Report on the Financial Statements
We have audited the accompanying Financial Statements of Garg Furnace
Limited (the Company), Kanganwal Road, V.PO Jugiana, G. T Road,
Ludhiana, which comprise the Balance Sheet as at March 31, 2013, the
Statement of Profit and Loss and Cash Flow Statement for the year then
ended, and a summary of significant accounting policies and other
Management''s Responsibility for the Financial Statement
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and Cash flows of the Company in accordance with
accounting principles generally accepted in India including Accounting
Standards referred to in Section 211 (3C) of the Companies Act 1956
(the Act).This Responsibility includes the design, implementation and
maintenance of Internal Control relevant to the preparation and
presentation of the financial statements that give true and fair view
and are free from material misstatement, whether due to fraud or error.
Our Responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatements.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on auditor''s judgment, including assessment of the
risks of material misstatement of the financial statements, whether due
to fraud or error In making those risk assessments; the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An auditor also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act 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 March 31, 2013. b). In the case of the tatement of
Profit and Loss, of the profit for the year ended on that date and c).
In the case of the Cash Flow Statement, of the cash flows for the year
ended on that date.
Report on Other Legal and Regulatory
1 As required by the Companies (Auditor''s Report) Order 2003 (the
Order) issued by the Central Government of India in terms of section
227(4A) of the Act, we give in the Annexure a statement on the matters
specified in paragraph 4 and 5 of the Order.
2 As required by section 227(3) of the Act, we report that:
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
b) In our opinion, proper books of account as required by law have been
kept by the Company so far as appears from ourexammation of those
c) The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account
d) In our opinion, the Balance Sheet, the statement of Profit and Loss,
and the Cash Flow Statement comply with the Accounting Standards
referred to in Section 211 (3C)oftheAct
e) On the basis of the written representations received from the
directors as on March 31, 2013, taken on record by the Board of
Directors, none of the directors is disqualified as on March 31, 2013,
from being appointed as a director in terms of Section 274( 1) (g) of
ANNEXURE TO THE AUDITOR REPORT
(REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING OF
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS''^OUR REPORTOF EVEN DATE.)
(I) a). The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b). All the assets have not been physically verified by the management
during the year but 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
c). During the year, the company has not disposed off substantial part
of its plant & machinery and hence the going concern status of the
company has not been affected.
(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). The company is maintaining proper records of inventory. The
discrepancies noticed on verification between physical stocks and the
book records were not material.
(iii) a). The company has not granted secured or unsecured loan to the
companies, firms or other parties covered in the register maintained
under section 301 of the companies Act 1956. Therefore the provisions
of Paragraph 4 (iii) (b) (c) and (d) of the above said order are not
applicable to the company.
b). The company has taken interest free unsecured loans from three
parties covered in the register maintained under section 301 of the
Companies Act, 1956. The amount involved in the transaction is Rs 1.93
Crores and balance outstanding at the end of the year is Rs 1.12 crores
c). In our opinion, the terms and conditions on which loan has been
taken are not prima facie prejudicial to the interest of the company.
d). In our opinion and according to the information and explanation
given to us, the payment of principal amount as agreed are regular.
(iv) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the company and the nature of its business for
purchases of inventory, fixed assets and for sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
(v) a), in our opinion and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in section 301 of the Companies Act, 1956, have been
entered in the register maintained underthat section.
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 Rs. five lacs or more in respect
of each party during the year, have been made at prices which are
reasonable having regard to the prevalent market prices at the relevant
(vi) In our opinion and according to the information and explanations
given to us, the provisions of sections 58A and 58AA or any other
relevant provisions of the Companies Act, 1956 and the companies
(Acceptance of Deposits) Rules, 1975 are not applicable to Company. No
order has been passed by the Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any other court or any other
(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 (1) (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. We have however not
made a detailed examination of the record with a view to determine
whether they are accurate or complete.
(ix) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident fund,
employees'' state insurance, income tax, sales tax, custom duty, excise
duty, cess, service tax and other material statutory dues applicable to
(x) The Company does not have any accumulated losses, further it has
not incurred cash losses during the financial year covered by our audit
and in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to
(xii) The company has not granted loans or 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
(xiv) In our opinion, the company has not dealt or traded in shares,
securities, debentures and other investments
(xv) The Company has not given guarantees for loan taken by others from
banks. Therefore provisions of 4(XV) of above said order are not
applicable to Company.
(xvi) In our opinion and according to the information and explanation
given to us, the term loans have been applied for the purpose for which
they were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, we report
that the no funds raised on short-term basis have been used for
(xviii) According to the information and explanations given to us, the
company has not made any preferential allotment of shares during the
year to parties and companies covered in the register maintained under
section 301 of the Act.
(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) The company has not raised money through Public Issue during the
period covered by our audit.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the year
For Dass Khanna & Co.
(Registration No. 000402 N)
Place: LUDHIANA. PARTNER
Date : 30-05-2013 M. No. 83142