We have audited the attached Balance Sheet of Patel Engineering Ltd as
at March 31, 2011, the Profit and Loss Account and Cash Flow Statement
of the Company 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.
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
1. As required by the Companies (Auditors'' Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956, and on the basis of such checks
as we considered appropriate and according to the information and
explanations given to us, we annex hereto a statement on the matter
specified in paragraphs 4 and 5 of the said Order.
2. 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 Law have
been kept by the Company so far, as appears from our examination of
c. the Balance Sheet, the Profit and Loss Account and Cash Flow
Statement of the Company dealt with by this report are in agreement
with the books of accounts of the Company;
d. in our opinion, the Balance Sheet, the 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 form the
Directors, as on March 31, 2011 and taken on record by the Board of
Directors, we report that none of the Director is disqualified as on
March 31, 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 together with notes
thereon and attached thereto give in the prescribed manner the
information required by the Companies Act, 1956 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, 2011;
ii. in case of the profit and loss account, of the profit of the
Company for the year ended on that date; and
iii. in the case of Cash Flow statement, of the cash flows for the
year ended on that date.
ANNEXURE TO AUDITORS'' REPORT
(Referred to in paragraph 1 of the Auditors Report of the even date to
the members of Patel Engineering Ltd on the accounts for the year ended
March 31, 2011), we report that:
i. a. The Company has maintained proper records
showing full particulars, including quantitative details and situation
of fixed assets.
b. We have been informed that, the fixed assets including assets of
the Company purchased in the name of Directors and their relatives and
employees have been physically verified at reasonable intervals by the
Management and no material discrepancies were noticed on such
c. Fixed Assets disposed off during the year were not substantial and
therefore do not affect the going concern status of the Company.
ii. a. Physical verification of inventories has been conducted at
reasonable intervals by the management.
b. In our opinion and on the basis of information and explanations
given to us, 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. The Company has maintained proper records of inventory. We have
been informed by the management, that the discrepancies between the
physical stock and book records were not material.
iii. a. The Company has granted unsecured loan at call to two
companies covered in the register maintained under section 301 of the
Companies Act 1956, aggregating to a maximum outstanding of Rs 169.26
million during the year and Rs 169.26 million outstanding at the year
b. In our opinion, the rate of interest and other terms & conditions
are prima facie not prejudicial to the interest of the Company.
c. The receipt of principal amounts and interest are at call.
d. There is no overdue amount in respect of the above loan.
e. The Company has not taken unsecured loans from Companies Firms or
Other parties covered in the register under section 301 of the Act
during the year Accordingly, clause 4(iii) (f) and (g) of the order is
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 work executed and we have
not observed any continuing failure to correct major weakness in such
internal control system.
v. a. In our opinion and according to the
information and explanations given to us, the particulars of contracts
or arrangements referred to in section 301 of the Companies Act 1956,
have been entered in the register required to-be maintained under that
b. As explained to us, the transactions made in pursuance of such
contracts or arrangements and exceeding the value of Rs 5,00,000 in
respect of any party during the year are at a negotiated price, fixed
at reasonable levels, having regard to the technical requirements/
quality consideration and alternate source of availability. There are
no comparable transactions with the Company of similar nature.
vi. In our opinion and according to the information and explanations
given to us, the Company has not accepted deposits from public and
consequently, the directives issued by the Reserve Bank of India and
the provision of section 58(A), 58(AA) or any other relevant provisions
of the Companies Act 1956 and the rules framed there under are not
vii. The internal audit function is carried out by a firm of
independent Chartered Accountants appointed by the management and is
commensurate with the size of the Company and the nature of its
viii. As explained to us the Central Government has not prescribed the
maintenance of the cost records under Section 209(l)(d) of the
Companies Act, 1956. Accordingly clause 4 (viii) is not applicable.
ix. a. As explained to us, the Company is generally regular in
depositing undisputed statutory dues, in respect of Provident Fund,
Investor Education & Protection Fund, Income Tax, Sales Tax, Wealth
Tax, Service Tax, Custom Duty, Excise Duty, cess and other material
statutory dues with the appropriate authorities.
b. According to the information and explanations given to us, details
of dues of sales tax, wealth tax, service tax, custom duty, excise duty
and cess which have not been deposited as on 31st March 2011 on account
of disputes are given below:
Particulars Financial year to
which amount relates Forum where dispute
is pending Rs in
Custom Duty 2001-2002, 2004-2005
and 2009-10 Commissioner of appea l28.25
Cess 2007-2008 and 2008-2009 High Court 53.70
Sales Tax 2001-2002 to 2003-2004 Appellate Tribunal 14.98
x. The Company does not have any accumulated losses as at the end of
the year and has not incurred cash losses during the financial year and
in the immediately preceding financial year.
xi. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to any
financial institutions or banks or to debenture holder as at the
xii. In our opinion and 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
xiii. The Company is not chit/nidhi/mutual benefit fund/ society.
Accordingly, clause 4(xiii) of the order is not applicable.
xiv. The Company is not dealing or trading in shares, securities,
debentures and other investment. Accordingly, clause 4(xiv) of the
order is not applicable.
xv. In our opinion and according to the information and explanations
given to us, the Company has given guarantee for loans taken by others
from Banks or Financial Institutions. The terms and conditions thereof
are not prima-facie prejudicial to the interest of the Company.
xvi. In our opinion and according to the information and explanations
given to us and on an overall examination, the term loans have been
applied for the purpose for which they were obtained.
xvii. On the basis of our examination of books of accounts and
information and explanations given to us, in our opinion, the funds
raised on a short term basis have not been used for long term
xviii. During the year, the Company has not made any preferential
allotment of shares to parties covered in the register maintained Under
Section 301 of the Act.
xix. The Company has created charged on outstanding debentures issued
during the year.
xx. The Company has not raised any money by public issue during the
xxi. During the course of our audit carried out in accordance with the
generally acceptable auditing practices and as informed by the
Management, no fraud on or by the Company has been noticed or reported
during the year.
For Vatsaraj & Co.
CA Nitesh K Dedhia
M. No.: 114893
September 10, 2011