We have audited the attached Balance Sheet of PANCHMAHAL STEEL LIMITED
as at 31st March, 2007, the Profit and Loss Account for the year ended
on that date annexed thereto and Cash Flow Statement for the year ended
on that date. 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
disclosures in the 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 as
amended by Companies (Auditors Report) (Amendment) Order, 2004
(together the Order) issued by the Central Government of India, in
terms of Section 227(4A) of the Companies Act, 1956, and on the basis
of such checks of the books and records of the Company as we considered
appropriate and according to the information and explanation given to
us, we set out in the annexure hereto a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
2. Further to our comments in the Annexure referred above, we report
a. 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;
b. 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
c. The Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
d. In our opinion, the Balance Sheet and Profit and Loss Account
comply with the Accounting Standards referred to in sub-section (3C) of
Section 211 of the Companies Act, 1956, to the extent applicable;
e. According to the information and explanations given to us, prima
facie no person appointed as a Director in the Company during the year
under audit was disqualified from being appointed as a Director at the
date of his appointment under clause (g) of sub-section (1) of Section
274 of the Companies Act, 1956 and
f. In our opinion and to the best of our information and according to
the explanations given to us, the accounts, read with 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:
i) in the case of 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 of the
Company 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.
ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF
PANCHMAHAL STEEL LIMITED FOR THE YEAR ENDED 31ST MARCH, 2007.
1. (a) The Company has maintained proper records to show full
particulars including quantitative details and situation of its fixed
(b) The fixed assets of the Company (other than items with third
parties) have been physically verified by the management during the
year and no material discrepancies have been noticed. In our opinion,
the frequency of verification is reasonable.
(c) In our opinion, and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed
off by the Company during the year.
2. (a) The inventory of the Company (excluding items in transit and
with third parties) has been physically verified by the management
during the year. In respect of inventory lying with third parties, they
have substantially confirmed these. In our opinion, the frequency of
verification is reasonable.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and nature of its business.
(c) On the basis of our examination of the inventory records, in our
opinion, the Company has maintained proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to book records were not material.
3. (a) The Company has not granted any loans secured or unsecured, to
companies, firms or other parties covered in the register maintain
under Section 301 of the Act. Accordingly the paragraphs 4(iii)(b),
4(iii)(c), 4(iii)(d) of the Order are not applicable.
(b) The Company has taken unsecured loan from the company covered in
the register maintained under Section 301 of the Act.
(c) In our opinion the rate of interest and other terms and conditions
thereof were prima facie not prejudicial to the interest of the
Company. Repayments of principal and interest are regular as
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 purchases of inventory, fixed assets and for
sale of goods and services. During the course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
5. According to the information and explanations given to us:
(a) We are of the opinion that transactions that need to be entered
into a register in pursuance of Section 301 of the Companies Act, 1 956
have been so entered;
(b) In our opinion, the transactions aggregating during the year to Rs.
Five Lacs or more in respect of each party in pursuance of contracts or
arrangements which are required to be entered in Register maintain
under Section 301 of the Companies Act, 1956, have been made at prices
which are reasonable having regard to the prevailing market prices at
the relevant time.
6. The Company has not accepted deposits from the public and hence the
provisions of Section 58A and 58AA of the Companies Act, 1956 and the
Companies (Acceptance of Deposits) Rules, 1 975 are not applicable.
7. In our opinion, the Companys present internal audit system (a firm
of Chartered Accountants has been appointed for the purpose) as
conducted in phased manner is commensurate with its size and nature of
8. We have broadly reviewed the books of account relating to
materials, labour and other items of cost maintained by the Company
pursuant to the rules made by the Central Government of India for the
maintenance of cost records under Section 209(1 )(d) of the Companies
Act, 1956 and we are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained.
9. According to the information and explanations given to us:
(a) The Company is regular in depositing undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Customs
duty, Cess and other statutory dues with the appropriate authorities.
No undisputed arrears of statutory dues were outstanding as on
31.03.2007 for a period of more than 6 months from the date they become
(b) There are no dues of Sales Tax, Income Tax, Custom Duty, Cess and
Excise Duty which have not been deposited on account of any except
Name of the Nature of Amount
Statute dues (Rs. in lacs)
Customs Act Custom Duty 3.46 plus interest
Period to which the Forum where
amount relates dispute is pending
10. Accumulated losses at the end of the financial year are not in
excess of 50% of the Net Worth of the Company. The Company has also-net
incurred any cash losses during the financial year ended on that date
or in the immediately preceding financial year.
11. According to the records of the Company examined by us and the
information and explanations given to us, the Company has not defaulted
in repayment of its dues as stipulated and sanctioned to any financial
institution, bank or debenture holders during the year.
12. The Company has not granted any loans or advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit
fund/mutual benefit fund/societies are not applicable to the Company.
14. In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
15. In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for the loans
taken by others from banks or financial institutions during the year.
16. In our opinion and according to the information and explanations
given to us and on an overall basis, the term loans have been applied
for the purposes for which they were obtained.
17. On the basis of an overall examination of the Balance Sheet of the
Company, in our opinion and according to the information and
explanation given to us, there are no funds raised on short-term basis,
which have been used for long-term investment and vice versa.
18. The Company has not made any preferential allotment of shares
during the year.
19. The Company has not issued any Debentures during the year.
20. The Company has not raised any money by public issue during the
21. According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
For and on behalf of
K. V. THAKKAR AND CO.
K. V. Thakkar
26th October, 2007. Membership No. 9312