Annual Report 2006 - Clariant

Clariant Chemicals (India) Limited24provisions of clause 4(i)(c) of the Order are notapplicable to the Company.(ii) (a) The inventories have been physically verifiedduring the year by the management except forstocks lying at third party locations for whichconfirmations have been obtained and forgoods-in-transit. In our opinion, the frequency ofverification is reasonable.(b) The procedures of physical verification ofinventories followed by the management arereasonable and adequate in relation to the size ofthe Company and the nature of its business.(c) In our opinion and according to the informationand explanations given to us, the Company ismaintaining proper records of inventory. Thediscrepancies noticed on verification betweenthe physical stocks and the book records werenot material and have been properly dealt with inthe books of account.(iii) (a) According to the information and explanationsgiven to us, the Company has granted an interestfree unsecured loan, repayable on demand to acompany (wholly owned subsidiary) covered inthe register maintained under Section 301 of theCompanies Act, 1956. The maximum amountinvolved during the period and the year endbalance was Rs. 735 lakhs.(b) In our opinion and according to the informationand explanations given to us, having regard to thefact that the company is a wholly ownedsubsidiary, the rate of interest and other termsand conditions are not, prima facie, prejudicial tothe interest of the Company.(c) According to the information and explanationsgiven to us, the interest-free loan repayable ondemand as referred to in (iii)(a) above has not yetbeen demanded. Accordingly, sub-clause (d) isnot applicable.(d) According to the information and explanationsgiven to us, the Company has not taken any loans,secured or unsecured, from companies, firms orother parties covered in the register maintainedunder Section 301 of the Companies Act, 1956.Accordingly, sub-clause (f) and (g) are notapplicable.(iv)In our opinion and according to the information andexplanations given to us, having regard to theexplanations that some of the items purchased are ofa special nature and suitable alternatives do not existfor obtaining comparable quotations, there areadequate internal control systems commensuratewith the size of the Company and the nature of itsbusiness with regard to purchases of inventory andfixed assets and with regard to the sale of goods andservices. Further, on the basis of our examination andaccording to the information and explanations givento us, we have neither come across nor have we beeninformed of any instance of major weaknesses in theaforesaid internal control systems.(v) (a) In our opinion and according to the informationand explanations given to us, the particularsof contracts or arrangements referred to inSection 301 of the Companies Act, 1956 have beenentered in the register required to be maintainedunder that Section.(b) In our opinion and according to information andexplanations given to us, the transactionsmade in pursuance of such contracts andarrangements entered in the register maintainedunder Section 301 of the Companies Act, 1956have been made at the prices which arereasonable having regard to the prevailingmarket prices at the relevant time except in caseof some transactions where alternate source ofsupply did not exist and therefore, no comparisonof prices was possible.(vi)(vii)(viii)In our opinion and according to the information andexplanations given to us, the Company has compliedwith the provisions of Sections 58A, 58AA or any otherrelevant provisions of the Companies Act, 1956 andthe Companies (Acceptance of Deposits) Rules, 1975with regard to the deposits accepted from the public.As informed to us, no order has been passed by theCompany Law Board or National Company LawTribunal or Reserve Bank of India or any Court or anyother Tribunal.In our opinion, the Company has an internal auditsystem commensurate with the size of the Companyand nature of its business.We have broadly reviewed the books of accountmaintained by the Company pursuant to the Rulesmade by the Central Government for the maintenanceof cost records under Section 209(1)(d) of theCompanies Act, 1956 and are of the opinion that primafacie the prescribed records have been maintainedand the prescribed accounts are in the process ofbeing made up. We have not, however, made adetailed examination of the records with a view todetermining whether they are accurate or complete.(ix) (a) According to the records of the Company,Provident Fund, Investor Education andProtection Fund, Employees’ State Insurance,Income tax, Sales tax, Wealth tax, Service tax,Custom Duty, Excise Duty, Cess and othermaterial statutory dues applicable to it have been