1. We have audited the attached Balance Sheet of India Extractions
Limited (the company) as at 31st March 2012, the Statement of Profit
and Loss and cash flow statement for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the company's 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 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 financial
statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the companies (Auditor's Report) Order, 2003, issued
by the central government of India in terms of section 227 (4A) of the
Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraph 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above we report that
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
b) In our opinion, proper books of account as required by law have been
maintained by the Company, so far as appears from our examination of
c) The Balance sheet, Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
sub- section (3C) of Section 211 of the Companies Act, 1956 except for
the matters contained in the paragraph 4(e) below.
e) The Company has during the year incurred Retrenchment Compensation
aggregating to Rs.43,02,523/-, on the termination of the employees on
account of discontinuation of manufacturing operations, the same has
been considered by the Company as Deferred Expenses which is to be
written off over a period of five years. The aggregate net amount of
deferred expenses is overstating the profit by Rs. 39,54,984/-.
f) Subject to our examination and observation in paragraph 4 (e), 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:
i) In the case of the balance sheet, of the state of affairs of the
Company as at 31th March, 2012;
ii) In the case of the statement of profit and loss, of the profit for
the year ended on that date; and
iii) In the case of the Cash Flow statement, of the cash flows for the
year ended on that date.
5. On the basis of the written representations received from the
directors as on 31st March, 2012 and taken on record by the board of
directors, we report that none of the directors is disqualified as on
31s1 March, 2012 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
ANNEXURE REFERRED TO IN PARAGRAPH 3 UNDER THE HEADING REPORT ON OTHER
LEGAL AND REGULATORY REQUIREMENTS OF OUR REPORT OF EVEN DATE TO THE
MEMBERS OF INDIAN EXTRACTIONS LIMITED ON THE FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31st MARCH 2012
(i) Fixed Assets
a) The company has maintained fixed asset register showing full
particulars, including quantitative details and situation of fixed
b) The fixed assets were physically verified during the year by the
Management in accordance with a regular program of verification which,
in our opinion, provides for physical verification of all the fixed
assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
c) During the year the Land, Building, Plant & Machinery of the Company
pertaining to the manufacturing operations has been sold off due to
discontinuance of this manufacturing operations. In our opinion and
according to the information and explanations given to us, substantial
part of fixed assets was been disposed of by the Company during the
year; and such disposal, in our opinion, would not affect the going
concern status of the company in view of implementations of future plans
and new business by the company.
a) The inventory has been physically verified by the management during
the year. In our opinion, the frequency of verification is reasonable.
b) In our opinion, the procedures of physical verification of inventory
followed by the management are adequate in relation to the size of the
Company and the nature of its business.
c) On the basis of our examination of the inventory records, in our
opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
(iii) Loans granted to or taken from related persons
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. Hence clause (b), (c) and (d) are not
applicable to company.
b) The company has taken unsecured loans from an individual covered in
the register maintained under section 301 of the Companies Act, 1956.
At the year end, the outstanding balance of such loan taken aggregated
Rs. 50,000/-, and the maximum amount involved during the year was Rs.
90,50,000/-. In our opinion in respect of loans taken by the company,
the terms & conditions are not prima facie prejudicial to the interest
of the company. There are no stipulations as regards repayment and
(iv) Internal Control
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 for the purchase
of fixed assets and for providing the services. Further, on the basis
of our examination of the books and records of the Company carried out
in accordance with the auditing standards generally accepted in India
and according to the information and explanations given to us, we have
neither , come across nor have been informed of any continuing failure
to correct major weaknesses in the aforesaid internal control system.
(v) Related Party Transactions
(a) In our opinion and according to the information and explanations
given to us, the contracts or arrangements that need to be entered into
the register in pursuance of Section 301 of the Act have been so
(b) In our opinion, and according to the information and explanations
given to us transactions made in pursuance of contracts or arrangements
entered in the register maintained under section 301 of the Companies
Act, 1956 and exceeding the value of Rs. Five lakhs in respect of any
party during the year have been made at prices which are reasonable
having regard to the prevailing market prices M the relevant time.
(vi) Deposits from Public
According to the information and explanation given to us the company
has complied with the provision of section 58A, 58AA or any other
relevant provision of the Companies Act, 1956 and the Rules framed
there under with regard to deposits accepted from public. We are
informed that no Order has been passed by the Company Law Board or the
Reserve Bank of India or any Court or any other Tribunal in this
(vii) Internal Audit
In our opinion, the Company has an internal audit system commensurate
with its size and nature of its business.
(viii) Cost Records
The central government has prescribed maintenance of cost records under
section 209(1) (d) of the Companies Act, 1956 in respect of the
products, manufactured by the company. However, during the year since
the Company has discontinued its manufacturing operations, the same
have not been maintained.
(ix) Statutory Dues
(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, sales-tax, wealth tax, service tax,
customs duty, excise duty, cess and other material statutory dues as
applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the
records of the Company examined by us, there are no dues of income-tax,
sales-tax, wealth tax, service tax, customs duty, excise duty and cess
as at March 31, 2012 which have not been deposited on account of a
(c) According to the information and explanations given to us, details
of dues of sales tax, income tax, customs duty, wealth tax, excise
duty, service tax and cess which have not been deposited as on 31st
March, 2012 on account of any dispute are given below.
Name of Nature of Amount Period to Forum where
Statue the Dues (Rs. In which the dispute is
Lakhs) amount pending
Sales Tax Sales Tax 33.34 A.Y. 1991-92 Gujarat Sales
Act Demands Tax Tribunal,
(x) Net Worth
In our opinion, the accumulated losses of the company are more than
fifty percent of its net worth at the end of the financial year. The
company has incurred cash profit in the end of the current financial
year as well as in the immediately preceding financial year.
(xi) Repayment of dues
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 or debenture
holders as at the balance sheet date.
(xii) Loans granted
The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Accordingly, paragraph 4(xii) of the Order is not applicable.
(xiii) Chit Fund
The provisions of any special statute applicable to chit fund / nidhi /
mutual benefit fund/societies are not applicable to the Company.
(xiv) Investment Company
In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments. Hence, this clause is not
(xv) Guarantee issued
According to the information and explanations given to us, the Company
has not given any guarantee for loans taken by others from banks or
financial institutions during the year.
(xvi) Utilization of term loans
According to the information and explanations given to us, the Company
has not obtained term loans during the year. Hence, this clause is not
(xvii) Utilization of short-term loans
On the basis of an overall examination of the balance sheet of the
Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term
basis which have been used for long- term investment and vice versa.
(xviii) Preferential Allotment
During the year, The Company has made preferential allotment of 90,000
Zero Coupon Redeemable Preference Shares of Rs. 100/- each aggregating
to Rs.90,00,000/- on a private placement and preferential basis to
parties and companies covered in the register maintained under Section
301 of the Act during the year.
The Company has not issued any debentures during the year. Hence, this
clause is not applicable.
(xx) End use of Public Issue
The company has not raised funds by way of public issue and hence this
clause is not applicable.
During the course of our examination of the books and records of the
Company, carried out in accordance with the auditing standards
generally accepted in India, and according to the information and
explanations given to us, we have neither come across any instance of
fraud by the Company, noticed or reported during the year, nor have we
been informed of such case by the management.
For THINGNA & CONTRACTOR
Firm Registration No. 110963W
Membership No. 042562
Date: 24 May, 2012.