TRANSPOWER ENGINEERING LIMITED
ANNUAL REPORT 2000-2001
The Shareholders of
Transpower Engineering Limited
We have examined the attached Balance Sheet of Transpower Engineering
Limited, as at 31st March, 2001 and the annexed Profit & Loss Account for
the year ended on that date which are in agreement with the books of
As required by the Manufacturing and Other Companies (Auditors' Report)
Order, 1988 and on the basis of such checks of the books and records of the
Company as we considered appropriate and the information and explanations
given to us during the course of our audit, we report that in our opinion:
A I) Company has maintained the records showing full particulars including
quantitative details and situation of fixed assets except the records of
items of work-in-progress at project at Nagpur site. The fixed assets of
the company have been physically verified by the Management during the
period and no material discrepancies between the book records and the
physical items were noticed.
ii) None of the fixed assets have been revalued during the year.
iii) The Management has not physically verified stock of finished goods and
raw material during the year.
iv) We are unable to comment on the adequateness & reasonableness of the
procedure of physical verification of stock followed by the Management.
v) We are unable to comment whether the discrepancies noticed on physical
verification of stocks as compared to book records, which were not
material, have been properly dealt with in the books of account.
vi) In our opinion the valuation of stocks is fair and proper and in
accordance with the normally accepted accounting principles and is on the
same basis as in the preceding year.
Vii) It is informed that there is no Company under the same management
within the meaning of Section 370(1B) of Companies Act, 1956 or a Company
to be listed in the register maintained u/s. 301 of the Companies Act, 1956
from whom the Company has taken an unsecured loan.
viii) It is informed that there is no Company which is to be listed under
Section 301 of the Companies Act or the Company as defined in Section
370(1B) of the Companies Act, 1956 to which loans and advances are granted.
ix) The Company has granted interest free loans and advances to certain
Companies/firms amounting to Rs. 3,39,92,136/- of which the principal
amount are not being recovered. The loans and advances granted to such
parties are prejudicial to the interest of the Company as the Company has
not charged any interest thereon and out of such loans and advances the sum
of Rs 2,58,82,744/- are bad of recovery.
X) In our opinion and according to the Information and explanation given to
us there are adequate internal control procedure commensurate with the size
of the Company and the nature of its business with regard to the purchase
of stores, raw materials including components, plant & machinery equipments
and other assets except in respect of transactions for the capital worK-in-
progress at Nagpur project.
xi) There are no transactions of purchase from and sale to parties of goods
and materials or for services rendered by the Company In pursuance of
contracts or arrangements entered in the register to be maintained under
section 301 of the Companies Act, 1956 and aggregating during the year to
Rs. 50,000 or more.
xii) As explained to us, no unserviceable or damaged stores and raw
materials are determined by the Company, hence the question of provision
having been made in the accounts for the loss arising there from does not
Xiii) The company has not accepted deposits from public as defined under
provisions of Section 58A of the Companies Act, 1956.
xiv) In our opinion reasonable records has been maintained by the Company
for the sale and disposal of realisable scrap, We are informed that the
Company has no by-product.
xv) The Company has no internal audit system though the capital and
turnover of the Company is more than minimum required limit for the
exemption from internal Audit Systems.
xvi) We are informed that The Central Government has not prescribed
maintenance of any cost records under section 209(1)(d) of the Companies
Act, 1956 in respect of the Company,
xvii) The Company is not regular in depositing the contribution of the
Provident Fund dues with the appropriate authorities.
xviii) According to the information and explanation given to us no
Undisputed amounts payable in respect of Income tax, Wealth tax, Custom
duty, Sales tax and excise duty were outstanding as on 31st March, 2001
except for Sales tax amounting to Rs 1,74,26,641 for a period of more than
6 months from the date they become payable.
xix) No personal expenses have been charged to revenue account other than
those payable under contractual obligations or in accordance with the
generally accepted business practices.
xx) Company is a sick industrial company within the meaning of clause (0)
of Section 3 of the Sick Industrial Companies (Special Provisions) Act 1985
and the Company is also registered as Sick. Industrial Company with Board
for Industrial & Financial Reconstruction.
B) The Company is engaged in undertaking jobs on labour basis. It is
therefore in our opinion a service company also.
i) There is a reasonable system for recording receipts issues and
consumption of materials and stores commensurate with the size of the
Company and nature of its business,
ii) Allocation of materials and man hours consumed related to job is not
iii) In our opinion there is proper control on issues of stores and there
is adeuate system of internal control commensurate with the size of the
Company and nature of its business. However allocation of stores and labour
to the job is not made.
Further to our comments above, we report that:
a) Advances granted in earlier years to M/s. Avon Global Pvt. Ltd.
amounting to Rs. 5,16,62,074/- for the supply of new machineries to be made
for the project at Nagpur site and the amount shown under the head capital
work in progress amounting to Rs. 9,74,29,427 which is capitalisation of
expenses Including Bank Interest paid to IDBI incurred for such project at
Nagpur site is not commensurate with the progress at Nagpur site. As
reported In the earlier year the interest payable to IDBI capitalised to
Nagpur project is not for the project at Nagpur site as in our opinion and
to the best of our information and explanation given to us, the loan
received from IDBI has not been fully utilised for Nagpur project, hence
the amount of interest of Rs. 47,92,987/- capitalised at Nagpur project is
also not in accordance with the normally accepted accounting principles.
b) The debtors including other deductions like penalty, freight and
insurance and other items amounting to Rs. 4,28,03,538/- are bad of
c) Loans and advances without specific terms and conditions amounting to
Rs. 2,58,82,744/- are in our opinion rot recoverable.
d) No provision & estimation for liability of gratuity has been made for
the period & current liabilities and provision is under stated by 129.00
e) No provision has been made for the diminution in value of investment in
shares and securities for Rs 32,96,600/-.
f) No capitalization of interest payable to IDBI for Nagpur project & no
provision for interest payable on Book debts, Cash credit, Working Capital
loan, interest payable to other & Lease Rent payable has been made in the
books for the period 1/4/00 to 31/3/01.
Subject to above remark in para a to f above
1) We have obtained all the information and explanations which to the best
of our knowledge and belief were necessary for the purposes of our audit.
2) In our opining, proper books of account have been kept by the Company as
required by law so far as appears from our examination of these books.
3) In our opinion and to the bust of our information and according to the
explanations given to us the said accounts together with the schedules and
notes give the information required by the Companies Act, 1956, In the
manner so required.
(i) the Balance Sheet gives a true and fair view of the state of the
Company's affairs as at 31st March, 2001 and
(ii) the Profit and Loss Account gives a true and fair view of the loss for
the year ended on that date.
4) In our opinion and to the best of our information the Balance sheet and
the Profit & Loss Account comply with the Accounting Standards referred to
in Section 211(3C) of the Companies Act, 1956 subject to note I(a) &
II(2,3) of Schedule 18 of notes to accounts.
5) On the basis of the written representations received from the company,
we report that None of the directors is disqualified from being appointed
as directors in terms of clause (g) of sub-section (1) of section 274
except Mr. Homi R. Pakel from whom no communication has received by the
company in the subject of qualification as director.
For M.A. Shah & Co.
Place: Mumbai R.C. Makadia
Datc : 29-10-2001 Partner