1. Basis of Accounts
The accounts of the company are under the historical cost convention
and in accordance with fundamental accounting assumptions as suggested
by Accounting Standard Board, issued by The Institute of Chartered
Accountants of India and the same has been accepted and incorporated
while preparing financial statements.
2. Fixed Assets
Fixed Assets are stated at original cost of acquisition including
freight and custom duty on imported machinery. Since the company has
not started its commercial production, depreciation has not been
provided in books of accounts.
3. Expenditure during construction period
Expenditure incurred during construction period are appearing under the
head Pre-Operative Expenses and will be capitalised on commencement of
4. Retirement Benefits
No provision is made for estimated liability for the year ended 31st
March, 2002 as Payment of Gratuity Act, 1972 is not applicable. The
same would be accounted in the year when the said Act would be
5. Preliminary and Public Issue Expenses
Preliminary and Public issue expenses would be amortised when company
starts commercial production.
6. Borrowing Cost
Borrowing costs directly attributable to the acquisition or
construction of Fixed Assets are capitalised as part of the cost of the
assets, upto the date the asset is put to use. Other borrowing costs
are charged to the Profit & Loss Account in the year in which they are
7. Deferred Taxation
Deferred Tax resulting from timing differences between book and tax
profits is accounted for under the liability method, at the current
rate of tax, to the extent that the timing differences are expected to
B. Notes on Accounts
1. Contingent Liabilities not provided for in respect of:
Interest Accrued on term loan from financial institutions and banks.
The exact quantum of the same is not ascertainable as no statement of
Accounts or Balance confirmation at the year end from financial
institutions and banks were produced before us.
2. Term Loans and accrued Interest thereon:
a) Term loan from Financial Institutions like IDBI, IRBI and The
Federal Bank Ltd. are secured by movable and Immovable properties of
the company. However confirmations in respect of closing balances were
not made available to us.
b) IDBI has filed suit against company before Bombay High Court for
term loan and interest dues. Interest on term loan from IDBI is
provided upto 15th March, 1998, since the company is unable to obtain
details of accrued interest thereafter.
c) IRBI has also filed suit against company before High Court for term
loan and interest dues. Interest on term loan from IRBI is provided
upto 15th May, 1998, since the company is unable to obtain details of
accrued interest thereafter
d) Interest on term loan from The Federal Bank Ltd. is provided upto
31st March, 1999, since the company is unable to obtain details of
accrued interest thereafter.
3. The company has taken unsecured loan from Directors, their
relatives and parties in which directors and their relatives are
interested of Rs. 670,79,0791- (Previous Year Rs.667,75,088/-) as per
stipulation of Financial Institutions. However the confirmation in
respect of closing balance were not made available to us.
4. The company has taken unsecured loans of Rs. 30,64,109/- (Previous
Year Rs. 30,64,109/-) which is subject to confirmation.
5. The Bank statements from Central Bank of India (Worli Branch), Indo
Suez Bank and State Bank of India (Main Branch) were not made available
to us and the year end balances are same as last year audited accounts.
6. In the Opinion of Board:
a) Current Assets and Loans and Advances are stated at value which will
be realised in ordinary course of business.
b) The Provision for all known liabilities are adequate and not in
excess of amount reasonably necessary.