1. We have audited the attached Balance Sheet of Nirma Limited, as at
30th September, 2012, and the Statement of Profit and Loss and Cash
Flow statement for the period from 1st April,2011 to 30th September,
2012 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 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 annex hereto a statement
on the matters specified in paragraphs 4 and 5 of the said Order.
4. Refer Note No 34 of Notes forming part of the Financials Statements
regarding the scheme of Demerged undertaking. The company has taken
over Demerged undertaking of Core Healthcare Ltd. (CHL) under the
composite scheme of Arrangement sanctioned by the Hon''ble High Court
of Gujarat by order dated 1st March, 2007. The appointed date for this
purpose was 1st December, 2004 and the effective date was 7th March,
2007. Three parties have filed appeal against this order before the
Division Bench of Hon''ble High Court of Gujarat and their appeal,
which has been admitted, is pending. The company has given effect to
the above scheme subject to the decision in appeal before the Hon''ble
5. Further to our comments in the Annexure referred to in paragraph
(3) & (4) 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
b) In our opinion, the Company has kept proper books of account, as
required by law, so far as appear from our examination of the books.
c) The Balance Sheet, Statement of Profit and Loss and Cash Flow
statement, dealt with by this report, are in agreement with the books
d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow statement dealt with by this report are in compliance with
the Accounting Standards referred to in sub-section (3C) of Section 211
of the Companies Act, 1956.
e) On the basis of the written representations received from the
directors, as on 30th September, 2012 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as
on 30th September, 2012 from being appointed as a director, in terms of
clause (g) of sub-section (1) of Section 274 of the Companies Act,
f) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
Significant Accounting Policies and notes thereon 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 Balance Sheet, of the state of affairs of the
Company as at 30th September, 2012,
(ii) In the case of the Statement of Profit and Loss, of the Loss for
the period ended on that date and,
(iii) In the case of Cash Flow Statement, of the cash flow for the
period ended on that date.
Referred to paragraph (3) thereof
1. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets on the basis of available information.
(b) As explained to us, the fixed assets have been physically verified
by the management during the period in phased periodical manner, which
in our opinion, is reasonable, having regard to the size of the Company
and nature of its assets. To the best of our knowledge, no material
discrepancies have been noticed on verification.
(c) In our opinion, the Company has not disposed of substantial part of
fixed assets during the period and the going concern status of Company
is not affected.
2. (a) The inventories other than that of with third parties have been
physically verified by the management at reasonable intervals. There is
a process of obtaining confirmation in respect of inventory with the
(b) In our opinion and according to the information and explanations
given to us the procedures for 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) In our opinion, the Company has maintained proper records of
inventories. The discrepancies between the physical stocks and the book
stocks are not material and have been properly dealt with in the books
3. In respect of loans, secured or unsecured, granted or taken by the
Company to and from companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956 :
(a) During the period, the company has given loan to One Entity
amounting to Rs 18.32 crores. The maximum amount involved during the
period was 18.32 crores and the period end balance of such loan given
was Rs 18.32 crores.
(b) In Our Opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions of the
loans given by the Company, are not prima facie prejudicial to the
interest of the company,
(c) The principal amounts are repayable on demand and there is no
repayment schedule. The interest is payable on demand.
(d) In respect of the said loans and interest thereon, there are no
(e) During the period, the company has taken unsecured loan from two
parties amounting to Rs. 534.82 crores. The maximum amount involved
during the period was Rs. 146.06 crores and the period-end balance of
such loan taken was Rs.141.16 crores. Further during the period,
company has also taken unsecured loan from one company amounting to Rs
213.33 crores. The maximum amount involved during the period was Rs.
75.00 crores and the period-end balance was Rs.48.60 crores.
(f) In our opinion and according to information and explanations given
to us, the rate of interest, wherever applicable and other terms and
condition are not prima facie prejudicial to the interest of the
(g) The principal amounts are repayable on demand and there is no
repayment schedule. The interest is payable on demand.
4. 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 with regard
to purchase of inventories, fixed assets and also for the sale of goods
& services. During the course of our audit, no major weaknesses have
been noticed in the internal control system.
5. In respect of transactions covered under Section 301 of the
Companies Act, 1956:
(a) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered into the register maintained
under Section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanation
given to us, the transaction made in pursuance of contracts /
arrangements entered in the register maintained under section 301 of
the companies Act, 1956 and exceeding the value of Rs. 500,000 in
respect of each party during the period have been made at prices which
appear reasonable as per information available with the company.
6. According to the information and explanations given to us, the
Company has not accepted any deposits from the public. Therefore, the
provisions of Clause (vi) of paragraph 4 of the Order are not
applicable to the Company.
7. The Company has a system of internal audit, which in our opinion,
is commensurate with the size of the Company and nature of its
8. The Central Government has prescribed the maintenance of cost
records under section 209(1) (d) of the Companies Act 1956 in respect
of certain manufacturing activities of the Company. We have broadly
reviewed the accounts and records of the Company in this connection and
are of the opinion, that prima facie, the prescribed accounts and
records have been made and maintained. We have not, however, made the
detailed examination of the same.
9. (a) According to the records, information and explanations provided
to us, the Company is generally regular in depositing with appropriate
authorities undisputed amount of provident fund, employees'' state
insurance, income-tax, sales-tax, Wealth Tax, Excise Duty, service tax
and any other statutory dues applicable to it and no undisputed amounts
payable were outstanding as at 30th September, 2012 for a period of
more than six months from the date they became payable except Excise
Duty, Land Rent, Employee State Insurance, Custom Duty, Water Charges
and cess on Lime Stone amounting to Rs 0.18 crore, Rs. 0.75 crore, Rs
4.03 crores , Rs. 22.17 crores, Rs. 14.68 crores and Rs. 0.01 crore
respectively. There is no due in respect of Investor Education and
(b) Following are the details of disputed Income Tax, Wealth Tax, Sales
Tax, Excise Duty, Custom Duty and Stamp Duty that have not been paid to
the concerned authorities.
SR NATURE OF FORUM WHERE
DISPUTE IS UNPAID
NAME OF THE
NO THE DUES PENDING (Rs. In
1. Income Tax
Act, 1961 Income Tax Assessing Officer 5.86
Income Tax (Appeals) 189.18
I.T.A. Tribunal 51.98
2. Central Excise
Act, 1944 Excise Duty
and Tribunal 1.88
Service Tax Commissioner of
Excise (Appeals) 0.09
High Court 0.19
3. Central Sales
Tax Act and Central
Sales Tax High Court 0.49
Sales Tax Act of
various and Sales
Tax Tribunal 4.12
Appellate Board 0.96
Joint Commissioner 31.02
Deputy Commissioner 0.45
4. Wealth Tax
Act, 1957 Wealth Tax Assessing Officer Rs. 5,440
5. Customs Duty
Act, 1962 Customs Duty High Court 2.11
6. The Bombay
Stamp Act, 1958 Stamp Duty High Court 3.17
In the absence of information as mentioned in Note No. 35 of Notes
forming part of financial statements in this Para pertaining to earlier
period and out standing as on 30th September, 2012 in respect of
Demerged undertaking of CHL received by the company are not adequately
10. The Company does not have accumulated losses at the end of the
Period. The Company has not incurred cash losses during the Period
covered by the audit and in the immediately preceding period.
11. Based on our audit procedures and on the information and
explanations given to us by the management, the Company has not
defaulted in repayment of the dues to any bank.
12. Based on our examination and according to the information and
explanations given to us, the Company has not granted loan on the basis
of security by way of pledge of share.
13. The Company is not a chit or nidhi or mutual benefit fund/society
and clause (xiii) of the order is not applicable.
14. The Company has maintained proper records of the transaction and
contracts in respect of dealing or trading in shares, securities,
debentures and other investments and timely entries have been made
therein. All shares, securities, debentures and other investments have
been held by the Company in its own name.
15. In our opinion and according to the information and explanations
given to us, the terms and conditions of the corporate guarantee and
deed of undertaking given by the Company, for various term loans taken
by wholly owned subsidiaries, are not prejudicial to the interest of
16. In our opinion and according to the information and explanations
given to us, term loans have been applied for the purpose for which
they were raised.
17. According to the information and explanations given to us and on
an overall examination of the Financial Statements of the Company and
after placing reliance on the reasonable assumptions made by the
Company for classification of long term and short term usages of funds,
we are of the opinion that prima facie as at the close of the period,
no Short term funds have been utilized for long term investments.
18. During the period, 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.
19. The Company has unsecured debentures outstanding during the
period, on which no security or charge is required to be created.
20. The Company has not raised any money by public issue during the
21. Based upon the audit procedures performed and information and
explanations given to us, we report that no fraud on or by the company
has been noticed or reported during the period.
For Hemanshu Shah & Co.
Firm Registration No. 122439W
Place : Ahmedabad H. C. Shah
Date : February 13, 2013 Proprietor
Membership No. 36441