We have audited the accompanying financial statements of SKY INDUSTRIES
LIMITED, which comprise the Balance Sheet as at March 31, 2013, and the
Statement of Profit and Loss and Cash Flow statement for the year then
ended, and a summary of significant accounting policies and other
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performanceof the Companyinaccordance with the Accounting
Standards referred to in sub-section (3C) of section 211 of the
Companies Act, 1956 (the Act). This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosuresin the financial statements.
The procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Company''s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidencewe have obtainedissufficient and
appropriate toprovide abasis for our audit opinion.
The company has not provided for diminution in the value of investments
in its subsidiary of Rs. 35,60,515/- as at the year end as required by
paragraph 19 of Accounting Standards (AS) 13 Accounting for Investments
issued by the Institute of Chartered Accounts of India. This has
resulted in understatement of loss for the current year and
overstatementof ReservesbyRs. 35,60,515/-.
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India subjecttoabove paragraph:
a) in the case of the Balance Sheet,of the stateof affairsof the
Company asatMarch 31, 2013; and
b) in the case of the Profit and Loss Account,of theLOSSfor the year
ended onthat date;
c) in the case of the Cash Flow statement,of the Cash Flows for the
year endedon that date.
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs4and 5of the Order.
2. Asrequiredbysection 227(3)of the Act,wereportthat:
a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purposeof our
b) in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examinationof those
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the booksof
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and
Cash Flow Statement comply with the Accounting Standards subjecttoabove
note referredtoinsubsection (3C)of section 211 of the Companies Act,
e) on the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in termsof clause (g) of sub-section (1)of
section 274of the Companies Act, 1956.
Referred to in paragraph 1 under the heading of Report on Other Legal
and Regulatory Requirements of our report of even date
1. InregardtoFixed Assets -
(a) The company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets.
(b) As explained to us, fixed assets have been physically verified by
the management at reasonable intervals; no material discrepancies were
(c) Inour opinion the company has not disposed off major partof its
Fixed Assets during the year.
2. In regard to inventories -
(a) The inventories (Excluding stock with 3rd party and material
in-transits) have been physically verified during the year by the
managementat reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, 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) In our opinion and on the basis of our examination of the records,
the Company is generally maintaining proper records of its inventories.
No major material discrepancy was noticed on physical verification of
stocks by the management as compared tobook records.
3. (a) The Company has not granted any loans, secured, unsecured loans
to the companies, firm or other parties covered in the register
maintained under section 301 of the Act. Therefore the provision of
clause 4(iii)(b),(c) and (d) of the said order are not applicableto the
(b) The Company has taken interest free loans from 4 parties covered in
the register maintained under Section 301 of the Companies Act, 1956.
The total amountof such loans received and outstandingasof 31st March
(c) The terms and conditions on which loans have been taken by the
Company are not prejudicial to the interest of the company.
(d) As no terms of repayment have been specified, we are unable to
comment whether the payment of principal is regular in respectof loans
4. In our opinion and according to the information and explanations
given to us, the internal control procedure commensurate with the size
of the company and the nature of its business, for the purchase of
inventories, fixed assets and sale of goods and services need to be
strengthened. During the course of our audit, we have not observed a
continuing failureto correct major weaknessesininternal controls
5. (a) The transactions made in pursuance of contracts of
arrangements, that need to be entered into the register maintained
under Section 301of the Companies Act, 1956 have been recordedinthe
(b) In our opinion and according to the information and explanations
given to us, these transactions in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act 1956 and exceeding the value of Rupees five lacs in
respect of each party during the year have been made at prices which
are prima facie reasonable having regardto the prevailing market
pricesatthe relevant time.
6. In our opinion and according to the information and explanations
given to us, the company has accepted deposits from shareholders
without issue of advertisement and at an interest rate higher the
prescribed limits. The company has not maintained adequate liquid
assets. Hence the company has contravened the provisions of Section
58A, 58AA ofthe Companies Act, 1956andtherulesframed there under.
7. Inouropinion, the internal audit system is not commensurate with
the sizeof the Company and the natureof its business.
8. The company has not maintained cost records as prescribed by the
Central Government under section 209(1)(d) of the Companies Act, 1956
in respect of its products / activities.
9 (a) The Company has been generally regular in depositing undisputed
dues of Provident Fund, Employees State Insurance, Income Tax,
Profession Tax, except CST of Rs.3,32,870/-, Entry Tax of Rs. 49,242/-
& Income Tax of Rs. 33,22,504/- outstanding for more than six months,as
at31st March 2013.
(b) Details o dues o ales Tax,ExciseDuty&Service Tax which have not
been deposited as on 3 March 2013 on account of disputes are given
Nature of Dues Amount in Rs. Period for which Forum where dispute
dispute relates is pending
Income Tax 114896 Asst year 2009-10 CIT(A)
Gujarat VAT 3208752 2006-07 & 2007-08 Commissioner of
CST 125149 2006-2007 Commissioner
of Sales Tax
Cess 3683521 1998-99 & 1999-00 Supreme Court of
10. The Company does not have accumulated losses at the end of the
financial year but it has not incurred cash losses in the current
financial year but incurred cash loss in immediately preceding the
11. Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that, the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security
byway of pledge of shares, debentures and other securities.
13. The Company is not a chit fund or a nidhi /mutual benefit
fund/society Therefore, the provision of this clause of the Companies
(Auditor''s Report) Order, 2003 (as amended) is not applicable to the
14. The Company is not dealing or trading in shares, securities,
debentures or other investments and hence the requirements of Para
4(xiv) are not applicable to the Company.
15. According to the information and explanations given to us, the
Company has given a guarantee for loan taken by a subsidiary of Rs. 2.5
crore from a bank. The terms and conditions thereof are prima facie not
prejudicial to the interest of the company
16. Based on our audit procedures and on the information given by the
management, we report that the company has not raised any term loans
during the year.
17. Based on the information and explanations given to us and on an
overall examination of the Balance Sheet of the Company as at 3 March,
2013, we report that no funds raised on short-term basis have been used
for long-term investment by the Company.
18. Based on the audit procedures performed and the information and
explanations given to us by the management, we report that the Company
has not made preferential allotment of shares during the year to the
parties and companies covered in the Register maintained under Section
301 of the Companies Act 1956.
19. The Company has no outstanding debentures during the period under
20. The Company has not raised any money by public issue during the
21. Based on the audit procedures performed and the information and
explanations given to us, we report that no fraud on or by the Company
has been noticed or reported during the year, nor have we been informed
of such case by the management.
For and on behalf of Sd/-
Thanawala & Company [ V.K. Thanawala ]
Chartered Accountants Proprietor
Firm Reg. No. 110948W Membership No. 15632
Place : Mumbai
Dated : 30/05/2013