss on sale of assets as anticipated
by the Company, the quantum of which is not ascertainable and for which no
adjustment has been made (Note # 1 of Schedule 16), non provision of
depreciation on plant and machinery (Note # 2 (a) of Schedule 16) and non
provision of interest on secured loans and unsecured loans from financial
institutions (Note # 4 of Schedule 16).
Subject to the above, in our opinion, and to the best of our information
and according to the explanations given to us, the said accounts together
with the accounting policies and notes thereon, give the information
required by the Companies Act, 1956, in the manner so required and give a
true and fair view:
(a) In the case of the Balance Sheet, of the sate of affairs of the Company
as at 30th June, 1999;
(b) In the case of the Profit and Loss Account, of the Loss for the period
ended on that date.
In accordance with the Manufacturing and other Companies (Auditor's Report)
Order, 1988 issued by the Company Law Board in terms of Section 227 (4 A)
of the Companies Act, 1956 we report as follows:
1. The company has maintained proper records showing full particulars
including location and quantitative details of fixed assets. We are
informed that the management has physically verified the assets during the
period. No material discrepancies were noticed on such verification.
2. None of the fixed assets of the Company have been revalued during the
year. However the Company has become sick and non viable and it anticipates
significant loss on sale of assets the quantum of which is no
ascertainable. (Refer note 1 of Schedule 16). Also refer para 4 of our main
3. The stocks of raw materials and spare parts are being physically
verified during the period by the management.
4. The procedure 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 discrepancies were noticed on such verification between physical
stock and book records.
6. On the basis of our examination of stock records, we are of the opinion
that the valuation of the stock is fair and proper, and in accordance with
the normally accepted accounting principles. There is no change in the
basis of valuation as compared to the previous year.
7. The company has not taken any loans from Companies, firms or other
parties listed in the register maintained under section 301 of the
Companies Act, 1956 and from Companies under the same management during the
8. In our opinion, the Company has not granted any loans secured or
unsecured to companies, firms or other parties listed in the register
maintained under section 301 and to the companies under the same management
as defined under section 370 (1B) of the Companies Act, 1956.
9. As there were no transactions involving purchase of goods, materials and
services made in pursuance of contracts or arrangements entered in the
register maintained under section 301, clause 4 A (ix) is not aPPlicable
10. In our opinion and according to the information and explanation given
to us, there are adequate internal control procedures commensurate with the
size of the company and the nature of its business. However there were no
transactions involving purchase of stores, raw materials including
components, plant and machinery, equipment and other assets and with regard
to the sale of goods during the year.
11. As there was no production during the period clause 4 A (xi) does not
12. As explained to us, the Company has a regular procedure for
determination of unserviceable or damaged stores, raw materials. Adequate
provision has been made in the accounts for the loss arising on the items
13. The company did not accept any fixed deposits during the period.
14. In our opinion, the Company has maintained reasonable records for the
sale and disposal of scrap. The company has nc by products.
15. The company has no formal internal audit system.
16. Maintenance of cost records has not been prescribed by the Central
Government under section 209 (1) (d) of the Companies Act, 1956 in respect
of the products.
17. The provisions of Provident Fund and Employees State Insurance Act are
not relevant to the Company for the period.
18. According to the information and explanations given to us, as
undisputed Income-tax of Rs. 45.81 lakhs has not yet been paid. No
undisputed amounts payable in respect of Customs duty, Excise duty were
outstanding as at 30.06.1999 for a period of more than six months from the
date they become 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 practices.
20. The company has been declared as a sick industrial Company under
section 3(1) (o) of the Sick Industrial companies (Special Provisions) Act,
1985 and the BIFR has appointed ICICI as the operating Agency.
For KARRA & CO.,
Date : 28.09.1999