1. We have audited the attached Balance Sheet of KATWA UDYOG LIMITED.
BELGAUM, as at 31st March 2007, Profit and Loss Account and also 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.
2. We conducted our audit in accordance with the 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
3. As required by the Companies [Auditors Report] Order, 2003 as
amended by the Companies (Auditors ReportXAmendment) Order, 2004(the
Order), issued by Central Government of India in terms of sub-
section (4A) of section 227 of the Companies Act, 1956, we annex hereto
a statement on the matters specified in paragraphs 4 and 5 of the said
4. Further, to our comments in the Annexure referred to in paragraph
(3) above, we report that:
i) We have obtained all the information and explanations, 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 law have
been kept by the Company, so far as appears from our examination of the
iii) The Balance sheet, Profit and Loss Account and cash flow
statements dealt with by this report are in agreement with the books of
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; save the compliance with accounting standards 28
on impairment of assets.
v) On the basis of the written representation 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 of the company are
disqualified as on 31st March 2007 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 with significant
accounting policies and other 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;
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 cash flow statement, of cash flows for the year ended
on that date.
STATEMENT ON THE COMPANIES [AUDITORS REPORT] ORDER, 2003
ANNEXURE TO THE AUDITORS REPORT
KATWA UDYOG LIMITED BELGAUM.
Referred to in paragraph 3 of our report of even date: In respect of
i. a. The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b. The Company has physically verified all the assets during the year
in accordance with programme of verification, which in our opinion
provides for physical verification of the Fixed Assets at reasonable
intervals. According to the information and explanations given to us no
material discrepancies were noticed on such verification
c. In our opinion and according to the information and explanations
given to us, the Company has not made any substantial disposal of
assets during the year and therefore the going concern concept is not
d. In our opinion and according the information and explanation given
to us, the company has purchased additional machinery spares amounting
to Rs. 53,98,7517- and deducted modvat credit of Rs. 13,72,458/. Net
amount of Rs.40,26,293/- is shown under schedule Fixed Assets.
In respect of Inventories:
ii. a. As explained to us the management during the year physically
verified the inventories. In our opinion, the frequency of verification
b. In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories
followed by the management were reasonable and adequate in relation to
the size of the company and in the nature of its business
c. In our opinion and according to the information and explanations
given to us, the company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
iii a. The company has not granted loans, secured and unsecured to
Companies, Firms or Other parties, covered in the register maintained
under section 301 of the Companies Act, 1956. Accordingly, sub- clause
(b)(c) and (d) are not applicable b. The Company has not given loan
and advances in the nature of loans to employees
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
regards to purchase of inventory, fixed assets and with regard to the
sale of goods and services. During the course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
v. In our opinion and according to the information and explanations
given to us, the company has not entered into any transactions
requiring entry in the register of contracts under section 301 of the
Companies Act, 1956.
vi. In our opinion and according to information and explanations given
to us, the company has accepted public deposit, and the company has by
and large complied with the provisions of section 58A,58AA of the
Companies Act, 1956 and the Companies (Acceptance of the Deposit )
Rules, 1975 with regard to the deposit accepted from public. No order
has been passed by the Company Law Board or Reserve Bank of India or
any Court or any other Tribunal.
vii. In our opinion, the company has an internal audit system
commensurate with the size and nature of its business, but it needs to
viii. It is reported by the management that the Company has engaged the
services of a qualified Cost Accountant for advising it on the
compliance with the requirements of cost records as required u.s.
209(l)(d) of the Companies Act 1956. The Cost Accountant has issued a
certificate stating that the Company has complied with the requirements
as required u.s. 209(1) (d) of the Companies Act 1956.
ix. According to the records of the company, Provident Fund, Investors
Education and Protection Fund, Employees State Insurance, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess,
Fringe Benefit Tax and other material statutory dues applicable to it
have been generally regularly deposited during the year with the
appropriate authorities. According to the information and explanations
given to us, no undisputed amounts payable in respect of above were in
arrears, as at March 31, 2007 for a period of more than six months form
the date on which they became payable.
x. According to the information and explanations given to us, there are
no dues of Income Tax, Service Tax, Wealth Tax, Sales Tax, Custom Duty,
Excise Tax, and Cess Fringe Benefit Tax, which have not been deposited
on account of any dispute.
xi. The company does not have accumulated losses at the end of the
financial year and had not incurred cash losses during the financial
year covered by our audit and the immediately preceding financial year.
xii. In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
xiii. Based on our examination of the records and the information and
explanation given to us, the Company has not granted any loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities.
xiv. 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 order are not applicable to the Company.
xv. In our opinion, as per the information and explanations given to
us the company has not given any guarantee for the loans taken by
others, xvi. In our opinion, the term loans have been applied for the
purpose which they were raised.
xvii. According to the cash flow statement and other records examined
by us and the information and explanations given to us, on an over all
basis, funds raised on short term basis have prima facie, not been used
during the year for a long term investment ( fixed assets etc) other
than temporary deployment pending application,
xviii. According to the information and explanations given to us, the
company has not made any preferential allotments of shares to parties
and companies covered in the register maintained under section 301 of
xix. According to the information and explanations given to us, during
the period covered by our audit report the company has not issued any
xx. The Company has not raised any money by public issue during the
year, xxi. According to the information and explanation given to us, no
fraud on or by the company has been noticed during the course of our
Place : Belgaum Prabhakar K. Latkan
Date: 13/08/2007 Chartered Accountant