We have audited the accompanying financial statements of M /s. SMITHS
AND FOUNDERS (INDIA) LIMITED [FORMERLY KNOWN AS SHIMOGA TECHNOLOGIES
LIMITED] (the Company) which comprise the Balance Sheet as at
March 31, 20I4, and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 (the Act). This responsibility
includes the design, implementation of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
(a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
(b) In the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
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 account as required by law have been
kept by the Company so far as appears from our examination of those
c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement comply with the Accounting Standards referred to in
subsection (3C) of section 211 of the Companies Act, 1956;
e. on the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956;
f. Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
Annexure to the Independent Auditors'' Report
(i) Fixed Assets
a) The Company has maintained proper records of fixed assets showing
full particulars, including quantitative details and situation of the
b) The Company has a regular programme for physical verification of its
fixed assets by which the fixed assets are verified on a phased manner.
In accordance with this programme, certain fixed assets were verified
during the year and no material discrepancies were noticed on such
c) On the basis of our examination of the books and records of the
Company, and according to the information and explanations given to us,
in our opinion, there was no disposal of substantial part of fixed
assets during the year.
a) The inventory has been physically verified during the year by the
management. In our opinion the frequency of verification is reasonable.
b) 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 is maintaining proper records of inventory. There were
no material discrepancies noticed on verification between physical
stock and books of account.
(iii) Loans and Advances
a) During the year, the Company has granted secured loans to parties,
covered In the register maintained under section 301 of the Act and the
same is as follows:
Number Maximum Amount
of parties Amount Involved as at 31.03.2014
1 Rs. 20,00,000/- NIL
The above loan was squared off during the year.
b) In our opinion the terms and conditions for repayment of the
principal and interest are not prejudicial to the interest of the
c) Based on our scrutiny of the Company''s records and according to
information and explanation given to us, the Company has not taken any
loans, secured or unsecured from companies, firms or other parties
covered in the register maintained under section 301 of Companies Act,
1956 during the year. Accordingly provisions of clause (iii) (b) (c) &
(d) of the above said order are not applicable to the company.
(iv) Internal Control
In our opinion and according to the information and explanations given
to us, there is an adequate internal control system commensurate with
the size of the Company and the nature of its business, with regard to
purchase of inventory, fixed assets and for sale of goods. We have not
noted any continuing failure to correct major weakness in the internal
controls during the course of audit.
(v) Particulars of contracts and arrangements required to be entered in
the register maintained under section 301 :
a) In our opinion, and according to the information and explanations
given to us, the particulars of contracts / arrangements referred to in
Section 301 of the Companies Act, 1956 have been entered in the
register required to be maintained under that Section.
According to the information and explanation given to us, the Company
has accepted deposits from the public. The directives issued by the
Reserve Bank of India and the provisions of sections 58A and 58AA of
the Act and the rules framed there under, where applicable, have been
(vii) Internal Audit
In our opinion, the Company has an internal audit system which is
commensurate with the size and nature of its business.
(viii) According to the information and explanation given to us, the
maintenance of cost records have been prescribed by the Centra!
Government under clause
(d) of sub-section (1) of section 209, of the Companies Act, 1956 and
the same has been maintained by the Company.
(ix) Statutory Dues :
a) According to the records of the Company, the Company is regular in
depositing with appropriate authorities undisputed statutory dues
including provident fund, employee''s state insurance, income tax, sales
tax, wealth tax, service tax, custom duty, excise duty, cess and other
statutory dues applicable to it.
b) According to the information and explanation given to us and based
on the records available, the Company had no undisputed amounts payable
in respect of provident fund, investor education and protection fund,
employees state insurance, income tax, wealth tax, sales tax, service
tax, customs duty, excise duty, cess and any other statutory dues with
the appropriate authorities as at the last day of the financial year
concerned, for a period more than six months from the date they were
c) According to the information and explanations given to us there is
no disputed dues as at 31st March 2014.
(x) Erosion of net worth :
The company does not have accumulated losses exceeding the net worth as
at the end of the financial year. The company has incurred cash losses
of Rs.80,00,966/- during the financial year covered by our audit and
Rs.9,54,615/- in the immediately preceding financial year.
(xi) Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that the
company has not defaulted in repayment of dues to banks. The Company
has no dues to any other financial institution or debenture holders.
(xii) According to the records of the Company, the Company has not
granted any loans and advances on the basis of security by way of
pledge of shares, debentures or other securities.
(xiii) In our opinion, the Company is not a Chit fund or a Nidhi or a
Mutual benefit fund or a Society. Accordingly clause 4(xiii) of the
order is not applicable.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly
clause 4 (xiv) of the Order is not applicable
(xv) According to the information and explanation given to us, the
Company has not given any guarantee for the loans taken by others from
the bank or financial institutions.
(xvi) According to the information and explanation given to us and
based on our audit procedures, the term loans availed from Bank during
the year were applied for the purposes for which they were obtained.
(xvii) According to the information and explanation given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment by the Company.
(xviii) According to information and explanations given to us, the
Company has not made any preferential allotment during the year.
(xix) Based on the examination of records and information and
explanation given to us, no debentures were issued during the year.
Hence clause 4(xix) of the Order is not applicable.
(xx) The Company has not raised any money by public issues during the
year. Accordingly clause 4(xx) of the Order is not applicable.
(xxi) In our opinion and to the best of our information and according
to the explanations given to us no fraud on or by the Company have been
noticed or reported during the year.
For B N Subramanya & Co.
Place: Bangalore Partner
Date : 30th May, 2014 Membership No. 027449