1. We have audited the attached Balance Sheet of Mahindra Gesco
Developers Limited as at 31st March, 2007, and the Profit and Loss
Account and the Cash Flow Statement of the Company 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 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 (Auditor's Report) Order, 2003, issued
by the Central Government in terms of Section 227(4A) of the Companies
Act, 1956, we give in the Annexure 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 in paragraph (3)
above, we report that:
(a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
(b) In our opinion, proper books of account as required by law have
been kept by the Company so far as it appears from our examination of
the books.
(c) The Balance Sheet and the Profit and Loss Account dealt with by
this report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement comply with the Accounting Standards referred
to in sub-section (3C) of Section 211 of the Companies Act, 1956.
(e) Without qualifying our opinion, we draw attention to:
Note No. 7(c) of Schedule 21 of the accounts, in respect of. which, we
have relied on management representation regarding realisability of
construction work in progress, project advances and interest accrued
thereon of Rs. 8,658.51 lakhs, on account of certain projects, the
commencement of which has been delayed pending resolution of certain
matters including receipt of appropriate approvals and outcome of the
court cases.
(f) In respect of projects under long term contracts undertaken and/or
financed by the Company [Note Nos. 1(e), 7(a) and 7(b)}, we have relied
upon the management's estimates of the percentage of completion, costs
to completion and the projections of revenues expected from projects
owing to the technical nature of such estimates, on the basis of which
profits/losses have been accounted, interest income accrued and
realisability of the construction work in progress and project advances
determined.
(g) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read with the notes
thereon give the information required by the Companies Act, 1956, in
the manner so required and subject to the matter referred to in
paragraph (f) above, 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, 2007,
ii) in the case of the Profit and Loss Account, of the profit for the
year ended on that date, and
iii) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
5. On the basis of the written representations received from the
Directors a.s on 31st March, 2007, and taken on record by the Board of
Directors, we report that, none of the Directors is 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.
For and on behalf of For and on behalf of
Kalyaniwalla and Mistry B. K. Khare and Co.
Chartered Accountants Chartered Accountants
Viraf R. Mehta Padmini Khare Kaicker
Partner Partner
M. No. 32083 M. No. 44784
Mumbai, 25 April 2007 Mumbai, 25 April 2007
ANNEXURE TO THE AUDITORS' REPORT
Referred to in Paragraph (3) of our report of even date on the accounts
of Mahindra Gesco Developers Limited ended 31st March, 2007.
1. i) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets.
ii) The Company has a program for physical verification of fixed assets
at periodic intervals. In our opinion, the period of verification is
reasonable having regard to the size of the Company and the nature of
its assets. No material discrepancies have been reported on such
verification.
iii) In our opinion, the disposal of fixed assets during the year does
not affect the going concern assumption.
2. The Management has conducted physical verification of inventory at
reasonable intervals. The procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and the nature of its business.
The Company is maintaining proper records of inventory and no material
discrepancies were noticed on physical verification.
3. i) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956.
ii) The Company has taken unsecured loan of Rs. 5,500 lakhs from a
company listed in the register maintained under Section 301 of the
Companies Act, 1956, which was repaid during the year.
iii) In our opinion and according to the information and explanations
given to us, the rates of interest and other terms and conditions on
which the loan was taken by the Company, were not prima facie,
prejudicial to the interest of the Company.
iv) The repayment of principal and interest was regular.
4. 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 the nature of its
business, for the purchases of inventory, fixed assets and for the sale
of goods and services. In our opinion and according to the information
and explanations given to us, there is no continuing failure to correct
major weaknesses in internal control.
5 i) In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in Section 301 of the Act have been entered in the register required to
be maintained under that section, have been so entered.
ii) In our opinion and according to the information and explanations
given to us, having regard to the explanation that many of the items
are of a special nature and their prices cannot be compared with
alternative quotations, the transactions made in pursuance of contracts
or arrangements referred to in Section 301 of the Act, have been made
at prices which are reasonable having regard to the prevailing market
prices at the relevant time.
6. In our opinion and according to the information and explanations
given to us, the Company has not accepted any deposits from the public
within the meaning of Sections 58A and 58AA of the Companies Act, 1956,
and the rules framed thereunder.
7. The Company has an internal audit system, which in our opinion is
commensurate with the size of the Company and nature of its business.
8. As informed to us, the maintenance of cost records has not been
prescribed by the Central Government under Section 209(1)(d) of the
Companies Act, 1956, in respect of the activities carried on by the
Company.
9. i) According to the records of the Company, the Company is generally
regular in depositing undisputed statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees' State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
Duty, Excise Duty, cess and other statutory dues applicable to it with
the appropriate authorities. According to the information and
explanations given to us, no undisputed amounts payable in respect of
Income tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and Excise
Duty were outstanding, at the year end for a period of more than six
months from the date they became payable.
ii) According to the information and explanations given to us, there
are no dues of Sales Tax, Service Tax, Customs Duty, Wealth Tax, Excise
Duty or Cess outstanding on account of any dispute.
10. The Company does not have accumulated losses at the end of the
financial-year and it has not incurred any cash losses in the current
year and in the immediately preceding financial year.
11. According to the information and explanations given to us and based
on the documents and records produced before us, the Company has not
defaulted in repayment of dues to banks.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares and other securities.
13. In our opinion and according to the information and explanations
given to us, the nature of activities of the Company does not attract
any special statute applicable to chit fund and nidhi/mutual benefit
fund/societies.
14. In our opinion, the Company has maintained proper records of the
transactions and contracts of the investments dealt in by the Company
and timely entries have been made therein. The investments made by the
Company are held in its own name except to the extent of the exemption
under Section 49 of the Act.
15. 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, the terms and conditions whereof are
prejudicial to the interest of the Company.
16. As informed to us, the term loans were applied for the purpose for
which the loans were obtained.
17. According to the information and explanations given to us on an
overall examination of the Balance Sheet and Cash Flows of the Company,
we report that the Company has not utilized funds raised on short-term
basis for long term investment.
18. According to the information and explanations given to us, the
preferential allotment of shares to companies covered in the register
maintained under Section 301 of the Companies Act, 1956, has not been
prejudicial to the interest of the Company.
19. The Company did not issue any debentures during the year.
20. The management has disclosed in the annual accounts, the end use of
money raised by the public issue and the same has been verified by us.
21. Based on the audit procedures performed and information and
explanations given by the management, we report that no fraud on or by
the Company has been noticed or reported during the year.
For and on behalf of For and on behalf of
Kalyaniwalla and Mistry B. K. Khare and Co.
Chartered Accountants Chartered Accountants
Viraf R. Mehta Padmini Khare Kaicker
Partner Partner
M. No. 32083 M. No. 44784
Mumbai, 25 April 2007 Mumbai, 25 April 2007
