1. We have audited the attached balance sheet of Modella Woollens
Limited, as at 31st March, 2012 and also the annexed profit and loss
account and cash flow statement 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 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 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956 we enclosed in the Annexure a
statement on the matters specified in paragraph 4 and 5 of the said
4. Further to our comments in the Annexure referred to above, we
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 accounts as required by the law
have been kept by the company so far as appear from our examination of
c. The balance sheet, profit and loss account and cash flow statement
dealt with by this report are in agreement with the books of account;
d. 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;
e. On the basis of written representations received from the
directors, none of the directors are disqualified as on March 31, 2012
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 explanation given to us, the said accounts read together with the
accounting policies and notes on 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 March 31, 2012; and
ii. in the case of the Profit and Loss Statement, of the Loss for the
year ended on that date.
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
As required by the Companies (Auditors'' Report) Order, 2003 issued by
the Company Law Board in terms of Section 227(4A) of the Companies Act,
1956, we further report that:
i. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of its fixed
(b) As informed to us, fixed assets have been physically verified by
the management during the year and no material discrepancies were
noticed on such verification.
ii. (a) We are informed that there was no stock of goods during the
year or at the year end and hence physical verification of stock was
not required to be conducted by the management. In view of above
therefore, we have no comment to offer on frequency of the physical
verification of such stocks.
(b) Since company is not having any stock, we have no comment to offer
on whether the procedures of physical verification of stocks followed
by the management are reasonable and adequate in relation to the size
of the Company and nature of its business.
(c) Since company is not having any stock, we have no comment to offer
on maintaining proper records of inventory and discrepancies on
physical verification of stocks as compared to book records.
iii. The company has not granted any loans secured or unsecured to
companies, firms or other parties covered in register maintained under
section 301 of the Companies Act, 1956
iv. The company has taken unsecured inter-corporate loan from a company
covered in register maintained under section 301 of the Companies Act,
v. In our opinion, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business, for the purchase of inventory and fixed assets and for sale
of goods and services.
vi. On the basis of our examination and according to the information
and explanation given to us, the company has not entered transactions
that need to be entered in the register maintained under section 301 of
the Companies Act. 1956.
vii. The Company has not accepted any deposits from the public within
the meaning of section 58A and 58AA or any order relevant provisions of
the Companies Act, 1956 and rules framed thereunder.
viii. The Company does not have an internal audit system.
ix. The Central Government has not prescribed maintenance of cost
records under section 209(1 )(d) of the Companies Act, 1956, for any
activities of the Company.
x. (a) The Company has been regular in depositing Provident Fund,
Investor Education and Protection Fund, Employees'' State Insurance,
Income tax, Sales tax, Wealth tax, Service Tax, Custom Duty, Excise
Duty, Cess and any other statutory dues with the appropriate
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of income-tax, wealth-tax,
sales-tax, custom duty, excise duty and cess were out-standing as at
March 31, 2012 for period of more than six months from the date they
xi. The Company has been registered for a period of not less than five
years and its accumulated losses at the end of the financial year
exceeds fifty percent of its net worth.
xii. The Company has not incurred cash losses in the financial year
immediately preceding current financial year.
xiii. The company has not taken any loans from any financial
institution or bank or debenture holders and hence the question of
default in payment does not arise.
xiv. The company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xv. The provisions of any special statute applicable to chit fund,
Nidhi or mutual Benefit Fund/ societies are not applicable to the
xvi. On the basis of our examination and according to the information
and explanation given to us, the Company during the year has dealt in
investments and has maintained proper records of the transactions and
contracts with timely entries made therein. The said investment has
been held by the company in its own name.
xvii. On the basis of our examination and 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.
xviii. The Company has not taken any term loan during the year.
xix. On the basis of our examination of the Cash Flow statement and
according to the information and explanation given to us, the funds
raised on short-term basis have not been used for long-term
xx. On the basis of our examination and according to the information
and explanation given to us, 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 during the
xxi. On the basis of our examination and according to the information
and explanation given to us, no Debentures have been issued by the
Company and hence, the question of creating securities in respect
thereof does not arise.
xxii. On the basis of our examination and according to the information
and explanation given to us, the Company has not raised any money by
way of public issue during the year.
xxiii. On the basis of our examination and according to the information
and explanations given to us, no fraud, on or by the Company, has been
noticed or reported during the year.
For DESAI & BHAGTANEY
SHAILESH S. DESAI
M. NO. 36935 Firm No. 115646W
Place of Signature : Mumbai.
Date : 25th April, 2012