We have audited the attached Balance Sheet of OVERSEAS SYNTHETICS
LIMITED, SURAT as at 31st MARCH, 2006, Profit and Loss Account and the
Cash flow statement of the Company for the year ended on that date
annexed hereto. 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.
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
disclosure 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.
1. As required by the Companies (Auditors Report) Order, 2003, issued
by the Department of Company Affairs in terms of Section 227 (4A) of
the Companies Act, 1956, we annex hereto Annexure `A on the matters
specified in paragraph 4 and 5 of the said order.
2. Further to our remark in 1 above, we report as under:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for (he 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 such
(iii) The Balance Sheet and Profit and Loss Account dealt with by the
report are in agreement with the books of accounts;
(iv) In our opinion, the Profit and Loss account and Balance sheet
comply with the Accounting Standards referred to in sub-section (3C) of
section 211 of the Companies Act, 1956, except as stated in Annexure
(v) In our opinion and to the best of our information and according to
the explanations given to us, the accounts give the information
required by the Companies Act, 1956 in the manner so required and give
a true and fair view in accordance with accounting principles generally
accepted in India except as stated in Annexure B.
I. In the case of the Balance Sheet of the Company of the state of
affairs of the Company as at 31st MARCH 2006.
II. In the case of the Profit and Loss account of the toss of the
company for the year ended on that date.
III. In the case of the Cash Flow statement, of the cash flows for the
year ended on that date.
(vi) On the basis of written representation received from the company
as at 31st March, 2006 and taken on record by the Board of Directors,
we report that no director is disqualified from being appointed as
director of the company under clause (g) of sub-section (1) of Section
274 of the Companies Act, 1956
For Natvarlal Vepari & Co.,
Surat, Date: 2 SEP 2006 Partner.
ANNEXURE `A TO AUDITORS REPORT YEAR ENDED: 31-3-2006.
(1) (a) The Company has maintained records showing particulars
including quantitative details and situation of fixed assets. However,
the records have not been updated.
(b) As informed to us, the assets have not been physically verified by
the management during the period covered by the audit report.
(c) During the year the company has disposed of a major part of plant
and machinery. Based on the information and explanation given by the
management we are of the opinion that the sale of the said part of
plant and machinery has not affected the going concern
(2) (a) As informed, inventories have been physically verified by the
management during the year at reasonable intervals.
(b) As informed and explained to us. 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) According to the information and explanations given to us and on
the basis of audit checks carried out by us, the Company has maintained
proper records of inventories. There were no material discrepancies
noticed on physical verification of inventories as compared to book
(3) (a) 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. Accordingly parargraphs
(iii) (a), (b), (c) and (d) of the Order are not applicable.
(b) The Company has taken unsecured loans from 6 parties covered in the
Register, maintained u/s 301 of the Companies Act, 1956 in respect of
transactions in earlier years. Maximum outstanding balance during the
year was Rs 41.25 lacs. The year end balance of loans taken from such
parties was Rs 41.25 lacs.
(c) In our opinion, the terms and conditions including rate of interest
on which loans have been taken from the parties listed in the register
maintained under section 301 are not prima facie prejudicial to the
interest of the company.
(d) In the absence of stipulations regarding repayment of principal, we
are unable to determine whether the Company is regular in its repayment
(e) On account of our observations in Clause (3) (c) above, we are
unable to state whether there is any overdue amount of more than Rupees
one lakh and therefore comment on the steps taken for repayment
(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 with regard to purchase of inventory and fixed asset and for
sale of goods. During the course of our assessment, no major weakness
in internal control has come to our notice.
(5) In respect of transactions entered in the register maintained in
pursuance of Section 301 of the Companies Act. 1956:
(a) On the basis of the audit procedures performed by us, we are of the
opinion that the Company has not updated the register required to be
maintained under section 301 of the companies Act, 1956.
(b) According to the information and explanations given to us and on
the basis of audit checks carried out by us, there were no transactions
exceeding the value of rupees five lakhs in respect of any party during
(6) Although the Company has not invited deposits from the public,
certain amounts were deposited with the Company voluntarily The Company
is required to comply with the provisions of Section 58A, 58AA of the
Companies Act, 1956 or any other relevant provisions of the Act and the
rules framed thereunder.
(7) In our opinion, the Company does not have an internal audit system
commensurate with its size and nature of the business.
(8) According to information and explanations given to us, the Company
has not made and maintained cost records prescribed by the Central
Government under Section 209 (1) (d) of the Companies Act, 1956.
(9) (a) The Company is generally regular in depositing undisputed
statutory dues including income tax, sales tax, wealth tax, custom
duty, excise duty, cess and any other statutory dues within the
prescribed time limits with the appropriate authorities during the year
except, the following dues which have been outstanding for more than
six months as on 31st March, 2006.
Name of the Nature of Amount Due Date Date of
Statute Dues Rs. payment
Companies Unpaid 250,000/- 30.03.2001
Act, 1956 debenture
Employees Employees 310,675/- Pertaining to
Provident Provident 200,909/- YE
Fund Act Fund Act 31.03.2000
Employees Employees 42,447/- Pertaining to
State State 61,285/- Y.E.
Insurance Act Insurance 31.03.2000
Act Dues 31.032001
Sales Tax Sales Tax 8,000/- Pertaining to
(b) According to Information and explanation provided to us, there are
no dues in respect of income tax, sales tax, wealth tax, custom duty,
excise duty, cess which have not been deposited, on account of any
dispute except the following:
Name of the Nature of Amount Period to Forum
Statute Dues Rs. which where
amount dispute is
Central Modvat 782,370/- 31.03.2000 CEGAT
Excise Act, Credit
Central Central 339.426 02.02.1998 High Court
Excise Act, Excise
(10) The Company has accumulated losses at the end of the financial
year which are exceeding fifty percent of its net worth and it has
incurred cash losses during the current financial year and the
immediately preceding financial year.
(11) With reference to repayment of loans taken from banks and
financial institutions, in absence of stipulations, we are unable to
determine whether there is a default in repayment of dues to lenders
(12) The Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(13) According to the information given to us, the Company has not
given any guarantee for loans taken by others from banks or financial
(14) No new tern loan has been taken by the Company during the year.
(15) No long term investment has been made during the year.
(16) The Company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under Section
301 of the Companies Act, 1956.
(17) No debentures have been issued by the Company.
(18) The Company has not raised any money by public issue, during the
(19) According to the information received by us, no fraud on or by the
Company, has been noticed or reported by the Company during the year.
Considering the nature of the present activities carried out, Clauses
(xiii) & (xiv) of paragraph 4 of the Companies (Auditors Report)
Order, 2003 are not applicable to the Company.
For Natvarlal Vepari & Co.,
Surat, Date: 2 SEP 2006 Partner