We have audited the attached Balance Sheet of Stone India Limited (the
Company) as at 31st March, 2011 and also the Profit & Loss Account of
the Company for the year ended on that date, annexed thereto and the
cash flow statement for the year ended on that date. These financial
statements are the responsibility of the Company''s 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 any material misstatement. An audit includes
examining, on test basis, evidence supporting the amounts and the
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 of our opinion.
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
order) as amended by the Companies (Auditor''s Report)(Amendment)
Order, 2004 issued by the Central Government in terms of Section 227
(4A) of the Companies Act, 1956 (the Act) and according to the
information and explanations given to us and on the basis of such
checks as we considered appropriate, we state that:
i) a) The Company has maintained proper records to show full
particulars including quantitative details and situation of its fixed
b) As explained to us, the fixed assets of the Company are physically
verified by the management over a phased manner, which we consider
reasonable considering the size of the Company and nature of its
assets. As explained to us such verification has been carried out by
the management and the necessary reconciliation with the book records
was under progress at the year end.
(c) In our opinion, during the year, the company has not disposed off
substantial part of its fixed assets.
ii) a) The inventory has been physically verified by the management
during the year. In our opinion and according to the information and
explanations given to us, the frequency of verification, wherever
carried out, 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 the nature of its business.
c) In our opinion, the Company has maintained proper records of its
inventory and the discrepancies between the physical stock and book
records were not material.
iii) Except for the advances recoverable in respect of expenses for a
wholly owned subsidiary as per the records of the company, it has not
taken/granted any loans, secured or unsecured , to any companies, firms
or other parties covered in the Register maintained under Section 301
of the Act. Advances recoverable as explained are against share
iv) Having regard to the fact that comparative quotations are not
available in respect of certain items of special nature purchased
during the year, 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 with
regard to sale of goods and services. During the course of our audit,
we have not observed any continuing failure to correct major weaknesses
in internal controls.
v) To the best of our knowledge and belief and according to the
information and explanations given to us and records of the company, we
are of the opinion that there is no transaction that needs to be
entered in to the register maintained under section 301 of the Act.
vi) The Company has not received or accepted any deposits during the
vii) The Company has an internal audit system which covers certain
specific areas of operations/processes. In the absence of any reports
in this respect we are unable to comment on the adequacy or otherwise
of the same.
viii) We are informed that Central Government has not prescribed the
maintenance of cost records under Section 209 (1) (d) of the Companies
ix) a) According to the information and explanations given to us and as
per the records of the Company, the Company is regular in depositing
with appropriate authorities undisputed statutory dues including
Provident Fund, Investor Education and Protection Fund, Employees''
State Insurance, Professional Tax, Wealth tax, Custom Duty, Excise
Duty, Cess and other material statutory dues applicable to it except
for ESI including as mentioned in Note No.B 9 of Schedule 19, tax
deducted at Source, income tax, excise duty and sales tax where there
were delays in depositing the dues to appropriate authorities. However,
according to the information and explanations given to us, there is no
undisputed amounts payable in respect of these which were in arrears,
as at 31st March 2011 for a period of more than six months from the
date they became payable.
b) According to information and explanations given to us, there are no
dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty
and Cess which have not been deposited on account of any dispute except
as given below:
Statute Nature Forum where Period to Amount
of Tax dispute is which in Lacs
West Bengal Sales Tax Revisional Board 2004-05 14.30
Central Sales Sales Tax Revisional Board 2003-04,
Tax Act, 1954 and 2005-06
Income Tax Income Tax Appeal to be filed A.Y. 2006-07 13.48
Act, 1961 in the High Court
x) The Company does not have any accumulated losses at the end of the
financial year. The Company has not incurred cash losses in the current
financial year and in the immediately preceding financial year.
xi) According to the information and explanation given to us, the
Company has not defaulted in repayment of dues to banks and financial
xii) 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) In our opinion, the company is not a chit fund or a nidhi mutual
benefit fund/society. Therefore, the provisions of clause 4(xiii) of
the said order are not applicable to the company.
xiv) The Company is not dealing/trading in securities.
xv) According to information and explanations given to us, the company
has not given any guarantee for loans taken by others from banks or
xvi) As per the information and explanations given to us and based on
the documents and records produced to us, in respect of fresh term
loans raised during the year, the Company deployed Rs. 202.81 lacs for
another project and the balance fund has been applied for the purpose
for which they were raised.
xvii) According to the information and explanations given to us and on
overall examination of the Balance Sheet of the company, we report that
funds raised on short-term basis have not been used for long-term
xviii) The Company has not made any preferential allotment of shares to
parties and companies required to be covered in the register maintained
under section 301 of the Act.
xix) The Company does not have any outstanding debentures during the
xx) The Company has not raised any money through a public issue during
xxi) During the course of our examination of books of accounts carried
out in accordance with generally accepted auditing practices in India,
we have neither come across any incidence of fraud on or by the company
nor have we been informed of any such case by the management.
2. Attention is invited to the following Notes to Schedule 19
(a) Rental demands on the Company amounting to Rs.228.97 lacs, pending
decision of the Court exact status of liability is presently not
ascertainable. (Note B 8)
(b) Payment of managerial remuneration amounting to Rs.18.82 lacs for
the year is subject to approval of the Central Government. (Note B7)
3. We further report that overall impact with respect to the Notes
given in paragraph (2) above cannot be ascertained and commented upon
4. Further to the above, we report that:
(a) We except as given in Note B 19 of Schedule 19 have obtained all
the information and explanations, which to the best of our knowledge
and belief were necessary for the purpose of our audit;
(b) The Balance Sheet, the Profit & Loss Account and Cash Flow
Statement dealt with by this Report are in agreement with the books of
(c) In our opinion, proper books of account, as required by law have
been kept by the Company so far as it appears from our examination of
(d) In our opinion, the Profit & Loss Account, Balance Sheet and Cash
Flow Statement prepared by the Company comply with the various
Accounting Standards referred to in Sub-section-3(c) of Section 211 of
(e) On the basis of written representations received from the directors
and taken on record by the Board of Directors, we report that none of
the directors of the Company is disqualified as on 31st March 2011 from
being appointed as a director under Section 274 (1) (g) of the Act;
(f) In our opinion and to the best of our information and according to
the explanations given to us, subject to our remarks as given in para 2
above whereby as given in para 3 above, we are unable to ascertain and
indicate the impact thereof on these accounts and Note B 19 of Schedule
19 regarding non availability of details relating to Micro, Small and
Medium Enterprise Development Act, 2006 and read together with the
other notes thereon, these accounts 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 Balance Sheet, of the State of Affairs of the
Company as at 31st March, 2011;
(b) in the case of Profit & Loss Account, of the profit for the year
ended on that date; and
(c) In the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
For Lodha & Co.,
Firm ICAI Registration No: 301051E
Place : Kolkata H.S.Jha
Date : 2nd May, 2011 Partner
Membership No. 55854