1. We have audited the attached Balance Sheet of Munjal Showa Limited
(the Company) as at March 31, 2007 and also the Profit and Loss
account and 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 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
3. As required by the Companies (Auditors Report) Order, 2003 (as
amended) issued by the 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 paragraphs 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 account as required by law have
been kept by the Company so far as appears from our examination of
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, 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.
v). On the basis of the written representations received from the
directors, as on March 31, 2007, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 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 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 March 31, 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 the cash flows for the year
ended on that date.
Annexure referred to in paragraph 3 of our report of even date Re:
Munjal Showa Limited
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed assets.
(b) All fixed assets were physically verified by the management in the
previous year in accordance with a planned programme of verifying them
once in three years which, in our opinion is reasonable having regard
to the size of the Company and the nature of its assets. As informed,
no material discrepancies were noted on such verification.
(c) There was no substantial disposal of fixed assets during the year.
2. (a) The management has conducted physical verification of inventory
at reasonable intervals including
at a date nearing or at the year end.
(b) 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.
(c) The Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification carried at
the end of the year.
3. (a) As informed to us, the Company has not granted any loans,
secured or unsecured to comparlies,
firms or other parties covered in the register maintained under Section
301 of the Companies Act, 1956. Therefore clause 4(iii)((b),(c) and
(d)) of the Order are not applicable to the Company.
(e) As informed 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.
Therefore clause 4(iii)((f)and (g)) of the Order are not applicable to
4. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods. As no
services are provided, the clause is not applicable to the extent of
services. During the course of our audit, no major weakness has been
noticed in the internal control system in respect of these areas.
5. (a) According to the information and explanations provided by the
management, we are of the opinion
that the particulars of contracts or arrangements referred to in
Section 301 of the Act that need to be entered into the register
maintained under section 301 have been so entered.
(b) In respect of transactions with parties with whom transactions
exceeding value of Rupees five lakhs have been entered into during the
financial year, because of the unique and specialized nature of the
items involved and absence of any comparable prices, we are unable to
comment whether the transactions were made at prevailing market prices
at the relevant time
6. The Company has not accepted any deposits from the public.
7. The Companys internal audit is undertaken by an independent firm
and the scope and coverage thereof is commensurate with its size and
the nature of its business.
8. We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under section 209(1 )(d) of the Companies
Act, 1956 and are of the opinion that prima facie the prescribed
accounts and records have been made and maintained. We have not,
however, made a detailed examination of the records with a view to
determining whether they are accurate or complete.
9. (a) The Company has been 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, custom duty,
excise duty, cess and other material statutory dues applicable to it
with the appropriate authorities.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees state insurance,
income-tax, wealth-tax, sales-tax, customs duty, excise duty, cess and
other undisputed statutory dues were outstanding, at the year end, for
a period of more than six months from the date they became payable.
(c) According to the records of the Company, there are no dues
outstanding of sales tax, income tax, custom tax, wealth tax, excise
duty and cess on account of any dispute, other than the following:
Name of the statute Nature of dues Amount in Rs. Forum where
dispute is pending
Customs Act, 1962 Interest demanded by 356,047 Assistant
customs authorities Commissioner
10. The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current and
immediately preceding financial year.
11. Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to any bank. The Company
did not have any dues from any financial institution or any outstanding
debentures during the year.
12. According to the information and explanations given to us and
based on the documents and records produced 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.
13. 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 Companies (Auditors Report) Order, 2003 are not applicable to the
14. In respect of Companys investments in various schemes managed by
recognized mutual funds, in our opinion and according to the
information and explanations given to us, proper records have been
maintained of the transactions and contracts and timely entries have
been made therein. These investments have been held by the Company, in
its own name.
15. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
16. Based on information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
17. According to the information and explanations given to us and on
an overall examination of the 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 investment and no long-term funds have been
used to finance short-term assets (excludes permanent working capital).
18. The Company has not made any allotment of shares during the year.
19. The Company did not have any outstanding debentures during the
20. The Company has not raised any money through a public issue during
21. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For S.R. Batliboi & Co.
per Pankaj Chadha
Place : Gurgaon Partner
Date : May 23, 2007 Membership No.: 91813