1. We have audited the attached Balance Sheet of MODERN INSULATORS
LIMITED as at 31st March 2007, the Profit & Loss Account and cash flow
statement of the Company for the year ended on that date annexed
hereto. These financial statements arc the responsibility of the
Companys management. Our responsibility is to express an opinion on
these financial statements bused on our audit.
2. 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 the 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 Companies (Auditors Report) Order, 2003 as amended
by Companies (Auditors Report) (Amendment) Order, 2004, issued by the
Central Government of India in terms of Section 227 (4-A) 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:
(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
(iii) The Balance Sheet, Profit & 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 & Loss Account and Cash
Flow Statement dealt with by this report, comply with the accounting
standards referred to in sub-section (3C) of section 2! 1 of the
Companies Act. 1956.
(v) (a) Balances of debtors and creditors are subject to confirmations
and reconciliations, if any.
(Note No. 4 of Schedule 14).
(b) In view of insufficient information from the suppliers regarding
their status as SSI units, amount overdue to such undertakings could
not he ascertained.
(Note. No. 11 of Schedule 14).
(vi) Some of the existing directors of the company are not eligible
from being re- appointed as directors under the proviso to Section
274(1)(g) of the Companies Act. 1956. However. the Company has obtained
an opinion according to which such directors of the Company can
continue to be in office during their tenure and they can also be
re-appointed as directors on the expiry of their tenure. We have been
further informed that the Company has made representation to the
Central Government (Department of Company Affairs) seeking appropriate
exemption from the applicability of the said section.
(vii) in our opinion and to the best of our information and according
to the explanations given to us, the said accounts subject to our
comments in para (v) above and read with 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 Profit & Loss Account, of the profit of the Company
for the year ended on that date and
(c) In the case of Cash Flow Statement, of the cash Hows for the year
ended on that date.
ANNEXURE FORMING PART OF THE AUDITORS REPORT
Referred to in the report of even date of the Auditors to members of
MODERN INSULATORS LIM1TRD.
(i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets except furniture & fixtures for which detailed records are not
(b) As per information and explanations given to us, most of the fixed
assets have been physically verified during the year by management in
accordance with a phased programme of verification at reasonable
intervals. According to the information and explanations given to us,
no material discrepancies were noticed on such verification.
(c) During the year, the company has not disposed off substantial pan
of the fixed assets.
(ii) (a) The inventory has been physically verified, during the year by
the management. In our opinion, the frequency of verification is
(b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed on physical verification between
the physical stocks and the book records were not material.
(iii) According to the information and explanations given to us, the
Company has not granted or taken any loan, secured or unsecured,
to/from the Companies, Firms or other parties listed in the Register
maintained under section 301 of the Companies Act, 1956 and therefore
clause 4(iii) of the order is not applicable to the Company.
(iv) In our opinion and according to the information and explanations
given to us, there arc adequate internal control procedures
commensurate with the size of the company and the nature of its
business for purchases of inventory, fixed assets and for the sale of
goods. During the course of our audit, we have not observed any major
weakness in internal controls.
(v) a) Based on audit procedures applied by us 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. ,
b) In our opinion and according to the information and explanations
given to us, there are no transactions made in pursuance of such
contracts or arrangements exceeding Rupees Five lakhs in respect of any
party during the year.
(vi) The Company has not accepted any deposits from the public during
(vii) In our opinion, the internal audit carried out during the year by
a firm of Chartered Accountants appointed by the company commensurates
with the size of the company and the nature of its business.
(viii) The Central Government has not prescribed the maintenance of
cost records u/s 209(1)(d) of the Companies Act, 1956 for the product
manufactured by the Company.
(ix) (a) According to the records of the company, the company is
regular in depositing with appropriate authorities undisputed statutory
dues including provident fund, investor education and protection fund,
employees slate insurance, income tax, service lax, sales-tax, custom
duty, excise duty and other statutory dues applicable to it and no
undisputed statutory dues as noted above is outstanding for a period of
more than six months from the date they became payable.
(b) According to the information and explanations given to us and as
per the records examined by us, the disputed demand of income tax for
Asst. year 2004-05 for Rs.88.33 hies has not been deposited as the same
is pending before C1T (Appeals)-11 Raj. Jaipur.
(x) The Company does not have accumulated losses as at the end of the
year and it has not incurred any cash losses during the financial year
covered by our audit and the immediately preceding financial year.
(xi) Based on our audit and as per information and explanations given
by the management, there has been no default in repayment of dues to
any financial institution or bank or debenture holders during the year.
(xii) Based on our examination of books of account and 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,
debentures and other securities,
(xiii) The provisions of any special statutes applicable to chit fund,
nidhi or mutual benefit fund/society are not applicable It) the
(xiv) The Company is not dealing or trading in shares, securities,
debentures and other investments and hence requirement of para 4(xiv)
is not applicable,
(xv) As per information and explanations given to us, the Company has
not given any guarantee for loans taken by others from bank or
(xvi) To the best of our knowledge and belief and according to the
information and explanations given to us, no fresh term loans were
obtained by the company during the year.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, we report
that no funds raised on short-term basis have been used for long-term
(xviii) No allotment of shares has been made by the company during the
(xix) During the period covered by our audit report, the Company has
not issued debentures.
(xx) During the year the company has not raised any money by way of
(xxi) Based upon the audit procedures performed and information and
explanations given by the management, no fraud on or by the company has
been noticed or reported during the year.
For S.S. KOTHARI & CO.
Place : Jaipur Partner
Date : 30th June, 2007 Membership No. 10900