1. We have audited the attached Balance Sheet of KG PETROCHEM LIMITED
as at 31st March 2011, the Profit and Loss Account and also 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 misstatements. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the
company, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
3. As required by the Companies (Auditor''s Report) Order, 2003 issued
by 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 paragraph 4 and 5 of the said order.
4. 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 accounts as required by the law
have been kept by the company as far
as appears from our examination of those books.
iii) The Balance Sheet, Profit and Loss Account, and Cash Flow
Statement dealt with by this report are in agreement with the books of
iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt
with by this report comply with the Accounting Standards referred to in
sub-section (3C) of section 211 of Companies Act, 1956.
v) On the basis of the written representations received from the
directors as on 31st March 2011 and taken on record by the Board of
Directors, we report that none of the director is disqualified from
being appointed as Director in terms of clause (g) of sub-section (1)
of section 274 of the Companies Act 1956ason31stMarch2011.
vi) Attention is drawn that Sales have been accounted for as soon as
material is dispatched from factory gate as per Accounting Policy No.5
of schedule no.20 of the Financial statements.
vii) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information as
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 as at 31st
b) ln the case of 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 flows for the
year ended on that date.
Statement referred to in paragraph (3) of our report of even date to
the members of the KG PETROCHEM LTD. on the accounts for the year ended
31 st March 2011.
(i.) (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
(b) According to the information and explanations given to us, the
fixed assets have been physically verified by the management during the
year in a phased periodical manner, which, in our opinion is
reasonable, having regard to the size of the company and nature of the
assets. No material discrepancies were noticed on such verification.
(c) During the year, Company has not disposed off any substantial
/major part of fixed assets; hence the going concern status of the
company is not affected.
(ii.) (a) As informed to us the inventory has been physically verified
by the management during the year at reasonable intervals. ln our
opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of the inventories followed
by the management are reasonable and adequate in relation to the size
of the Company and nature of its business.
(c) The company is maintaining proper records of the inventory. The
discrepancies noticed by the management on verification between the
physical stocks and the book records were not material.
(iii) (a)to(g) The company has not granted/taken any loans secured or
unsecured to companies, firms or other parties covered in the register
maintained u/s 301 of the Act. Accordingly paragraph (iii) (a) to (g)
is not applicable.
(iv.) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and nature of its business
with regard to the purchase of inventories, fixed assets, other assets
and with regard to sale of goods. During the course of our audit, we
have not observed any major weakness in internal controls
(v.) (a) On the basis of checks carried out by us and according to the
information and explanations given to us, we are of the opinion that
the transactions that need to be entered into the register maintained
under section 301 of the Companies Act, 1956 have been entered.
(b) In our opinion and according to the explanations and information
given to us, the transactions in pursuance of the contracts or
arrangements entered in the register maintained under section 301 of
the companies Act, 1956 and exceeding the value of rupees five lacs in
respect of a party during the year have been made at prices which are
prima facie reasonable having regard to the prevailing market prices at
the relevant time.
(vi) According to the information and explanations given to us, company
has not accepted deposits under provisions of Sections 58A and of the
(vii) In our opinion the company has internal audit system commensurate
with the size and nature of its business.
(viii) According to information and explanation given to us, the
Central Government has not prescribed under Section 209(1 )(d)of the
Companies Act 1956 maintenance of the cost records in respect of
products manufactured by the company.
(ix) (a) According to the records examined by us the company is
generally regular in depositing with appropriate authorities all
applicable undisputed statutory dues including Provident Fund, Investor
Education & Protection Fund, Employees State Insurance, Income Tax,
Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess & any other
statutory dues applicable to it. According to the information and
explanations given to us there were no undisputed amount payable in
respect of Income Tax, Sales Tax, Service Tax, Custom Duty, Excise
Duty, Cess & any other statutory dues were in arrears, as at 31.03.11
for the period of more than six months from the date they became
(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 & cess which have not been deposited on account of
any dispute except the following.
Period to which Forum which
Statue Nature of Amount the amount dispute
Dues (ln Rs) relates (F.Y.) pending
Act, 1961 Income Tax 1,07,026/- 1998-1999 CIT (A)
Central Excise 2001-02 to
Act, 1944 Excise Duty 2,43,190/- (up to Feb-05) CESTAT
(x) There are no accumulated losses at the end of the financial year.
Therefore, the provisions of clause 4 (x) of the Companies (Auditor''s
Report) Order, 2003 are not applicable to the company.
(xi) In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to any
financial institutions or bank.
(xii) According to the information and explanations 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.
(xiii) The company is not a chit fund or a nidhi/mutual benefit
society. Therefore, the provisions of clause 4 (xiii) of the Companies
(Auditor''s Report) Order, 2003 are not applicable to the company.
(xiv) The company is not dealing in or trading in the shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order,
2003 are not applicable to the company.
(xv) 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.
(xvi) In our opinion and according to the information and explanation
given to us, the company has prima facie applied the sum raised on term
loans for the purposes for which the loans were obtained.
(xvii) According to the records examined by us and information and
explanations given to us and on overall examination of Balance Sheet
and Cash Flow Statement of the company, we report that no funds raised
on short-term basis have been used for long-term investments
(xviii) The company has not made any allotment of shares to the parties
covered in register maintained un deletion 301 of the Companies Act,
(xix) The company has not issued debentures during the year.
(xx) The company has not raised any money through public issue during
(xxi) To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the company
has been noticed or reported during the year.
For Kalani& Company
Place: JAIPUR. (K.L. Jhanwar)
Date :28th May 2011 Partner
(M. No. 14080)