1. We have audited the attached Balance Sheet of RAINBOW PAPERS
LIMITED as at 31st March 2012, and also the Statement of Profit and
Loss and 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 the 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 as
amended by the companies (Auditor''s Report) (Amendments) Order 2004
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 in Paragraph 3
above, we report that;
i. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of
ii. 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
iii. The Balance Sheet, Statement of Profit and 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 and Loss
and Cash Flow Statement dealt with this Report comply with the
Accounting Standards referred to in Sub-section (3C) of Section 211 of
the Companies Act, 1956;
vi. 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 is 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;
vii. 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
gives 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.
(b) In the case of the Statement of Profit and Loss, of the profit 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 AUDITORS'' 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
b. As explained to us, the Company has a phased program of physical
verification of its fixed assets, which in our opinion, is reasonable,
having regard to the size of the Company and nature of its business.
During the year, the company has physically verified some of the assets
and no material discrepancies were noticed on such verification.
c. In our opinion, the Company has not disposed of substantial part of
fixed assets during the year and hence the going concern status of the
Company is not affected.
ii) a. The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
b. In our opinion and according to the information and explanations
given to us, the procedures of 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. On the basis of our examination of the records of the Company, we
are of the opinion that the company is maintaining proper records of
inventories. As explained to us, there was no material discrepancies
noticed on physical verification of inventories as compared to the book
iii) In respect of the Loans, secured or unsecured, granted or taken by
the Company to / from companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956:
a) The Company has not given any Loan during the year to companies,
firms or other parties covered in the register maintained under Section
301 of the Companies Act, 1956. Consequently, the requirements of
Clause 4 (iii) (b), (c)&(d) of the Order are not applicable.
e) The Company has taken Loan from one party. In respect of the said
loans, the maximum amount outstanding at any time during the year was Rs.
2745 Lacs and year-end balance is Rs.2745 Lacs.
f) 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 taken by the Company, are not prejudicial to the interest of the
g) In respect of the said Loans and interest thereon, there are no
iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system & procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and also with
regard to the sale of goods and services. Duringthe course of our
audit, we have not observed any continuing failure to correct major
weaknesses in internal control system
v) In our opinion and according to the information and explanations
given to us, there were no transactions exceeding Rs. 5 Lacs with any
party covered under section 301 of the Companies Act, 1956 that needs
to be entered into the register maintained under the said section.
Hence clause 4 (v)
(b) of the Order is not applicable.
vi) In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposit from the public
and hence the provisions of Section 58A and 58AA or any other relevant
provisions of the Companies Act, 1956 and the Companies (Acceptance of
Deposits) Rules, 1975 with regard to the deposits accepted from the
public are not applicable to the Company.
vii) The Company has appointed a firm of Chartered Accountants as its
Internal Auditor for the year under audit. The internal audit for the
year is therefore carried out by the said firm. In our opinion, the
Company has an internal audit system commensurate with the size of the
company and nature of its business.
viii) We have broadly reviewed the cost records maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government under section 209(l)(d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
ix) a. According to the information & explanations given to us,
undisputed statutory dues including Provident Fund, Employee State
Insurance, Income Tax, Sales tax, Wealth Tax, Service Tax, Customs
Duty, Excise Duty, Cess and other dues have been generally regularly
deposited with the appropriate authorities. According to the
information and explanations given to us, no undisputed amounts payable
in respect of the aforesaid dues were outstanding as at 31st March,
2012 for a period of more than six months from the date of becoming
b. According to the information and explanations given & the records
of the Company examined by us, the details of disputed dues not paid
are as follows:
Name of the Nature of Forum where Total Amount Period to
Statue Dues Pending Amount paid
under which it
Rs. protest relates
Revenue Dept, Additional Gujarat
Lacs 18.78 lacs 2003
Gujarat State premium Tribunal, Interest
on Land Ahmedabad **
** The Tribunal has cancelled the order regarding additional premium on
Land and the matter is again referred to The Collectors, Mehsana for
re-valuation of premium amount.
x) The Company does not have any accumulated losses at the end of the
financial year. The Company has not incurred cash losses during the
financial year covered by our audit and the immediately preceding
xi) Based on our audit procedures and on the basis of information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to the banks. The
company does not have any debentures.
xii) In our opinion and according to the explanations given to us, the
Company has not granted any loans against security by way of pledge of
shares, debentures and other securities. Therefore the provisions of
this clause 4 (xii) of the Order are not applicable to the Company.
xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/ society. Therefore, clause4(xiii) of the Order is not
applicable to the Company.
xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Order are not applicable to the
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)In our opinion and according to the information and explanations
given to us, the Term Loans availed by the Company have been applied
for the purpose for which they were obtained
xvii) According to information and explanation given to us and on an
overall examination of the financial statements and other records of
the company, we are of the opinion that funds raised on short term
basis have not been used for long term investment. Further we report
that unsecured loans raised from one bank are not considered as short
term loans, as the said borrowings are rolled over and considered by
the company available for long term period and the amount raised is
used for long term purposes.
xviii)During the year, the Company has issued 40,00,000 Equity Shares
at a price of Rs. 61/- (face value Rs. 2/- each) amounting to Rs. 2,440 Lacs
as preferential allotment of shares to the company covered in the
register maintained u/s 301 of the Companies Act, 1956. The price at
which such shares has been issued is not prejudicial to the interest of
xix) During the year covered by our audit report, the Company has not
issued any debentures. Accordingly, the provision of clause (xix) of
the Order are not applicable to the Company.
xx) The Company has not raised any money by way of public issue during
the year. However, we have verified the end use of money initially
raised through GDR issue. The same is disclosed in the notes to the
Financial Statements (Refer Note No. 3(e)).
xxi) Based on the audit procedures performed and representation
obtained from management we report that, no case of fraud on or by the
Company has been noticed or reported for the year under audit.
For Talati & Talati
Firm Reg No:110758W
Place: Ahmedabad Partner
Date: May 24th 2012 Membership No: 129033