annual report - Jindal Group of Companies

ANNEXURE TO THE AUDITORS' REPORT(As referred to in paragraph '3' of our report to the members of JINDAL DRILLING AND INDUSTRIES LIMITED on the accountsas at & for the year ended 31st March 2011)1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixedassets.b) In our opinion, certain fixed assets of the Company have been physically verified by the management according to aphased programme designed to cover all assets over a period of three years, which in our opinion is reasonable havingregard to the size of the company and the nature of fixed assets. No material discrepancies were noticed on such verificationas compared to the books of account.c) Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.2. (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verificationis reasonable.b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relationto the size of the Company and the nature of its business.c) In our opinion, the Company is maintaining proper records of inventory. As far as we could ascertain and according tothe information and explanations given to us, no material discrepancies were noticed between the physical stock and thebook records.3. (a) As per the information and explanations given to us, the Company has granted unsecured loan to one company coveredin the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the yearwas Rs. 8930.34 lacs and the year-end balance of loans granted to such parties was Rs. 8930.34 lacs.b) In our opinion, the rate of interest and other terms and conditions of such loans are not, prima facie, prejudicial to theinterest of the company.c) The receipts of the principal amount and interest thereon is as stipulated.d) There is no overdue amount in respect of loan granted to such parties.e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956. Accordingly clauses 4(iii) (f) and (g) of the order are notapplicable.4. In our opinion and according to the information and explanations given to us, there exists adequate internal controlsystem commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixedassets and with regard to the sale of goods and services. During the course of our audit, we have neither come across norhave we been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system of theCompany.5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts orarrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 havebeen so entered.b) As far as we could ascertain on the basis of our selective checking and according to the information and explanationsgiven to us, the transactions made in pursuance of aforesaid contracts or arrangements including those exceeding theaggregate amount of rupees five lacs in respect of each party made during the year have been made at prices which arereasonable having regard to prevailing market prices at the relevant time.6. The Company has not accepted any deposits from the public and consequently the directives issued by the Reserve Bankof India and the provisions of section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rulesframed there under are not applicable to the Company.29