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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 our opinion.
As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Sub section (4A) of Sec. 227 of the Companies Act 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 & 5 of the said Order to the extent applicable.
Further to our comments in the Annexure referred to above, we report that:
(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 audit.
(ii) In our opinion, the Company has kept proper books of account as required by law so far as appears from our examination of the books.
(iii) In our opinion the Balance Sheet and Profit & Loss Account comply with the accounting standards referred to in Sub section (3C) of Section 211 of the Companies Act, 1956, subject to:
Note 2(h), in respect of no provision for gratuity has been made in accounts, in the event of any employee leaving the services by reason of death / incapability / retirement or resignation.
Note 13, in respect of non provision of sundry debtors amounting to Rs. 2307.13 lacs transferred from subsidiary company which are considered good by the management.
Note 14(3), in respect of inoperative bank accounts amounting to Rs. 1.53 lacs, no confirmation is received and the accounts are neither closed nor written off.
(iv) We further report that, had the observation made by us in Para above, been considered, the loss for the year would have been Rs. 3072.25 lacs (as against reported loss of Rs.763.59 lacs) and accumulated loss would have been Rs. 2442.23 lacs (as against reported accumulated loss of Rs. 133.57 lacs) and sundry debtors would have been Nil (as against reported sundry debtors of Rs. 2307.13 lacs) and Cash and Bank balance would have been Rs. 14.83 lacs (as against reported Cash and Bank balance of Rs. 16.36 lacs)
(v) The Balance Sheet and Profit & Loss A/c dealt with by this report are in agreement with the books of account.
(vi) On the basis of written representations received from the directors, as on 31s March 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31s 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.
(vii) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view, Subject to Para (iii) and (iv) above in conformity with the accounting principles generally accepted in India:
a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2012.
b) In the case of Profit & Loss Account, of the Loss of the company for the year ended on that date.
c) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.
ANNEXURE TO THE AUDITOR'S REPORT
1. The Company has maintained proper records showing full particulars, including quantitative details and situations of fixed assets.
The fixed assets of the company have been physically verified by the Management during the year and no material discrepancies were noticed on such verification. In our opinion the verification is reasonable having regard to the size of the Company and the nature of its assets.
As per the information and explanations given to us, during the year, the company has not disposed off any substantial part of the fixed assets that would affect the going concern.
2. The company is primarily engaged in investing activities. Accordingly, it does not hold any physical inventories. Thus paragraph 4(ii) of the Order is not applicable to the company.
3. The company has not taken any loans from companies or firms listed in the register maintained under section 301 of the company's act 1956 and from company under the same management. The company has not given any loan to companies or firms listed in the register maintained under section 301 of the companies act, 1956 and from companies under the same management.
4. The Company has adequate internal control procedures commensurate with its size and nature of business with regard to purchase of shares, fixed assets and for the sale of shares, assets or equipments. We have not observed any continuing failure to correct such internal control systems.
5. The transactions that are required to be entered into the register in pursuance of Section 301 of the act have been so entered.
In our opinion and according the information and explanations given to us the transactions made in pursuance of contracts or arrangements entered in the register maintained u/s 301 of the companies act 1956 and exceeding the value of Rs.5 Lacs in respect of any party during the year have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time where such market prices are available.
6. During the year under review, the company has not accepted any deposits from the public to which the provisions of Section 58A of the Companies Act, 1956 apply.
7. Company does not have any internal audit department, commensurate with the size of the company and nature of its business.
8. We have been informed that Central Government has not prescribed the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, in respect of any activities carried on by the Company.
9. According to the information and explanations given to us, the company has been regular in depositing Employees Provident Fund dues and has also been regular in depositing undisputed income tax and other applicable statutory dues with appropriate authorities.
According to the information and explanations given to us and the records of the Company examined by us, the particulars of income tax as at 31s March 2012 which have not been deposited on account of a dispute pending are as under:
Name AY Nature Forum where Amount of the of the disputes Disputed Statute Dispute are pending
Income 1995- Demand raised ACII Company Rs.20.20 tax Act, 96 subject to recti- Circle III (2) lacs 1961 fication by ACIT
Income 2003- Diminution in the Madras High Rs.1289 tax Act, 04 value of stock Court lacs 1961 (Value written off)
Income 2006- Department has Commissioner Rs.562.33 tax Act, 07 disallowed the of Appeals-III, lacs 1961 Carrry forward Chennai-34. Loss related to The Appeal has AY 1998-99, been made 2003-04. The against 143(1) company had of the Income claimed the tax Act Carry forward loss related to AY 2003-04, as the matter is pending before Hon'ble Madras High court
Income 2007- Department has Commissioner Rs.598.14 tax Act, 08 raised demand of Appeals-III, lacs 1961 on Short Term Chennai-34. Capital gains @ The Appeal is 30.99% instead made against of 15% company the order u/s had claimed the 154 of the Carry forward Income tax Act loss related to AY 2003-04, as the matter is pending before Hon'ble Madras High court
10. The company has no accumulated losses till the immediately preceding financial year, but has incurred a losses of Rs. 763.59 Lacs during the current financial year under this report.
11. On the basis of records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.
12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
13. In our opinion the company is not a Chit Fund or a Nidhi/Mutual Fund/Society. Therefore the provisions of clause 4 (xiii) of the companies (Auditor's Report) Order, 2003 are not applicable to the company.
14. The Company has maintained proper records of transactions and contracts in respect of trading in shares, debentures and other investments and timely entries have been made therein.
15. The company has given corporate guarantee of Rs. 287.50 lacs for the credit facilities availed by its subsidiary. According to the information and explanations given by the management, in our opinion the terms and conditions of the guarantee given for loans are not prejudicial to the interest of the Company.
16. According to the information and explanations given to us, the company has not obtained any term loans during the year under review.
17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, funds raised on short term basis, have not been used for long term investments.
18. The company has not made any preferential allotment of shares during the year.
19. There are no secured debentures issued during the year.
20. The company has not raised any money by public issue during the year.
21. To the best of our knowledge and belief and according to the information and explanations given to us no material fraud on or by the company has been noticed or reported during the course of our audit.
For M.B. Ladha & Company
Mukesh Ladha (M.No.35544)