SAMANA STEELS LIMITED AUDITOR'S REPORT BHUSHAN AGGRWAL & CO. Chartered Accountants 678 Aggar Nagar Ludhiana - 141 004 To The Members of Samana Steels Limited SAMANA. We have audited the attached Balance Sheet of Samana Steels Limited. Samana as at 30th June, 1998 and the Profit and Loss Account of the Company for the year ended on that date annexed hereto and report that: 1.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, we enclose in the Annexure hereto a stat-ement on the matters specified in paragraphs 4 and 5 of the said Order. 2. Further to our comments in the Annexure referred to in paragraph (I) above ,we state that:- 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 accounts 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 and Loss Account referred to in his report are in agreement with the books of account: d) In our opinion and to the best of our information and according to the explanations given to us the said Statement of Accounts, read with notes in Annexure "XX" ,give the information required by the Companies Act, 1956 in manner so required and gi e a true and fair view:- i) In the case of the Balance Sheet, of the State of Affairs of the Company as at 30th June ,1998 and ii) In the case of the Profit & Loss Account. of the Profit for the year ended on that date. for Bhushan Aggarwal Co. Chartered Accountants Sd/- (S. B. Aggarwal) Prop. Place : Samana Date : 02/12/1998. ANNEXURE TO THE AUDITOR'S REPORT Referred to in paragraph (I)of our report of even date .) 1. The company has Maintained proper records showing full particulars including quantitative details and situation of fixed assets. The management has informed that physical verification of all major items of fixed assets has been carried out during the year and no material discrepancies were noticed on such verification. 2. None of the fixed assets have been revalued during the year . 3. In our opinion and according to the explanations given to us,the physical verification of finished goods. stores,spare parts and raw materials was conducted by the management, wherever particable,during the ear. In our opinion, the frequency of verification is reasonable. 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 were found 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 stock as compared to the book records. 6. In our opinion 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 previous year. 7. The company has not taken any loans, secured or unsecured from Compa- nies or firms listed in the register maintained Under Section 301 & 370(1 - C) of the Companies Act, 1956 . 8. The Company has not granted any secured and unsecured loans to Companies firms or other parties listed in the register maintained Under Section 301 of the Companies Act,1956, or to Companies under the same management with in the meaning of Section 370(1-B ) of the Companies Act, 1956. 9. The Company has not given any loans and advances in the nature of loans. 10. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures Commensureate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials including components, plant & machinery, equipments and other assets. 11. According to the information and explanations given to as,the transaction for purchase of goods and materials nd sales of goods. materials and services made in arsons of contracts or arrangements falling under Section 01 of the Companies Act,1956 and aggregating during the ear Rs.50,000/-or more in respect of each party have been made at prices which are reasonable having regard to the raveling market prices for such goods, materials or service of the prices at which transactions for similar goods or materials or service have been made with other parties. 12. As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores and raw materials . 13. The Company has not accepted any fixed deposits from the public during the period and,therefore. The question of compliance with the directives issued by the Reserve Bank of India and the provision of Section 58 A of the Companies Act, 1956 does not aries. 14. As explained to us, the Company is mainLining reasonable records for the sale and disposal of realisable by products and scrap. 15. In our opinion, the Company has an adequate system of internal audit which is commensurate with the size and nature of its business. 16. We have been informed that the Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956. 17. As explained to us Employees' State Insurance Act is not allocable to the Company. According to the records of the company, the Provident fund dues have not been deposited during the year with the appropriate authority. 18. According to the information and explanations given to us . there were no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty, which have remained, outstanding as at 30th June. 1998 for a period of more than six months from the date, they become payable . 19. According to the information and explanations given to us and the records of the Company examined by us, no personal expenses have been charged to revenue account other than payable under contractual obligations or in accordance with the generally accepted business practices 20. The Company is not a sick industrial company with in the manning of cloisonne (O)of Sub-Section (I)of Section 3 of the Sick Industrial companies (Special Provisions) Act,1985. For Bhushan Aggarwal & Co, Chartered Accountants Sd/- (S. B. Aggarwal) Prop. Place : Samana Date : 02.12.1998