1. We have audited the attached balance Sheet of ACCURATE TRANSFORMERS
LTD. As at 31st March, 2007 and also the Profit & Loss Account 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 Management of the company. Our responsibility is
to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generallyaccepted 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
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 (Auditors Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of section
227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a
statement on the matters specified in paragraphs 4 and 5 of the said
order to the extent applicable.
4. Further to our comments in Annexure referred to above, we report
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, subject to paragraph 5.1 and 5.2 below, proper books
of the account as required by law have been kept by the company so far
as appears from our examination of the books;
c) The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account;
d) In our opinion, subject to paragraph 5.3, Balance Sheet and Profit &
Loss Account dealt with by this Report comply with the Accounting
Standards referred to in sub-section (3C) of Section 211 of the
companies Act, 1956;
e) On the basis of the written representation received from the
directors and taken on the record by the Board of Directors, we report
that none of the director of the Company is disqualified as on 31 st
March, 2007 from being appointed as director under clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956 with
reference to the matters relating to the Company;
f) In our opinion and to the best of our information and according to
the explanation given to us, the said accounts read together with
accounting polices and noted thereon and attached thereto, give the
information required by the Companies Act, 1956 in the manner so
required and subject to our comments in paragraph 5 below, give
respectively, a true and fair view in conformity with the accounting
principles generally accepted in India:
(i) In the Case of the Balance Sheet, of the state of affairs of the
Company as at 31st March,2007;and
(ii) In the case of the Profit and Loss Account, Profit for the year
ended on that date, and
(iii) In the case of the cash Plow statement, of the cash flows for the
year ended on that date.
5.1. Income Tax Authorities has conducted search proceedings under
section 132 of the Income Tax Act, 1961 on 26th July 2006 at the
Company and seized the Books of Accounts and records of the Company.
The Audited Accounts have been prepared on the basis of photocopies of
Books of Accounts and Records obtained by the Company from the Income
Tax Department, Adjustment, if any, as may be deemed necessary will be
made after the release of the above mentioned books and records.
5.2. During the Search Proceedings, the Company has offered Rs. 175
lacs as additional income, and the same has been taken into
consideration in F.Y. 2006- 2007, Financial Statements by the Company
under the head Other Income and corresponding amount has been shown as
other assets. The exact effect of the same would be taken into the
Accounts when the search proceedings would be completed.
5.3. The liability towards the retirement benefits i.e. gratuity and
leave encashment was provided by the Company on cash basis, contrary to
the AS-15, issued by ICAI, the effect of the same is not ascertainable
as the amount of liability in not available.
Annexure referred to in paragraph (3) of the Auditors Report of even
date on the accounts of Accurate Transformers Limited for the Year
ended 31st March, 2007.
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative detail and situation of fixed
(b) The management has carried out a physical verification of most of
its fixed assets during the year. In our opinion, the frequency of
verification is necessary having regard to the size of the Company and
the nature of its fixed assets. The discrepancies noticed on such
verification were not material and have been properly dealt with in the
book of account.
(c) In our opinion and according to the information and explanations
given to us during the year there was not substantial disposal of fixed
assets during the year.
(ii) .(a) During the year, the inventories have been physically
verified by the management except for inventory lying with third
(b) In our opinion and according to the information and explanation
given to us, the procedures of physical verification of stocks followed
by the management are reasonable and adequate in relation to the size
of the Company and nature of its business.
(c) On the basis of our examination of the record of inventories, we
are of the opinion that, the Company is maintaining proper records of
inventories. The discrepancies noted on physical verification of
inventories as compared to book records were not material and have been
properly dealt with in books of accounts.
(iii) (a) According to die information and explanations given to us,
the Company, has not granted any loans, secured or unsecured during the
year to companies, firms or other parties covered in the Register
maintained under section 301 of the Act, during the year.
(b) According to the information and explanations given to us, the
Company, has taken unsecured loan during the year from the companies,
firms or other parties covered in the Register maintained under section
301 of the Act, during the year
(c) In our opinion, in case of loans, secured or unsecured granted or
taken by / from companies, firms or other parties covered in the
Register maintained under section 301 of the Companies Act, 1956. In
the previous years, we are not making any comments because the terms of
repayment and / or interest have not been specified.
(iv) In our opinion and according to the information and explanations
given to us, their are adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to the purchase of inventories and fixed assets and with regard to sale
of goods and services. Further on the basis of our examination and
according to the information and explanations given to us, we have
neither come across nor have been informed of any instances of major
weakness in the aforesaid internal control procedure.
(v) (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars or arrangement
referred to in section 301 of the Act transactions that need to be
entered into the register maintained under section 301 of the Companies
Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five lakh have been entered into
during the | financial year at prices which are reasonable having
regard to prevailing market price at the relevant time. (vi) In our
opinion and according to the information and explanations given to us,
the Company has not accepted deposits form the public.
(vii) In our opinion, the internal audit system of the Company is
commensurate with its size and nature of its business.
(viii) The maintenance of the cost records has not been prescribed by
the Central Government under clause (d) of sub-section (1) of section
209 of the Act.
(ix) (a) According to the information and explanations given to us and
records of the Company examined by us, the Company is general regular
in depositing, except in few cases, undisputed statutory dues including
employees provident fund, income tax, service tax and other material
statutory dues applicable to it,
(b) According to the information and explanations given to us and the
records of the Company examined by us, the details of disputed dues are
Name of the statute Amount (in lacs) Forum where dispute is
Trade Tax 05.69/- Tribunal Trade Tax
Trade Tax 01.25/- Commissioner (Appeals)
Excise Duty 02.02 CESTAT
(x) The Company does not have any accumulated losses at the end of the
financial year and has not incurred cash losses during the financial
year and in the immediately preceding financial year.
(xi) According to the records of the company examined by us and the
information and explanations given to us, the Company during the year
has not defaulted in repayment of dues to financial institution, bank
or debenture holders.
(xii) As the Company has not granted any loans and advances on the
basis of security by way of pledge of shares, debentures and other
securities, paragraph 4(xii) of the Order are not applicable.
(xiii) The provision of any special statue as specified under paragraph
4 (xiii) of the Order are not applicable to the Company..
(xiv) As the Company is not dealing or trading in shares, securities,
debentures and other investments, paragraph 4 (xiv) of the Order is not
(xv) In our opinion and according to the information and explanations
given to us, the Company has not given guarantee for loans taken by
other from bank or financial instructions.
(xvi) In our opinion and according to the information and explanations
given to us, term loans, were applied for the purpose for which loans
(xvii) In our opinion and according to the information and explanations
given to us, funds raised on short term basis have, prima facie, not
been used during the year for long term investment.
(xviii) As the Company has not made any preferential allotment of
shares during the year, paragraph 4 (xviii) of the Order is not
(xix) As the Company has not issued any debentures, paragraph 4 (xix)
of the Order is not applicable
(xx) As the Company has not raised any by way of public issued,
paragraph 4 (xx) of the Order is not applicable. However during the
year the Company has accepted Share Application money.
(xxi) 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 audit
for year ended March 31,2007.
For SXAL & COMPANY
Ghaziabad, 31.10.2007 Sohan Lai, F.C A.