We have audited the attached Balance Sheet of MICRO FORGE (INDIA)
LIMITED, as at 31st March, 2009 and also the profit and Loss Account of
the Company for the year ended on that date annexed thereto. This
financial statement are the responsibility of the companys management.
Our responsibility is to express as opinion on these financial
statement based on our audit.
1. We conducted audit in accordance with 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 misstatements. 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 estimate made
by management as well as evaluating the overall financial statement
presentations. We believe that our audit provides a reasonable basis
for our opinion.
2. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Govt.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 matter specified in paragraph 4 and 5 of the said Order.
3. We were not able to verify Bank Balances As on 31st March 2009,
because of non availability of the Bank Statements.
4. Further to our comments in the Annexure referred to in paragraph 1
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 it appears from our examination of the
c) The Balance Sheet and Profit and Loss Account referred to in this
Report are in agreement with the Books of Account.
d) In our opinion, the Profit and Loss Account and Balance Sheet comply
with the mandatory accounting standard referred accounting Section
211(3C) of the Companies Act,1956 to the extent applicable.
e) Based on information and explanations given to us, none of the
directors are disqualified as on 31st March, 2009 from being appointed
as directors in terms of clause (g) of sub section (1) of section 274
of the Companies Act, 1956.
f) Subject to Para no.3, In 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:
i) in the case of the balance sheet, of the state of affairs of the
company as at 31st March, 2009; ii) in the case of the profit and loss,
of the Loss of the company for the year ended on that date;
ANNEXURE TO THE AUDITORS REPORT TO THE MEMBER OF MICRO FORGE (INDIA)
(i) (a) As per information provided, 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 periodical manner 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) During the year, the Company has not disposed off substantial part
of its fixed assets.
(ii) (a) As explained to us, the inventories have been physically
verified by the management at regular intervals during the year.
(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 inventories and no
discrepancies were notice on physical verification as compared with the
books of accounts
(iii) (a) As per the information and records made available, the
Company has not granted any unsecured loans to company listed in the
register maintained under section 301 of the Companies Act, 1956.
(b) The Company has not accepted unsecured loans from company covered
in the register maintained under section 301of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the company and the nature of its business for the
purchase of inventory.fixed assets and for the sale of goods and
services. Further, on the basis of our examinations and according to
the information and explanations given to us, we have neither come
across nor we have been informed of any instance of major weaknesses in
the aforesaid internal control systems.
(v) a) The transaction that requires to be entered into the register in
pursuance to the section 301 of the Act have been so entered.
b) The transactions of purchase and sales of goods and material made in
pursuance of contracts or arrangement entered in the register maintain
under section 301 of the companies Act 1956 and exceeding the value of
Rs.five lacs in respect of any party during the year have been made at
the prices which are reasonable having regard to the prevailing market
prices at the relevant time as explanation and information provided to
(vi) In our opinion & according to the information and explanation
given to us, The Company has neither invited nor accepted deposit from
(vii) In our opinion, the company has not an internal audit system but
it needs to be established both in terms of coverage and periodicity to
be commensurate with the size and nature of its business.
(viii) We have informed that the maintenance of cost records Under
Section 209(1) (d) of the Companies Act, 1956 is not required by the
(ix) (a) According to the explanation, company is regular in depositing
with appropriate authorities undisputed statutory dues including
Provident Fund, Sales Tax, Income Tax, Customs duty excise duty, cess
and other material statutory dues as applicable with the appropriate
authorities. Except Professional tax which payable since year 2007-08
of Rs.43090, Fringe Benefit Tax of Rs. 125217 of the year 2007-08
(b)There are disputed amounts of statutory dues, Disputed Income Tax
Rs. 70 Lacs , Disputed Sales Tax Rs. 55 Lacs, Disputed Providend Fund
Approx Rs.10 Lacs.
(x) The Company has accumulated loss of Rs 22,32,94,968. at the end of
the financial year and has incurred loss of Rs.9,44,93,184 during the
year and the Net worth of the company is negative by 14,74,71,653
therefore company is sick within the meaning of Sick Industrial company
(Special Provision) Act 1985
(xi) Based on our audit procedures and according to the information and
explanation given to us, we are of the opinion that the Company has
defaulted in repayment of dues to banks and accordingly bank has filed
a suit against company during the year.
(xii) In our opinion and according to the information and explanation
given to us, no loans and advances have been granted by the Company on
the basis of security by way of pledge of shares, debentures and other
(xiii) In our opinion, the Company is not a chit fund or a nidhi
/mutual benefit fund/ society. Therefore, clause 4(xiii) of the
Companies (Auditors Report) Order 2003 is not applicable to the
(xiv) The Company has not entered into any transactions and contracts
in respect of trading in securities, debentures and other investments.
(xv) The Company has given a corporate guarantees to the banks for
loans given to related company.
(xvi) The Company has not raised new unsecured loans during the year.
(xvii) According to the information and explanations given to us and on
an overall examination of the financial statements of the Company, we
are of the opinion that the Company has not utilised any short term
fund for long term investments.
(xviii) During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under Section 301 of the Companies Act, 1956.
(xix) The company has not issued any debenture during the year.
(xx) The company has not raised money by public issue during the year.
(xxi) In our opinion and according to the information and explanation
given to us, no fraud on or by the Company has been noticed or reported
during the year.
FOR M. B. SARDHARA & ASSOCIATES
Date : 6th August,2009
Place : Rajkot