| We have audited the attached Balance Sheet of "Tamilnad Hospital
Limited" as at 30th September 2000 and the Profit and Loss Account for
the period eighteen months period ended that date annexed thereto and
report that:
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 matters specified in paragraphs 4 and 5 of the said
order.
2. Further to our comments in the Annexure referred to in pararaph 1
above, we state that :
(i) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the pupose of our
audit.
(ii) Proper books of account as required by law have been kept by the
Company so far as appears from our examination of such books.
(iii) The Balance Sheet and the Profit and Loss Account referred to in
this report are in agreement with the books of account.
(iv) In our opinion and to the best of our information and according to
the explanations given to us, the said Balance Sheet and the Profit and
Loss Account read together with the notes thereon give the information
required by the Companies Act, 1956 in the manner so required and
subject to :
(a) The Balance Sheet and Profit and Loss Account not complying with
the Mandatory Accounting Standards referred in Section 211 (3C) of the
Companies Act, 1956 in respect of the following :
(1) Recognition of income from Health Guard Schemes on receipt basis as
per Accounting Policy (A) in Note No. (1) read with Note No. (9) which
is not in conformity with the Accounting Standard - 9 (A.S-9) issued by
the Institute of Chartered Accountants of India;
and
(2) Non estimation and Non provision for contingencies on corresponding
cost of services to be rendered against the receipts under Health Guard
Schemes referred in (1) above which is not in accordance with the
Accounting Standard - 4 (A.S - 4) issued by the Institute of Chartered
Accountants of India.
and
(3) Accounting of Provision in respect of Gratuity benefits by adopting
method specified under the Payment of Gratuity Act 1972 and not by
acturial valuation method, read with Note No.5 which is not in
confirmity with the Accounting Standard - 15 (A.S. 15) issued by the
Accountants of India and the effect on change is not ascertainable
(b) Increase of Authorised Share Capital without Notice of such
increase as per Note No. (8) gives a true and fair view :
(1) In so far as it relates to the Balance Sheet, of the state of
affairs of the Company as at 30th September 2000;
and
(2) In so far as it relates to the Profit and Loss Account, of the LOSS
of the Company for the eighteen months period ended that date.
ANNEXURE TO AUDITORS REPORT DATED 3RD MARCH, 2001 REFERRED TO IN
PARAGRAPH 1 OF OUR REPORT OF EVEN DATE
11. The Company has maintained records showing fuii particulars
including quantitative details and situation of fixed assets. Most of
the assets nave Deen physically verified by the management during the
accounting period pursuant to a regular programme of verification which
in our opinion is reasonable having regard to the size of the Company
and the nature of its assets and no material discrepancies were noticed
on such verification. However no sucfi physical verification was
carried out by the management since 19.6.2000 as referred in Note No.
10.
2 Fixed Assets except Furniture & Fittings had Deen revalued at their
Fair Market Value as on 1.4.1994 on the basis of the Technical
evaluation during that year.
Fixed assets having Fair Market Value higher than the Book Vaiues (WDV)
have been stated at their Fair Market Value The difference arising on
revaluation have been credited to Revaluation Reserve Account which is
seperately disclosed in the Balance Sheet.
3. The stocks of Hospital supplies, medicines, catering supplies etc..
have been physically verified by the management. In our opinion, the
frequency of verification is reasonable. However no such physical
verification was carried out by the management since 19.6.2000 as
referred in Note No. 1C.
4. The procedure of physical verification of stocks followed by the
management is reasonable and adequate in relation to the size of the
Company and the nature of its business subject to the discrepancies
referred in item 3 above.
5. The material discrepancies noticed on verification between the
physical stocks as compared to book records have been properiy dealt
within the books of accounts as referred in Note No 10.
6. in our opinion and according to the information and explanations
given to us, the Company has no realisable value of stocks as on the
Balalnce Sheet date as discussed in Note No. 10 and in our opinion that
the valuation of stock is fair and proper and in accordance with the
normally accepted accounting principles and is on the same basis as in
the preceding year.
7 in our opinion and according to the information and explanations
given to us, the company has not taken interest free advances from
Managing Director and not taken any loans secured or unsecured from
Companies or other parties covered by the provisions of Section 301 of
the Companies Act, 1956.
8 In our opinion and according to the information and explanations
given to us. the Company has not granted any loans secured or unsecured
to companies, firms and other parties covered by the provisions of
Section 301 and 370 (1B) of the Companies Act, 1956.
9. In respect of loans and advances in the nature of interest free
loans given by the Company, the parties have generally repaid the
principal amounts as stipulated.
10.in our opinion and according to the infomation and explanations
given to us, there are adequate internal control procedures
commensurate wih the size of the Company and the nature of its business
with regard to purchase of Hospital supplies, Medicines, Catering
Stores, Plant and Machinery, Equipment and other Assets and with regard
to sale of goods.
11. In our opinion and according to the information and explantions
given to us, 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
and aggregating during the year to Rs 50,000/- or more in respect of
each party have been made at prices which are reasonable having regard
to prevailing market prices/rates as are available with the Company for
such goods, materials (or) services.
12. As explained to us. the Company nas a regular procedure for
determination of unserviceable or damaged stores, hospital materials
etc., and adequate provisions has been made in the accounts.
13. In our opinion and according to the information and explanations
given to us. the company has not accepted " deposits from the public,
during the year under the review
14.In our opinion, the Company has maintained reasonable records for
sale and disposal of scrap
15. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and tne nature of its
business.
16. We are informed that the Central Government has not prescribed
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956
17. The Company is not regular in depositing Provident Fund dues with
the appropriate authoritiesand the remittance is pending since April
1999 amounting to Rs. 40,46,493 including penal interest and damages
liability. According to the information and explanations given to us.
the Employees State Insurance Act is not applicable to the Company.
18. In our opinion and according to the information given to us, no
undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
Tax, Customs Duty and Excise Duty were outstanding as at the close of
the Financial Year for more than six months from the date on which they
became payable except for remittance of Tax Deducted at Source
amounting to Rs. 10,09,110 is pending
19. in our opinion and according to the information ana explanations
given to us, no personal expenses of employees (or) Directors have been
charged to revenue account other than those payable under contractual
obligations (or) in accordance with generally accepted business
practice.
20. The Company is not a Sick Industrial Company within the meaning of
Clause (O) of Subsection (1) of Section 3 of the Sick Industrial
Companies (Special Provisions! Act 1985.
As the Company is a service company, a statement on the additional
matters specified and applicable to the Company is given below :
(i) In our opinion and according to the information and explanations
given to us, the Company has a reasonable system of recording receipts,
issues and consumption of materials and stores and allocating materials
consumed to the relative activities / departments commensurate with its
size and nature of its business.
(ii) In our opinion and according to the information and explanations
given to us, the Company has a reasonable system of allocating man
hours utilised- to the relative activities / departments commensurate
with its size and nature of its business.
(iii) In our opinion and according to the information and explanations
given to us, there is a reasonable system of authorisation at proper
levels and an adequate system of internal control commensurate with the
size of the Company and the nature of its business on the issue of
stores and allocation of stores and labour to various activities /
departments.
For M.R. NARAIN & CO
Chartered Accountants
Chennai M.PRABAKAR
3rd March 2001 Panner
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