We have audited the attached balance sheet of Sundaram-Clayton Limited,
Chennai - 600 006 as at 31st March 2012 and the statement of profit and
loss 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 the responsibility of the Company''s management. Our responsibility
is to express an opinion on these financial statements based on our
1. We have conducted our audit in accordance with auditing standards
generally accepted in India. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free from any 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 presentation of the
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
2. As required by the Companies (Auditor''s Report) Order, 2003 and
amended by the Companies (Auditor''s report) (Amendment) Order, 2004
issued by the Central Government 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
3. Further to our comments in the Annexure referred to above, we state
(i) we have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purpose 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 such
(iii) the balance sheet, statement of profit and loss and cash flow
statement, dealt with by this report, are in agreement with the books
(iv) in our opinion, the balance sheet, statement of profit and loss
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) on the basis of written representations received from the Directors
of the Company, as on 31st March 2012 and taken on record by the Board
of Directors, we report that none of the directors is disqualified from
being appointed as a director in terms of Clause (g) of sub-section (1)
of Section 274 of the Companies Act, 1956 on the said date.
(vi) in our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
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.
a. in so far as it relates to the Balance Sheet, of the state of
affairs of the Company as at 31st March 2012;
b. in so far as it relates to the Statement of Profit and Loss of the
profit of the Company for the year ended on that date; and
c. in so far as it relates to 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) Fixed assets are physically verified by the management at
reasonable intervals as per the Company''s policy. In terms of this
policy, the Company has carried out the verification last during the
year 2010-2011. The next verification of assets is planned to be
undertaken shortly. In our opinion, the interval is reasonable having
regard to the size of the Company and the nature of its assets.
(c) The assets disposed off during the year are not substantial and
therefore do not affect the going concern status of the Company.
Further the investments transferred on demerger also do not affect the
going concern status of the Company.
(ii) (a) The inventory other than overseas inventory has been
physically verified at reasonable intervals during the year by the
management. In our opinion, the frequency of such verification is
adequate. In respect of inventory with third parties, which have not
been physically verified, there is a process of obtaining confirmation
from such parties.
(b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventory
followed by the management were reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) In our opinion, the Company has maintained proper records of
inventory. The discrepancies between the physical stocks and the books
were not material and have been properly dealt with in the books of
(iii) (a) During the year the Company has granted loan of Rs.1485 lakhs
to one of its subsidiaries covered in the register maintained under
section 301 of the Companies Act, 1956 (through its erstwhile wholly
owned subsidiary company viz. Anusha Investments Limited, Chennai).
Balance due as at the year end is Rs.1485 lakhs along with interest
accrued thereon amounting to Rs.1.92 lakhs.
(b) In our opinion, the rate of interest and other terms and conditions
on which such loans and advances are made are not prima facie
prejudicial to the interest of the Company.
(c) The loan amount of Rs.1485 lakhs along with the interest thereon
was recovered by the Company on 3rd April, 2012.
(d) As on the date of Balance Sheet, there was no overdue amount
recoverable on the said loans and advances.
(e) During the year, the Company has not availed any loan, secured or
unsecured, from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of inventory, fixed assets and for the
sale of goods and services. During the course of our audit, no minor or
major continuing failure has been noticed in the internal control
(v) (a) Based on the audit procedures applied by us and according to
the information and explanations provided by the management, we are of
the opinion that the contracts or arrangements that need to be entered
in the register maintained under Section 301 of the Companies Act, 1956
have been properly entered in the said register.
(b) In our opinion and according to the information and explanations
given to us, the transactions entered in the register maintained under
Section 301 of the Companies Act, 1956 and exceeding the value by
rupees five lakhs in respect of each party during the year, have been
made at prices which are reasonable having regard to the prevailing
market prices at the relevant time.
(vi) The Company has not accepted any deposit from the public.
(vii) The Company has an Internal Audit System which, in our opinion,
is commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government under
Section 209 (1)(d) of the Companies Act, 1956 for maintenance of cost
records and are of the opinion that, prima facie, the prescribed
accounts and records have been made and maintained.
(ix) (a) According to the records provided to us, the Company is
regular in depositing undisputed statutory dues including Provident
Fund, Employees'' State Insurance, Investors Education and Protection
Fund, Income tax, Sales tax, Wealth tax, Customs duty, Excise duty,
Service tax and Cess and other statutory dues with the appropriate
authorities. However, delays have been noticed in respect of payments
of service tax (three instances) and tax deducted at source (one
instance). The die casting divisions at Belagondapalli near Hosur and
Mahindra World City, Kancheepuram are not covered under the Employees''
State Insurance Act, 1948.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
Tax, Customs Duty, Excise Duty, Service tax and Cess were in arrears,
as at 31st March 2012 for a period of more than six months from the
date they became payable.
(c) According to the information and explanations given to us, the
following are the details of the disputed dues, that were not deposited
with the authorities concerned.
Name of the Nature of Amount Forum where
statute dues (Rs. in lakhs) dispute is pending
Income Tax Act, Income Tax (a) 50.30 The Hon''ble High
1961 Court of Judicature
(b) 7.18 Commissioner of
Wealth Tax Act, Wealth tax 14.61 Commissioner of
1957 Income tax
Act, Interest on
1944 Excise duty (a) 5.97 The Hon''ble High
Court of Judicature
Excise duty (b) 831.96 Commissioner of
Act, 1994 Service tax (a) 52.54 Central Excise and
(b) 45.50 Commissioner
(c) 144.20 Commissioner of
(d) 66.57 Additional
(e) 19.61 Joint Commissioner
of Service tax,
(f) 3.13 Asst. Commissioner
of Service tax,
(g) 155.83 Commissioner of
Tamilnadu Town Fee payable 69.42 The Hon''ble High
and Country to CMDA / Court of Judicature
1971 Municipal at Madras
(x) The Company neither has accumulated losses as at the end of the
financial year nor has incurred cash losses during the financial year
and in the immediately preceding year.
(xi) Based on our verification and according to the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to its banks.
(xii) Based on our examination and according to the information and
explanations given to us, 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 / nidhi / mutual benefit fund /
society and as such this clause of the Order is not applicable.
(xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments other than in mutual fund investments.
Proper records have been maintained in respect of these transactions
and contracts and timely entries have been made therein. The
investments are held by the Company in its own name, other than those
acquired on amalgamation, which are pending transfer in Company''s name.
(xv) In our opinion, the terms and conditions of guarantees granted by
the Company for loans taken by others are not prejudicial to the
interests of the Company.
(xvi) The term loans availed by the Company were applied for the
purpose for which the loans were obtained.
(xvii) On the basis of our examination, the Company has not used funds
raised on short term basis for long term investments.
(xviii) During the year the Company has not allotted any shares on
preferential basis to parties and companies covered in the register
maintained under Section 301 of the Companies Act, 1956.
(xix) During the year, the Company has not issued any secured
(xx) During the year the Company has not raised any money through
(xxi) The Company has received an intimation from a Chennai based Bank
that a person has drawn fraudulently Rs.190 lakhs from the Bank under
bill discounting facilities towards forged invoices for canteen
supplies to the Company. The fact that the Company has no relation with
the said person and it has no connection with the invoices raised has
been intimated to the Bank by the Company. Hence the Company is not
liable to pay the said amount of Rs.190 lakhs. Accordingly, this has
been included under ''Liabilities contested and not provided for.''
For SUNDARAM & SRINIVASAN
Firm Regn. No. 004207S
28th August 2012 Membership No. F7945