We have audited the attached Balance Sheet of M/s. Blue Blends (India)
Limited, as at 31th March 2008 and also the Profit & Loss Account and
Cash Flow Statement of the Company For the year ended on that date
annexed thereto. 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, 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 amount 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. We report
1. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
2. 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 (he
books of account.
3. The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
4. In our opinion the Balance Sheet, Profit & Loss Account and Cash
Flow Statement dealt with by this report comply with the mandatory
Accounting Standards referred to in Sub Section 3 C of Section 211 of
the Companies Act, 1956.
5. The Company is a Sick Industrial Company within the meaning of
clause (o) of sub-section (1) of Section 3 of the Sick Industrial
Companies (Special Provisions) Act, 1965 and it has been declared so by
the Honble Board for Industrial and Financial Reconstruction ( BIFR)
under the provisions of Sick Industrial Companies (Special Provisions)
Act, 1985 vide their order dated 29 March,2006.
6. In our opinion and on the basis of the information & explanations
given to us and on the basis of (he written representations received
from the Directors and taken on record, none of the directors of the
Company is disqualified as on 31th 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.
7. Attention is drawn to the Note No. 4 of Schedule- M- Notes to the
Accounts regarding non- provision of interest liability of Rs. 1823.84
8. Subject to above, 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 Significant Accounting policies and other notes
thereon, give the information required by the Companies Act, 1956 in
the manner so required and give a true and fair view:
i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31th March, 2008.
ii) In the case of the Profit & Loss Account, of the loss of the
Company for the year ended on the date. and
iii) In the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
9. As required by the Companies (Auditors Report) Order, 2003, issued
by the Central Government of India in terms of Section 227(4A) of the
Companies Act, 1956 and on the basis of such checks of books and
records of the Company as we considered appropriate and according to
the information and explanations given to us during the course of
audit, we further state on the matters specified in paragraphs 4 and 5
of the said Order that:
(i) In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
b) As explained to us, the management during the year has physically
verified the fixed assets in a phased periodica! manner, which in our
opinion is reasonable, having regard to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
c) In our opinion, the Company has not disposed off substantial part of
fixed assets during the year and the going concern status of the
Company is not affected.
(ii) In respect of its inventories:
a. As explained to us, the management at regular intervals during the
year, has physically verified inventories.
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c. The Company has maintained proper records of inventories. As
explained to us, there were no material discrepancies noticed on
physical verification as compared to the book records.
(iii). In respect of loans, secured or unsecured granted or taken by
the Company to/from companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956:
a. The Company has neither granted nor taken any loans during the
year. b In our opinion and according to the information and
explanations given to us, the rate of interest, wherever applicable and
other terms and conditions are prima facie not prejudicial to the
interest of the Company.
c. In respect of loan granted by the Company to three parties, the
loans are interest free and are repayable on demand. In respect of
loans taken by the Company, the loan is interest free and the principal
amount is repayable on demand.
d. There is no overdue amount in respect of loans taken by the
Company. In respect of loans given by the Company, these are repayable
on demand and therefore the question of overdue amounts does not arise.
(iv) In our opinion and according to the information and explanation
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business. During the course of our audit, we have not observed any
major weaknesses in internal controls.
(v) In respect of transactions covered under section 301 of the
Companies Act, 1956:
a. In our opinion and according to the information given to us, the
transactions made in pursuance of contracts or arrangements that needed
to be entered into in 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, where such transactions are in excess of Rs, 5 lakhs in
respect of any party, the transactions have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time.
(vi) The Company has not accepted any deposits from the public
(vii) In our opinion the internal audit system of the Company is
adequate commensurate with its size and nature of its business.
(viii) The Central Government has prescribed maintenance of cost
records under section 209(1 )(d) of the Companies Act, 1956 in respect
of products of the Company. We have broadly reviewed the accounts and
records of the Company in this connection and are of the opinion that
prima facie the prescribed accounts and records have been made and
maintained. However, we have not made any detailed examination of the
(ix) In respect of statutory dues:
a. According to the records of the Company, undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs
Duty, Excise Duty, Cess and other statutory dues have been generally
regularly deposited with the appropriate authorities. According to the
information and explanation given to us, no undisputed amounts payable
in respect of the aforesaid dues were outstanding as at 31st March,
2008 for a period of more than six months from the date of becoming
(x). The Company has accumulated losses of Rs. 12026.15 lakhs. The
Company has incurred cash loss of Rs. 49.70 lacs during the financial
year covered by our audit but there was no cash loss in the immediately
preceding financial year.
(xi) According to the explanations and information given to us the
Company is in default in repayment of dues to certain Financial
Institutions and Banks, settlement of which are under negotiation with
(xii). In our opinion and according to the information and explanation
given to us, no loans and advances have been granted by the Company on
the basis of security by way of pledge of shares, debentures and other
(xiii) In our opinion the Company is not a chit fund or a nidhi /mutual
benefit fund/society. Therefore, clauses 4(xiii) of the Companies
(Auditors Report) Order, 2003 is not applicable to the Company.
(xiv) The Company has maintained proper records of transactions and
contracts in respect of trading in securities, debentures and other
investments and timely entries have been made therein. The Company in
its own name has held all shares, debentures and other investments.
(xv) The Company has given guarantees for loans taken by others from
banks or financial institutions. According to the information and
explanation given to us, we are of the opinion that the terms and
conditions thereof are not prima facie prejudicial to the interest of
(xvi) The Company has not raised any new term loans during the year.
The term loans outstanding at the beginning of the year were applied
for the purposes for which they were raised.
(xvii) According to the information and explanations given to us and on
overall examination of the Balance Sheet of the Company, we are of the
opinion that the Company has repaid certain Term Loans and acquired
some fixed assets out of the sources generated by its business
(xviii) During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) The Company doesnt have any debenture issued during the year
(xx) The Company has not raised any money by way of public issue during
(xxi) In our opinion and according to the information explanations
given to us, no fraud on or by the Company has been noticed or reported
during the year that causes the financial statements to be materially
For P.C. Surana & Co.
Place : Mumbai. Membership No: 39761
Dated : 31st July, 2008.