We have audited the attached Balance Sheet of Annapurna Foils Limited
(the Company) as at 31st March 2002 and also the Profit & Loss Account
of the Company for the year ended on that date, annexed thereto, and
(1) As required by the Manufacturing and other Companies (Auditors'
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 a
statement on the matter specified in paragraphs 4 and 5 of the said
(2) Further to our comments in the annexure referred to in paragraph 1
(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
(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
(c) the balance Sheet and the Profit & Loss Account dealt with by this
report are in agreement with the books of accounts;
(d) in our opinion, the balance sheet and profit and loss account dealt
with by this report have been prepared in compliance with the
accounting standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956, to the extent applicable;
(e) on the basis of written representations received from the Directors
of the Company as on 31st March, 2002, and taken on record by the Board
of Directors, we report that no Directors of the Company is
disqualified from being appointed as a Director in terms of Clause (g)
of sub-Section (1) of Section 274 of the Companies Act, 1956; and
(f) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
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 affairs of the
Company as at 31st March 2002
ii. in the case of Profit and Loss Account, of the Loss for the year
ended on that date.
Annexure referred to in paragraph 1 of our report of even date to the
members of Annapurna Foils Limited (the Company).
1. The Company has maintained proper records showing quantitative
details and the situation of its fixed assets. A major portion of fixed
assets have been physically verified by the management during the year.
In our opinion, the frequency of verification of fixed assets by the
management is reasonable, having regard to the size of the Company and
the nature of its assets. No material discrepancy has been noticed
between the book records and the assets physically verified.
2. None of the fixed assets have been revalued during the year.
3. The stocks of finished goods, stores and maintenance spares,
components and raw materials have been physically verified by
management during the year. In respect of stock lying with third
parties, confirmation for most of the stocks held has been received. In
our opinion, the frequency of such verification is reasonable.
4. The procedures for the physical verification of stocks followed by
the management are reasonable and adequate in relation to the size of
the company and nature of its business.
5. The discrepancies identified on such verification between the
physical stocks and the book records were not material and were
properly dealt with in the books of account.
6. On the basis of our examinations of the stock records, we are of
the opinion that the valuation of the stocks is fair and proper, in
accordance with the normally accepted accounting principles and is on
the same basis as in previous years.
7. As per BIFR Scheme, the Company has taken interest free loans from
Companies, firms or other parties listed in the registers maintained
under Section 301 of the Companies Act, 1956.
8. The Company has not granted any loans, secured or unsecured to
Companies, Firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956 or Companies under the
same management as defined under Section 370(1B) of Companies Act,
9. The Company has given loans and advances in the nature of interest
free loans to its employees and the same are not prejudicial to the
interest of the Company.
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 for the purchase of stores, spares, raw materials including
components, plant and machinery, equipment, other assets and for the
sale of goods.
11. In our opinion, and according to the information and explanations
given to us and having regard to the fact that some of the items
purchased are of a special nature and suitable alternative sources do
not exist for obtaining comparative quotations, the transactions of
purchase of goods and materials and sale of goods, materials and
services, made in pursuance of contracts or arrangements entered in the
register maintained under Section 301 of the Companies Act, 1956 and
aggregating during the year to Rs. 50,000 or more in respect of each
party, were made at prices which are reasonable having regard to
prevailing market prices as available with the Company for such goods,
materials or services or the prices at which transactions for similar
goods or services were made with other parties.
12. The Company has a regular procedure for the determination of
unserviceable or damaged stores, raw materials, finished goods and
adequate provision has been made in the accounts for the loss arising
on the items so determined.
13. The Company has not accepted deposits from public.
14. In our opinion reasonable records have been maintained by the
Company for the sale and disposal of realizable scrap. The Company has
no realizable by-products.
15. The Company has an internal audit system commensurate with the
size and nature of its business.
16. We were informed that the Central Government has not prescribed the
maintenance of cost records u/s 209(1) (d) of the Companies Act, 1956.
17. According to the records of the Company, Provident Fund and
Employee State Insurance dues have been regularly deposited during the
year with the appropriate authorities.
18. According to the information and explanations given to us, no
undisputed amount payable in respect of Income Tax, Wealth Tax, Sales
Tax, Customs Duty and Excise Duty were outstanding as on 31st March
2002 for a period of more than six months from the date they become
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 the revenue account, other than those payable under
contractual obligations or in accordance with generally accepted
20. The Company has paid all the principal dues to the Financial
Institutions, Bank and erstwhile promoters, in terms of One Time
Settlement Scheme (OTS) sanctioned by Hon'ble Appellate Authority for
Industrial and Financial Reconstruction (AAIFR) vide its order dated
26th September, 2001. The Company is still continues to be a sick
industrial company within the meaning of Clause (o) of Section 3(1) of
the Sick Industrial Companies (Special Provisions) Act, 1985.
Further the AAIFR vide Order dated 8th March 2002 sanctioned the scheme
of merger of the Company with Indian Aluminium Company, Limited with
effect from 1st April, 2002 subject to compliance of requisite
For C. B. Mouli & Associates
Place: Hyderabad Mani Oommen
Date: 17th April, 2002 Partner