We have audited the attached Balance Sheet of Gati Ltd as at 30th June
2010, the annexed Profit and Loss Account and the Cash Flow Statement
of the Company for the year ended on the date, in which are
incorporated the audited accounts of the Coast-to-Coast Division and
the branch in Nepal as audited by other auditors.
1. 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 misstatements. An audit also
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 (as
amended) 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 as we considered appropriate and according to the
information and explanations given to us during the course of audit, we
enclose in the Annexure hereto a statement on the matters specified in
paragraphs 4 & 5 of the said Order.
4. Further to our comments in the Annexure, referred to in paragraph 3
above, we report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
ii) In our opinion, proper books of accounts as required by law have
been kept by the Company so far as appears from our examinations of the
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 appropriately dealt with.
iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account
and returns from the branches.
iv) In our opinion, the Profit and Loss Account, the Balance Sheet and
the Cash Flow statement comply with the accounting standards referred
to in section 211 (3C) of the Companies Act, 1956.
v) On the basis of written representation received from the directors
as on 30th June, 2010 and taken on record by the Board of Directors
none of the directors is disqualified as on 30th June, 2010 from being
appointed as a director under section 274(1) (g) of the Companies Act,
vi) Reference is invited to the following notes on accounts :
a) Note 3 regarding pending dispute with National Aviation Company of
India Limited (NACIL) and claims & counter claims made in this behalf.
Further Rs.2659 lakhs due from NACIL are included in loans and advances
pending realisation. According to the legal opinion received by the
company no liability is contemplated to arise and no provision is
necessary in these accounts in this behalf. We a r e unable to express
an opinion in the matter.
b) Note 7 regarding remuneration paid to the Managing Director and
Whole-Time Director aggregating to Rs.127.79 lakhs which is subject to
the approval of the Central Government and the share holders.
Subject to para (vi)
vii) 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
notes and accounting policies 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 the accounting principles generally
accepted in India:
a) In the case of Balance Sheet of the state of affairs of the Company
as at 30th June, 2010.
b) In the case of Profit and Loss Account, of the profits of the
Company for the year ended on that date and
c) In the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
Annexure to Auditors Report Referred to in paragraph 3 of our reports
of even date.
1. The Company has maintained records showing full particulars
including quantitative details and situation of fixed assets like land,
building, vehicles, plant and machinery, computers etc. We are informed
that a test physical verification of these assets was carried out by
the management during the year and no material discrepancies were
noticed. The management has informed us that in respect of other fixed
assets like furniture and fittings, office equipments, having regard to
their numbers and the numerous locations where these exist, maintenance
of detailed records and reconciliation of their value in general ledger
is nor feasible.
2. During the year the Company has not disposed off a substantial part
of its fixed assets.
3. Physical verification was conducted by the management in respect of
inventories at reasonable intervals. The Company has maintained proper
records of its inventories and no material discrepancies were noticed
on physical verification. The procedures followed by the management for
such physical verification are in our opinion, reasonable and adequate
in relation to the size of the Company and the nature of its business.
4. (a) The Company has during the year granted unsecured loans to two
subsidiaries, which are covered in the register maintained under
Section 301 of the Companies Act, 1956. The maximum amount involved
during the year aggregate to Rs.916 lakhs and the year end balances to
Rs.915 lakhs. There are no stipulations as to the dates for repayment
of principal and interest. However interest is being charged thereon.
(b) In our opinion, the rate of interest and other terms and conditions
of above loans are not prima facie prejudicial to the interest of the
(c) As informed the Company has not taken any loans, secured or
unsecured from companies, firms or other parties covered in the
register maintained under Section 301 of the Act.
5. There is an adequate internal control system commensurate with the
size and nature of the Companys business for the purchase of
inventories, fixed assets and for the sale of services. During the
course of our audit no major weakness has been noticed in the internal
control system, nor we have been informed of any such instance.
6. (a) To the best of our knowledge and belief and according to the
information and explanations given to us, the particulars of contracts
or arrangements that need to be entered into the register in pursuance
of Section 301 of the Act, 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 entered into the register in pursuance of Section 301 of
the Act, have been made at prices which are reasonable having regard to
the prevailing market prices at the relevant time.
7. The Company has complied with the provision of Sections 58A, 58AA
and other relevant provisions of the Companies Act, 1956 and the rules
framed thereunder with regard to deposits accepted from the public.
8. The Company has appointed a firm of Chartered Accountant at Coast-
to- Coast Division to do the internal audit regularly. The in- house
internal audit department of the company conducts internal audit at
other places. The internal audit system is commensurate with the size
and nature of Companys business.
9. The Central Government has not prescribed the maintenance of Cost
records under Section 209 (1)(d) of the Companies Act, 1956 in respect
of any activities of the Company.
10. (a) According to the information and explanations given to us and
the records of the Company examined by us in our opinion, the Company
is generally regular in depositing the undisputed statutory dues
including provident fund, investor education and protection fund,
employees state insurance, income-tax, wealth tax, service tax, customs
duty and other material statutory dues as applicable with the
(b) According to the information and explanations given to us and the
records of the Company examined by us, there are no statutory dues as
at the year end which have not been deposited on account of a dispute.
11. The Company has no accumulated losses as at June 30, 2010 and has
not incurred any cash losses in the financial year ended on that date
or in the immediately preceding financial year.
12. According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank or debenture
holders as at the balance sheet date.
13. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
14. The provisions of any special statue applicable to chitfund /
nidhi/ mutual benefit fund/ societies are not applicable to the
15. In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments. The investments in
shares, securities, debentures etc are held by the Company in its own
16. In our opinion, and according to the information and explanation
given to us, the terms and conditions on which the Company has given
guarantee for loans taken by others from banks or financial
institutions, are not prima facie prejudicial to the interest of the
17. In our opinion, and according to the information and explanations
given to us, on an overall basis the term loans have been applied for
the purpose for which they were obtained.
18. On the basis of an over all examination of the balance sheet of
the Company, in our opinion and according to the information and
explanations given to us, funds raised on short-term basis, have not
been used for the long-term investment.
19. The company has not made any preferential allotment of shares
during the year.
20. There are no secured debentures issued during the year.
21. The company has not raised any money by public issue during the
22. 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
material fraud on or by the Company, noticed or reported during the
year, nor we have been informed of such cases by the management.
For R.S. Agarwala & Co.
Firms Regn. No.: 304045E
Camp : Secunderabad R.S. Agarwala
Date : August 18, 2010 Partner