1. We have audited the attached balance sheet of V-Guard Industries
Private Limited as at 31st March 2007, the profit and loss account and
also the cash flow statement for the year ended on that date, both
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 the 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 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
3. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4 A) 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. Further to our comments in the Annexure referred to above, we
(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 written representations received from the
directors,as on 31st March 2007 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March 2007 from being appointed as a director in terms of
clause(g) of sub-section(l) 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 read together with the
Notes thereon 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 3 Is1 March, 2007;
(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
(Referred to in paragraph 3 of our report of even date)
i) The nature of business of the Company during the year is such that
the provisions of clauses vi, x, xii,
xiii, xiv, xviii to xx of paragraph 4 of the Companies(Auditors
Report)Order,2003 are not applicable to the Company for the year ended
31st March 2007.
ii) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
(b) As explained to us, the Company has a programme of verification of
assets and all assets in accordance with the programme, were verified
during the year. According to the information and explanations given to
us, no material discrepancies were noticed on such verification
(c) In our opinion, the fixed assets disposed off during the year were
not material so as to affect the going concern status of the Company.
iii) (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.
iv) (a) The Company has not granted any loans, secured or unsecured, to
companies, firms or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956.
(b) The company had taken unsecured loans from four parties covered in
the register maintained under section 301 of the Companies Act,
1956.The maximum amount involved during the year was Rs. 1,251.34 lakhs
and the balance outstanding at the year-end was Rs.Nil.
(c) In our opinion, the rate of interest and other terms and conditions
on which loans have been taken from parties listed in the register
maintained under section 301 of the Companies Act, 1956 are not, pritna
facie, prejudicial to the interest of the Company.
(d) The company is regular in repaying the principal amounts as
stipulated and has been regular in the payment of interest.
v) In our opinion, and according to the information and explanations
given to us, there exists an adequate internal control system
commensurate with the size of the Company and the nature of its
business with regard to the purchases of inventory, fixed assets and
with regard to the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to correct major
weaknesses in internal control system of the company.
vi) (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 particulars of all contracts or arrangements 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 the information and explanations
given to us, the 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
in respect of any party during the year have been made at prices which
are reasonable having regard to prevailing market prices at the
vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii) We have broadly reviewed the books of account and records
maintained by the Company in respect of manufacture of PVC electrical
insulated cables pursuant to the rules made by the Central Government
for maintenance of cost records prescribed under Section 209( 1) (d) of
the Companies Act, 1956, and are of the opinion that prima facie, the
prescribed accounts and records are made and maintained. However, we
have not made a detailed examination of those accounts and records to
determine whether they are accurate or complete. To the best of our
knowledge, and according to the information and explanations given to
us, the Central Government has not prescribed the maintenance of cost
records for any other product of the company.
k) (a) According to the information and explanations given to us, the
Company is generally regular in depositing with appropriate authorities
undisputed statutory dues including Provident Fund, Investor Education
Protection Fund, Employees State Insurance, Income tax, Sales Tax,
Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
material statutory dues applicable to it.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth
Tax, Service Tax, Customs Duty, and Excise Duty were in arrears, as at
31st March,2007 for a period of more than six months from the date they
(c) According to the information and explanations given to us, details
of sales tax dues which have not been deposited on account of any
dispute are given below:
Name Period to which Amount Forum where
of Statutes the amount disputed disputed
relates (Rs in lakhs)
Sales Tax Act 1988-89 to 1994-95 30.62 Supreme Court of
-do- 1994-95 1.58 Sales Tax Appellate
-do- 1997-98 10.55 High Court of Kerala.
-do- 1998-99&99-00 9.11 Dy. Commissioner
Karnataka Sales 1998-99 49.00 Karnataka Appellate
Tax Act Bangalore.
Karnataka Value 2005-06 1.32 Commercial tax
Added Tax Act Tumkur check post,
General Sales Tax Act 2002-03 1.52 Dy. Commissioner
Kerala Tax on Entry 2005-06 5.45 High Court of
of goods into Local Kerala, Ernakulam
Areas Act, 1994
x) In our opinion, and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution or bank except the interest on term loans for
March 2007 which is paid subsequently.
xi) In our opinion, the terms and conditions on which the company has
given guarantee for loans taken by others from banks are not
prejudicial to the interest of the company.
xii) In our opinion, the term loans have been applied for the purpose
for which they were raised.
xiii) According to the information and explanations 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
xiv) 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 S.B. Billimoria & Co.
Place : Kochi Partner
Date : 29th May 2007 Membership No. 16399