We have audited the attached Balance Sheet of HINDUSTAN EVEREST TOOLS
LTD. as at 31st March, 2007 and the Profit & Loss Account and Cash Flow
for the year ended as 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 amounts and
disclosures in the financial statement. 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
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, we enclose
in the Annexure a Statement on the matters specified in paragraphs 4
and 5 of the said order.
Further to our comments in the Annexure referred to above^, we report
i) We have obtained all the information and explanation which to the
best of our knowledge and belief, were necessary for the purpose of our
ii) In our opinion, proper books of Account as required by the law have
been kept by the Company so far as appears from our examination of
iii) The Balance Sheet, Profit and Loss Account and Cash Flow dealt
with by this report are in agreement with the books of account;
iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash
Flow dealt with by this report comply with the Accounting Standards
referred to in sub-section (3C) of section 211 of the Companies Act,
v) On the basis of written representations received from the directors
as on 31st March, 2007 and taken on record by the Board of Directors,
we report that none of the directors is disqualified as on 31st March
2007, from being appointed as directors in terms of clause (g) of
Sub-section (I) of Section 274 of the Companies Act, 1956.
vi) a) Refer Note No. 9 (b) in Schedule 22 regarding provision of
deferred tax assets of Rs. 46,67,225 (net of reversal of Rs. 34,43,558
for the year) based on future profitability projection made by the
management. However, we are unable to express any opinion on the above
projections and consequent impact, if any, on such deferred tax assets.
b) Refer Note No.13in Schedule22regardingnon- provision of diminution
in value of longterm investment Rs.1,06,049, which in theopininon of
the management is temporary innature.
vii) Subject to our inability to ascertain the related financial
impact, if any, of our comments as given in paragraph (vi) (a) & (b)
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
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 the accounting principles generally accepted in India;
a) In the case of Balance Sheet, of the state of affairs of the company
as at 31st March, 2007 and
b) In the case of Profit and Loss account, of the loss of the company
for the year ended on that date.
c) In the case of Cash Flow Statement, of the cash flows of the Company
for the year ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 3 of our report of even date Re: Hindustan
Everest Tools Ltd.
(i) a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
b) Fixed assets have been physically verified by the Management during
the year. In our opinion, the frequency of physical verification is
reasonable having regard to the size of the Company and nature of its
assets. No material discrepancies were noticed on such verification.
c) The Company has not disposed off substantial part of fixed assets
during the year.
(ii) a) As explained to us inventories were physically verified during
the year by the management at reasonable intervals.
b) In our opinion and according to the information and explanatinos
given to us, the procedures of physical verification of inventory
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanation
given to us, the Company is maintaining proper records of inventory and
no material discrepancies were noticed on physical verification.
(iii) a) According to the information and explanations given to us, the
Company has taken unsequred loan including the previous year from three
Parties (maximum and year end balance Rs.44,47,100) entered in the
register maintained under section 301 of the Companies Act1956.
b) The rate of interest other terms & condition of such loan are prima
facie not prejudical to the interest of the Company.
c) As informed to us, the Company has not granted any loan to parties
covered in the register maintained under section 301 of the Companies
(iv) In our opinion and according to the information and explanations
given to us, there is adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods and
services. During the course of our audit, no major weakness has been
noticed in the internal control.
(v) a) In our opinion and according to the information and explanations
provided by the management, we are of the opinion that the particulars
of contract or arrangement that need to be entered into the register
maintained under section 301 of the Companies Act1956 have been so
b) In our opinion and according to the information and explanations
given to us, there is no transaction of purchase and sale of goods,
materials and services made from the parties covered under section 301
of the Companies Act1956.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the directives issued by the
Reserve Bank of India and provisions of section 58 A and 58 AA of the
Companies Act, 1956 and rules framed there under with regard to the
deposits accepted from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) The Central Government has not prescribed maintenance of cost
records for the Companys products under section 209 (I) (d) of the
Companies Act, 1956.
(ix) According to the records of the Company, the Company is generally
regular in depositing undisputed statuatory dues including provident
fund, Investor education and protection fund, employees state
insurance, income-tax, sales-tax, services tax wealth tax, custom duty,
excise duty, cess and other statuatory dues applicable to it with the
appropriate authorities though there have been delays yet to be
deposited in few cases. There are no undisputed outstanding statutory
dues as at the year end for period of more than six months from the
date they became payable.
b) According to the records of the Company, there are no dues
outstanding of sales tax, income tax, service tax, custom tax, wealth
tax, excise duty and cess on account of any dispute.
(x) The Company has no accumulated losses at the end of the financial
year. And the Company has not incurred cash loss during the current
Financial Year. However, the Company has incurred cash loss in
immediately preceding financial year.
(xi) Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to financial institution
and banks. We have been informed that the Company has not issued any
debenture during the year.
(xii) According to the information and explanations given to us and
based on the documents and records produced to us, the Company has not
granted loans and advances on the basis of security by way of pledge of
shares, debentures and other securities.
(xiii) In our opinion, the company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore, the provisions of clause 4 (xiii) of
the Companies (Auditors Report) Order, 2003 (as amended), are not
applicable to the Company.
(xiv) The Company does not deal or trade in shares, securities,
debentures and other securities.
(xv) According to the information and explanations given to us, the
Company has not given any guarantees in favours of banks / financial
institution for loans taken by others.
(xvi) According to the information and explanations given to us, term
loans taken by the company have been applied for the purpose for which
they were taken.
(xvii) According to the information and explanation given to us, on an
overall basis, as on Balance Sheet date, funds raised on short term
basis have, prima facie, have not been used during the year for long
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained
under-Section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the
year, Hence, question of creation of security or charge does not arise.
(xx) The Company has not raised any money through a public issue during
(xxi) Based on our examination of the books and records of the Company,
carried out in accordance with the generally accepted auditing practice
in India and according to the information and explanations given to us,
no fraud on or by the Company, was noticed or reported during the year.
for SINGHI & CO.
Place : New Delhi B. K. SIPANI
Dated : 29th June, 2007 Partner
Membership No. 88926