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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 our opinion.
As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order 2004 (the 'Order) issued by the Central Government of India in terms of Section 227 (4A) of The Companies Act, 1956' of India (the 'Act') 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 explanations given to us, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.
Further to our comments in the annexure referred to 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 purposes of our audit.
b) In our opinion, proper books of accounts as required by law have been kept by the Company, so far as appears from our examination of those books.
c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts.
d) In our opinion, the Balance Sheet and the Profit & Loss Account dealt with by this report comply with the accounting standards referred to in sub-section 3(C) of Section 211 of the Companies Act, 1956.
e) On the basis of the written representations received from the directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together 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 the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012; and
ii. In the case of the Profit & Loss Account, of the profit of the Company for the year ended on that date, and
iii. In the case of the Cash Flow statement of the Cash Flow for the year ended on the date.
Referred to in paragraph (3) of our Report of even date on the statements of Account of as at March 31, 2012
1 (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The fixed assets of the company have been physically verified by the Management during the year. We have been informed that no material discrepancies were noticed on such physical verification.
(c) No substantial part of the fixed assets has been disposed off during the year, which has bearing on the going concern status of the company.
2 (a) The stock of inventory has been physically verified during the year, by the Management. In our opinion, the frequency of verification is reasonable.
(b) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and the nature of its business.
(c) In our opinion and according to the information given to us, the company is maintaining proper records of the inventory and no material discrepancies were noticed on physical verification of the inventory.
3 (a) The company has not granted any unsecured loans to any party covered in the register maintained u/s 301 of the companies act, 1956. And hence the provisions of clause 4(iii) (a),(b),(c) and (d) are not applicable .
(b) In our opinion and according to information and explanation given to us the company had taken interest free unsecured loans from a director covered in the register maintained under section 301 of the Companies Act 1956. Maximum amount outstanding during the year ended 31st March 2012 was Rs. 436 Lacs and the year ended balance was Rs. 39 Lacs.
(c) According to information and explanations provided to us, the terms and conditions of the said unsecured loans are prima facie not prejudicial to the interest of the Company.
(d) According to information provided to us there is no stipulation of time schedule for repayment of principal and hence provision of clause 4(iii) (g) of the order is not applicable.
4 In our opinion and according to information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regards to purchase of inventory and fixed assets and for the sale of inventories.
During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.
5 (a) According to the information and explanation given to us, we are of the opinion that the transactions/particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register maintained under that section. .
(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
6 In our opinion and as per the information and explanation given to us, the Company has not accepted deposits within the meaning of section 58-A or Section 58-AA of the Companies Act,1956 and the Companies Acceptance of Deposit Rules,1975 and hence the provisions of Clause 4(vi) of the order are not applicable to the Company .
7 In our opinion and according to the information and explanations given to us the Company has an internal audit system commensurate with the size and nature of its business.
8 In our opinion and as per the information and explanation given to us, the Central Government has not prescribed maintenance of cost records, Under Section 209(1) (d) of the Companies Act, 1956 for any of the products of the Company. Hence the provisions of clause 4(viii) of the Order are not applicable to the Company.
9 According to the records of the company, the company is not regular in depositing the undisputed statutory dues relating to the contributions under provident fund Act, Employees State Insurance Act and the remittance in respect of TDS, Income Tax And the Fringe Benefit Tax Wherever applicable to it with appropriate authorities. The company is generally regular in depositing statutory tax dues including Excise Duty Customs Duty and other applicable dues with appropriate authorities.
There is no amount payable in respect of the above undisputed dues are in arrears, as at 31st March, 2012 for the period of more than six months from the date on which they become payable due.
According to the information and explanations given to us and the records of the company examined by us there are no dues of income tax, sales tax. Wealth tax, service tax, custom duty, and excise duty which have not been deposited on account of any dispute pending before any forum other than the following amounts:
Serial Name of the Statute Nature of dues Amount No (In lakhs)
1 Pondicherry General Sales Tax Act Turnover Tax 25.89
2 Pondicherry General Sales Tax Act Turnover Tax 84.70
3 Pondicherry General Sales Tax Act Turnover Tax 27.04
4 Kerala General Sales Tax Act Turnover Tax & 84.92 Interest thereon
5 Income Tax Act 1961 Non Deduction of 124.62 Tax Deducted at Source - Disallowance u/s 40(a)(ia) and Deduction u/s 80 IB
6 Income Tax Act 1961 Non Deduction of Tax 275.51 Deducted at Source - Disallowance u/s 40(a)(ia) and Deduction u/s 80 IB
Name of the Statute Period to which Forum where the dispute the amount relates is pending
Pondicherry General Sales Tax Act 2002-2004 Appellate Assistant Commissioner Pondicherry
Pondicherry General Sales Tax Act 2004-2008 High Court, Madras
Pondicherry General Sales Tax Act 1999-2002 High Court, Madras
Keralal General Sales Tax Act 2001-2004 High Court, Kerala
Income Tax Act 1961 2008-2009 Commissioner of Income Tax (Appeals). Chennai
Income Tax Act 1961 2007-2008 Commissioner of Income Tax (Appeals). Chennai
10 In our opinion, The Company does not have accumulated losses as at the end of financial year and has not incurred cash losses in the current financial year and immediately preceding financial year.
11 In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.
12 In our opinion and according to the records of the Company, the Company has not granted any loans & advances on the basis of security by way of pledge of shares, debentures and other securities and hence the provisions of clause 4(xii) of the Order are not applicable to the Company.
13 The company is not a chit fund, nidhi, mutual benefit fund or a society and clause 12 of the order is not applicable. Therefore the provision of clause 4 (xiii) of the Companies (Auditor's report) order, 2003 are not applicable to the company.
14 As the company is not dealing or trading in shares, securities, debentures and other investments so clause (xiv) of the said order is not applicable to the company.
15 According to the information and explanations given to us, the Company has given guarantee for loan taken by others from bank or financial institutions are not prejudicial to the interest of company.
16 In our Opinion & on the Basis of the Review of utilization of funds pertaining to term loan & related information as made available to us, the term loan taken by the company from Sundaram Finance Limited, (Non Banking Financial Institution) of Rs. 1.20/- Crores for the purpose of Machinery have been utilized for working capital purpose.
17 According to the information and explanation given to us, and On the basis of 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.
18 According to the information and explanation given to us, during the year, 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; hence question of issue price of shares prejudicial to interest of the company does not arise.
19 During the year covered by our audit report, the company has not issued any Secured debentures. Hence the creation of security in respect of debenture is not applicable.
20 The Company has not made any invitation to public to subscribe to share of the Company during the financial year 2011-2012.
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 to us, we report that no fraud on or by the company has been noticed or reported during the course or our audit during the year.
For Ramanand & Associates
CA Ramanand Gupta, Partner
Membership No. 103975
Place : Chennai
Date : August 11, 2012