1. We have audited the attached balance sheet of SNL Bearings Limited,
as at 31st March, 2009, and also the profit and loss account and the
cash flow statement for the year ended on that date annexed thereto.
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.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. These 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 the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said
4. Without qualifying our opinion, we draw attention to note 3 on
schedule 19. Notwithstanding the accumulated losses, the financial
statements have been prepared on a going concern basis having regard to
the reasons stated in the said note.
5. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes 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
(iii) The balance sheet, profit and loss account and cash flow
statement dealt with by this report are in agreement with the books of
(iv) In our opinion, the balance sheet, profit and loss account and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956.
(v) On the basis of the written representations received from the
directors, as on 31st March, 2009, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March, 2009 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956.
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts 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:
(a) in the case of the balance sheet, of the state of affairs of the
company as at 31st March, 2009;
(b) in the case of the profit and loss account, of the profit for the
year ended on that date; and
(c) in the case of the cash flow statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF SNL BEARINGS LIMITED
ON THE ACCOUNTS FOR THE YEAR ENDED 31 ST MARCH, 2009
(referred to in paragraph 4 of our report of even date)
(i) (a) The company has maintained proper records showing full
particulars including quantitative details and situation of fixed
(b) As explained to us, the fixed assets are being physically verified
by the management once in two years. Such verification due as per this
programme was carried out in the previous year. In our opinion, the
frequency of verification is reasonable having regard to the size of
the company and the nature of its assets.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(ii) (a) The inventory has been physically verified during the year by
the management. In our opinion, the frequency of verification is
(b) 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) The company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) (a) The company has not granted any loans, to companies, firms or
other parties covered in register maintained under section 301 of the
Companies Act, 1956. Accordingly, the provisions of clause (iii) (b),
(c) and (d) of the Companies (Auditors Report) Order, 2003
(hereinafter referred to as the said Order) are not applicable to the
(b) The company has taken loans from a company covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
principal amount involved during the year was Rs.650.00 lacs and the
year-end balance of such loans was Rs. 300.00 lacs.
(c) In our opinion, the rate of interest and other terms and conditions
on which loans have been taken from the company listed in the register
maintained under section 301 of the Companies Act, 1956 are, prima
facie, not prejudicial to the interest of the company.
(d) The payment of principal amount and interest in respect of such
loans are as per stipulations (iv) In our opinion and according to the
information and explanations given to us, there is an
adequate internal control system commensurate with the size of the
company and the nature of its business with regard to purchases of
inventory, fixed assets and with regard to sale of goods. As per the
information and explanations provided to us the Company is not involved
in any service activities. During the course of our audit, we have not
observed any continuing failure to correct major weakness in internal
(v) In respect of contracts or arrangements entered in the register
maintained in pursuance of
section 301 of the Companies Act 1956, to the best of our knowledge and
belief and according to the information and explanations given to us:
(a) The particulars of contracts or arrangements referred to in section
301 of the Companies Act, 1956 that need to be entered into the
register, maintained under the said section have been so entered.
(b) The transactions made in pursuance of such contracts or
arrangements and exceeding the value of rupees five lacs in respect of
any party are of a special nature for which there are no alternative
sources available nor are there any similar transactions with other
parties. In the absence of prevailing market prices of such
transactions being produced to us, we are unable to form an opinion on
the reasonableness of prices paid / received.
(vi) The company has not accepted any deposits from the public to which
the provisions of sections 58A, 58AA and any other relevant provisions
of the Companies Act, 1956 and the rules framed there under would
apply. Accordingly, the provisions of clause (vi) of the said Order are
not applicable to the company.
(vii) In our opinion, the internal audit functions carried out during
the year by a firm of Chartered Accountants appointed by the management
have been commensurate with the size of the Company and the nature of
(viii) We have broadly reviewed, without carrying out a detailed
examination, the books of account maintained by the company pursuant to
the Order made by the Central Government for the maintenance of cost
records under section 209(1 )(d) of the Companies Act, 1956 and are of
the opinion that prima facie the prescribed accounts and records have
been maintained. We have, however, net made a detailed examination of
the records with a view to determining whether they are accurate or
(ix) (a) According to the records of the company, undisputed statutory
dues including provident fund, investor education and protection fund,
employees state insurance, income-tax, fringe benefit tax, sales tax,
value added tax, wealth-tax, service tax, customs duty, excise duty,
cess and other material statutory dues applicable to it have generally
been regularly deposited with the appropriate authorities.
(b) According to the information and explanations given to us, there
are no arrears of outstanding undisputed statutory dues as at 31st
March, 2009, for a period of more than six months from the date it
(c) According to the information and explanations given to us, there
are no dues of income- tax, wealth-tax, service tax, sales tax, customs
duty, excise duty and cess which have not been deposited on account of
any dispute as at March 31, 2009 except in respect of certain disputed
dues detailed as under;
Name of Nature of Amount
statute the dues (Rs. In lacs)
Central Sales Sales Tax dues 5.24
Delhi Sales Tax Sales Tax dues 1.45
Delhi Sales Tax Sales Tax dues 2.69
Central Value CENVAT dues 2.99
Excise & Service Tax on 11.71
Service Tax Act Lease rent
Period to which Forum where
the amount relates dispute is pending
2000-01 Joint Commissioner
2000-01 Joint Commissioner
2001-02 to Joint Commissioner
2002-03 Appeals (Delhi)
2002-03 to Commissioner of
(x) In our opinion, the accumulated losses of the company are more than
fifty percent of its net worth. The company has not incurred cash
losses during the financial year covered by our audit and in the
immediately preceding financial year.
(xi) In our opinion and according to the information and explanations
given to us, the company has not defaulted in the repayment of dues to
banks. The Company has not borrowed from any financial institution.
Also, the Company has not issued any Debentures.
(xii) According to the information and explanations given to us, the
company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
(xiii) The company is not a chit fund or a nidhi / mutual benefit fund
/ society. Accordingly, the provi- sions of clause 4(xiii) of the said
Order are not applicable to the company.
(xiv) The company is not dealing in or trading in shares, securities,
debentures and other investments.
Accordingly, the provisions of clause 4(xiv) of the said Order are not
applicable to the company.
(xv) According to the information and explanations given to us, the
company has not given any guarantees for loans taken by others from
banks or financial institutions.
(xvi) According to the information and explanations given to us, in our
opinion, the term loan has been, prima facie, applied by the Company
during the year for the purpose for which the loan was obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, in our
opinion, no funds raised on short term basis have been used for long
(xviii) 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. Accord- ingly, the question of
reporting on whether the price at which such shares have been issued is
prejudicial to the interest of the company does not arise.
(xix) The company has not issued any debentures. Accordingly, the
question of creating a security or charge for debentures does not
(xx) The company has not raised any money by public issues during the
year. Accordingly, the question of disclosure of end use of such monies
does not arise.
(xxi) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit.
For A. F. FERGUSON & CO.
Mumbai : April 22, 2009 Membership No. 17814