1. We have audited the attached Balance Sheet of Graphite India
Limited (the Company) as at 31st March, 2012, and the related Profit
and Loss Statement and Cash Flow Statement for the year ended on that
date annexed thereto, which we have signed under reference to this
report. 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 the 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, as
amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
(together the Order) issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of ''The Companies Act, 1956''
of India (the ''Act'') and on the basis of such checks of the books and
records of the Company as we considered appropriate and according to
the information and explanations given to us, we further report that:
i. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation, of fixed
(b) The fixed assets of the Company have been physically verified by
the Management during the year and no material discrepancies between
the book records and the physical inventory have been noticed. In our
opinion, the frequency of verification is reasonable.
(c) In our opinion, and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
of by the Company during the year.
ii. (a) The inventory(excluding stocks with third parties) has been
physically verified by the Management during the year. In respect of
inventory lying with third parties, these have substantially been
confirmed by them. In our opinion, the frequency of verification is
(b) In our opinion, the procedures of physical verification of
inventory followed by the Management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
iii. (a) The Company has not granted any loans, secured or unsecured,
to companies, firms or other parties covered in the register maintained
under Section 301 of the Act other than unsecured loan of Rs. 12.00
lakhs to a director of the Company. The maximum amount involved during
the year and the year-end balance of such loan is Rs. 12.00 lakhs and
Rs. 10.80 lakhs respectively.
(b) In our opinion, the rate of interest and other terms and conditions
of such loan are not prima facie prejudicial to the interest of the
(c) In respect of the aforesaid loan, the party is repaying the
principal amount, as stipulated, and is also regular in payment of
interest, as applicable.
(d) In respect of the aforesaid loan, there is no overdue amount more
than Rupees One Lakh.
(e) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties covered in the register maintained
under Section 301 of the Act.
iv. In our opinion, and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of inventory and fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and
records of the Company, and according to the information and
explanations given to us, no major weakness has been noticed or
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 Act 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 and exceeding the value of Rupees Five Lakhs in respect of
any party during the year have been made at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
vi. The Company has not accepted any deposits from the public within
the meaning of Sections 58A and 58AA of the Act and the rules framed
vii. In our opinion, the Company has an internal audit system
commensurate with its size and the nature of its business.
viii. We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by
the Central Government of India, the maintenance of cost records has
been prescribed under clause (d) of sub-section (1) of Section 209 of
the Act, and are of the opinion that, prima facie, the prescribed
accounts and records have been made and maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
ix. (a) According to the information and explanations given to us and
the records of the Company examined by us, in our opinion, the Company
is regular in depositing the undisputed statutory dues, including
investor education and protection fund, employees'' state insurance,
sales tax, wealth tax, service tax, customs duty, excise duty and other
material statutory dues, as applicable with the appropriate authorities
and is generally regular in respect of provident fund and income tax.
(b) According to the information and explanations given to us and the
records of the Company examined by us, the particulars of dues of
customs duty, sales tax, service tax and excise duty as at 31st March,
2012 which have not been deposited on account of a dispute (there being
no such cases with regard to income tax and wealth tax), are as
Name of Nature of Amount
the statute the dues (Rs. in Lakhs)
Central Excise Act Excise Duty, Interest 13.70
Central & State Sales Tax, Interest 6.62
Sales Tax Acts and Penalty
Customs Act Custom Duty, Interest 877.75
Finance Act, Service Tax, Interest 7.98
1994 - Service Tax and Penalty
Name of the Period to which the Forum where the
statue amount relates dispute is
Central Excise Act 1996-97, 2008-09 to Assistant / Deputy
2010-11 Commissioner of
2008-09 Additional Commissioner
of Central Excise
2004-05 to 2005-06 Commissioner, Central
Excise Division, Patna
1999-2000 to 2009-10 Customs, Excise &
Service Tax Appellate
2000-01 Calcutta High Court
Central & State 1998-99 Sales Tax Officer
Sales Tax Acts
2006-07 Deputy Commissioner
of Commercial Taxes
2006-07 to 2007-08 Additional Commissioner
of Commercial Taxes
2003-04 Joint Commissioner
of Commercial Taxes
2003-04 Commissioner (Appeals)
1996-97, 2001-02 to Sales Tax Tribunal
2005-06 to 2008-09
Customs Act 1991-92, 2005-06 to Commissioner of
1996-97 to 2000-01 Customs, Excise &
Finance Act, 2006-07 to 2007-08 Assistant / Deputy
1994 - Service Commissioner,
Tax Central Excise
2004-05 to 2007-08 Additional Commissioner
2004-05 to 2010-11 The Commissioner
1996-97, 2005-06 to Customs, Excise &
2010-11 Service Tax
x. The Company has no accumulated losses as at 31st March, 2012, and it
has not incurred any cash losses in the financial year ended on that
date and 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 bank as at the balance sheet date. The Company
does neither have any outstanding dues to any debenture holder or any
financial institution at the beginning of the year nor has it obtained
any loans from such parties during the year.
xii. The Company has not granted any 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
fund/nidhi/mutual benefit fund/societies are not applicable to the
xiv. In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
xv. In our opinion, and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from banks or financial institutions during the year.
xvi. In our opinion, and according to the information and explanations
given to us, the term loans have been applied, on an overall basis, for
the purposes for which they were obtained.
xvii. On the basis of an overall examination of the balance sheet of
the Company, in our opinion, and according to the information and
explanations given to us, there are no funds raised on short- term
basis which have been used for long-term investment.
xviii. The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
xix. The Company has not issued any debentures during the year; and
does not have any debentures outstanding as at the year end.
xx. The Company has not raised any money by public issues during the
xxi. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of any such case by the Management.
4. Further to our comments in paragraph 3 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
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, Profit and Loss Statement and Cash Flow
Statement dealt with by this report are in agreement with the books of
iv. In our opinion, the Balance Sheet, Profit and Loss Statement and
Cash Flow Statement dealt with by this report comply, in all material
respects, with the accounting standards referred to in sub- section
(3C) of Section 211 of the Act;
v. On the basis of written representations received from the directors
and taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2012 from being appointed as a director
in terms of clause (g) of sub-section (1) of Section 274 of the Act;
vi. In our opinion and to the best of our information and according to
the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give, in the prescribed
manner, the information required by the Act, and give a true and fair
view in conformity with the accounting principles generally accepted in
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
(b) in the case of the Profit and Loss Statement, 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.
For PRICE WATERHOUSE
Firm Registration Number - 301112E
Membership No. 57572
11th May, 2012