We have audited the attached Balance Sheet of STI India Limited as at
31st March, 2012, the Profit and Loss Account and the Cash Flow
Statement of the Company 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.
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
1. As required by the Companies (Auditor''s Report) Order, 2003 as
amended issued by the Central Government in terms of sub-Section (4A)
of Section 227 of the Companies Act, 1956. We enclose in the annexure
hereto a Statement on the matters specified in paragraphs 4 and 5 of the
2. Further to our comments in the Annexure referred to in paragraph 1
above, 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 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 and Loss Account and Cash Flow Statement
dealt with by 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 comply with the accounting
standards as referred to in sub-section (3C) of Section 211 of the
Companies Act, 1956.
e) On the basis of written representations received from directors as
on March 31, 2012 and taken on record by the Board of Directors, we
report that none of the Directors are disqualified as on March 31, 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 explanations given to us, the said financial statements together
with notes thereon and attached thereto give in the prescribed manner
the information required by the Companies Act, 1956, required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
i) In so far as it relates to the Balance Sheet of the state of affairs
of the Company as at March 31, 2012.
ii) In so far as it relates to the Profit & Loss Account of the PROFIT
of the company for the year ended on that date, and
iii) In so far as it related to the Cash Flow Statement, of the Cash
Flows for the year ended on that date.
1. In respect of Fixed Assets:
a) The Company has maintained proper records showing full particulars,
quantitative details and situation of its fixed assets.
b) The fixed assets have been physically verified by the management at
reasonable intervals during the year. We are informed that no material
discrepancies were noticed by the management on such verification.
c) Based on our scrutiny of the records of the company and the
information & explanation received by us, we report that there were
sale of fixed assets during the year but the fixed assets disposed off
did not constitute a substantial part of the fixed assets of the company.
2. In respect of Inventories:
a) As explained to us physical verification of inventories has been
conducted during the year by the management at reasonable intervals.
b) In our opinion, 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) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of its
inventories and no material discrepancies were noticed on physical
3. In respect of loans, secured or unsecured granted or taken by
the Company to/from the companies, firms or other parties covered in
the register maintained under Section 301 of the companies Act, 1956:
a) During the year Company has not granted any loans to parties covered
in the register maintained under Section 301 of the Companies Act, 1956.
b) In view of our comments above, clause 4 (iii) (b), (c) & (d) of the
said order is not applicable to the company.
c) During the year Company has taken loans from 1 party covered in the
register maintained under Section 301 of the Companies Act, 1956 and
the maximum amount outstanding during the year is Rs 15.90 crores and
the year- end balance is Rs 7.25 crores.
d) In our opinion and according to the information and explanations
given to us, the rate of interest, where applicable and other terms and
conditions, are not prima facie prejudicial to the interest of the
e) In respect of the said loans, the same are repayable on demand and
there is no repayments schedule.
f) In respect of the said loans, the same are repayable on demand and
therefore the question of overdue amounts does not arise. In respect of
interest, where applicable there are no overdue amounts.
4. In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
fixed assets. Further, on the basis of our examination of the books and
records of the company, carried out in accordance with the auditing
standards generally accepted in India and according to the information
and explanations given to us, we have neither come across nor have we
been informed of any continuing failure to correct weaknesses in the
aforesaid internal control system.
5. In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
a) In our opinion and according to the information and explanations
given to us the particulars of contracts or arrangements referred to in
Section 301 of the Act have been entered in to the register required to
be maintained under that section.
b) In our opinion and according to the information and explanations
given to us, transactions made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Act and exceeding the value of Rupees Five Lakhs in respect of any
party during the year, have been made at prices, which are prima facie
reasonable having regard to the prevailing market prices at the
6. According to the information and explanations given to us, the
Company has not accepted any deposits from public.
7. In our opinion the Company has an internal audit system
commensurate with the size and nature of its business.
8. As per the information and explanations provided to us, we are the
opinion that in pursuant to the prescribed rules by Central Government,
the company had maintained cost records u/s. 209(1) (d) of the
Companies Act, 1956, however we have not done a detailed examination
of the same.
9. In respect of Statutory Dues:
a) According to record of the Company produced before us, the Company
is generally regular in depositing with appropriate authorities
undisputed statutory dues including provident fund, investor education
and protection fund, employees'' state insurance, income tax, sales
tax, wealth tax, service tax, customs duty, excise duty, cess and other
statutory dues applicable to it.
b) According to the information and explanations given, no undisputed
amounts payable in respect of Income-Tax, sales tax, wealth tax,
service tax, customs duty, excise duty/cess were outstanding as at
31.03.2012 for a period of more than six months from the date they
became payable except as given below:-
Statement of Arrears of statutory dues outstanding for more than six
months as at 31st March 2012:
Sl. Nature of the Dues Amount Period to which
No. (Rs in lacs) amount relates
1 Central Sales Tax 3.87 1995-96
2 Central Sales Tax 12.65 1997-98
3 Entry Tax 11.40 1996-97
4 Entry Tax 4.04 1997-98
5 Madhya Pradesh Sales
Tax (M.P.S.T) 8.39 1997-98
Total 40.35 _
Interest amount on the above dues (S. No 1 to 5) as on 31st March 2012
is Rs 65.41 lacs.
(c) According to the records of the company there are no dues of
Income-Tax, sales tax, wealth tax, service tax, customs duty, excise
duty/cess which have not been deposited on account of any dispute
except as given below.
Nature of the Act Nature of the Dues Amount Period to which Forum
(RsIn Lacs) the amount
Central Sales Central Sales Tax 63.00 1995-96 Writ
Tax Act,1956 M.P High
State Sales Tax State Sales Tax 2.88 1997-98 Writ
Act 1068 /
Central Sales Tax Central Sales Tax 1.43 2004-05 Appeal
M. P. Vat Vat 0.45 2009-10 Additional
Act, 2002 Commissioner
Central Excise Excise Duty 2129.07 March 2004 Commissioner
Act, 1944 to September Customs &
Central Excise Excise Duty 27.03 September CESTAT,
Act, 1944 2004
Central Excise Excise Duty 65.49 March 2004 In the
Act, 1944 to September of M.P
Central Excise Excise Duty 11.02 2007-08 & Additional
Act, 1944 2008-09 Commissioner,
Income Tax Income Tax 7.00 2004-05 CIT (Appeals)
Act, 1961 Indore
10. In our opinion, the accumulated losses of the Company are more
than its net worth reflecting erosion of its entire net worth. The
company has not incurred cash loss during the financial year covered by
our audit and in the immediately preceding financial year.
11. As per the information and explanations given to us the company is
generally regular in making the repayments due to banks & financial
institution and as at March 31, 2012 there is no overdue amount.
12. According to the information and explanations given to us the
company has not granted any loans and / or advances on the security by
way of pledge of shares, debentures and other securities.
13. In our opinion, and to the best of our information and according
to the explanations provided by the management, we are of the opinion
that the company is neither a Chit Fund nor a nidhi/mutual benefit
society. Hence, in our opinion, the requirements of para 4 (xiii) of
the Order do not apply to the company.
14. As per records of the company and information and explanations
given to us by the management, company is not dealing or trading in
shares, securities, debentures and other investments.
15. 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.
16. According to the records of the Company, the Company has not
obtained any term loans during the year. Hence, comments under the
clause are not called for.
17. According to the information and explanations 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.
18. The company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
19. During the period covered by audit report the company has not
issued any debentures.
20. During the year the company has not raised any money by way of
21. Based upon the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the course of our
For V.K. Beswal & Associates
CA R.P. Laddha
Place: Mumbai M. No. 48195
Date : 04.05.2012 Firm Registration No.: 101083W