1. We have audited the attached Balances Sheet of M/S.CRIMSON METAL
ENGINEERING COMPANY LIMITED. As at 31st March 2012 and also the
Statement of Profit & Loss and Cash Flow Statement on that date annexed
there to. 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 (Auditors'' Report) Order, 2003 (As
amended) issued by the Central Government of India in terms of section
227(4A) of the Companies Act, 1956. and on the basis of such checks as
we considered appropriate and according to information and explanation
given to us, we setout in the annexure a statement on the matters
specified in paragraph 4 and 5 of the said order.
4. Further to our comments in the annexure referred to above, we
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of the
b) 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 those
c) The Balance Sheet and Statement of Profit & Loss and Cash flow
statement dealt with by this report are in agreement with the books of
d) In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash flow statement dealt with by this report have been prepared, in
all material respects, in compliance with the applicable Accounting
Standards referred to in section 211(3C) of the Companies Act, 1956.
e) On the basis of the written representations received from the
directors and taken on record by the Board of Directors, none of the
directors is disqualified as 31st March 2012 from being appointed as a
director in terms section 274(1) (g) of the Companies Act 1956.
f) In our opinion and to the best of our information and according to
the explanation 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 accounting principle generally
accepted in India.
(i) In the case of the Balance Sheet of the state of affairs of the
company as at 31st March, 2012; and
(ii) In the case of Profit and Loss Account, of the profit for the year
ended on that date.
(iii) In the case of the Cash Flow Statement, of the cash flow for the
year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF M/S. CRIMSON METAL ENGINEERING COMPANY LIMITED (Formerly
known as SRI SAARBATI STEEL TUBES LIMITED), CHENNAI, THE ACCOUNT FOR
THE YEAR ENDED ON 31ST MARCH, 2012.
(i)(a) The Company records showing full particulars including
quantitative details and situation of Fixed Assets have been lost and
an FIR has been filed on 03.08.2003 in that regard. It was explained to
us that record from 01.04.2003 is being made. Further, the Company is
taking efforts to make the records of Fixed Assets for earlier period
as much as possible.
(b) Some of the Fixed Assets were physically verified by the management
randomly during the year in accordance with a programme of verification
which, in our opinion, provides for physical verification of all assets
at reasonable intervals. According to information and explanations
given to us, no material discrepancies were noticed on such
(c) None of the Fixed Assets have been revalued during the year.
(d) There was no disposal of substantial part of fixed assets during
(ii) (a) The Inventories of the company at its locations have been
physically verified during the year by the management.
(b) In our opinion the procedures of physical verification of
inventories followed by the management are reasonable and adequate in
relation to the size of the company and nature of its business.
(c) The company has maintained proper records of inventories and the
discrepancies noticed on verification between the physical stocks and
the book records have been properly dealt with in the books of account.
(iii) (a) The company has taken loans secured or unsecured from two of
the corporate bodies amounting to Rs.8.47 Crores.The Maximum amount
involved during the year was Rs.8.87 Crores.
(b) In our Opinion, the rate of interest and other terms and conditions
on which loan have been taken from the companies are not, prima-facie,
prejudicial to the interest of the Company.
(c) The company is regularly paying the principal and interest amount
as so stipulated.
(d) There is no overdue amount of loan taken from parties listed in the
register maintained under section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information
and explanation 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 the purchase of inventories, fixed assets
and sale of goods. During the course of our audit, we have not observed
any continuing failure to correct major weakness in internal Controls.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered into
the register maintained under section 301 of Companies Act, 1956 have
been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transaction 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 five lakhs rupees in
respect of any party covered during the year have been made at prices
which are reasonable having regard to prevailing market prices at the
(vi) The company has not accepted any fixed deposits from the public
during the year.
(vii) 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 books of account
relating to materials, labour and other items of cost maintained by the
company pursuant to the rules made by the central government for the
maintenance of cost records under section 209 (I) (d) of the companies
Act, 1956 and we are of the opinion that prima facie the prescribed
accounts and records have been made and maintained. However, we have
not carried out detailed examination of such accounts and records.
(ix) (a) The company is regular in depositing with appropriate
authorities undisputed statutory dues including investor''s education
protection fund, Income Tax, Wealth Tax, customs duty, excise duty,
cess and other material statutory dues applicable to it. However some
delays were there in payment of provident fund, Employee state
insurance during the year.
(b) According to the information and explanation given to us, no
undisputed amounts payable in respect of provident fund, investor
education under protection fund, Employees state insurance, income tax.
Wealth Tax, service tax, Sales tax, customs duty, excise duty, cess and
other material on disputed statutory dues were outstanding, at the year
end, for a period of more the\an six month they became payable.
(c) According to information and explanation given to us, there are no
dues of sales tax, income tax, customs duty, wealth tax, excise duty
and cess which have not been deposited on account of any dispute.
(x) The accumulated losses of the company exceed fifty percent of net
worth at the end of the year. The company has not incurred cash loss
during the financial year covered by our audit and immediate preceding
(xi) In our Opinion and according to information and explanation given
to us, the Company has not defaulted in repayments of dues to a
financial institutions, bank or debenture holders.
(xii) The company has not granted any loan and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the company is not a chit fund or a nidhi/mutual
benefit/society. Therefore, the provision of clause 4 (xiii) of the
companies (Audit Report) Order 2003, (as amended) are not applicable to
(xiv) In our opinion, the company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiii) of the companies (Audit Report) Order
2003, (as amended) are not applicable to the company.
(xv) The company has not given any guarantee for loans taken by others
from banks or financial institutions.
(xvi) According to the information and explanation given to us no terms
loans raised by the company during the year covered by our audit.
(xvii) According to the information and explanations given to us and an
overall examination of the balance sheet of the company, we report that
Rs 2.66 Cores fund raised on short term basis have been used for long
term investment. No long term fund has been used to finance short term
assets except permanent working capital.
(xviii) According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties or
Companies covered in the register maintained U/s 301 of the Companies
(xix) According to the information and explanations given to us, during
the period covered by our audit report, the company has not issued any
(xx) We verified the books of accounts of the company and report that
the company has not raised any money by public issue during the year.
(xxi) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For ABHAY JAIN & CO.
Place : Chennai Partner
Date : 03.09.2012 M. No. 70224