We have audited the attached Balance Sheet of KAR MOBILES LIMITED as at
March 31, 2008 the Profit and Loss Account for the year ended on that
date and the Cash Flow Statement for the year ended 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. These 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 management as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
I. 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 the Annexure a statement on the
matters specified in Paragraphs 4 and 5 of the said Order;
II. Attention is invited to Note No.7 (a) regarding change in
accounting policy of the Company relating to expenses on voluntary
retirement and (he impact of the same on the accounts for the year.
III. Further to our comments in the Annexure referred to above, we
(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 account as required by 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 Statement
dealt with by this report are in agreement with the books of account;
(iv) In our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow 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 written representations received from the directors
and taken on recordby the Board of Directors, we report that none of
the Directors of the company is disqualified as on March 31, 2008 from
being appointed as a director in terms of clause (g) of sub-section (1)
of Section 274 of the Companies Act, 1956;
(vi) 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
significant accounting policies and notes on accounts attached thereto,
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 the Balance Sheet, of the state of affairs of the
company as at March 31, 2008;
b) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
c) in the case of the Cash Flow statement, of the cash flow of the
company for the year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH I OF OUR AUDIT REPORT OF EVEN DATE TO
THE MEMBERS OF KAR MOBILES LIMITED ON THE ACCOUNTS FOR
THE YEAR ENDED MARCH 31, 2008
1. (a) The company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
(b) We are informed that most of the fixed assets of the company have
been physically verified by the management during the year which, in
our opinion is reasonable having regard to the size of the company and
the nature of assets and discrepancies noticed on such verification,
which are not material have been dealt with in the accounts.
(c) The company has not disposed off substantial part of fixed assets
during the year.
2. (a) We are informed that the inventory of rawmaterials, stores and
spares in the custody of the company are physically verified by the
management on a continuing basis as per a programme of perpetual
inventory and inventories of other items have been physically verified
at the year-end, the frequency of which, in our opinion is reasonable,
having regard to the size of the company and the nature of its
(b) In our opinion and according to the explanations given to us, the
procedures of physical verification of inventory followed by the
management are fairly reasonable and adequate in relation to the size
of the company and the nature of its business and offers scope for
(c) The company is maintaining proper records of inventory and as
informed to us, discrepancies of material nature noticed on physical
verification, by the management, have been adequately adjusted in the
books of accounts.
3. (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.Companies Act, 1956.
(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 Companies Act, 1956.
4. In our opinion and according to the information and explanations
given to. us, there are fairly adequate internal control procedures
commensurate with the size of the company and nature of its business
for the purchase of inventory and fixed assets and for the sale of
goods and offers scope for further improvement.
5. According to the information and explanations given to us, all
transactions which require to be entered in a register maintained
pursuant to Section 301 of the Companies Act, 1956 have been so
entered. Where each of such transactions is in excess of Rs.5 lakhs in
respect of any party, they have been made at cost/negotiated prices and
they either compare favourably with market prices or there are no
6. The company has accepted deposits from the public in earlier years
and the provisions of sections 58A and 58AA of the Companies Act, 1956
and the rules framed there under have been complied with.
7. In our opinion, the company has an adequate internal audit system
commensurate with the size of the Company and the nature of its
8. We have broadly reviewed the records maintained by the company
pursuant to the order issued by the Central Government under Section
209(l)(d) of the Companies Act, 1956, for the maintenance of cost
records in respect of the products of the company and are of the
opinion that prima facie, the prescribed accounts and records have been
made and maintained. We have, however, not made a detailed examination
of these records with a view to determine whether they are accurate or
9 (a) According to the information and explanations given to us and as
per our verification of the. records of the company, the company has
been fairly regular in depositing undisputed statutory dues including
Provident fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Custom Duty, Excise Duty; Cess, Investor Education and
Protection Fund and other statutory dues with the appropriate
authorities during the year to the extent applicable. There are no
arrears of undisputed statutory dues of a material nature outstanding
for a period of more than six months from the date on which they became
(b) According to the information and explanations given to us and as
per our verification of the records of the company, the following
disputed amounts of tax/duty have not been deposited with appropriate
authorities as at March 31, 2008:
Name of the Nature of the Amount
Statute dues (Rs.in thousands)
Bihar Finance Act, 1981 Sales Tax 133
Period to which the Forum where dispute
amount relates is pending
2004 - 2005 Joint Commissioner of
10. There are no accumulated losses at the end of the financial year.
The company has also not incurred cash losses during the year and in
the immediately preceding financial year.
11. According to the information and explanations given to us and as
per our verification of the records of the company, the company has not
defaulted in repayment of dues to the financial institutions and banks.
12. The company has not granted any loans or advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. Since the company is not a chit fund/nidhi/mutual benefit
fund/society, the relative reporting requirements are not applicable.
14. Since the company is not dealing or trading in shares, securities,
debentures or other investments, the relative reporting requirements
are not applicable.
15. According to the information and explanations given to us and as
per the verification of the records of the company, there are no
guarantees given by the company for loans taken by others from banks or
16. At the year end, the Company had obtained a term loan of Rs. 800
Lakhs. Pending utilization funds from the Loan was credited to the cash
credit account of the Company.
17. According to the information and explanations given to us and as
per our verification of the records of the company, on an overall basis
the company has not utilized funds raised on short-term basis for long
18. The company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under Section
301 of the Act.
19. The company has not issued any debentures during the year.
20. The company has not raised any money by public issues during the
21. According to the information and explanations given to us and as
per our verification of the records of the company, no fraud either on
or by the company has been noticed or reported during the year.
ForVARMA & VARMA
Chennai Cherian K Baby
May 23, 2008 Partner