1. We have audited the attached Balance Sheet of SQL STAR
INTERNATIONAL 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 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
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, the 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, the Statement of Profit and
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 is disqualified as on
31 st 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, 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 31 st March 2012;
(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.
i) a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b) These fixed assets have been physically verified by the management
at reasonable intervals which, in our opinion, is reasonable having
regard to the size of the Company and the nature of its business and
assets. No material discrepancies were noticed on verification.
c) No substantial part of fixed assets has been disposed off during the
ii) a) Inventories have been physically verified during the year by the
management. In our opinion, the frequency of verification is
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 the nature of its business.
c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
book records have been properly dealt with in the books of accounts and
were not material.
iii) a) The Company has not granted secured/unsecured loan to a Company
covered in the register maintained under section 301 of the Companies
b) The Company has taken unsecured loans from three Companies covered
in the register maintained under section 301 of the Companies Act;
1956.The amount outstanding at the end of the year is Rs.430.54 lakhs
including interest of Rs 28.54 lakhs.
c) In our opinion, the rate of interest and other terms and conditions
on which loans have been taken are not, prima facie, prejudicial to the
interest of the Company.
d) The Company is regular in repaying the principal amounts as
stipulated however interest has not been paid from March 2008 onwards.
iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control System commensurate
with the size of the Company and the nature of its business for the
purchases 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 weaknesses in internal controls.
v) The Company has not entered into any contracts or arrangements with
any parties referred to under section 301 of the Companies Act, 1956.
vi) The Company has not accepted loans which are in the nature of
deposits without complying with provisions of section 58A and the rules
made there under.
vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii) The Central Government has not prescribed the maintenance of cost
records under Section 209 (1) (d) of the Companies Act, 1956
ix) a) Undisputed Statutory dues including Provident Fund, Income Tax,,
Service Tax, Employees State Insurance and Cess have not been regularly
deposited with the appropriate authorities and there have been delays
in a number of cases except in respect of Investor Education and
Protection Fund, Sales Tax and Wealth Tax.
b) The arrears of Statutory dues as at the last day of the Financial
year outstanding for a period of more than six months from the day it
is payable is detailed below:
c) According to the information and explanations given to us, there are
no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service
Tax, Excise Duty and Cess which have not been deposited on account of
any dispute other than the following:
x) The accumulated losses, as at 31st March 2012 is more than 50% of
the Companies Net worth. The Company has incurred cash losses in the
financial year under report and in the immediately preceding financial
xi) The Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
xii) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities .
xiii) The Company is not a chit fund or a nidhi / mutual benefit fund /
xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments.
xv) The Company has not given any guarantees for loans taken by others
from banks or financial institutions.
xvi) According to the information and explanations given to us, the
Company has not raised any term loans during the year.
xvii) According to the information and explanations given to us and on
overall examination of the financial statements of the Company as at
31st March, 2012, we report that funds raised on short-term basis have
not been used for long-term investment.
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.
xix) The Company has not issued any debentures during the year.
xx) The Company has not raised money by public issues during the year
xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For Maharaj N. R. Suresh and Co.,
FRN No. 001931S
Place : Chennai Partner
Date : 4th December, 2012 M. No. 204368