1. We have audited the attached Balance Sheet of Gwalior Chemical
Industries Limited (The Company) as at 31 st March 2009, and Profit &
Loss Account and also the Cash Flow statement for the year ended on
that date annexed thereto, (hereinafter collectively referred as
financial statements). 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 have 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 the management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditors Report) Order 2003 (as
Amended) issued by the Central Government in terms of sub-section (4A)
of section 227 of the Companies Act, 1956 (The Act) and on the basis
of such checks as we considered appropriate and according to the
information and explanation given to us during the course of audit, we
set out in the Annexure, a statement on the matters specified in
paragraphs 4 and 5 of the said order.
4. Further to our comments in the Annexure referred to above, we
Attention is invited to Notes to Accounts no. 23 in schedule 24
regarding definitive agreement entered by the Company for sale of its
Chemical & Windmill Business.
Subject to above,
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
b) In our opinion, proper books of account as required by law have been
kept by the Company so far as it appears from our examination of such
c) The Financial Statements dealt with by this report, are in agreement
with the books of account;
d) In our opinion, and to the bests of our information and according to
the explanation given to us the financial statement dealt with this
Report, comply with the applicable accounting standards referred to in
Section 211 (3C) of the Act;
e) On the basis of written representations received from the directors
and taken on records by the Board of Directors, we report that none of
the Directors of the Company is disqualified as on 31 st March 2009
from being appointed as a director in terms of clause (g) of
sub-section (1) to Section 274 of the Act;
f) In our opinion, and to the best of our information and according to
the explanations given to us, the said Financial Statement read
together with the notes thereon, give the information required by the
Act, in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India;
i. in the case of Balance Sheet, of the state of affairs of the
Company as at 31 st March, 2009 ;
ii. in the case of Profit & Loss Account, of the profit of the Company
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.
ANNEXURE TO THE AUDITORS REPORT
Annexure referred to in Para 3 of our Report of even date on the
financial statements for the year ended 31st March 2009 of Gwalior
Chemical Industries Limited.
Based on the audit procedures performed for the purpose of reporting a
true and fair view of the financial statements of the Company and
taking into consideration the information and explanations given to us
and the books and other records examined by us in the normal course of
our audit. Further, in our opinion and to the best of our knowledge we
report that -
I. (a) The Company has maintained unit wise proper record showing full
particulars including quantitative details and however, locations of
the fixed assets have not been marked in the records. In respect of
furniture and fixtures, office equipment and data processing
equipments, the quantitative details are not recorded and record in
terms of values are only kept.
(b) Some of the fixed assets were physically verified during the year
by the management in accordance with a program of verification, which
in our opinion does not provides for physical verification of all the
fixed assets at reasonable intervals. According to information and
explanation given to us, no material discrepancies were noticed on such
(c) The assets disposed off during the year are not substantial and
therefore do not affect the going concern assumption. However the
Company has entered into a definitive agreement for sale of its
Chemical and Windmill business on a cash and debt free basis on 8th
II. (a) The inventories have been physically verified by management
during the year at reasonable intervals, except materials lying with
third parties, where no confirmations are obtained.
(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 has maintained proper records of inventory. The
discrepancies noticed on physical verification of inventories as
compared to book records were not material and have been properly dealt
in books of account.
III. (a) The Company has not granted any loans, secured or unsecured
to Companies, firms or other parties covered in the register maintained
under section 301 of the Act; and hence clause (b) ,(c) and (d) are not
(b) 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; and hence clause (b) ,(c) and (d) are not
IV. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and the nature of its business, with
regard to for the purchase of inventories and fixed assets and with
regards to the sale of goods and services. In our opinion and according
to the information and explanation given to us, there is no continuing
failure to correct major weakness in the internal controls.
V. (a) In respect of transactions entered in the register maintained
in pursuance of section 301 of the Companies Act 1956, to the best of
our knowledge and belief and according to the information and
explanations given to us, particulars of contracts or arrangements that
needed to be entered into the register have been so entered.
(b) The transactions in pursuance of such contracts or arrangements
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 deposit from public. Accordingly
the provisions of the Clause 4(vi) of the order are not applicable.
VII. In our opinion, the company has an internal audit system
commensurate with the size of the Company and nature of its business.
VIII. According to the explanations given to us and to the best of our
knowledge the Company has not been prescribed by the Central Government
under section 209(1) (d) of the Companies Act, 1956 to maintain cost
IX. (a) According to the information and explanations given to us on
the basis of examination of the books of account, the Company has been
generally regular in depositing undisputed statutory dues including
Provident Fund, Investor Education and Protection Fund, Employees
State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom
Duty, Excise Duty, Cess and other material statutory dues with
appropriate authorities. According to the information and explanation
given to us, the Company did not have any undisputed amounts payable in
this respect at 31st March 2009 for a period of more than six months
from the date they became payable.
(b) According to the information and explanation given to us, dues of
Sales Tax, Entry Tax and excise duty have not been deposited by the
Company with the appropriate authorities on account of disputes as
Name of the Nature of Dues Amount
Statute (Rs. In lacs)
State and Central Tax and Interest 5.79
Sales Tax Acts
Penalty for non 15.07
Submission of forms and
State Entry Tax Act Tax, Interest and Penalty 1.62
for non submission
of forms and other 0.32
disallowances (Deposits 0.52
under dispute 0.83 Lacs)
Central Excise & Cenvat Credit disallowed 7.11
Salt Act by the department
Year to which Forum where dispute
the amount is pending
2001 -02 Appellant Tribunal -
Bhopal (2nd Appeal)
2001-02 Appellant Tribunal -
1995-96 Appellant Tribunal -
2007-08 Commissioner of
Central Excise, Indore
X. The Company does not have any accumulated losses and has not
incurred cash losses during the current year and in the immediately
preceding financial year.
XI. According to the records of the Company examined by us and the
information and explanation given to us, the Company has not defaulted
in repayment of dues to any financial institution or bank as at the
balance sheet date.
XII. According to the information and explanations given to us, the
Company has not granted any loans or advances on the basis of security
by way of pledge of shares, debentures and other securities.
XIII. The Company is not a Chit/Nidhi/Mutual benefit fund/Society and
Clause XIII of the Order is not applicable.
XIV. The Company is not dealing or trading in shares, securities,
debentures and other investments.
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 and according to the information and explanations
given to us and on an overall examination, the term loans of Rs 3333.98
Lacs have not been applied for the purpose for which they were raised.
XVII.On the basis of our examination of the Cash Flow statement and
other records, the funds raised on short-term basis have not been used
for long-term investment.
XVIII. During the period under review the Company has not made any
preferential allotment of shares to parties and companies covered in
the register maintained in pursuance of section 301 of the Companies
XIX. The Company has not issued any secured debentures during the
period under review. Accordingly the provisions of the Clause 4(xix) of
the order are not applicable.
XX. The Company has not raised any money by public issue during the
year. Accordingly the provisions of the Clause 4(xx) of the order are
XXI. No fraud on or by the Company has been noticed or reported during
the period covered by our audit.
For SARDA & PAREEK
CA Sitaram Pareek
Place: Mumbai Partner
Date : 8th June, 2009 Membership No. 16617