ANNUAL REPORT 1999-2000
MOTOROL SPECIALITY OILS LIMITED
Motorol Speciality Oils Ltd.
We have audited attached Balance Sheet of Motorol Speciality Oils Limited,
Baroda as at 31st March, 2000 and also the annexed Profit and Loss Account
for the year ended on that date and we report that:
1. We have obtained all the information and explanations which to be best
of our knowledge and belief were necessary for the purpose of our audit
except, the necessary documentary in respect of the transactions and
documentation in respect of quantitative information as stated in notes
forming part of account and the particulars referred to in separate
qualifications given hereunder.
2. 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 the books.
3. The said Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account.
4. In our opinion and to the best of our information and according to the
explanations given to us and read with the notes thereon and in particular
the notes referred to hereunder, namely.
a. Note No. 1: Balances of debit & credit parties are subject to
confirmations and reconciliation.
b. Note No. 2: During the search & seizer operations by sale tax department
on 16.02.2000 certain records have been seized by the sales tax department.
Hence the same could not be verified by us.
c. Note No. 5: Reference is invited to non payment of Non Convertible
Debentures and creations its charge.
d. Note No. 8, 19 & 15: No provision has been made in the books of accounts
for certain unascertained liabilities as follows.
i) The Company has not made any provisions for doubtful debtors Amount of
such doubtful debtors are not determined. (refer not no 8)
ii) No provision has been made for demunation on investment in quoted
shares Rs. 36.01 lakhs. The amount of demunation in unquoted shares is also
not determined and remain unprovided. (refer note no 15)
iii) Statutory dues of employees who have. left the employment with the
Company remains unprovided. The amount of such liability is not determined.
(refer note no 19)
e. Note No. 10: Reconciliation of certain accounts related to share
premium, unclaimed dividend are in progress.
f. Note No. 13: Pending documentation an advance of Rs. 4.87 crores paid
for acquisition of immovable properties. We are informed that the company
has taken legal action against the party for recovery of dues and / or
g. Note No. 14: The Company has received an amount Rs. 7.32 lakhs as
advance towards sale of land and an amount of Rs. 1.80 lakhs against sale
of residential quarters which amount has been shown under the head current
liabilities in the books of accounts. though fixed assets of the Company
have been transferred.
h. Note No. 24: It is noticed that the company has outstanding from Motorol
(India) Ltd. which has been wound up and order have been passed by Gujarat
High Court appointing liquidator who has stated to have taken charge during
the year. Details in respect of transaction with them during the year could
not be confirmed. No provision is made for amount due from them as the
company is pursuing the matter. In view of the circumstances & legal
position involved we are unable to express our opinion on the said
i. Note No.16: The Company has discontinued the Group Gratuity Scheme for
its employees and discontinued the Master Policy held with the Life
Insurance Corporation of India. The present liability for the future
payment of gratuity to employees therefore stands uncovered. The amount of
additional liability on account of future gratuity has not been determined
and no provision has been made for the incremental liability for the year
and up to previous year on this account.
j. Note No. 18: The Company is yet to complete the formalities Prescribed
under the Companies Act in respect of increasing authorised and paid up
capital in earlier years.
k. Note No. 20: Reference is invited to Depreciation not provided Rs. 20.21
l. Note No. 22 & 28: No provision has been made for interest on NCD, ICD,
deposits & bank credits (estimated at Rs.23 lakhs) in view of its
operational status and hopeful of getting it waived under the
m. Note No. 23: In contradiction to the Company's policy on Deferred
Revenue Expenditure stated in item 5 of statement of accounting policy, the
Company has not written off an amount of Rs.19.99 lakhs being the amount in
respect of public issue, corporate image development and other deferred
n. Note No. 27: The company has paid Flexpack India Ltd. Rs.4.5 crores
towards share application money for which shares are to be received.
o. Note No. 29: The company has undertaken petro project for Rs. 572.27
lakhs and product development know how for Rs. 275 lakhs. In absence of
availability of details to us we could not verify the same and therefore
unable to express out opinion on same.
p. Note No. 31: Reference is invited to dues and loans & Advances from
concerns / parties in which directors have shown their interest as
q. Note No. 32: The accounts books are audited from the computer screen.
Printed copies of the same are yet to be taken.
5. Subject to the above, In or opinion the Balance Sheet and Profit & Loss
Account comply with the accounting standards referred to in sub-section
(3C) of Section 211 of the Companies Act,1956.
6. Subject to matters reffered to in para 1 & 4, in our opinion and to the
best of our information and according to the explanations given t,o 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.
A. In the case of Balance Sheet of the state of affairs of the Company as
at 31st March, 2000
B. In the case of Profit and Lass Accounts of the profit for the year ended
on that date.
As required by the Manufacturing and Other Companies (Auditor's Report
order, 1988 issued by the Central Government in terms of section 227 (4A)
of the Companies Act, 1956 and on the basis of such checks as we considered
appropriate we further report that:
1. The updated records showing particulars including quantitative details
and situation of the Fixed Assets are stated to be under compilation &
reconciliation. Physical verification of Fixed Assets of the company is yet
to be made & discrepancies of any needs to be accounted.
2. None of the fixed assets has been revalued during the year.
3. The stock in trade has been stated to be physically verified by the
management at the end of period. In our opinion, the frequency of the
verification needs to be increased.
4. In our opinion and according to the information and explanations given
to us, the procedures of physical verification of stocks followed by the
company needs to be more frequent and in relation to the size of the
company and the nature of its business.
5. We are informed that there are no material discrepancies noticed on
physical verification of stocks as compared to the book records and the
same has been properly dealt with in the books of account.
6. in our opinion, the valuation of stocks is in the same basis as in
preceding year and in accordance with the normally accepted accounting
7.- Company has taken loans,,secured or unsecured from Companies as listed
in the Register maintained by the Company under section 301 of the
Companies Act, 1956 or from the Companies under the same management as
defined under Sub Section (1B) of Section 370 of the Companies Act, 1956,
no stipulations are made as regards the interest or other conditions in
respect of the same
8. According to the information and explanations given to us, the Company
has granted loans, secured or unsecured to Companies, firms or other
parties listed in the Register maintained under section 301 of the
Companies Act,1956, no stipulations are stated to be made as regards the
interest or other conditions in respect of the same.,
9. The parties to whom loans or advances in the nature of loans have been
given by the Company are generally repaying the principal amount. As stated
there is no stipulation for repayment and interest. In absence of full
details made available extent of its prejudicalness could not be verified.
10. In our opinion and according to information and explanations given to
us, internal control procedure need to be strengthened commensurate with
the size of the company and the nature of its business with regard to the
purchases of plant and machinery, equipment and other assets. The companies
internal control procedure for purchase and sale of goods needs to be
strengthened so as to commensurate with the size of the Company and the
nature of its business. Proper documents and supporting records of
transactions also needs to be obtained.
11. The Company has entered in to transaction for the purchase/sale of
goods provision of services to and availing services from the companies in
which some of the. Directors are interested for amounts aggregating Rs.
50,000/- or more in respect of each party during the year. We are not in
position to comment as to whether the prices/rates charged or paid are
reasonable or otherwise in view of technical nature of the services
rendered and comparable prices of similar goods not being available with
the Company. -
12. The Company has procedures for determining unserviceable or damaged
stores, raw materials and finished goods and the necessary adjustments for
the loss, where occurred has been made in the Accounts.
13. The Company h,,as not accepted fixed deposits from the public during
the year and therefore the provisions under Section 58A of the Companies
Act,1956, or the directives of the Reserve Bank of India are not
14. We are informed that the Company has no realisable scrap and no by-
products arise in the manufacturing process of the Company.
15. The Company avails of the services of the Internal Audit Department of
the group companies and this internal audit system is found inadequate and
required to be strengthened.
16. The Central Government has not prescribed maintenance of cost records
in respect of the products manufactured by the Company under Section 209
(1) (d) of the Companies Act,1956.
17. The Company has deposited the Provident Fund and Employees State
Insurance dues with the appropriate authorities during the year except the
delay in such payments.
18. According to the information and explanation given to 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
31.3.2000 for a period of more than six months from the date they became
19. According to the information and explanations given to us and as
appears from the available records of the Company examined by us, no
personal expenses have been charged to revenue account except out of
commercial, expediency, custom or discharge of contractual liability.
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 Provision) Act,1985.
For AMBALAL M. SHAH & CO.
Place: Baroda ASHOK JAIN
Date : 02/12/2000 Partner