We have audited the annexed Balance Sheet of Suncity industries Limited
having its registered office at S-272/A, MIA Phase II, Basni, Jodhpur
as at 31st March, 2002 and the Profit & Loss account of the company
annexed thereto. These financial statements are the responsibility of
the companys management. Our responsibility is to express and opinion
on these financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
Further to our comments in the annexure referred to above, we report
1. We have obtained all the information and explanation which to the
best of our knowledge and belief were necessary for the purpose of our
2. In our opinion, proper books of account as required by law have been
kept by the company so far as appears from our examination of the books
3. The Balance Sheet and Profit & Loss Account dealt with by this
report are in agreement with the books of accounts.
4. In our opinion and to the best of our information and according to
the explanations given to us, the Balance Sheet and the Profit & Loss
Accounts dealt with by this report are prepared in compliance with the
applicable accounting standards refer to in terms of sub-section (3)(c)
of section 211 of the Companies Act, 1956.
Subject to Notes on accounts (schedule 16 annexed herewith) and further
subject to comments given below:
1. The company has not charged interest on advances given to various
2. The back side idle land ad measuring 4.19 acre approx. 16760 Sq.
meter approx. and building thereon of the company was taken over by
RlICO Ltd., under section 29 of SFC Act to realise its loan by sale of
said land. RIICO Ltd., has informed vide its, letter no. F&R/R-703 Dt.
23.07.1999 that the entire land was neither sold, nor sale proceeds
were adjusted. Therefore, the company did not pass any entry for sale
of said land and building in its books of accounts.
3. During the year the company has not undertaken any production
5. 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 and on the basis of such checks on
books and records of the Company as we considered appropriate and
according to the information and explanations given to us during the
course of audit, we further state on the matters specified in paragraph
4 and 5 of the said order that:
(i) The Company has not maintained records of fixed assets hence we are
unable to comments upon the material discrepancies, if any, between the
book records and the physical verification carried out by the
(ii) None of the fixed assets have been revalued during the year.
(iii) As per information and explanation given to us, the Stocks of
Finished Goods, Stores & Spare Parts and Raw Material lying with the
company have been physically verified by the management as at the year
end and the discrepancies are reported to be nil. The stock is laying
untouched during the year. The opening stock has been taken as closing
(iv) On the basis of information and explanation given to us, the
procedure of physical verification of stocks followed by the management
is said to be reasonable and adequate considering the size of the
company and the nature of its business, however, no such record were
produced before us.
(v) As explained to us, the discrepancies noticed on physical
verification of the stocks as compared to the book records were not
material and the same have been properly dealt with in the accounts,
however, no such records were produced before us.
(vi) In our opinion and on the basis of our examination of the
valuation of stocks, such valuation is fair and proper and in
accordance with normally accepted accounting principles and is on the
same basis as in the preceding year.
(vii) The Company has taken temporary unsecured loans from parties
listed in the register maintained under section 301 of the Companies
Act, 1956. The rate of interest and other terms and conditions are
however prima facie not prejudicial to the, interest of the company.
According to information to us there is no Company under the same
management within the meaning of section 370(1B) of the Companies Act,
(viii) As per information and explanation given to us, the rate of
interest and other terms and conditions of loans to companies, firms
and parties listed in register maintained pursuant to section 301 of
the Companies Act, 1956 and/or to the companies under the same
management as defined under sub section (1B) of section 370 of the
Companies Act, 1956, are not prima-facie prejudicial to the interest of
(ix) The loans or Advances in the nature of loans given by the Company,
we are informed that there were no stipulation for repayment of
principal amount and interest thereon. The loans given are not secured
by any security or guarantee.
(x) In our opinion and according to information and explanations given
to us procedures adopted by the Working Directors constitute adequate
for the internal control purpose looking to the size company and the
nature of its business for the purchase of raw material including
components, plant & machinery, equipments and other assets and for the
sale of goods.
(xi) In our opinion and according to the information and explanation
given to us, the transaction of purchase of goods and material and sale
of goods, materials and services made in pursuance of contracts or
arrangements failing under section 301 of the Companies Act, 1956 and
aggregating during the year to Rs. 50,000 or more in respect of each
party have been made at prices which are seems to be reasonable looking
to the volatile rates variation in the prices of goods used in the
(xii) According to information and explanations given to us, the
company in our opinion is having a regular procedure for the
determination of unserviceable or damaged stores, raw material and
finished goods. Loss arising on the damaged or unserviceable stores
have adequately been provided for.
(xiii) According to the information and explanations given to us, the
company has not accepted any deposits from public within the meaning of
provisions of Sec. 58A of the Companies Act, 1956 and the rules framed
(xiv) In our opinion no records have been maintained by the company for
the sale and disposal other than of releasable by-products.
(xv) The company is not having any formal internal audit system as
such, but its internal control procedures involve reasonable internal
check on its activities and on its financial records.
(xvi) According to the information and explanation given to us, the
Central Government has not prescribed maintenance of cost records u/s
209(1)(d) of the Companies Act, 1956 for any of the products of the
(xvii) According to the record of the Company, old outstanding dues
towards Provident Fund and Employees State Insurance dues have still
not been deposited with appropriate authorities.
(xviii) As explained to us and as per records checked by us there were
various undisputed amounts payable in respect of Income Tax, Sales Tax,
Wealth Tax, Customs Duty and Excise Duty which have remained
outstanding as at 31st March, 2002 for a period of more than 6 months
viz Income Tax Rs. 10,83,296.00 and TDS Rs. 91,761.65 under Income Tax
Act 1961 and EPF payable under Provident Fund Act amounting to Rs.
1,08,990.76 & ESIC payable under ESI Act, 16,913.33, RST Rs. 8,920.20
under Rajasthan Sales Tax Act.
(xix) On the basis of test cheek carried out during the course of audit
and according to the information and explanations given to us no
personal expenses (other than those payable in accordance with terms of
service conditions of employees or in accordance with generally
accepted business practice) appear to have been debited to Profit &
(xx) The company is a Sick Industrial Company within the meaning of
clause (o) of sub-section (1) of Sec. 3 of the Sick Industrial
Companies (Special Provisions) Act, 1985.
(xxi) In respect of the Companys trading activity there is a procedure
for the determination of damaged goods. We are informed that the
company does not have any damaged goods lying with it at the end of the
year. Therefore no provision for any loss is required to be made in the
For: K. D. MOONDRA & CO.
Place: Jodhpur Sd/-
K. D. MOONDRA