1. We have audited the attached Balance Sheet of ACCURATE TRANSFORMERS
LIMITED as at 31st March, 2012 and also the Profit & Loss Account and
the Cash flow Statement for the year ended on that date annexed
thereto. The 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
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
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 the Annexure referred to above, we
report that: -
a. We have obtained all the information and explanation which to the
best of our knowledge and belief were necessary for the purpose of our
b. In our opinion, subject to paragraph 5.1,5.2 and 5.3 below, and
notes given in schedule 26, proper books of account as required by law
have been kept by the company so far as appears from our examination of
c. The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
d. In our opinion, subject to paragraph 5.4 and 5.5, Balance Sheet,
Profit & Loss Account 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;
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 31st
March, 2012 from being appointed as a 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 policies and notes 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 at31 st March, 2012; and
(ii) in the case of the Profit & Loss Account, Profit for the year
ended on that date; and
(iii) in the case of cash flow 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 The
Assessment proceeding has been completed. The Company has gone in
appeal in all cases. Now the matter is pending before I.T.A.T.
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
assessment of the F.Y. 2006-07.The Company has taken the same under the
head other Income (in F.Y. 2006-07) and corresponding amount has been
shown as other current assets. The exact effect ofthe same would
betaken into the Accounts when the appeal is decided by I.T.A.T.
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 ofthe same is not ascertainable
as the amount of liability is not available.
5.4 That the company not follows the Accounting Standard (AS-17),
Segment Reporting as company deals in Manufacturing ofthe
Transformers, Trading of Iron & Steel and Electrification Project
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, 2012
(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 reasonable 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) There was no disposal of a substantial part of fixed assets during
(ii) (a) During the year, the inventories have been physically verified
by the management except for inventory lying with third parties.
(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 not reasonable and adequate in relation to the
size of the Company and the 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
(iii) (a) According to the information and explanations given to us,
the Company has granted 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 which are prima facie
prejudicial to the interest of the company.
(b) According to the information and explanations given to us, the
Company has taken unsecured loans 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 to/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, there are adequate internal control systems 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 inform of any instances of major
weaknesses in the aforesaid internal control procedures.
(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 invited deposits from the public.
(vii) In our opinion, the internal audit system of the Company is
commensurate with the size and nature of its business.
(viii) The company has informed to us to maintain the cost records, in
pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209(1 )(d) of the Companies
Act, 1956. We have not examined the records with a view to determine
whether they are accurate or complete.
(ix) According to the information and explanations given to us and
records of the Company examined by us, the Company is generally regular
in depositing with the appropriate authorities undisputed statutory
dues i.e. employees' provident fund, ESI, income tax, TDS, service tax,
VAT/sales tax, excise duty, cess, Investor education and protection
fund and other material statutory dues applicable to it. (Referto Note
No. 26.5(V) of the Schedule 26).
(x) According to the information and explanations given to us and the
records of the Company, the following are the particulars of disputed
dues on account of excise duty, Income Tax, and Sales tax/VAT, Cess
matters that have not been deposited by the company as at March
S. Name of the Statute Nature Amount
No. of the (Rs.in
1. Central Excise Tax Excise 0.51
2. Income Tax Act, Income 26.25
3. Sales Tax/VAT Sales 1.92
Name of the Statute Period to From where dispute
which the is pending
Central Excise Tax 2003-04 High court of Allahabad
2002-06 Customs, Excise &
2002-06 Tax Appellate Tribunal
Income Tax Act 2009-10 Commissionerof
Income Tax (Appeals)
Sales Tax /VAT 2007-08 Joint Commissioner
* Amount as per demand orders including interest and penalty wherever
indicated in the demand.
(C) Rs. 6.51 Lacs pertaining to Unclaimed Dividend and Unclaimed Share
Application Money due, not deposited with the Investor Education and
Protection Fund till date.
(xi) 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.
(xii) 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, banks
or debenture holders.
(xiii) 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 is not applicable.
(xiv) The provisions of any special statue as specified under paragraph
4 (xiii) of the Order are not applicable to the Company.
(xv) As the Company is not dealing ortrading in shares, securities,
debentures and other investments, paragraph 4 (xiv) of the Order is not
(xvi) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from bank or financial institution.
(xvii) In our opinion and according to the information and explanations
given to us, terms loans were applied for the purpose for which loans
(xviii) 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 investments.
(xix) According to the information and explanation given to us, the
company has not allotted any shares on preferential basis to parties
and companies covered in the Register maintained under section 301
(xx) As the Company has not issued any debentures, paragraph 4 (xix) of
the Order is not applicable.
(xxi) As the Company has not raised any money by way of public issue,
paragraph 4 (xx) of the Order is not applicable.
(xxii) 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 the year ended March 31,2012.
For S.LAL& COMPANY
Sohan Lai, F.C.A
Dated:05.09.2012 M. No.017310