1. We have audited the attached Balance Sheet of BEMCO HYDRAULICS LTD
as at 31st March 2008 and also the annexed Profit and Loss Account and
Cash Flow Statement of the Company for the year ended on that date.
These financial statements are the responsibility of the Companys
management. 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
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
3. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government of India in terms of Sub-Section (4A) of
Section 227 of the Companies Act, 1956 and on the basis of such checks
of books and records we considered necessary and according to the
information and explanations given to us, we give below our comments on
the matters specified in paragraph 4 & 5 of the said Order as far as
i. The Company has maintained proper records showing full particulars,
including quantitative details and situation of its Fixed Assets. The
Fixed Assets have been physically verified by the Management during the
year. No material discrepancies were noticed on such verification.
There was no substantial disposal of fixed assets during the year.
a) The management has conducted physical verification of inventory at
reasonable intervals during the year.
b) In our opinion, the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and nature of its business.
c) The Company js maintaining proper records of inventory.
Discrepancies noticed on physical verification as compared to book
record, which were not material, have been properly dealt with in the
books of accounts.
a) As informed, the company has not granted any loan, secured or
unsecured, to companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956
b) The Company has taken loan from four companies and three parties
covered in the register maintained under Section 301 of the Companies
Act, 1956. The maximum amount involved during the year was Rs. 305.31
Lacs and year end balance of such loan taken was Rs 170.33 Lacs.
c) In our opinion, the rate of interest and other terms and conditions
on which loan has been taken from companies and parties covered in the
Register maintained under Section 301 of the Companies Act, 1956 are
not, prima facie, prejudicial to the interest of the Company.
d) The Company is regular in repaying the principal amount as
stipulated and has been regular in the payment of interest.
iv. In our opinion and according to the information & explanation given
to us, there is an adequate internal control system commensurate with
the size of the Company & nature of its business, for the purchases of
inventory and fixed assets and for sale of goods. During the course of
our audit, we have not observed any continuing failure to correct major
weaknesses in internal control system.
(a) According to the information and explanations given to us, we are
of the opinion that the transactions that need to be entered into a
register in pursuance of Section 301 of the Companies Act, 1956 have
been so entered.
(b) In our opinion and according to the information & explanations
given to us, the transactions made in pursuance of such contracts or
arrangements have been made at prices, which are reasonable, having
regard to the prevailing market prices at the relevant time.
vi. In our opinion & according to the information & explanations given
to us, the Company has not accepted any deposit from public during the
vii. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii. We are informed that maintenance of cost records has not been
prescribed by the Central Government under Sec 209(l)(d) of the
Companies Act, 1956.
ix. The Company is regular in depositing undisputed statutory dues
with appropriate authorities.
There were no undisputed statutory dues as at the last day of the
financial year outstanding for a period of more than six months from
the date they became payable. As informed, there are no disputed dues
of sales tax, income tax, customs duty, wealth tax, service tax, excise
duty or cess as at the year-end.
x. The Company does not have accumulated losses at the end of the
financial year. It has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
xi. As per books and records maintained by the Company and according to
the information and explanations given to us, the Company has not
defaulted in repayment of dues to financial institution, banks or to
debenture holders except as under.
Period of DelayNature of Due_Amount Rs. (In lacs)
Less Than 30 DaysInterest On Cash Credit7.78
xii. As informed and explained to us, the Company has not granted any
loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
xiii. In our opinion and according to the information and explanations
given to us, the nature of activities of the Company does not attract
any special statute applicable to chit fund nidhi/mutual benefit
xiv. In respect of Investment in Shares, proper records have been
maintained of the transactions and contracts and timely entries have
been made therein. The shares are held in the name of the company or in
xv. 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 institutions.
xvi. In our opinion, the Term Loan were applied for the purpose for
which they were raised.
xvii. 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 to finance
xviii.The Company has made preferential allotment of 8,00,000 Equity
shares, having face value of Rs. 10/- each and share premium of Rs.
5.25/- per share to parties and companies covered in the Register
maintained under Section 301 of the Companies Act, 1956, the price
being determined as per SEBI guidelines. In our opinion the price at
which shares have been issued is not prejudicial to the interest of the
xix. During the period covered by our audit report, the Company has not
issued any debentures.
xx. The Company has not raised any money from public issue during the
xxi. During the course of our examination of the books and records of
the Company carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud on or by the Company, noticed or reported during the year, nor
have we been informed of such case by the management. Further to
4. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
5. In our opinion, proper books of accounts as required by law have,
been kept by the Company so far as appears from our examination of the
6. The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by the report are in agreement with the books of account.
7. In our opinion, the Profit and Loss Account, Balance Sheet and Cash
Flow Statement, comply with the applicable Accounting Standards
referred to in Section 211 (3C) of the Companies Act, 1956.
8. On the basis of written representations received from the
directors, as on 31st March, 2008, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March, 2008 from being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956.
9. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with
significant accounting policies and 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 accounting principles generally
accepted in India:
a. In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2008;
b. In the case of the Profit and Loss Account, of the Profit for the
year ended on that date. AND
c. In the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
For A.C. BHUTERIA & CO.
Place : Kolkata
Dated : 17/06/2008 (MOHIT BHUTERIA)
Membership No. 56832