1. We have audited the attached Balance Sheet of AIA ENGINEERING
LIMITED as at 31st March, 2012, and also the Statement of Profit and
Loss and the Cash Flow Statement for the year ended on that date
annexed thereto. These Financial Statements are the responsibility of
the Company''s management. Our responsibility is to express an opinion
on these Financial Statements based on our audit.
2. We conducted our audit in accordance with the 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 of 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
3. As required by the Companies (Auditor''s Report) Order, 2003 as
amended by the Companies (Auditor''s Report) Order, 2004 (hereinafter
referred to as ''the Order'') issued by the Central Government of India
in terms of Sub-section (4A) of Section 227 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.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report that;
i. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
ii. In our opinion, proper books of accounts as required by law have
been kept by the Company so far as appears from our examination of
iii. The Balance Sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with this Report comply with the Accounting
Standards referred to in Sub-section (3C) of Section 211 of the
Companies Act, 1956;
v. Without qualifying our opinion, we draw attention to:
Note No.33 regarding derivatives contracts entered into by the Company
to hedge Foreign Currency Risk, the notional Mark - to – Market loss on
these unexpired contracts as on 31st March, 2012 amounting to Rs.829.86
Lacs has not been considered in the Financial Statements.
Further the Company has hitherto been accounting for export benefits on
receipts basis i.e. as and when utilised/sold. During the year the
Company changed its method of accounting from receipts to accrual, as a
consequence of this, current year export incentive income and profit is
higher by Rs.3,233.34 Lacs.
vi. On the basis of written representations received from the
Directors, as on 31st March, 2012 and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2012 from being appointed as a Director in terms of Clause
(g) of Sub-Section (1) of Section 274 of the Companies Act, 1956;
vii. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India;
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012.
(b) In the case of the Statement of Profit and Loss, of the profit for
the year ended on that date.
(c) In the case of the Cash Flow statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
(Referred to in paragraph 3 of our report of even date) (i) (a) The
Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
(b) Majority of the Fixed Assets have been physically verified by the
management during the year and there is 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. No material
discrepancies were noticed on such verification.
(c) During the year, the Company has not disposed off any substantial
part of the Fixed Assets and hence in our opinion going concern is not
(ii) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) On the basis of our examination of the records of the Company, we
are of the opinion that the Company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
(iii) (a) During the year, the Company has granted unsecured loan to
one Company covered in the register maintained under Section 301 of the
Companies Act, 1956. The maximum amount involved in the transactions
during the year was Rs.691.80 Lacs and the year end balance of loan
granted to this Company was Rs.691.80 Lacs.
(b) As per the information and explanations given and records produced
before us, the rate of interest and other terms and conditions of loan
given by the company are not prima facie prejudicial to the interest of
(c) As per information and explanations given and records produced
before us, the receipt of interest is as per terms and conditions.
There is no schedule for recovery of principal amount and the same
shall be received on demand.
(d) As per the information and explanations given and records produced
before us, there is no overdue amount, hence this clause is not
(e) The Company has not taken any Loans, secured or unsecured, from
Companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act, 1956. Consequently, Clause
(iii) (f) and (iii) (g) of Paragraph 4 of the Order are not applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of inventory, fixed assets and with
regard to the sale of goods. During the course of our audit, no major
weaknesses have been noticed in the internal controls.
(v) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the transactions that need to be entered into the
register maintained under Section 301 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of Rs. 5 Lacs in respect
of each party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the
(vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from the public
and hence the provisions of Section 58A and 58AA or any other relevant
provisions of the Companies Act, 1956 and the Companies (Acceptance of
Deposits) Rules, 1975 with regard to the deposits accepted from the
public are not applicable to the Company.
(vii) The Company has appointed a firm of Chartered Accountants as its
Internal Auditor for the year under audit. The Internal Audit for the
year is therefore carried out by the said firm. In our opinion, the
Company has an internal audit system commensurate with the size and
nature of its business.
(viii) We have broadly reviewed the Cost Records maintained by the
Company pursuant to Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under Section 209(1)(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed Cost Records are maintained. We have, however, not made a
detailed examination of the Cost Records with a view to determine
whether they are accurate or complete.
(ix) (a) According to the records of the Company, the Company is
generally regular in depositing with appropriate authorities undisputed
statutory dues including Provident Fund, Investor Education and
Protection Fund, Employees State Insurance, Income-Tax, Sales Tax,
Wealth Tax, Custom Duty, Excise Duty, Cess and other Statutory Duties
applicable to it. There are no undisputed Statutory Dues as referred to
above as at 31st March, 2012 outstanding for a period of more than six
months from due date they become payable.
Further, since the Central Government has till date not prescribed the
amount of Cess payable under section 441A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the Company in depositing the same.
(b) According to the information and explanations given to us, details
of dues of Income Tax, Excise Duty, Service Tax and Sales Tax which
have not been deposited on account of any dispute are given below:
Name of the statute Nature of dues Amt. under
dispute not yet
deposited As on
31st March, 2012
Income Tax Act, 1961 Income Tax including 6.74
interest as applicable 24.58
The Central Excise
Act, 1944 Excise Duty including 63.04
interest and penalty as
Finance Act, 1994 Service Tax including
(Service Tax) interest and penalty 106.61
Central Sales Tax
Act, 1956 and Sales Sales Tax / Central
Tax Act, of Sales Tax 49.00
Name of the statute Periods to Forum where the
which the dispute is pending
Income Tax Act,1961 1998-99 Dy. Comm.
2000-01 Dy. Comm.
2006-07 CIT (Appeal)
2007-08 CIT (Appeal)
2008-09 Dy. Comm.
The Central Excise 2001-2003 High Court
2005-2009 Comm. (Appeal)
2006-2010 Comm. (Appeal)
Finance Act,1994 1997-98 Commissioner (Appeal)
(Service Tax) to returned to Asstt.
2009-10 Asstt. Comm.
Central Sales Tax Act, 2003-04 Deputy Commissioner of
1956 and Sales Tax Commercial Tax (Appeal)
Act,of Various States
(x) The Company does not have any accumulated losses at the end of the
Financial Year. The Company has not incurred cash losses during the
Financial Year covered by our audit and the immediately preceding
(xi) Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to the banks.
(xii) In our opinion and according to the explanations given to us, the
Company has not granted any loans against security by way of pledge of
Shares, Debentures and other Securities. Therefore the provisions of
this Clause of the Order are not applicable to the Company.
(xiii) The Company is not a chit fund/ nidhi /mutual benefit
fund/society. Therefore, the provisions of this clause of the Order are
not applicable to the Company.
(xiv) The Company is not dealing in or trading in shares, securities,
debentures and other investments. Therefore, the provisions of this
Clause of the Order are not applicable to the Company.
(xv) In our opinion the Company has provided Guarantees for Non-fund
based limits taken by others from Banks. According to the information
and explanations given to us, we are of the opinion that the terms and
conditions thereof are not prejudicial to the interest of the Company.
(xvi) According to the information and explanations given to us, the
Company has not raised any Term Loan during the year under audit.
(xvii) Based on the information and explanations given to us and on an
overall examination of the Balance Sheet of the Company, we are of the
opinion that no funds raised on short-term basis have been used for
long-term investment by the Company.
(xviii) The Company has not made any preferential allotment of shares
to parties covered in register under Section 301 of the Companies Act,
(xix) During the period covered by our audit report, the Company has
not issued any debentures. Accordingly, provisions of this clause of
the Order are not applicable to the Company.
(xx) The Company has not raised any monies by way of Public / QIP /
Right Issues during the year.
(xxi) Based on the audit procedures performed and representation
obtained from management we report that, no case of material fraud on
or by the Company has been noticed or reported for the year under
For TALATI & TALATI
(Firm Regn. No. 110758W)
Place : AHMEDABAD Partner
Date : 30th May, 2012 Membership No. 129033