I have audited the attached Balance Sheet of Caprolactam Chemicals
Limited as at 31st March, 2011 and also the Profit and Loss Account and
Cash Flow Statement of the Company for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the Company''s management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit In accordance with auditing standards generally
accepted in India. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
Includes examining on test basis evidence supporting the amounts and
disclosure 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. I believe that my audit provides reasonable basis for my
1. As required by the Companies [Auditors report] Order 2003 Issued by
the Central Government of India In terms of section 227(4A) of the
Companies Act 1956 and on the basis of checks of the books and records
of the Company as I considered appropriate and according to the
information & explanation given to me I enclose in the annexure a
statement on the matters specified In the paragraph .4 and S of the
2. Further to my comments in the Annexure referred to in paragraph 1
above, report that :
a] I have obtained all the information and explanations which to the
best of my knowledge and belief were necessary for the purpose of my
b] In my opinion, proper books of account as required by the law have
been kept by the Company, so far as it appears from my examination of
the books of accounts of the Company;
c] The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are In agreement with the books of account of
d] The Company has not made provision towards retirement benefit due to
employees as per AS 15 on Employees Benefit.
The impact on profit of the company and on reserve and surplus that may
arise due to adjustment on account of the above comment is
e] On the basis of written representations received from the directors
as on 31st March, 2011 and taken on record by the Board of Directors, I
report that none of the directors is disqualified as on 3lst March, 2011
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
f] In my opinion and to the best of my information and according to the
explanation given to me, the account read together with the notes
thereon ; give the information required by the Companies Act, 1956 in
the manner so required and subject to the notes thereon give true and
 In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011 and
 In the case of the Profit and Loss Account, of the profit of the
company for the year ended on that date; and
 In the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
Annexure to the Auditor''s Report to the members of Caprolactam
Chemicals Limited as required by the Companies (Auditor''s Report)
Order, 2003 (Refer Para 1 of my report)
(i) (a) The Company has maintained proper records showing full
particulars Including quantitative details and situation of Fixed
(b) As explained to me, these fixed assets have been physically
verified by the management in a phased periodical manner. In my opinion
the frequency of verification is reasonable. No material discrepancies
were noticed on such physical verification.
(c) The Company has not disposed off any substantial part of if s fixed
assets so as to affect is going concern status.
(ii) (a) As explained to me, inventories have been physically verified
by management at reasonable intervals during the year. In my opinion,
the frequency of such verification is reasonable.
(b) In my opinion and according to the information and explanations
given to me, 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) The Company has maintained proper records of inventory and
discrepancies noticed on physical verification as compared to the book
records have been properly dealt with in the books of accounts.
(iii) (a) According to the Information and explanation given to me, the
Company has not granted any loans, secured or unsecured to company,
firms and other parties covered in the register maintained under
section 301 of the Companies Act, 1956. Accordingly, paragraph 4 (iii)
(b), (c) and (d) of the order are not applicable.
(b) The Company has taken unsecured loans from two parties whose names
are to be covered In the register maintained under section 301 of the
Act. The Maximum amount Involved during the year was Rs.88,82,500/-
and the balance outstanding as on 31st March, 2011 was Rs.88,82,500/-.
(c) The rate of interest and other terms and conditions of the loan are
not prima fade prejudicial to the interest of the Company.
(d) The Company has been regular in repaying principal amount wherever
stipulated and the Company is also regular in payment of interest
(iv)ln my opinion and according to the information and explanation
provided to me. There is an adequate internal control procedure
commensurate with the size of the Company and the nature of its
business, for the purchase of the Inventory and fixed assets and for
the sale of goods & services.
(v)(a) According to the Information and explanation provided by the
management, I am of the opinion that all the particulars of contracts
or arrangements that need to be entered Into a register In pursuance of
section 301 of the Act have been so entered.
(b) According to the information and explanation provided by the
management, 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 Rs. Five 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 my opinion and according to the information and explanations
given to me, the Company has not accepted any deposits from the public.
(vii) The Company has an adequate internal audit system, which in my
opinion is commensurate with the size of the Company and the nature of
(viii) According to information/explanation given to me, the rules made
by Central Government under clause (c) of Sub-section (1) of section
209 of the Companies Act 1956, are not applicable to the company.
(Ix)(a) According to the information & explanation given to me and the
records of the company examined by me, In my opinion, the company is
generally regular in depositing undisputed statutory dues including
Provident fund, Employee State Insurance, Income Tax, Sales Tax, Wealth
Tax, Service Tax, Custom Duty Excise Duty, Cess & other statutory dues
as applicable with appropriate authorities.
According to the information & explanation given to me, no undisputed
amounts payable in respect of the aforesaid dues were outstanding as at
31st March 2011 for a period of more than six months from the date they
(b) According to the information & explanation given to me there are no
disputed amount of statutory dues towards Income Tax, Sales Tax, Wealth
Tax, Service Tax, Custom Duty Excise Duty, Cess that have not been paid
to concerned authorities.
(x) The company has accumulated losses as at 31st March 2011 and has
neither incurred cash losses during the financial year ended on that
date nor in the immediately preceding financial year.
(xi) According to the information & explanation given to me and based
on the audit procedures applied by me, the company has not defaulted in
repayment of its dues to any financial institution or bank as at the
Balance sheet date.
(xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) The provisions of any special statute applicable to chit find/
nidhi/ mutual benefit/ societies are not applicable to the company.
(xiv) In my opinion and according to the information and explanations
given to me, the Company is not dealing in or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause (xiv) of Paragraph 4 of the Companies ( Auditor''s
Report) Order, 2003 are not applicable to the Company.
(xv) According to information & explanation given to me, the Company
has not given any guarantee for loans taken by others from banks or
(xvi) According to information & explanation given to me, the Company
has not taken any Term Loan from banks or Financial Institutions.
(xvii) According to the information & explanation given to me, and
based on the examination of Balance Sheet of the Company, prima facie,
the funds raised on short term basis have not been used for long term
(xviii) According to the information and explanations given to me, the
Company has not made preferential allotment of shares to parties and
companies covered in the register maintained under Section 301 of the
Companies Art, 1956 during the year.
(xix) The company has not issued any secured debentures during the
year, and accordingly, no securities were required to be created.
(xx) The company has not raised any funds by way of a public issue
during the year.
(xxi) During the course of my examination of the books of the accounts
and records of the company and according to the information
&explanation given to me, I have neither come across any instances of
material fraud on or by the Company, noticed or reported during the
Place: Mahad JATIN V. SHAH
Date: 19th August, 2011 CHARTERED ACCOUNTANT