1. We have audited the attached Balance Sheet of M/s SAN ENGINEERING &
LOCOMOTIVE CO. LTD., Whitefield Road, Bangalore - 560 048, as at
31.03.2010 and also the Profit & Loss Account for the year ended on
that date, annexed thereto and the Cash Flow Statement for the year
ended on that date. These financial statements are responsibility of
the Companys 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 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 (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, we give in the Annexure a
statement on the matters specified in paragraphs 4 & 5 of the said
4. Further to our comments in 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 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
those books ;
iii) The Balance Sheet, Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the Books of
iv) In our opinion, the Balance Sheet, Profit and Loss Account and the
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) 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 ;
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010 ;
b) in the case of the Profit and Loss Account of the PROFIT for the
year ended on that date ; and
c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. On the basis of the written representations received from the
Directors as on 31st March 2010, and taken on record by the Board of
Directors, we report that none of the director is disqualified as on
31st March, 2010 from being appointed as a Director in terms of clause
(g) of sub section (1) of Section 274 of the Companies Act, 1956.
Annexure to Auditors Report Annexure Referred to in paragraph 3 of the
report of even date of the auditors to the members of M/s SAN
Engineering & Locomotive Co. Ltd.,
On the basis of such checks, as we considered appropriate and in terms
of the information and explanations given to us, we report that :
1. a. The Company has maintained proper records showing the full
particulars including quantitative details and situation of fixed
b. The fixed assets are being physically verified by the management
under a phased programme, in our opinion, is reasonable, and no
material discrepancies have been noticed on such verification.
c. The Company has not disposed off substantial part of its fixed
assets during the year.
2. a. As explained to us, inventories have been physically verified
during the year by the management.
b. The procedures of physical verification of inventories followed by
the management are, in our opinion, reasonable and adequate in relation
to the size of the Company and the nature of its business.
c. According to the inventory records produced to us for our
verification, we are of the opinion that the Company is maintaining
proper records of its inventory and the discrepancies noticed on
physical verification between physical stocks and the book records were
3. a. According to information and explanations
given to us, the Company has not granted any loan, secured or
unsecured, to companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act, 1956.
b. According to the information and explanations given to us, the
company has taken loans from parties listed in the register maintained
under section 301 of the Companies Act, 1956. The rate of interest and
other terms and conditions of such loans are in our opinion, prima
facie not prejudicial to the Company.
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control procedure
commensurate with the size of the Company and the nature of its
business with regard to purchase of inventory and fixed assets and for
sale of goods and services. Further, on the basis of our examination of
the books and records of the Company, we have neither come across nor
have been informed of any continuing failure to correct major
weaknesses in the aforesaid internal control procedures.
5. The Company has complied with the provisions of Sections 58 A and
58 AA of the Act and the Companies (Acceptance of Deposit) Rules 1975
with regard to deposits accepted from public.
6. a. According to the information and explanations
given to us, we are of the opinion that the particulars of contracts or
arrangements that need to be entered into the register maintained under
section 301 of the Companies Act, 1956, have been so entered in the
register required to be maintained under the section.
b. In our opinion and according to the information and explanations
given to us, the transactions in pursuance of such contracts or
arrangements have been made at prices which are reasonable having
regard to prevalent market prices at the relevant time as evaluated on
the basis of quotations obtained from parties / and considering that
having regard to certain items purchased / sold are of a special nature
in respect of which suitable alternative sources do not exist for
obtaining comparative quotations in general.
7. In our opinion, the Companys internal audit system is commensurate
with its size and nature of its business.
8. We are informed that the Central Government has not prescribed the
maintenance of cost records under Section 209 (1) (d) of the Companies
Act, 1956 for any of the products of the Company.
9. a. The Company is regular in depositing with the appropriate
authorities the undisputed statutory dues relating to Provident Fund,
Investor Education and Protection Fund, Employees State Insurance,
Income Tax, Value Added Tax, Customs Duty, Excise Duty, Service Tax and
other statutory dues applicable to it.
b. According to the information and explanations given to us, no
undisputed amounts in respect of the statutory dues referred to above
were outstanding as at 31st March, 2010 for a period of more than six
months from the date they become payable, except a sum of Rs.1,33,833/-
disputed before the Central Excise Department as at 31st March 2010.
10. The Company has no accumulated losses as at 31st March 2010 nor it
has incurred any cash losses during the financial year covered by our
audit or in the immediately preceding financial year.
11. The Company has not granted any loans or advances on the basis of
security by way of pledge of shares, debentures and other securities.
12. The provision of any special statute applicable to a chit fund /
nidhi / mutual benefit fund / societies are not applicable to the
13. The Company is not dealing or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of
clause 4 (xiv) of the Companies (Auditors Report) order 2003 are not
applicable to the Company.
14. The Company has not given any guarantees for loan taken by others
from banks or financial institutions.
15. According to the information and explanation given to us, the
Company has not made any preferential allotment of shares during the
year to parties and Companies covered in the register maintained under
Section 301 of the Act.
16. The Company has not issued any debentures during the year under
17. The Company has not raised any money by public issues during the
year under audit.
18. According to the information and explanations given to us and to
the best of our knowledge and belief, no fraud on or by the Company has
been reported or noticed during the year.
For N. R. RAJAGOPALAN & CO.,
Place : Bangalore (R. NARASIMHAN)
Date : 7,th July, 2010 Partner