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Kinetic Motor Company
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Explore Kinetic Motor connections « Sep 09
Auditor's Report (Kinetic Motor Company) Year End : Sep '10
1.  We have audited the attached Balance Sheet of KINETIC MOTOR COMPANY
 LIMITED (the Company) as at 30th September 2010, the Profit and Loss
 Account and also the Cash Flow Statement for the year ended on that
 date annexed thereto. These financial statements are the responsibility
 of the Companys 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 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 as
 amended by the Companies (Auditors 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
 (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 enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  We draw attention to Note 22 - Schedule 14 regarding certain
 transactions of purchase of components which require approval of the
 Central Government under Section 297 of the companies Act, 1956;
 
 5.  We draw attention to Note 21 - Schedule 14, regarding the
 appropriateness of the going concern basis used for the preparation of
 these financial statements, as the validity of the going concern basis
 depends upon undertaking the new business and the financial support
 from the promoters of the Company. Based on the undertaking of the new
 business subsequent to the year end and financial support from
 promoters, these financial statements have been prepared on a going
 concern basis.
 
 6.  Further to our comments in the Annexure referred to in paragraph 3
 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 purposes of our
 audit;
 
 (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
 those books;
 
 (c) The Balance Sheet, the Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 accounts;
 
 (d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub section (3C) of section 211 of
 the Companies Act, 1956;
 
 (e) On the basis of written representations received from the
 directors, as on 30th September 2010 and taken on record by the Board
 of Directors, we report that none of the directors is disqualified as
 on 30th September, 2010 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 our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements read
 together with the notes thereon and attached thereto give the
 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:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 30th September 2010;
 
 (ii) in the case of the Profit and Loss Account, of the Loss of the
 Company for the year ended on that date; and
 
 (iii) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our
 report of even date to the members of KINETIC MOTOR COMPANY LIMITED on
 the financial statements for the year ended 30th September, 2010)
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) According to the information and explanations given to us, all the
 fixed assets have been physically verified, at regular intervals by the
 management during the period, 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 such verification.
 
 (c) The Company has disposed off substantial part of its Fixed Assets
 during the year. However, as per the information and explanations
 provided to us, the Company is exploring the avenues for undertaking
 new business and after considering the financial support from the
 promoters of the Company; in our opinion the risk of going concern is
 mitigated.
 
 (ii) (a) As per the information furnished, the inventories have been
 physically verified during the year by the management. In our opinion,
 having regard to the nature and location of inventory, the frequency of
 verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, 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. In our
 opinion the discrepancies noticed on verification of physical stocks
 and the book records were not material and have been properly dealt
 with the books of account.
 
 (iii) (a) According to information and explanation given to us, the
 Company has not granted any loans secured or unsecured to companies,
 firms or other parties covered in register maintained under Section 301
 of Companies Act, 1956. Sub-Clauses (b), (c) and (d) are not
 applicable.
 
 (b) The Company has taken interest free unsecured loans during the year
 from 2 companies covered in register maintained under section 301 of
 Companies Act, 1956. The Maximum amount outstanding during the period
 was Rs. 24,59,77,750/- and the year end balance was Rs. 24,59,77,750/-
 
 (c) In our opinion, the other terms and conditions in respect of
 interest free unsecured loans granted by the Companies (referred to in
 (b) above) are prima-facie, not prejudicial to the interest of the
 Company.
 
 (d) In respect of the aforesaid loans taken, there are no stipulations
 as regards repayment of loans.
 
 (iv) 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 for purchase of fixed assets and sale of goods . There is no
 purchase of inventory during the year. During the course of our audit
 no major weaknesses have been noticed in internal control system.
 
 (v) (a) On the basis of audit procedures performed by us and according
 to the information and explanations given to us, we are of the opinion
 that the contracts and arrangements that needed to be entered into the
 register maintained under section 301 of the Companies Act, 1956 have
 been so entered in the register.
 
 (b) In our opinion and according to explanations given to us, having
 regard to our comments in paragraph (iv) above,the transactions made in
 pursuance of contracts or arrangements entered in the register
 maintained under section 301 of the Companies Act, 1956 have been made
 at prices which are reasonable having regard to the prevailing market
 prices for such transactions at the relevant time.
 
 (vi) The Company has not accepted any deposits from public to which the
 provisions of sections 58A, 58AA, or any other provisions of the
 companies Act, 1956 and the companies (Acceptance of Deposits) Rules,
 1975 apply.
 
 (vii) The Company has an internal audit system, which is commensurate
 with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the notification of the Central Government for
 maintenance of cost records under section 209(1) (d) of the Companies
 Act, 1956 and on basis of information received, 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
 said records.
 
 (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 not regular in depositing the undisputed statutory dues including
 investor education and protection fund, employees state insurance,
 income tax, custom duty, excise duty, cess and other material statutory
 dues as applicable, with the appropriate authorities except for the
 delay in payment of provident fund, state value added tax & service tax
 and the periods of delays range from 1 day to 515 days.
 
 Based on our audit procedure and according to the information and
 explanations given to us, no undisputed dues payable in respect of
 provident fund, employees state insurance, income tax, state value
 added tax, service tax, customs duty, excise duty and cess were in
 arrears, as at 30th September, 2010 for a period of more than six
 months from the date they became payable except for the provident fund
 (companys contribution) amounting to Rs.4,70,950 and Employees
 provident fund amounting to Rs.2,37,600 which are in arrears for a
 period of more than six months from the date they became payable.
 
 b) The details of dues in respect of central sales tax, state value
 added tax, excise duty, entry tax and cess which have not been
 deposited as at 30th September, 2010, on account of disputes are give
 below:
 
 Nature of the dues        Amounts involved     Forum where dispute
                           (dues to the extent       is pending
                           not deposited)
                           (Rs. In lakhs.)
 
 Central Sales Tax            39.74             Appellate Deputy
 (Assessment years 1994-                        Commissioner,
 1995, 1999-2000, 
 2000-2001)                                     Commercial Tax, Indore
 
 Central Sales Tax            24.22             Madhya Pradesh
 (Assessment years                              Commercial Tax
 2001-2002)                                     Tribunal, Bhopal
 
 Central Sales Tax             5.34             Madhya Pradesh
 (Assessment years                              Commercial Tax
 1998-1999)                                     Tribunal, Bhopal
 
 Sales Tax Kolkatta            0.60             Sales Tax Tribunal,
 (Assessment years 2001-2002)                   Kolkatta
 
 Central Sales Tax            16.91             Appellate Deputy
 (Assessment years                              Commissioner,
 2002-2003)                                     Commercial Tax, Indore
 
 Central Sales Tax            27.70             Appellate Deputy
 (Assessment years                              Commissioner,
 2003-2004)                                     Commercial Tax, Indore
 
 Sales Tax Behrampur           4.50             Special Additional
 (Assessment years                              Commissioner
 1999-2000, 2000-2001,                          Commercial Tax,
 2001-2002)                                     Behrampur
 
 Entry Tax                     0.64             Deputy Commissioner
 (Assessment years                              Commercial Tax,
 1994-1995, 1995-1996)                          Indore
 
 Madhya Pradesh                1.88             Madhya Pradesh
 Commercial Tax                                 Commercial Tax
 (Assessment years 1998-1999>                   Tribunal, Bhopal
 
 Madhya Pradesh                0,78             Appellate Deputy
 Commercial Tax                                 Commissioner,
 ( Assessment years 1999-2000)                  Commercial Tax, Indore
 
 Excise Duty                  50.47             Supreme Court
 
 Excise Duty                  21.05             High Court Madhya
                                                Pradesh - Indore
                                                Branch
 
 Excise Duty                   1.22             Commissioner
                                                Appellate Tribunal
 
 Madhya Pradesh               16.46             Appellate Deputy
 Commercial Tax                                 Commissioner,
 (Assessment Year 2007-2008).                   Commercial Tax, Indore
 
 (x) Based on our audit procedures and on the information and
 explanations given by the management, we are of the opinion that, the
 accumulated losses of the Company exceeds fifty percent of its net
 worth. Further, the Company has incurred cash losses in the current
 financial year but has not incurred cash losses in the immediately
 preceding financial period.
 
 (xi) Based on our audit procedures and on the information and
 explanations given by the management, we are of the opinion that the
 Company had no outstanding dues payable to the Banks and financial
 institution. There were no amounts outstanding on account of debentures
 during the year.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 Accordingly, clause 4(xii) of the Order is not applicable.
 
 (xiii) The Company is not a chit fund, nidhi or mutual fund or a
 society. Accordingly, clause 4(xiii) of the Order is not applicable.
 
 (xiv) The Company has maintained proper records of transactions and
 contracts in respect of dealing in securities and that timely entries
 have been made therein. All securities have been held by the Company in
 its own name.
 
 (xv) According to the information and explanation given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions. Accordingly clause 4(xv) of the Order is not
 applicable.
 
 (xvi) There were no term loans taken during the year.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, in our
 opinion, no funds raised on short term basis have been used for long
 term investment.
 
 (xviii)According to the information and explanations given to us, the
 Company has made preferential allotment of shares to a company covered
 in the register maintained under section 301 of the Act and the price
 at which the shares have been issued is prima facie not prejudicial to
 the interest of the Company.
 
 (xix) The Company has not issued any debentures. Accordingly clause
 4(xix) of the Order is not applicable.
 
 (xx) The Company has not raised any money by public issue during the
 year. Accordingly clause 4(xx) of the Order is not applicable.
 
 (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
 material fraud on or by the Company, noticed or reported during the
 year, nor we have been informed of such case by the management.
 
                                          For Lakhani & Co.
 
                                      Chartered Accountants
                                      Firm Regn No.:105524W
 
                                                 Parag Modi
 
                                                    Partner
 Pune : February 12, 2011                       M.No.114105
 
 
 
Source : Dion Global Solutions Limited
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