I. We have audited the attached Balance Sheet of CANFIN HOMES LIMITED
as at March 31st 2007, the Profit and Loss Account AND Cash Flow
Statement 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.
II. We conducted our audit in accordance with the auditing standards
generally accepted in India. These Standards require that we plan and
perform the audit to obtain a reasonable assurance about whether the
financial statements are free of material misstatements. 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
III. 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, we give in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the said
IV. Further to our comments in the Annexure referred to above, we
1 We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of the
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
those books and proper returns adequate for the purpose of our Audit
have been received from the Branches not visited by us. The Branch
Auditors Reports have been forwarded to us and have been appropriately
dealt with by us in preparing this report;
3. The Balance Sheet and the Profit and Loss Account dealt with by
this report are in agreement with the books of account and the audited
returns received from the Branches.
4. The Balance Sheet and Profit and Loss account and Cash Flow
Statement dealt with by1 this report are prepared in accordance with
the Accounting Standards referred to in sub section (3C) of section 211
of the Companies Act, 1956.
5. On the basis of written representations received by the company
from the directors, as on 31st March 2007, and taken on record by the
Board of Directors, we report that none of the directors are
disqualified as at 31st March 2007 from being appointed as a director
under section 274 (1) (g) of The Companies Act, 1956.
6. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956 in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India;
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2007; and
b) In the case of the Profit and Loss Account, of the prof it of the
Company for the year ended on that date and
c) In the case of Cash Flow Statement, of the cash flow, for the year
ended on that date.
ANNEXURE TO AUDITORS REPORT
(REFERRED TO IN PARAGRAPH (2) OF OUR REPORT OF EVEN DATE)
I. a. The company has maintained proper records showing full
particulars inclusive of quantitative details and situation of fixed
b. The management has physically verified the Fixed assets during the
course of the year and no material discrepancies were noticed on such
c The company has not disposed off any substantial part of the fixed
assets during the year.
II As the company does not have any inventory of goods, the provisions
of Para 4(ii) of the Companies (Auditors Report) Order, 2003 are not
applicable to the Company.
III. a The company has granted loans a single party listed in the
register maintained under Section 301 of
the Companies Act, 1956 amounting to Rs.250 lakhs. The balance
outstanding from the party as at the end of the year is Rs.180.83
b. In our opinion, the rate of interest and other the terms and
conditions on which the loan has been granted are not prima facie
prejudicial to the interest of the company.
c The party is regular in repaying the principal amounts as stipulated
and has been regular in the payment of interest.
d. There is no overdue amount from the said party.
e. The company has not taken any loans secured or unsecured from
companies, firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956.
IV. In our opinion and according to information and explanations given
to us, the internal control system for the purchase of fixed assets and
for sanction, disbursement and recovery of loans given by the company
are adequate and commensurate with the size of the Company and present
nature of its business. During the course of audit we have not observed
any continuing failure to correct major weaknesses in internal
V. (a) According to information and explanation given to us, other
than the transactions reported in
Paragraph(iii)(a) above, there were no contracts or arrangements that
need to be entered in the register maintained under section 301 of the
Companies Act, 1956.
(b) As there are no transactions made during the year in pursuance of
contracts or arrangements entered in the register maintained under
section 301 of the Companies Act, 1956, the provisions of this Para are
not applicable to the Company.
VI. In our opinion and according to the information and explanations
given to us, the company has complied with the provisions of section
58A and 58AA or any other relevant provisions of the Companies Act,
1956 and the rules framed there under to the extent applicable and the
Housing Finance Companies (NHB) Directions, 2001 with regard to the
deposits accepted from the public. The Company Law Board or National
Company Law Tribunal or Reserve Bank Of India or any Court or any other
Tribunal has passed no order.
VII. The Internal Audit is being conducted by Firms of Chartered
Accountants and in our opinion, the scope and coverage of internal
audit is commensurate with size and nature of companys business.
VIII. The Central Government has not prescribed the maintenance of
cost records under section 209(1 )(d) of the Companies Act, 1956 for
IX. a. According to information and explanation given to us, the
Company is regular in depositing undisputed statutory dues including
Provident Fund, Investor Education and Protection Fund, Employees State
Insurance, Income Tax, Wealth Tax, Service Tax, Interest Tax, Cess, and
other statutory dues with the appropriate authorities.
b. According to information and explanation given to us, there are no
undisputed statutory due outstanding as at 31st March 2007 for a period
of more than six months from the date they became payable.
c According to information and explanation given to us, there are no
dues of Income Tax/Service Tax, Cess, which have not been deposited on
account of any dispute.
X In our opinion, the Company has no accumulated losses at the end of
the financial year and has not incurred any cash losses in the current
financial year and in the immediately preceding financial year.
XI. In our opinion and according to information and explanations given
to us, the Company has not defaulted in repayment of its dues to Banks,
Financial Institutions and debenture holders.
XII. According to information and explanations given to us, the
Company has not granted any loans and advances on security of Shares,
Debentures, other securities.
XIII. In our opinion and according to information and explanations
given to us the company is not a Chit Fund, Nidhi or Mutual Benefits
XIV. According to information and explanations given to us the Company
is not dealing or trading in shares, securities, debentures and other
XV. According to information and explanations given to us, the company
has not given a guarantee in respect of loans taken by other companies
from banks and financial institutions.
XVl. In our opinion and according to information and explanations given
to us, the Company has prima facie applied the term loans for the
purpose for which they were obtained.
XVII. According to information and explanation given to us and on an
overall examination of the balance sheet and Cash Flow Statement of the
company, we report that prima facie no funds raised on short-term basis
have been utilized for any long-term investment purposes.
XVIll. According to information and explanation given to us, 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. According to information and explanation given to us, the Company
has created security/charges in respect of debentures issued by it.
XX. According to information and explanation given to us, the Company
has not raised any money from public issues during the year.
XXI. According to information and explanations given to us, no
material fraud on the company or by the company was noticed or reported
during the year. However there have been few cases of loans becoming
doubtful of recovery consequent upon fraudulent misrepresentation by
borrowers, the amounts where of are not material in the context of the
size of the company and the nature of its business.
For K. P. RAO & CO.,
Bangalore VINAY G. RAO
April 28, 2007 PARTNER