We have audited the attached balance sheet of MALVIKA STEEL LIMITED as
at 30th June, 2001 and also the Profit and Loss Account of the Company
for the year ended on that date annexed thereto 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 and on the basis of such checks of
books and records of the Company as were considered appropriate and the
information and explanations given to us during the course of audit, we
enclose in the Annexure, a statement on the matters specified in
paragraph 4 and 5 of the said order.
2. Further to our comments in the Annexure referred to in paragraph 1
a. Subject to non availability of books of account, and others records
of Ghaziabad branch, investment scrips and non confirmation of balance
of debtors, loans and advances as explained in Note No 14 & 6
respectively of Schedule of P (Part-B) on notes on accounts, 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 such
books and proper returns adequate for the purpose of audit have been
received from the branches, not visited by us except for as in para (a)
c. In our opinion, the Profit and Loss Account and the Balance Sheet
comply with the Accounting Standards referred to in sub-section (3C) of
Section 211 of the Companies Act, 1956.
d. The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account.
e. On the basis of written representations received from the Directors
as on 30th June, 2001 and taken on record by the Board of Directors, we
report that none of the Directors is disqualified as on 30th June, 2001
from being appointed as a Director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
f. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts, subject to (a)
capitalization of expenses net of sales & other income and including
interest on borrowing on blast furnaces as further explained in note
no. 7(a) of Schedule P (Part-B) on Notes on Accounts and (b) non
provision of rental charges Rs. 74592 thousand on equipment in bonded
warehouse resulting decrease in Capital Work in Progress and current
liabilities to that extent, gives the information required by the
Companies Act, 1956 in the manner so required and give a true and fair
(i) in the case of Balance Sheet of the state of affairs of the Company
as at 30th June, 2001 and
(ii) in the case Profit and Loss Account, of the loss for the year
ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
(Annexure referred to in paragraph 1 of our Report of even date on the
accounts of Malvika Steel Limited for the year ended on 30th June,
1. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets. Physical
verification of fixed assets was not carried out by the management
during the year however, the physical verification was conducted in the
previous year and after the date of balance sheet and having regard to
the size of the company and nature of the assets non material
discrepancy between the book records and the physical inventory was
2. None of the fixed assets of the Company has been revalued during the
3. Physical verification of stocks have been conducted by the management
during the year in respect of finished goods, stores, spare parts, and
raw-materials and stock in transit.
4. The discrepancies, if any between the physical stocks and book
records were ascertained and have been properly dealt with in the books
5. The valuation of stocks of finished goods, stores and spare parts,
raw materials is fair and proper and in accordance with normally
accepted accounting principles and is on the same basis as in the
6. The company has not taken any loans, secured or unsecured from
companies, firms or other parties listed in the register maintained
under section 301 of the Companies Act, 1956 and Companies under the
same management as defined under sub section (1B) of Section 370 of the
Companies Act, 1956.
7. The Company has not granted any loans, secured or unsecured to the
Companies, firms or other parties listed in the register maintained
under section 301 and / or to the companies under the same management
as defined under sub section (1B) of Section 370 of the Companies Act,
8. There is no Loans or Advances in the nature of Loans other than the
staff advances given by the Company who are repaying the principal
amounts as stipulated and are in general regular in payment of interest
9. There is an adequate Internal Control Procedure commensurate with
the size of the Company and the nature of its business for the purchase
of stores, raw materials including components, plant and machinery
equipments and other assets and for the sale of goods.
10. There is no transaction for purchase of goods and materials and
sale of goods, material and services made in pursuant of contracts or
arrangement entered in the register maintained under section 301 of the
Companies Act, 1956 as aggregating during the year Rs. 50000 or more.
11. On the basis of evaluation made by person responsible for custody of
stocks, unserviceable and damaged stores, raw materials and finished
goods have been determined by the company and necessary adjustments for
loss have been made in accounts.
12. The Company has not accepted any deposits during the year from
public as per the provision of Section 58-A of the Companies Act, 1956
read with the Companies (Acceptance of Deposits) Rules, 1975.
13. In our opinion reasonable records have been maintained by the
company for the sale and disposal of realisable scrap and by-products.
14. In our opinion company has an internal audit system commensurate
with the size and nature its business.
15. Maintenance of Cost Records under Section 209(1)(d) of the
Companies Act, 1956 has not been prescribed by the Central Government.
16. The Company has been regular in depositing Provident Fund except
for the months from April, 2001 to June, 2001 and Employees State
Insurance dues with the appropriate authorities during the year.
17. There were no undisputed amounts payable in respect of income tax
wealth tax, sales tax, excise duty and customs duty outstanding as at
the end of the financial year for a period of more than six months from
the date they became payable.
18. During the course of our examination of the books of accounts
carried out in accordance with the generally accepted auditing
practices and according to the information and explanations given to
us, we have not come across any persona expense which have been charged
to Profit and Loss Account other than those payable under contractual
obligations or in accordance with prevailing business practices.
19. 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
Companies (Special Provisions) Act, 1985.
20. In case of trading activity, we were informed that there were no