(1) We have audited the attached Balance Sheet of KSB Pumps Limited as
at 31st December, 2011 and also the Profit and Loss Account and the
Cash Flow Statement for the year ended on that date annexed thereto.
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 our opinion.
(3) As required by the Companies (Auditor''s Report) Order, 2003
issued by the Central Government of India in terms of sub- section (4A)
of section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
(4) Further to our comments in the annexure referred to above, we
i) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
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 account and cash flow statement
dealt with by this report are in agreement with the books of account;
iv) in our opinion, the balance sheet, 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;
v) in our opinion and to the best of our information and according to
the explanations 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 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 31st December, 2011;
b) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
c) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
(5) On the basis of written representations received from the
directors, as on 31st December, 2011 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
on 31st December, 2011, from being appointed as a director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act,1956.
STATEMENT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF KSB PUMPS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31st
(i) (a) The Company has maintained
proper records showing full particulars including quantitative details
and situation of fixed assets.
(b) As explained to us, the management has physically verified most of
the fixed assets during the year, other than patterns lying with third
parties for which confirmations have been obtained from parties in most
of the cases, and no material discrepancies were noticed on such
verification. In our opinion, the frequency of physical verification of
fixed assets is reasonable having regard to the size of the Company and
the nature of the assets.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute substantial part of the fixed assets of the Company and
such disposal has, in our opinion, not affected the going concern
status of the Company.
(ii) (a) Inventories have been physically
verified during the period by the management. In respect of inventories
lying with third parties confirmation have been obtained for a major
portion of inventories. In our opinion, the frequency of verification
(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) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verification between physical
stocks and book stocks were not material having regard to the size of
operations of the Company and have been properly dealt with in the
books of accounts.
(iii) According to the information and explanations given to us, the
Company has not granted or taken any loans, secured or unsecured, to or
from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956. Accordingly
clauses (iii)(a) to (iii)(g) of paragraph 4 of the Companies
(Auditor''s Report) Order, 2003 are not applicable.
(iv) In our opinion and according to the information and explanations
given to us and having regard to the explanation that some of the items
purchased/ sold are of a special nature and comparable alternative
quotations/ prices are not available, there is an adequate internal
control system commensurate with the size of the Company and the nature
of its business, with regard to purchase of inventory and fixed assets
and for the sale of goods and services. There is no continuing failure
to correct major weaknesses, if any, in internal controls system.
(v) (a) Based upon the audit procedures applied by us and according to
the information and explanations given to us, contracts or arrangements
that need to be entered into the register maintained in pursuance of
section 301 of the Companies Act, 1956 have been so entered.
(b) The transactions made in pursuance of such contracts or
arrangements have been made at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of section
58A, 58AA or any other relevant provisions of the % Companies Act, 1956
and the rules ''framed there under, with regard to the deposits accepted
from the public. No order has been passed by the Company Law Board.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company relating to the manufacture of Power Driven Pumps pursuant to
the notification of the Central Government for the maintenance of cost
records under Section 209(l)(d) of the Companies Act, 1956 and, on the
basis of the information received, are of the opinion that prima facie
the prescribed accounts and records have been maintained/ are being
made up. We have not, however, made a detailed examination of the
records with a view to determining whether they are accurate or
complete. To the best of our knowledge and according to the information
given to us, the Central Government has not prescribed the maintenance
of cost records under Section 209(l)(d) of the Companies Act, 1956 for
any other products of the Company.
(ix) (a) According to the records of the Company, apart from the
certain instances of delays in depositing undisputed income tax
deducted at source, Provident Fund and Sales tax, the Company has been
regular in depositing undisputed statutory dues including Provident
Fund, Employees'' State Insurance, Investor Education and Protection
Fund, Income tax, Sales tax, Service Tax, Wealth tax, Custom Duty,
Excise Duty, cess and other statutory dues with the appropriate
authorities. Based on our audit procedures and according to the
information and explanations given to us, there are no arrears of
statutory dues which has remained outstanding as at 31st December, 2011
for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us and
records of the company the dues of sales tax/ income tax/ customs duty/
wealth tax/ service tax/ excise duty/ cess, which have not been
deposited on account of any dispute are as follows:
Nature of Amount Forum where
Dues (Rs.) dispute is
Excise Duty 310,000 Customs Excise and Service Tax
Excise Duty 975,585* Customs Excise and Service Tax
Excise Duty 18,750,512* Customs Excise and Service Tax
Service Tax 6,418,950 Commissioner (Appeals), Central
* stay granted for recovery.
(x) The Company does not have any accumulated losses as at 31st
December, 2011. The Company has not incurred any cash losses during the
financial year covered by our audit and the immediately preceding
(xi) Based on our audit procedures and according to the information and
explanations given to us, the Company has not defaulted in repayment of
dues to financial institution/ bank/ debenture holders.
(xii) According to the information and explanations given to us, 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 Company is not a chit fund, nidhi/ mutual benefit fund and
therefore the requirements pertaining to such class of companies is not
(xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments.
(xv) 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.
(xvi) To the best of our knowledge and belief and according to the
information and explanations given to us, in our opinion the Company
has not availed any term loans 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, funds
raised on short term basis have not been used during the year for long
(xviii) 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 Companies Act, 1956.
(xix) The Company has not issued any debentures during the year and
therefore the question of creating security or charge in respect
thereof does not arise.
(xx) The Company has not made any public issue during the year and
therefore the question of disclosing the end use of money does not
(xxi) Based upon the audit procedures performed and according to the
information and explanations given and representations made by the
management, we report that no fraud on or by the Company has been
noticed or reported during the year.
For Deloitte Haskins & Sells
Registration No.: 117366W
Membership No.: 038019
Pune, 22nd February, 2012