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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 amount 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 per the requirements of the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 we enclose in Annexure, a statement on the matters specified in paragraph of the said Order.
4. Further to our comments in the Annexure referred to in Para 3 above, we report as follows:
(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 audit;
(ii) In our opinion, proper books of account as required by the law have been kept by the Company so far as it appears from our examination of those books;
(iii) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the Books of Accounts;
(iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable;
(v) On the basis of written representations received from the concerned directors and taken on record by the Board of Directors, we report that none of directors is disqualified as on 30th September, 2012 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956;
(vi) (a) Refer Note No. 33 regarding non-provision in the Company's books in respect of an Interest free Security deposit given by the Company based on an MOU with a body corporate amounting to Rs. 1500.00 Lacs against which the Company is expected to derive benefits in the future years and hence in the management's view the same is fully recoverable, having consequential impact on the Loans & Advances, Provisions and Loss for the year to the extent stated above and;
(b) Note No. 34 regarding capitalization under the fixed assets in respect of expenses incurred on Publicity and Promotion including satellite rights, instead of charging the same to revenue in earlier years, in departure from the recommendations of Accounting Standard- 26, Intangible Assets, on account of the which, fixed assets are overstated to an extent of Rs. 339.72 Lacs.
(vii) Subject to our comments in paragraph 4 (vi) above, 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 the 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 the Balance Sheet, of the State of Affairs of the Company as at 30th September 2012;
(b) In the case of the Statement of Profit and Loss, of the Loss of the Company for the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.
Annexure to the Auditors' Report
(Referred to in paragraph 3 of our report of even date)
In terms of the information and explanations given to us and the books and records examined by us and on the basis of such checks as we considered appropriate, we further report as under:
(i) The Company has updated its Fixed Assets Register to show full particulars, including quantitative details and situation of fixed assets. As explained to us, these fixed assets have been physically verified by the management at reasonable intervals during the year and that no material discrepancies were noticed on such verification.
No significant part of fixed assets has been disposed off by the Company during the year under review.
(ii) During the year, the management has conducted physical verification of inventories comprising of shares and body care products at regular intervals. The procedures of physical verification of inventories followed by the management, in our opinion, is commensurate in relation to the size of the Company and nature of its business. The Company has maintained proper records of inventory. As explained to us no material discrepancies have been noticed upon physical verification conducted by the management.
(iii) According to the information and explanations given to us, 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.
The Company has not granted any loans to any bodies corporate, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 during the year under review.
(iv) In our opinion, there are internal control procedures for the provision of services in the wellness activities. The same are adequate and commensurate with the size of the Company and the nature of its business. During our review, we have not come across any major weaknesses in the internal controls relating to wellness activities prevailing in the Company.
(v) Transactions that need to be entered into with the parties listed in the Register maintained under Section 301 of the Companies Act, 1956 have been updated in the said Register. In our opinion, the said transactions during the year under review have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public within the purview of the directives issued by the Reserve Bank of India and the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder.
(vii) In our opinion, the Company has a formal internal audit system during the year under review, which is commensurate with the size of the Company and the nature of its business.
(viii) As explained to us, the maintenance of cost records has not been prescribed by the Central Government for the Company under Section 209(1)(d) of the Companies Act, 1956.
(ix) As per the records verified by us, the Company is generally regular in depositing the undisputed statutory dues involving Provident Fund, Employees' State Insurance, Income tax, Service Tax and Value Added Tax with the appropriate authorities during the year under review, and there were no outstanding undisputed statutory dues with the Company for a period of more than six months as at the close of the year. The provisions of the statutes governing Wealth Tax, Customs Duty, Investor Education and Protection Fund, Excise Duty and Cess are, as explained to us, not applicable to the Company during the year under review.
As per the records of the Company, except for the disputed dues aggregating to Rs. 58.27 Lacs relating to Income Tax as given below, there are no disputed dues relating to Value Added Tax, Customs duty, Wealth tax, Excise duty. The details of the disputed Income Tax dues before Income Tax authorities are as follows:
Assessment Amount Forum where dispute is pending Year (Rs. in Lacs)
2006-07 50.53 Income Tax Appellate Tribunal
2008-09 7.74 Commissioner of Income Tax (Appeals)
(x) As per the accounts verified by us, the Company's accumulated losses as at the end of the current financial year have not exceeded fifty per cent of its net worth. Also, the Company has incurred cash losses during the current year amounting to Rs. 244.30 Lacs (Previous year - Rs. 102.42 Lacs).
(xi) The Company has availed a vehicle loans from bank and has not made any default in repayment of dues in respect of the said loans taken. The Company has not borrowed from any financial institution nor it has issued any debentures during the year under review.
(xii) As per the records verified by us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) The provisions of special statutes applicable to chit fund / nidhi/ mutual benefit fund/societies are not applicable to the Company during the year under review.
(xiv) In respect of dealings in Shares and securities, proper records have been maintained by the Company for the transactions and timely entries have been made therein. The shares, securities held as investments are in the name of the Company.
(xv) As per the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.
(xvi) No term loans were obtained by the Company during the year under review.
(xvii) Based on the cash flows of the Company, we are of the opinion that the funds raised by the Company on short-term basis have been used only for the purpose intended and not for long-term investment.
(xviii)The Company has not made any preferential allotment of equity shares during the year under review.
(xix) The Company has not issued any debentures and hence no securities are required to be created in respect thereof.
(xx) No money has been raised by way of public issue by the Company during the year under review.
(xxi) As per the books examined by us and based on the explanations given to us no fraud on or by the Company has been noticed or reported during the year.
For Shyam Malpani and Associates Chartered Accountants
Firm Registration No. - 120438W
Place : Mumbai, Membership No. F - 34171
Date : 23rd November 2012