We have audited the accompanying financial statements of Sky Industries
Limited which comprise the Balance Sheet as at March 31,2014, 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''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Company''s Management is responsible for the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance of the Company in accordance with the
Accounting Standards notified under the Companies Act, 1956 (the Act)
(which continue to be applicable in respect of Section 133 of the
Companies Act, 2013 in term of General Circular 15/2013 dated 13th
September 2013 of the Ministry of Corporate Affairs) and in accordance
with the accounting principles generally accepted in India. 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 due to fraud or error.
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 disclosures in 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, but not for the
purpose of expressing an opinion on the effectiveness of the Company''s
internal control. 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 evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Thanawala & Co.
In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid 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:
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2014;
b) in the case of the Statement of Profit and Loss Account, of the
PROFIT of the Company for the year ended on that date; and
c) in the case of the Cash Flow Statement, of the Cash Flows of the
company for the year ended on that date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) issued by the Central Government of India in terms of Section
227(4A) of the Act, we give in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, 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 purpose of 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 examination of those
c) the Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
d) in our opinion, the Balance Sheet, the Statement of Profit and Loss,
and the Cash Flow Statement comply with the Accounting Standards
notified under the Act (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circulars
15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs)
e) on the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of Section274(l)(g) of the Act.
Annexure referred to in paragraph 3 of the Report of even date of the
Auditors to the members of M/s Sky Industries Limited on the financial
statements for the year ended 31st March, 2014
1. In regard to Fixed 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
noticed on such verification.
(c) In our opinion the company has not disposed off major part of 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
management at 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 to book 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 applicable to
(b) The Company has taken interest free loans from 16 parties covered
in the register maintained under Section 301 of the Companies Act,
2013. The total amount of such loans received and outstanding as of
31st March 2014 is Rs.7,57,74,603/-.
(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 respect of loans
taken by the company;
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 failure to correct major weaknesses in internal controls
5. (a) The transactions made in pursuance of contracts of arrangements,
that need to be entered into the register maintained under Section 301
of the Companies Act, 1956 have been recorded in the register;
(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 regard to the prevailing market
prices at the 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 The company has not maintained adequate
liquid assets. Hence the company has contravened the provisions of
Section 58A, 58AA of the Companies Act, 1956 and the rules framed there
7. In our opinion, the internal audit system is not commensurate with
the size of the Company and the nature of its business.
8. The company has not maintained cost records as prescribed by the
Central Government under section 209(l)(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 VAT of Rs.5,00,989/-, CST of Rs. 4,9697- Entry
Tax of Rs. 1,37,472/- & Income Tax of Rs. 33,22,504/- outstanding for
more than six months, as at 31st March 2014.
(b) Details of dues of Sales Tax, Excise Duty & Service Tax which have
not been deposited as on 31st March 2014 on account of disputes are
Nature of Dues Amount in Rs. Period for which Forum where dispute
dispute relates is pending
Income Tax 114896 Asst year 2009-10 CJT (A)
Gujarat VAT 3208752 2006-07 & 2007-08 Commissioner of
CST 125149 2006-2007 Commissioner of
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 by
way 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.
1.26 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 31st
March, 2014, 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
Section301 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-
Thanawala & Company
Firm Reg. No. U0948W
Membership No. 15632