ANNUAL REPORT 1998-99 SHREE NEELACHAL LABORATORIES LIMITED, AUDITORS' REPORT TO THE MEMBERS SHREE NEELACHAL LABORATORIES LIMITED, We have audited the attached BALANCE SHEET of SHREE NEELACHAL LABORATORIES LIMITED at 31st March, 1999 and we 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 on the basis on the basis of such checks of the books and records as we consider appropriate and the information and explanations given to us during the course of Audit we annex hereto a Statement on the matter specified in paragraph 4 and 5 of the said Order. 2. 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 Accounts as required by law have been kept by the Company so far as it appears from our examination of these books. c. The Balance Sheet and Profit & Loss Account dealt with this report are in agreement with the books of account. d. In our opinion, the Balance Sheet complies with the mandatory accounting standards referred to in section 211 (3C) of the Companies Act, 1956. e. In our opinion and to the best of our information and according to the explanations furnished to us, subject ot Accounting Policy (E) (ii) relating to interest on Allotment Money in arrears being accounted for by the Company as and when received and Note No. 5 of Notes forming part of Accounts regarding non provision of gratuity liability and the accounts read inconjunction 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. i. In the case of Balance Sheet the State of Affairs of the company as at 31st March, 1999 and ii. In the case of Profit and Loss Account of the Loss of the Company for the year ended on that date. For AMARKANTA & ASSOCIATES Chartered Accountants Place : Berhampur. (A. K. PADHY) Date : 6.9.1999 Partner ANNEXURE REFERRED TO IN PARAGRAPH 1 OF AUDIT REPORT OF EVEN DATE I. The Company has generally maintained records of Fixed Assets showing full particulars including quantitative details and situation of Fixed Assets. The assets have been physically verified by the Management at reasonable intervals and no material discrepancies were noticed on such verification. As regards Capital Work-In-Progress, the same will be verified by the management on completion of assets. II. None of the Fixed Assets have been re-valued during the year. II. The Stocks of Stores, Spare Parts, Finished Goods and Raw Materials of the Company have been physically verified by the management during the year at reasonable intervals. IV. The procedures of physical verification of followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its Business. V. The discrepancies noticed on physical verification Stock as compared to Books and Records, which in our opinion were not material, have been properly dealt within the Books of Accounts. VI. In our opinion and on the basis of our examination, the valuation of stocks is fair and proper in accordance with the normally accepted accounting principles during the year under review. VII. The Company has not taken advances in the nature of loan from parties listed in the registers maintained under section 310 and 370 (1C) of the Companies Act, 1956. VIII. The Company has given interest free loans and advances in the nature of loans to parties listed in the register maintained under section 310 of the Companies Act, 1956. IX. The Company has given loans and advances in the nature of interest free loans and advance to the employees who have been repaying the principal as stipulated/ restipulated. In respect of other Loans and Advances in the nature of loans given by the company, no stipulations have been made regarding recovery. X. 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 purchase of Stock, Row Materials, Components, Plant and Machinery, Equipment and other assets. XI. In the opinion and according to the information and explanations given to us, the transactions of purchase of materials and sale of goods and services, made in pursuance of Contracts or arrangements entered in the Registers maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000/- (Rupees Fifty Thousand only) or more in respect of each party, have been made at prices which are responsible having regard to prevailing market price at which transaction for similar goods, materials or services have been made with other parties. XII. It has been explained to us, the unserviceable or damaged stores, Raw Materials and finished goods have been determined and have been properly dealt with in the accounts of the Company. Adequate provision has been made in the accounts for the loss arising on the items so determined. XIII. According to the information and explanations given to us, the Company has not accepted any deposits covered by the provision of Section 58 A of the Companies Act, 1956. XIV. The Company has no by-product and as per the information and explanations given to us, by the management reasonable records have been maintained for sale and disposal of the realisable scrap. XV. In our opinion and according to the information and explanations given to us, the Company has not appointed/ developed an internal audit system during the year under review. XIV. We broadly reviewed, without carrying out detailed examinations of the books of the accounts maintained by the Company pursuant to the order made by the central government for the maintenance of Cost records under the Section 209 (1) (d) of the Companies Act, 1956 and report that the Company as started maintaining such a records but as at the date of the review, they were not completed. XVII. In our opinion and according to the information and explanations given to us, the provided fund act is not applicable to the Company at this stage. XVIII. According to the information and explanations given to us there are no undisputed amounts payable in respect of customs duty and excise duty which are outstanding for a period of more than six months from the date they become payable. XIX. According to the information and explanations given to us, no personal expenses of the employees or Directors have been charged revenue account other than those payable under contractual obligations and in accordance with generally accepted business practice. XX. 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 Company (Special Provision ) Act, 1985. For AMARKANTA & ASSOCIATES Chartered Accountants Place : Berhampur. (A. K. PADHY) Date : 6.9.1999 Partner