1. We have audited the attached Balances Sheet of the Nirma Limited,
as at 31st March, 2011, 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 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
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 annex hereto a statement on
the matters specified in paragraphs 4 and 5 of the said Order.
4. Refer note no 7 of Notes to Accounts in Schedule 19 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 is 7th March, 2007. Three parties
have fled 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 High Court.
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
audit.
b) In our opinion, the Company has kept proper books of account, as
required by law, so far as appears from our examination of the books.
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 the written representations received from the
directors, as on 31st March, 2011 and taken on record by the Board of
Directors, we report that none of the directors of the Company are
disqualified as on 31st March, 2011 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 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 Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011;
(ii) In the case of profit and Loss Account, of the profit for the year
ended on that date; and
(iii) In the case of Cash Flow Statement, of the cash fow for the year
ended on that date.
ANNEXURE TO AUDITORS'' REPORT
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 year 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 year 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 confrmation in respect of inventory with the
third parties.
(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
of account.
3. In respect of loans, secured or unsecured, granted or taken by the
Company to and from companies, frms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956 :
(a) The Company has not given loans to any party or company covered
under Section 301 of the Companies Act, 1956 during the year.
Accordingly para 4 (iii) (b) to para 4 (iii) (d) of the order are not
applicable.
(e) During the year, the Company has taken loan from three parties
amounting to Rs. 215.02 crores. The maximum amount involved during the
year was Rs. 227.12 crores and the year-end balance of such loan taken
was Rs.82.80 crores. Further during the year, Company has also taken
unsecured loan from one company amounting to Rs.46.55 crores. The
maximum amount involved during the year was Rs.52.65 crores and the
year-end balance was Rs.3.59 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
Company.
(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 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 explanations
given to us, there are no transactions in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 aggregating during the year to Rs.5,00,000/-
(Rupees Five Lacs only) or more in respect of any party.
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
business.
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, service tax and any other statutory
dues applicable to it and no undisputed amounts payable were
outstanding as at 31st March, 2011 for a period of more than six months
from the date they became payable.
(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.
UNPAID
SR. NATURE OF FORUM WHERE DISPUTE
IS
NAME OF THE STATUTE AMOUNT
THE DUES PENDING
NO. (Rs. In
Crores)
1. Income Tax Act, 1961 Income Tax Commissioner Of
Income Tax (Appeals) 451.49
Assessing Officer 0.52
2. Central Excise Act,
1944 Excise Duty and Tribunal 1.23
Service Tax
Commissioner of
Excise (Appeals) 0.01
High Court 0.19
3. Central Sales Tax
Act and Central Sales
Tax High Court 0.48
Sales Tax Act of
various states and Sales Tax
Tribunal 4.00
Appellate Board 0.52
Commissioner 0.59
Joint Commissioner 30.45
Deputy Commissioner 0.28
4. Wealth Tax Act, 1957 Wealth Tax Assessing Officer Rs. 5,440
5. Customs Duty Act, 1962 Customs Duty High Court 0.64
Supreme Court* 20.00
Tribunal 0.20
6. The Bombay Stamp
Act, 1958 Stamp Duty High Court 3.17
*Stay granted by Hon''ble Supreme Court.
In the absence of information as mentioned in Note 8 of Schedule 19 of
the accounts information in this Para pertaining to earlier period and
out standing as on 31st March, 2011 in respect of Demerged undertaking
of CHL received by the company are not adequately disclosed.
10. The Company does not have accumulated losses at the end of the
financial year. The Company has not incurred cash losses during the
financial year covered by the audit and in the immediately preceding
financial year.
11. Based on our audit procedures and on the information and
explanations given 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 granted loan on the basis of
security by way of pledge of share. We are of the opinion that adequate
documentation and records are maintained in this regard.
13. The Company is not a chit or nidhi or mutual beneft 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 given
by the Company, for various term loans taken by wholly owned foreign
subsidiaries, are not prejudicial to the interest of the Company.
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 year, no
Short term funds have been utilized for long term investments.
18. 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 Act.
19. The Company has issued short term privately placed secured
debentures. The said debentures have been repaid before the time
permissible for creating the security. Hence there is no need to create
the security.
20. The Company has not raised any money by public issue during the
year.
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 year.
For Hemanshu Shah & Co.
Chartered Accountants
Firm Registration No. 122439W
Place : Ahmedabad H. C. Shah
Date : May 30, 2011 Proprietor
Membership No. 36441
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