1. We have audited the attached Balance Sheet of M/s. SANGHI CORPORATE
LIMITED as at 31st March 2012, and also the Profit & Loss Account and
the Cash Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
management of the Company. 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
3. As required by the Companies (Auditor''s Report) Order, 2003 issued
by the Central Government in terms of Section 227 (4A) of the Companies
Act, 1956, and on the basis of such checks as we considered and
according to the information and explanations given to us. We set out
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said order.
4. The Income Tax authorities conducted search and seizure operations
at the premises of the Company on 18 June 1998 and the Management
confirmed that certain documents were furnished to the Income Tax
Department. We were farther informed that certain person without
Management''s knowledge and proper authority opened and operated upon
certain Bank Accounts in the name of the company under forged
signatures and unauthorised resolutions to cover up certain
unauthorised and illegal business transactions through false and forged
invoices. The company has taken further action by filing complaints
with the concerned Authorities. Pending complaint of enquiries and
investigation, the extent of impact on the Company of the aforesaid
fraudulent transactions could not be ascertained in absolute terms.
The Books of account, records and other relevant documents/papers
pertaining to the aforesaid transactions routed through the said
unauthorised bank accounts have not been produced to us and hence not
examined by us.
However the Income Tax authorities have completed the Block Assessment
up to the period of search and ascertained the liabilities to the
extent of Rs. 3,60,47,377/- which has been disputed by the company
before the higher authorities and the same has not been provided in the
5. Further to our comments as referred to in paragraph 4 above,
a) We have obtained all the information and explanation which to the
best of our knowledge and belief were necessary for the purposes of our
b) 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
c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
referred to in 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 have been prepared in
compliance with the applicable accounting standards referred to in
Section 211 (3C) of the Companies Act, 1956.
e) On the basis of written representations received from the Directors
as on 31s'' March 2012 and taken on record by the Board of Directors of
the Company, none of the Directors are disqualified as on 31s1 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.
f) In our opinion and to the best of our information and according to
the explanation given to us, the accounts read together with the
following notes as referred to in Note 17 of the Accounting Policies:-
2: Regarding the debtors
3: Regarding Company Secretary
4: Regarding Confirmation of Balance
and other Notes thereon 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 the Balance Sheet of the state of affairs of the
Company as at 31s'' March, 2012.
ii) In the case of Profit and Loss Account of the Loss 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 the date.
1. In respect of its Fixed Assets:-
a. There is no Fixed Assets during the year.
b. This clause is not applicable in view of clause a above.
c. This clause is not applicable in view of clause a above.
2. In respect of its inventories:-
a. As explained to us, inventories have been physically verified by
the Management at regular intervals during the year.
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 nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there was no material discrepancies noticed on
physical verification of inventory.
3. a. During the year, the Company has not granted any loans to
parties listed in the register maintained under Section 301 of the
Companies Act, 1956. However the Company has taken loans from its
directors, the details of which are as follows:
No. of persons Maximum Amount Balance as on
2 1 6476000 1 3475000
b) In our opinion, the rate of interest and other terms on which the
said loan have been taken are not, prima facie, prejudicial to the
interest of the Company;
c) The terms of loan taken h''ave not specified the repayment mode.
Hence the question of regularity in payment of principal amount and
interest as per the terms does not arise;
d) As per the information and explanation given to us the amount of
loan taken is not overdue;
4. 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. During the course of our audit, we have not
observed any major weakness in internal controls.
5. Based on the audit procedure applied by us and according to the
information and the explanations provided by the management, we are of
the opinion that the there are no transactions that need to be entered
into the register maintained under Section 301 of the Companies Act,
6. The Company has not accepted deposit''s from the public.
7. As explained to us Company has an internal audit system
commensurate with its size and nature of its business.
8. Maintenance of cost records has not been prescribed by the Central
Government under clause (d) of sub-section (1) of section 209 of the
Companies Act 1956.
9. In respect of statutory dues:
a) According to the information and explanations given to us and as per
the records examined by us there were no undisputed dues including
Provident Fund, Investor Education and Protection Fund, Employees State
Insurance, income Tax, Sales Tax, Wealth Tax, Customs Duty, Cess which
were in arrears as at 31sl March 2012, for a period of more than six
months from the date of becoming payable.
b) According to the information and explanations given to us, there are
no dues of Sales Tax, custom duty, wealth tax, excise duty and cess
which have not been deposited on account of any disputes except dues on
account of Income Tax aggregating to Rs 3,60,47,377 (dispute whereof is
pending before Income Tax Appellant Tribunal, Mumbai for the block
assessment A Y 1988-1998)
10. The Company''s accumulated losses at the end of the financial year
are not less than fifty percent of its net worth. The company has
incurred cash loss during the financial year covered by our audit and
has also incurred cash loss in the immediately preceding financial
11. The company does not have any outstanding dues payable to any
financial institution and debenture holders
12. Based on our examination and according to the information and
explanation given to us, the Company has not granted loans and advance
on the basis of security by way of pledge of shares, debenture and
13. The company is not a chit/nidhi/mutual benefit fund/society and
hence clause 4(xiii) of the order is not applicable.
14. Based on our examination and according to the information and
explanation given to us proper records have been maintained of the
transactions relating to trading in shares, securities and other
instruments and timely entries have been made therein.
15. On the basis of the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions;
16. On the basis of the information and explanations given to us the
Company has not taken any term loan.
17. On the basis of the information and explanations given to us the
Company has not raised funds on short term basis.
18. During the year, the Company has not allotted shares to parties
covered in the Register maintained under Section 301 of the Act.
19. The Company does not have any outstanding debenture during the
20. The Company has not raised any money by public issues during year.
21. Based on the audit procedure performed and information and
explanations given to us by the management, we report that fraud on or
by the Company has not been noticed or reported during the course of
For V1VEK R. AGARWAL & CO.