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Richimen Silks Ltd.

BSE: 514048 Sector: Industrials
NSE: RICHSILK ISIN Code: N.A.
BSE 05:30 | 01 Jan Richimen Silks Ltd
NSE 05:30 | 01 Jan Richimen Silks Ltd

Richimen Silks Ltd. (RICHSILK) - Auditors Report

Company auditors report

RICHIMEN SILKS LIMITED ANNUAL REPORT 1999-2000 AUDITORS REPORT To The Members of RICHIMEN SILKS LIMITED We have audited the attached Balance sheet of RICHIMEN SILKS LIMITED Balance Sheet as at March 31, 2000 and the profit and Loss Account of the Company for the year ended on that date annexed there to and report as follows: 1. As required by the Manufacturing and Other Companies Auditors Report Order, 1988, issued by the Company Law Board in terms of Section 227 (4-A) of the companies Act, 1956, we enclose in the annexure a Statement on the matters specified in paragraphs 4 and 5 of the said order, wherever applicable. 2. a) The Company has not made provision for depreciation on Fixed Assets of Rs. 48,96, 919 consequent to which loss for the year is understated by Rs. 48,96 919 with the same effect on accumulated losses. b) The company has not provided for Customs duty of Rs. 43,17,417 and fines and penalties of Rs. 37,50,000 imposed by the Collector of Customs & Central Excise (see note 7 (a), of which an amount of Rs 27,50,000 was paid by the company and included under Loans & Advances, pending disposal of the company appeal. In our opinion, the non provision of the amount resulted in overstatement of Reserves by Rs.80,67,401. c) The company has not made provision for gratuity liability of Rs. 1,54,573 since the same is accounted for on cash basis. d) The allotment of Rs. 9,99,500 Equity Shares made during an earlier to the promoters/directors of the company is at variance with the terms of allotment as advised by the Hyderabad Stock Exchange vide its letter dated 18th June, 1991 in respect of which the company made a representation for altering the terms thereof. e) We could not obtain confirmations from Debtors and Creditors, as such we can not comment upon the recoverability or payment obligations of the above as they are long overdue. f) During the year the company has reversed the interest charged on out standing of Bank of Baroda and Andhra Bank on submission of proposal for one time settlement to the extent of Rs. 10,70,00,000/-. Accordingly no interest was changed for the current year which may work out upto Rs. 2,38,54,355/-. The reversal is subject to final confirmation from the respective banks. As such the loss during the year was understated by Rs. 2,38, 54, 355/-. 3. 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 appears from our examination of the books. c. The Balance sheet and Profit & Loss Account are in agreement with the books of account. d. 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 together with and subject to 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 the Balance sheet of the state of affair as at March 31, 2000; and ii. in the case of the profit & Loss Account of the Loss of the Company for the year ended on that date. For MRK REDDY & CO., Chartered Accountants, Date : 01st September, 2000 Place : Hyderabad. (M. Ramakrishna Reddy) Partner A N N E X U R E 1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. All the fixed assets were verified by the management and no descripancies were noticed on such notification. 2. None of the fixed assets have been revalued during the year. 3. The stocks of the finished goods, spare parts and raw materials have been physically verified during the year by the management. In our opinion the frequency of verification is reasonable. 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 material descripancies were noticed by the management on verification between the physical stocks and the books records. 6. On the basis of our examination of stock records we are of the opinion that the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles, and is on the same basis as in the preceding year. 7. In our opinion, the rate of interest and other terms and conditions on which loans have been taken from the parties listed in the register maintained under section 301 are not prima facie prejudicial to the in#rest of the company. However the company has taken interest free loans from the Directors. 8. The company has not granted any loans, secured or unsecured, to companies firms or other parties listed in the register maintained under the section 301 and/or to the companies under the same management as defined under the sub-section (1 B) of section 370 of the companies Act, 1956. 9. The company has not given any loans or advances in the nature of loans except for staff advances which are being recovered regularly. 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, with regard to the purchase of the stores, raw materials including components, plant and machinery, equipment and other assets with regard to the sale of goods. 11. According to the information and explanations given to us, sales transactions of goods,material and services made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 during the year aggregating to Rs. 50,000 or more in respect of each party, have been made at prices which are reasonable having regard to the prevailing market prices. There are no purchase transactions during the year made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956. 12. As explained to us, the Company has the regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. There were no such items during the year requiring provisions. 13. We are informed that the Company has not accepted any deposits covered under the provisions of section 58A of the Companies Act 1956. 14. In our opinion, the Company is maintaining reasonable records for sale and disposal of realisable scrap. We are informed that the Company has no realisable by-products. 15. The Company does not have internal audit system. 16. The maintenance of cost records has not been prescribed for the Company by the Central Government under section 209 (1) (d) of the Companies Act, 1956. 17. Regional Provident Fund Commissioner, Hyderabad has issued a notice to the Company as to why the provisions of Provident Fund Act cannot be applied to the company with effect from 01st January, 1991 in respect of employees at Head Office but in respect of employees situated at factory, the company applied the provisions from 1st October, 1992. The matter is yet to be resolved by the Provident Fund Commissioner. Pending the order of Regional Provident Fund Commissioner the company deducted provident fund from the employees and contributed its share in accordance with the stand of the company but payments were not made to the authorities. The amount to be remitted is not qualified. According to the information and explanations given to us the company is not covered by the provisions of Employees state Insurance Acts. 18. According to the information and explanations given to us, there were no undisputed amounts payable in respect of income-tax, excepting an amount of Rs. 5,15,455 and arrears Income Tax Deducted at source, Wealth Tax, sales-tax pending amount to be qualified customs duty which were outstanding as at 31st March, 2000 for a period of more than 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 Accounts, other than those payable under contractual obligations or in accordance with generally accepted business principles. 20. The Company is a Sick Industrial company within the meaning of the clause (o) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985. For MRK REDDY & CO., Chartered Accountants. (M. Ramakrishna Reddy) Partner Date : 01st September, 2000 Place : Hyderabad.