1) We have audited the attached Balance Sheet of KABSONS INDUSTRIES
LIMITED, HYDERABAD (A P) as at 31st March, 2010 and also the Profit and
Loss Account for the year ended on that date annexed thereto and the
cash flow statement for the period ended on that date. 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 missstatement. An audit
includes examing, 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 statements
presentation. We believe that our audit provides a reasonable basis
for our opinion:
3) As required by the Companies (Auditors Report) Order, 2003, issued
by the Central Government of India in terms of Section 227 (4A) of the
Companies Act, 1956, we enclose in theAnnexure 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 report
i) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposes 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 examination of
iii) The Balance Sheet, Profit & Loss account and Cashflow statement
dealt with by this report are in agreement with the books of account.
iv) In our opinion, the Balance Sheet, Profit & Loss account and
Cashflow statement dealt with by this report comply with the Accounting
Standards referred to in sub-section (3C) of Section 211 of the
Companies Act, 1956.
v) On the basis of the written representations received from the
Directors as on 31st March, 2010 and taken on record by the Board of
Directors, we report that, none of the Directors is disqualified as on
31st March, 2010 from being appointed as a Director in terms of Clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
5) a) Interest for the year and for earlier years Rs.6,47,679/- and
Rs.52,29,554/- respectively against Trade
Deposits received from Dealers/Distributors are not provided resulting
in understating the Loss for the year by Rs.6,47,679/- and understating
the current liabilities by Rs.58,77,233/- (Refer Note No.6 of Notes on
b) We draw attention to note no.2 of Notes on accounts in the financial
statements. The companys current liabilities exceeded its current
assets by Rs.565.78 Lakhs as on 31.03.2010. This factor along with the
other matters as setforth in the note referred to, raise substantial
doubt that whether the company will be able to continue as a Going
c) The Company has not complied with the requirements of AS-15
Employee Benefits in respect of gratuity. In view of this, the
liability of the Company in this regard could not be ascertained. Conse
quently, we are unable to comment about the impact of this on the
profit for the year.
6) In our opinion and to the Best of our information and according to
the explanations given to us, the said 1956, in the matter 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 31st March, 2010; ii) In case of the Profit & Loss
account, of the Profit of the company for the year ended on that date;
and iii) In the case of Cashflow statement of the cash flows for the
year ended on the date.
ANNEXURE Statement on the Companies (Auditors Report) Order 2003 Re :
KABSONS INDUSTRIES LIMITED
i) a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b) All the assets have not been physically verified by the management
during the year but there is a regular program of verification which,
in our opinion, is reasonable having regard to the size of the company
and the nature of its assets. No material discrepancies were noticed on
c) During the year, The company had disposed off some of the fixed
assets, In our opinion, the sale of those assets does not affect the
going concern assumption in respect of gas trading activity carried on
by the company.
ii) a) The inventory has been physically verified during the year by
the management. In our opinion, the fre quency of verification is
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in related to the size of
the company and the nature of its business.
c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records have been properly dealt with in the 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
u/s 301 of the Act.
b) The Company had taken interest free loan from two companies and from
a party covered in the register maintained under section 301 of the
companies Act, 1956. The maximum amount involved during the year was
Rs.53.00 Lakhs and the year-end balance of loans taken from such
parties was Rs.53.00 Lakhs.
c) In our opinion, the terms and conditions on which loans have been
taken from companies, and parties listed in the register maintained
under section 301 of the Companies Act, 1956 are not, prima facie,
prejudicial to the interest of the Company.
d) According to the explanations given to us, the lenders have not
specified repayment terms, In view of this we cannot comment upon
whether the payment of principal in regular.
iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the company and the nature of its business with regard
to purchases of inventory, fixed assets and with regard to the sale of
goods and gas. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
v) a) According to the information and explanations given to us, we are
of the opinion that the particulars of contracts or arrangements
referred to in section 301 of the Act have been entered in the register
required to be maintaining under that section and b) In our opinion and
according to the information and explanations given to us, the
transactions made in pursuance of contracts or arrangements entered in
the register maintained under section 301 of the companies Act, 1956
have been made at prices which are reasonable having regard to
prevailing market prices at the relevant time.
vi) The Company has not accepted the deposits from the public within
the meaning of section 58A and 58AA of the Companies Act, 1956 and the
Rules framed thereunder.
vii) The company has no internal audit system.
viii) Central Government has not prescribed maintenance of cost records
under clause (d) of sub-section (1) of the section 209 (1)(d) of the
companies Act, 1956 for the products / items dealt with by the Company.
ix)a) The Company is not regulat in depositing with appropriate
authorities undisputed statutory dues including investor education
protection fund, employees state insurance, sales tax.
b) According to the information and explanations given to us, there are
no dues of sales tax, income tax, customs duty, wealth tax, excise
duty, service tax and cess which have not been deposited on account of
x) In our opinion, the accumulated losses of the company
are more than fifty percent of its networth. The Company has not
incurred cash losses during the financial year covered by our audit and
as well as in the immediately preceeding financial year.
xi) During the financial year covered by our audit the Company had not
borrowed from financial institutions. Hence, clause (xi) of the above
referred order is not applicable.
(xii) The Company has not granted any loans and advances on the basis
of security by way of pledge of shares,debentures and other securities.
xiii) The Company is neither a chit fund nor a nidhi mutual benefit
fund / society. Therefore, the provisions ofclause 4(xiii) of the above
referred Order are not applicable to the company.
(xiv) The Company not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of clause
4(xiv) of the above referred order are not applicable to the company.
(xv) The Company has not given any guarantee for loans taken by others
from banks or financial institutions. xvi) During the year the company
has not availed any term loans from banks or financial institutions.
Accordingly, the provisions of clause 4(xvi) of the above referred
Order are not applicable to the company.
xvii) According to the information and explanations given to us and on
overall examination of the balance sheetm of the company, we report
that no funds raised on short-term basis have been used for long-term
investment. xviii)The Company has not made preferential allotment of
shares to parties and companies covered in the register maintained
under section .301 of the Act during the year.
(xix) The Company has not issued any debentures. Accordingly, the
provisions of Clause 4(xix) of the above referred Order are not
applicable to the company. xx) During the year the company has not
raised money by public issue. Accordingly, the provisions of clause
4(xx) of the above referred Order are not applicable to the company.
(xxi) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For BRAHMAYYA & CO.,
Place: Hyderabad Sd/-
Date : 13-08-2010 (D.SEETHARAMAIAH)
Partner, Membership No.2907