1. We have audited Balance Sheet of GARWARE SYNTHETICS LIMITED as at
31st March, 2012 and also the annexed Profit and Loss Account and the
Cash Flow Statement of the Company for the year ended on that date.
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 required 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 presentation of the
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government of India in terms of sub section (4A) of
section 227 of the Companies Act, 1956 and on the basis of such checks
as we considered appropriate, and according to the information and
explanation given to us, we enclose in the Annexure hereto a statement
on the matters specified in paragraphs 4 and 5 of the said order to the
extent applicable to the Company.
4. Further to our comments in the Annexure referred to in paragraph 2
above, 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 our examination of the
books of account.
c) The Balance Sheet and Profit and Loss Account and Cash Flow
Statement dealt with by this Report are in agreement with the books of
d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report are in compliance with the
accounting standards referred to in sub section (3c) of Section 211 of
the Companies Act, 1956.
e) As per the information and explanation given to us, all the
Directors of the Company are qualified from being appointed as
Directors in terms of clause (g) of sub-section (1) of Section 274 of
the Companies Act, 1956.
5. We further report that -
a) The Accounts have been prepared on going concern basis.
b) Subject to Para (a) above, we are of the opinion, that to the best
of our information and according to the explanation given to us the
accounts read together with the accounting policies and the notes
thereon, give 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.
c) In the case of Balance Sheet of the State of affairs of the Company
as at 31.03.2012 and
d) In the case of the Profit and Loss Account, of the Profit for the
year ended on that date.
e) In so far as it relates to the Cash Flow Statement of the Cash Flow
for the year ended on that date.
ANNEXURE REFFERED TO IN PARAGRAPH 3 OF AUDITORS'' REPORT OF EVEN DATE TO
THE MEMBERS OF GARWARE SYNTHETICS LIMITED ON THE ACCOUNTS FOR THE YEAR
MARCH, 2012. 1. In respect of its fixed assets:
a. The company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets on the
basis of information available.
b. According to the information and explanations given to us, the
fixed assets have been physically verified by the management during the
year in a phased periodic manner, which in our opinion is reasonable,
having regard to the size of the Company and nature of the assets. No
material discrepancies were noticed on such verification. However the
fixed assets include land & Building. The title of the same is under
dispute and the case is pending with the court of law.
c. The Company has not disposed off any substantial part of fixed
assets that would affect the going concern status of the Company.
2. In respect of its inventories:
a. The inventory has been physically verified during the year by the
Management. In our opinion, the frequency of verification is
b. The procedure of physical verification of inventories followed by
the management is 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. As
explained to us, the discrepancies noticed in physical verification of
the stock as compared to book records were not material and the same
have been properly dealt with in the books of accounts.
3. In respect of loans covered under Section 301 of the Companies Act,
a. As per the information and explanation given to us and the records
produced to us for our verification, the company has granted/taken
interest-free loans, to a Company listed in the register maintained
under Section 301 and also to directors in which no stipulation has
been made as to repayment of principal.
b. The Company has taken any loans, secured or unsecured, during the
current financial year from companies, firms or other parties covered
in the register maintained under section 301 of the Companies Act, 1956
to repay its outstanding bank liabilities.
c. The loan given by the Company are not prima facie prejudicial to
the interest of the Company.
4. 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 the purchases of inventories, fixed assets and
with regard to sale of goods. As per the information given to us, no
major weaknesses in the internal controls have been identified by the
management during the year. During the course of our audit, nothing had
come to our notice that may suggest a major weakness in the internal
control systems of the company;
5. In respect of transactions covered under Section 301 of the
Companies Act, 1956.
a In our opinion and according to the information and explanations
given to us, no any such the transactions made in pursuance of
contracts or arrangements, that needed to be entered into the register
maintained under Section 301 of the Companies Act, 1956.
b. In our opinion and according to the information and explanations
given to us, there are no transactions in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 aggregating during the year to Rs.5,00,000/-
(Rupees Five Lakhs Only) or more in respect of any party.
6. During the year the Company has not accepted any deposits under the
provisions of Section 58 A, 58 AA of the Companies Act 1956 and the
Rules framed there under.
7. The Company has Internal Audit system, which in our opinion is
commensurate with the size and nature of its business.
8. As per the explanation given to us, the company has not prepared
the Cost records pursuant to the Rules made by the Central Government
for maintenance of cost records under Section 209(l)(d) of the
Companies Act, 1956 for the year 2010-11.
9. In respect of statutory dues:
a. According to the information and explanations given to us,
undisputed statutory dues including Provident Fund, E.S.I.C.,
Profession Tax, Investor Education and Protection Fund, Income Tax,
TDS, Wealth Tax, Custom Duty, Cess and other material statutory dues
applicable to it have not been regularly deposited with the appropriate
b. According to the information and explanation given to us,
undisputed amounts payable in respect of income tax, wealth tax,
customs duty, excise duty and cess and various other authorities were
in arrears as at 31.03.2012 for a period of more than six months from
the date they became payable is Rs.223.67 lakhs.
c. According to the information and explanation given to us, there are
no dues to sales tax, income tax, customs duty, wealth tax, excise duty
and cess which have not been deposited on account of any dispute,
except the cases give below :
Sr. Name of
the Nature of Amount of Forum where dispute is
No Statute dues Dispute
1. Sales Tax Sales Tax 4.21 Deputy Commissioner
of Sales Tax
Sr Bombay Sales
Sales Tax Forum where
No Year (bst) (CST) Dispute is
1 2001 - 02 34,80,294 7,70,246 of Sales Tax
2 2002-03 33,16,840 11,15,852 of Sales Tax
3 2003-04 62,22,840 50,98,890 of Sales Tax
4 2004-05 19,48,300 9,46,532 of Sales Tax
10 in our opinion, the accumulated losses are more than fifty percent
of its net worth, the company has incurred cash losses during the
financial year covered in the audit and also in the immediately
11. -me Company has not defaulted in repayment of dues to a financial
institutions and bank. The Company , has not issued any Debentures.
12. The Company has not granted any loans or advances on the basis of
security by way of pledge of shares, debentures and other securities.
13 In our opinion, the company is not a chit fund / nidhi / mutual
benefit fund / society therefore the provision of clause 4 (xiii) of
the Companies (Auditor''s Report) Order, 2003 are not applicable to the
14. The Company has not dealt or traded in shares, securities,
debentures or other investments during the year.
15. As per the information and explanation given to us the Company has
given guarantees for loan taken from im, the terms and conditions
whereof are prima facie prejudicial to the interest of the company.
However, the said loan is defaulted.
16. The Company has not raised any new term loan during the year. -
17 According to 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 long term basis have been used for
short term investment and funds raised on short term basis have been
used for short term purposes except to the extent of accumulated
18. According to the information and explanations given to us, the
Company has not made preferential allotment of equity and preference
shares to companies covered in the register maintained under Section
301 of the Companies Act 1956.
19. The Company has not issued any debenture during the year.
20. The Company has not raised any money by public issue during the
21. As per the information and explanations given to us and on the
basis of examination of records, no material fraud on or by the company
was noticed or reported during the year.
For B.V. Shah & Associates
Bharat V. Shah
M No. 040210
Place : Mumbai
Date : 24th August, 2012