1. We have audited the attached Balance Sheet of POLYCHEM LIMITED as
at 31st March, 2012, the Statement of Profit and Loss 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 the management, as well as evaluating the overall financial
statement preparation. 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 enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
4. Further to our comments in the Annexure referred to above, we
i. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
ii. In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
iii. The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
iv. In our opinion, the Balance Sheet, Statement of Profit & Loss 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;
v. On the basis of written representations received from the
directors, as on 31st March, 2012 and taken on record by the Board of
Directors, we report that none of the directors of the Company POLYCHEM
LIMITED are disqualified as on 31st March, 2012 from being appointed as
a director in terms of clause (g) of sub-section (1) of Section 274 of
the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to
the explanations given to us, they said accounts read together with
notes thereon, give the information required by the Companies Act, 1956
in the manner so required and also give a true and fair view in
conformity with the accounting principles generally accepted in India:
a. In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2012, and
b. In the case of the Statement of Profit & Loss, of the loss of the
Company for the year ended on that date.
c. In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITOR''S REPORT
(Referred to in paragraph 3 of our report of even date)
(i) (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
The fixed assets have been physically verified by the management during
the year according to a phased programme as designed by the management.
This, in our opinion, is reasonable having regard to the size of the
Company and the nature of its assets. We have been further informed
that there is no material discrepancies between the book records and
the physical verification have been noticed.
(b) In our opinion, and according to the information & explanations
given to us, the Company has not disposed off substantial part of fixed
assets during the year.
(ii) (a) The inventory has been physically verified by the management
during the year. In our opinion, and according to the information and
explanation given to us, the frequency of verification is reasonable.
(b) The procedures of physical verification, in our opinion, are
reasonable and adequate in relation to the size of the Company and
nature of its business.
(c) The Company is maintaining proper records of inventory. No
discrepancies were noticed on verification between the physical stocks
and the book records.
(iii) The Company has neither granted nor taken any loans, secured or
unsecured to and from companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956.
Accordingly, the sub-clauses (a) to (g) of the clause 4 (iii) of the
Order are not applicable.
(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 and fixed assets and for the sale of goods and
services. During the course of our audit, we have not observed any
continuing failure to correct major weakness in internal control
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions for the year that need 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, during the year, there is no transaction made in pursuance
of contracts or arrangements entered in the register maintained under
section 301 of the Companies Act, 1956 and exceeding the value of
rupees five lakh in respect of any party.
(vi) In our opinion and according to the information and explanation
given to us, the Company has not accepted deposits from the public and
therefore, the provisions contained in sections 58A, 58AA or any other
relevant provisions of the Act and Rules framed there under are not
applicable to the Company. As informed to us, the Company has refunded
principal amount of deposit in case of matured deposits.
(vii) The Company does not have an internal audit system.
(viii) We have broadly reviewed the books of account maintained by the
Company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub- section (1) of section 209 of the
Act, and are of the opinion that, prima facie, the prescribed accounts
and records have been made and maintained. We have not, however, made a
detailed examination of the records with a view to determine whether
they are accurate or complete.
(ix) (a) Based on the records produced before us, the Company is
generally regular in depositing with appropriate authorities undisputed
statutory dues such as provident fund, investor education and
protection fund, employees state insurance, income-tax, sales-tax,
wealth tax, service tax, custom duty, excise duty, cess and other
material statutory dues wherever applicable and there are no amounts in
arrears as at March 31, 2012 for a period of more than six months from
the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of income-tax, sales-tax, wealth tax, service tax, customs
duty, excise duty, cess which have not been deposited on account of any
dispute except disputed dues as under:
Name of the Nature of Assessment Amount Authority with whom
Statue dues Year In Rs
(000''s) Appeal Pending
Act, 1961 Income Tax 2005-06 85 Income Tax
Act, 1948 ESIC 2001-02 94 Assistant Director
(x) In our opinion, the accumulated losses of the Company are not more
than fifty percent of its net worth as at 31st March 2012. The Company
has incurred cash losses during the financial year covered by our
audit. The Company had incurred cash losses during the immediately
preceding financial year.
(xi) The Company has neither raised any loans from banks and financial
Institutions nor issued any debentures, therefore the provisions of
clause 4 (xi) of the Companies (Auditor''s Report) Order regarding
default in repayment of dues to banks and debenture holders are not
applicable to the Company.
(xii) The Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
(xiii) In our opinion, the company is not a nidhi / mutual fund /
society. Therefore the provisions of clause 4(xiii) of the order are
not applicable to the Company.
(xiv) According to the information and explanations given to us the
Company is not dealing or trading in shares, securities, debentures and
other investments. The investments by way of bonds, mutual funds and
shares are held by the Company in its own name.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) The Company has not availed term loans during the year and hence
provisions of sub clause (xvi) of clause 4 of the Order are not
applicable to the Company.
(xvii) According to the information and explanations given to us and on
an overall examination of balance sheet of the Company, we report that
no funds raised on short-term basis have been used for long-term
(xviii) 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 year, hence the
question of whether the price at which shares have been issued is
prejudicial to the interest of the company does not arise.
(xix) The Company has not issued any debentures, hence the question of
whether securities or charge have been created does not arise.
(xx) The Company has not raised any money by public issues during the
year covered by our report.
(xxi) During the course of our examination of the books and records of
the Company carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanations given to us, no fraud (i.e. intentional material
misstatements resulting from fraudulent financial reporting and
misappropriation of assets) on or by the company has been noticed or
reported during the year by the Company.
For G. M. KAPADIA & CO.
Firm Registration No. 104767 W
Dated: 27th July 2012 (Membership No. 48243)