1. We have examined the attached Balance Sheet of Taneja Aerospace and
Aviation Limited (the company) as at June 30, 2009 and also the
Profit and Loss account and Cash Flow Statement of the Company for the
period April 01,2008 to June 30,2009. 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 the accounting 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 also
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 or audit provides a reasonable
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
Order to the extent applicable.
4. Further to our comment in the Annexure referred to above, we report
that:
o4.1 As detailed in the Note No. 17 of Schedule 15, the Company has
transferred Rs. 20,00,00,000/- from Revaluation Reserve to Profit &
Loss Account . This amount has been utilised for prior year write offs
/ provisions amounting to Rs. 15,20,94,875/- and current period
adjustments of Rs. 4,26,03,010/- and the balance is carried over.
Above treatment is not in accordance with generally accepted accounting
principles and have effect of overstatement of profit for the period by
Rs. 20,00,00,000/- (Rupees twenty crores)
4.2 The difference between the actual sales tax liability and
discounted value is being treated as revenue expenditure in the year in
which it is paid. This accounting practice is not in accordance with
generally accepted accounting principles. Further, during the period
Company has not accounted the difference between the actual liability
and the discounted value of liability as revenue expenditure.
Consequently, the profit for the period is further overstated by Rs.
36,92,497/- (Refer Note No. 18).
5. Subject to our comments in paragraph 4 above and our comments in
the annexed report,
(a) we have obtained all the information and explanation, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(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 books;
(c) the Balance Sheet, Profit and Loss account and Cash Flow Statement
dealt with by our report are in agreement with the books of account.
(d) in our opinion, the Balance Sheet, Profit and Loss account and Cash
Flow Statement dealt with the report comply with Accounting Standards
referred to in sub-section (3C) of Section 211 of the Companies Act,
1956.
(e) on the basis of written representations received from the
Directors, as on June 30, 2009 and taken on record by the Board of
Directors, we reportthat none of the Directors is disqualified as on
SO1 June, 2009 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 explanation given to us, the said accounts, read with the schedules
thereto and the notes thereon give 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 Balance Sheet, of the state of affairs of the
Company as at June 30,2009.
ii. in the case of Profit and Loss account, of the Profit for the
period ended on that date; and
iii. In the case of Cash Flow Statement, of the cash flows for the
period ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 3 of our report of even date)
(i) a. The company has maintained records showing full particulars,
including quantitative details and situation of fixed assets.
b. According to the information and explanation given to us, the fixed
assets were physically verified by the management in accordance with
the programme of verification, which in our opinion is reasonable
having regard to size of the Company and the nature of its assets. The
discrepancies noticed on physical verification were not material and
have been dealt with the books of account. The Company has made
estimated provision of Rs. 100 lacs for impairment of Fixed Assets.
(Ref. Note No. 17)
c. According to the information and explanations given to us, the
company has not disposed off major part of fixed asset during the
period under audit, which would affect the going concern of the
company.
(ii) a. The company has not produced any physical verification report
of inventory for the period under audit, however physical inventory
arrived at by the management as on June 30,2009 is used as the basis.
b. The company has valued its inventory of raw material, stores and
work in progress at cost without Comparing the same with realizable
value. The company has written off inventory based on managements
estimates as referred to inNoteNo.17.
(iii) In respect of unsecured loans granted to companies covered in
register maintained under section 301 of the Companies Act, 1956 and
according to the information and explanation given to us-
a. During the year, the Company has not granted any advances to
company/companies covered in the register maintained under section 301
of the Companies Act, 1956. Out of advances granted in earlier years,
the amount outstanding as on June 30, 2009 is Rs. 430 lacs.
Further, company has paid additional amount of Rs 670 lacs (previous
year Rs 300 lacs) as Share Application Money to one of the companies
covered in the register maintained under section 301 of the Companies
Act, 1956. Equity shares against the same have been allotted to company
on October 27, 2009 (date after the reporting period) and consequently
it became a subsidiary of the company from that date.
b. As explained to us, the advance is repayable on demand. In our
opinion and according to the information and explanations given to us,
the rate of interest and other terms and conditions on which advance
have been granted to companies, firms or other parties listed in the
register maintained under section 301 of the Companies Act, 1956 are
not, prima facie, prejudicial to the interest of the company.
c. As the advance is repayable on demand, we are unable to comment on
regularity of receipt of principal and interest amount.
d. No loan or interest can be termed as overdue in absence of time of
repayment and thus the question of taking reasonable step for recovery
of principal amount and interest there on does not arise.
e. During the year, the Company has taken advances aggregating to
Rs.3160 lacs from one of the companies covered in the register
maintained under section 301 of the Companies Act, 1956. At the year
end, the aggregate amount outstanding was Rs.995 lacs. The maximum
balance outstanding during the yearisRs.1511 lacs
f. As explained to us, the advance is repayable on demand. In our
opinion and according to the information and explanations given to us,
the rate of interest and other terms and conditions of advance taken by
the company; are prima facie not prejudicial to the interest of the
company;
g. As the advance is repayable on demand, we are unable to comment on
the regularity of repayment of principal and interest amount.
(iv) In our opinion and according to the information and explanations
given to us, there are weaknesses in internal control in stores,
purchase procedure and in accounting of revenue of the company. The
Company needs to take immediate steps to strengthen the internal
control system.
(v) a) To the best of our knowledge and belief and according to the
information and explanations given to us, we are of the opinion that
the transactions that need to be entered into the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
b) In our opinion and according to explanations given to us,
transactions made 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 lakhs have been made at prices
which are reasonable having regard to prevailing market prices at the
relevant time subject to our comments contained in clause (iii) (b).
(vi) As per explanation given to us, the Company has not accepted any
deposits from public to which the provisions of section 58A and 58AA of
the Companies Act, 1956 and the Companies (Acceptance of Deposits)
Rules, 1975 would apply. Therefore, the provisions of clause 4 (vi) of
the Companies (Auditors Report) Order, 2003 are not applicable to the
company.
(vii) The company has appointed an external firm of Chartered
Accountants as internal auditor from October 01, 2008. Scope and area
of checking in relations to internal control and systems needs to be
expanded to bring the internal audit in line with size and complexities
of operations of the company.
(viii) The Central Government has not prescribed the maintenance of the
cost record u/s 209(1) (d) of the Companies Act, 1956 and hence the
provisions of clause 4 (viii) of the Companies (Auditors Report)
Order, 2003 are not applicable to the company.
(ix) a) According to the information and explanations given to us, the
Company has been generally regular in depositing undisputed statutory
dues including provident fund, investor education and protection fund,
income-tax, sales tax, wealth tax, service tax, customs duty, excise
duty, cess and other material statutory dues with the appropriate
authorities during the year,
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of income tax, wealth tax, sales
tax, customs duty, excise duty, cess and other material statutory dues,
were in arrears, as at June 30, 2009 for a period of more than six
months from the date they became payable, except
Name of Nature of Dues Amount Period to
Statute (Rs. In lacs) which it relates
The Income
Tax deducted 9.74 Apr-06to
Tax Act,1961 but not paid
June-07
c) According to the explanation and information given to us, there are
no dues of income tax/sales tax/wealth tax/service tax/custom
duty/excise duty/cess which have not been deposited on account of any
dispute.
(x) The Company does not have any accumulated losses. The company has
not incurred any cash losses during the period covered by our audit and
in the immediately preceding financial year.
(xi) According to the records of the company examined by us and the
information and explanation given to us, the company has not defaulted
in repayment of dues of any financial institutions or bank. The company
is paying the interest on the Bank Loans that have been computed and
provided in the accounts based on restructuring scheme as approved by
banks subject to continuance of compliance of conditions of scheme.
(xii) According to the 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.
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund or a nidhi/mutual benefit
fund/society. Therefore, the provisions of clause 4 (xiii) of the
Companies (Auditors Report) Order, 2003 are not applicable to the
company.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not dealing in or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4 (xiv) of the Companies (Auditors Report) Order,
2003 are not applicable to the company.
(xv) In our opinion and according to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from bank or financial institution. Hence, the provisions of
clause 4 (xv) of the Companies (Auditors Report) Order, 2003 are not
applicable to the company.
(xvi) As per the information and explanations given to us, during the
period Company has taken over a Term Loan on an assignment basis
amounting to Rs 12,00,00,000/- sanctioned by a bank to one of its
subsidiary companies for implementation of Projects of the company. The
loan is secured by deposit kept with the bank by a third party.
Approval from the bank for assignment of loan is awaited. The term loan
was applied for the purposes for which it was obtained.
(xvii) According to information and explanation given to us, and on an
overall examination of the Balance Sheet of the Company, we report that
no funds raised on short-term basis have been used for long-term
investment.
(xviii) According to information and explanation given to us, during
the period covered by our audit report, the company has not made
preferential allotment of equity shares to parties and companies
covered in the Register maintained under section 301 of the Companies
Act, 1956.
(xix) In our opinion and according to the information and explanations
given to us, the Company has not issued any secured debentures during
the period of our audit. Therefore, clause 4 (xix) of the Companies
(Auditors Report) Order, 2003 is not applicable to the company.
(xx) The company has disclosed the end use of the funds raised through
Preferential issue by way of notes to accounts.
(xxi) To the best of our knowledge and belief and 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 Haresh Upendra & Co,
Chartered Accountants,
Haresh B. Shah
Partner
Membership No.; 32208
Pune, December 05,2009
