1. We have audited the attached balance sheet of M/s Arihant
Foundations And Housing Limited (the Company) as at 30th
September 2012, and also the annexed profit and loss account of the
Company 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 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
(the Order), as amended by the Companies (Auditor''s Report)
(Amendment) Order 2004, 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 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 purposes of our
ii) In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
iii) The balance sheet and profit and loss account dealt with by this
report are in agreement with the books of account;
iv) In our opinion, the balance sheet, and profit and loss account
dealt with by this report comply with the accounting standards referred
to in sub-section (3C) of section 211 of the Companies Act, 1956,
except Accounting Standard (15) and in case of HUDCO the company has
not accrued interest amounting to Rs. 11, 01, 67,851.50/- for the
period from 1/07/2004 to 30/09/2012.
v) On the basis of written representations received from the directors,
as on 30th September 2012, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
30th September 2012 from being appointed as a director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act,
vi) 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 except as mentioned in note (iv) above are 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 30th September 2012 and
(b) In the case of the profit and loss account, of the profit of the
Company for the year ended 30th September 2012.
(c) In the case of cash flow statement, of the cash flows for the year
ended on That date.
Re: M/S ARIHANT FOUNDATIONS AND HOUSING LIMITED
Referred to in paragraph 3 of our report of even date,
On the basis of such checks we considered appropriate and according to
the information and explanations given to us during the course of
audit, we state that:
(i) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets. None of the assets have been revalued during the year.
(b) The fixed assets have been physically verified by the management at
reasonable interval and no material discrepancies are noticed on such
(c) The company has not disposed off substantial part of fixed assets
during year so as to affect its going concern status.
(ii) (a) The stock of construction materials has been physically
verified at periodic intervals and no significant discrepancies has
been noticed on such verification during the year.
(b)The procedure of physical verification of stock of building
material, followed by the management is reasonable and adequate in
relation to the size of the company and nature of its company.
(c) The company does not maintain stock records of raw materials. We
are of the opinion that the valuation of the stock of building is as
per normally accepted accounting principles. The company has not
identified slow moving building materials separately.
(iii) (A) The company has granted during the year loans of unsecured in
nature to companies, firms or other parties listed in the register
maintained under section 301 of the companies Act 1956, and the details
are as follows
No of parties : (9)
Maximum amount involved in the transaction :
Rs. 68,15,13,649/- Closing balance of the loan is Rs. 57,20,31,013/-
(b) The rate of interest and other terms and conditions of loans given
by the company, secured and unsecured are not prima facie prejudicial
to the interest of the company.
(c) The receipt of principal and interest thereon are regular.
d) Where the overdue amount exceeds rupees one lakh the company has
taken necessary steps to recover the amount and interest thereon.
e) The company has taken loans, secured or unsecured from companies,
firms or other parties listed in the register maintained under section
301 of the companies Act 1956 and the details are as follows
No of parties : (9)
Maximum amount involved in the transaction :
Rs. 21,69,58,069/- Closing balance of the loan is Rs. 19, 91,86,472/-
(f) The rate of interest and other terms and conditions of the loan
taken by the company, secured and unsecured are not prima facie,
prejudicial to the interest of the company.
(g) The repayment of principal and interest thereon to the concerned
parties is also regular. During the year the company has repaid loans
to the extent of Rs 24, 67, 91,669/-.
(iv) The company has an adequate internal control procedure
commensurate with the size and nature of business for the purchase of
stores and raw materials, plant & machinery, equipment and other assets
for the sale of finished stocks.
(v) (a) In our opinion and according to the information and
explanations given by the management, contracts and arrangements
referred to in section 301 of the Companies Act, 1956 have been entered
in the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements entered in the register maintained under section 301 of
the companies Act 1956 and exceeding the value of rupees five lakhs in
respect of any party during the year, have been made at a price which
are reasonable having regard to the prevailing market prices at the
(vi) The Company has accepted fixed deposits and in our opinion and
according to the information and explanation given to us, the
directives issued by the Reserve Bank of India and provisions of
Section 58A,58AA and other relevant provisions of the Companies Act,
1956 and rules framed there under, where applicable, have been duly
complied with except in case of unsecured loans others borrowed by the
company which fall within the definition of deposits defined u/s 2(b)
of companies act amounting to Rs 2,62,02,436. We are informed that no
order has been passed by the company Law Board or National Company Law
Tribunal or Reserve Bank of India or any court or any other tribunal.
(vii) In our opinion the company has an internal audit system
commensurate with size and nature of its business.
(viii)We have broadly reviewed the cost records maintained by the
company pursuant to the rules made by the Central Government for the
maintenance of cost records by the Company under section 209 (1) (d) of
the Companies Act,1956 and are of the opinion that primafacie the cost
records have been maintained by the company. We have however not made a
detailed examination of the same as the same has been certified by a
(ix) According to the information and explanations given to us and on
the basis of our examination of books of account, in our opinion
a) The Company is regular in depositing undisputed statutory dues
including, Investor Education and protection fund, Income Tax, Wealth
Tax, Service Tax, Cess, Sales tax, VAT, Excise duty and any other
material statutory dues during the year with the appropriate
authorities. Except the company did not remit the employees provident
fund due in time.
b) According to the information and explanation given to us there are
dues in respect of following taxes on account of dispute , which are as
Income Nature of Amount Pending
tax A.Y. due before Which
1999-2000 Regular Rs.76,38,692 CIT Appeals
Sl Pertaining Amount Pending
No to Period Before Authorit
1 October 2004 (Madras High
to March 2007 23,16,081/- Court)
The company has filed a writ against the above service tax levied by
the department and the penalty levied by the service tax department to
the tune of Rs.70 lakh vide court case no.6562 / 2011 before the
honorable madras High Court and the high court has granted a stay until
(x) The company has no accumulated losses as at September 30, 2012 and
it has not incurred cash losses in the financial year ended on that
date or in the immediately preceding financial year.
(xi) According to the records of the company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any financial institution or Bank or debenture
holders as at the balance sheet date. (Except in case of HUDCO, wherein
the company is disputing the amount of interest payment / Principal
payment and rate of interest due to non release of NOC in favor of
prospective buyers vide court case No Q.A.No 78 of 2004. The company
had filed contempt of court petition vide petition No 384/2004 against
HUDCO for not obeying the directions of High Court. HUDCO had filed a
suit in the Debt Recovery Tribunal). The company has paid a sum of the
above dispute as to principal and interest thereon a sum of Rs
15,48,54,845/- was determined as principal by the Debt Recovery
Tribunal. The company has paid the principal amount of Rs.15,48,54,845
to HUDCO (Rs.12,87,47,121/- AND 2,61,07,364/- as interest). The company
has not accrued interest to the tune Rs 9,93,77,130.40/- as payable to
HUDCO as per the order of the Debt Recovery Tribunal Dated 8/8/2011 for
the period (01/07/2004 to 26/08/2011) and further consequent interest
as per recovery officer amounting to Rs1,07,90,720.70 for the period
(27/08/2011 to 30/09/2012) needs to be further accounted for belated
payment of (interest and incidental cost).
(xii) According to the information and explanation given to us, the
company has not granted loans and advances on the basis of security by
way of pelage of shares, debentures and other securities.
(xiii) The provision of any special statute applicable to a chit fund /
mutual benefit fund / societies are not applicable to the company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly,
clause 4(xiv) of the order is not applicable.
(xv) In our opinion, and according to information and explanations
given to us, the Company has not given guarantees for loans taken by
others from banks or financial institutions.
(xvi) According to the information and explanations given to us and on
the basis of examination of books of accounts, the company has applied
term loans for the purpose for which the loans were obtained.
(xvii) According to the information and explanation given to us and on
an overall examination of balance sheet of the company, we report that
no funds raised for short term basis utilised for long term investment
and vice versa.
(xviii) According to the information and explanations given to us the
Company has not made any preferential allotment of share to the parties
and companies covered in the register maintained under section 301 of
the companies Act 1956, accordingly clause 4(xviii) of the order is not
(xix) The company has not issued any debentures during the year hence
question of having security or registering a charge with the Registrar
of Companies does not arise during the year.
(xx) The company has not raised the public issue during the year;
accordingly, clause 4(xx) of the Order is not applicable to the
(xxi) According to information and explanations given to us, no fraud
on or by the company has been noticed or reported during the course of
For B.P.JAIN & CO.
FIRM REG NO-050105S
CA Devendra Kumar Bhandari
Membership No. 208862
Place : Chennai
Date : 29/11/2012