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C.R. Sukumar

HYDERABAD, Jan. 3

THE statutory auditors of Siris Ltd, the Hyderabad-based ailing pharmaceutical company, have qualified the accounts of the company for the year ended March 31, 2002.

Interestingly, the auditors have also announced that the directors of the company as on March 31, 2002 were disqualified in terms of Section 274 (1)(g) of the Companies Act, 1956, from being appointed as directors.

The directors were disqualified for the company's default in repayment of its debentures.

As on March 31, 2002, the company has secured loans in the form of debentures to the tune of Rs 71.67 crore.

According to the guidelines of the Securities and Exchange Board of India (SEBI), debenture redemption reserve was to be provided at 50 per cent of the debentures before the redemption starts in equal instalments. However, citing absence of profits, the company failed to create such reserve. As on last count, the accumulated losses stood at Rs 226.42 crore on an equity base of Rs 7 crore and reserves and surplus of Rs 52.67 crore.

Of the total outstanding debenture amount of Rs 71.67 crore, the first category of 19 per cent non-convertible debentures of Rs 100 each aggregating Rs 8 crore were placed with General Insurance Corporation, Life Insurance Corporation and their subsidiaries. These were to be redeemed at par in three equal instalments on the expiry of fourth, fifth and sixth years from the date of allotment - May 17, 1996.

The second category of 18.5 per cent non-convertible debentures of Rs 100 each aggregating Rs 9.37 crore placed with ICICI were redeemable at part in 16 quarterly instalments commencing from June 15, 1998.

While the third category of 18.5 per cent debentures of Rs 100 each aggregating Rs 7 crore placed with ICICI were redeemable at par in 20 instalments commencing from May 15, 2001, the fourth category of 17 per cent debentures of Rs 100 each aggregating Rs 15 crore were placed with IDBI and were to be redeemed at par in five equal yearly instalments at the end of second, third, fourth, fifth and sixth years. The first instalment fell due on January 1, 2001.

The interest accrued and due on the above mentioned four categories of debentures stood at Rs 32.2 crore as on March 31, 2002.

The auditors have pointed out that the company's fixed assets register was yet to be updated and according to the information and explanations furnished to them, no physical verification of fixed assets was carried out during the last fiscal.

Even in the case of finished goods, stores, spare parts and raw materials, there was no physical verification conducted by the management.

In the absence of physical verification, the auditors said, "it is not possible for us to state whether any finished goods, stores, spare parts and raw materials are damaged or unserviceable requiring to be provided for in the accounts."

The auditors have also stated that no reasonable records for the sale and disposal of realisable scrap were maintained by the management and the company did not have a system of internal audit.

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