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Auditor Report of Butterfly Gandhimathi Appliances Ltd.

Mar 31, 2015

Report on the Financial Statements

1. We have audited the accompanying financial statements of Butterfly Gandhimathi Appliances Limited ("the Company"), which comprises the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

3. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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.

Auditors' Responsibility

4. Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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.

5. 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 judgement, 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 financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, the 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, of the state of affairs of the Company as at 31st March 2015, and its profit and its cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

8. As required by the Companies (Auditor's report) Order, 2015 ('the Order'),issued by the Central Government of India in terms of Sub-Section (11) of section 143 of 'the Act', we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

(a) We have sought and obtained all the information and explanations 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 examina- tion of those books;

(c) The Balance sheet, the Statement of Profit & Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the aforesaid financial statements, comply with the Accounting Standards specified under Section 133 of 'the Act', read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from the Directors as on 31 March 2015, and taken on record by the Board of Directors, none of the Directors are disqualified as on 31 March 2015, from being appointed as a Director in terms of section 164(2) of 'the Act';

(f) With respect to other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to explanations give to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statement - Refer Note 24 to the financial statements.

ii. The Company did not have any long term contracts including derivative contracts for which there were any material fore- seeable losses.

iii. No amount is required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

TO THE MEMBERS OF BUTTERFLY GANDHIMATHI APPLIANCES LIMITED.

(Referred to in our Report of even date)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) These fixed assets are physically verified by the management in a phased manner, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(ii) (a) The inventories have been physically verified by the management during the year. In our opinion, the frequency of physical verification is reasonable in relation to the size of the Company and the nature of its business.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) In our opinion, the Company has maintained proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book stocks were not material and have been properly dealt with in the books of account.

(iii) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of 'the Act'.

(iv) 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 purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weak- ness in the internal control system.

(v) According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause (v) of Para 3 of the Order are not applicable to the Company.

(vi) The Central Government has prescribed maintenance of cost records U/s. 148(1) of 'the Act'. We have broadly reviewed the records maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under the said section and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues payable including Provident Fund ,Employees ' State Insurance, Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Cess and other statutory dues with the appropriate authorities.

(b) The details of the disputed Statutory dues which have not been deposited are as under:

Sl. Amount No Name of the Statute Nature of the Dues (Rs. in Lakhs)

1. Central Excise Act, Excise Duty, Interest and 1006.09 1944 penalty

2. VAT Acts. Sales Tax 115.95

3. ESI Act ESI contribution / 26.05 interest / damages

4. Labour Act Additional Compensation 47.08

Sl. Forum where the dispute No Name of the Statute is pending

1. Central Excise Act, CESTAT, Chennai 1944

2. VAT Acts. Deputy Commissioner (Appeals)

3. ESI Act Principal Labour Court, Chennai 4. Labour Act Principal Labour Court, Chennai

(c) According to the information and explanation given to us, no amount is required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act 1956 and rules made thereunder.

(viii) The Company has no accumulated losses at the end of the financial year and has not incurred cash losses during this financial year and in the immediately preceding financial year.

(ix) On this basis of verification of records and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to Financial Institutions/Banks. The Company has not issued any debentures during the year.

(x) In our opinion and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

(xi) In our opinion, the term loans availed by the Company have been applied for the purpose for which they were obtained.

(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For RUDHRA KUMAR ASSOCIATES Chartered Accountants Registration No.007033S

R.RUDHRA KUMAR Chennai - 600 017 Proprietor Date - 26.05.2015 Membership No. : 019444


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Butterfly Gandhimathi Appliances Limited (the "Company"), which comprise the Balance sheet as at 31st March 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 oT the Companies Act, 1956 (''the Act'') and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal controls 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.

Auditors'' responsibility

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 misstatements.

An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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 auditors consider 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 the 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.

Opinion

In our opinion, and to the best of our information and according to the explanations given to us, the said 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, 2013;

(b) in the case of the Statement of Profit and Loss, 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 j

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), 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'' a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, 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 purposes 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance sheet, Statement of Profit and Loss 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''Act'',

(e) On the basis of written representations received from the Directors as at March 31, 2013, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as at March 31,2013, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the '' Act''.

ANNEXURE ''A'' TO THE INDEPENDENT AUDITORS'' REPORT TO THE

MEMBERS OF BUTTERFLY GANDHIMATHI APPLIANCES LIMITED

(Referred to in Paragraph 1 under ''Report on other Legal and Regulatory Requirements'' section of our Report of even date)

1. In respect of the Company''s fixed assets :

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) These fixed assets are physically verified by the management in a phased manner, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

2. In respect of the Company''s Inventories : /

(a) The Inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable in relation to the size of the Company and the nature of its business.

(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) On the basis of examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. However, the discrepancies noticed on physical verification which were not material, have been properly dealt with, in the books of account.

3. (a) The Company has not granted any loans, secured or unsecured, during the year to Companies, firms or other parties, covered in the register maintained under Section 301 of the ''Act''.

(b) The Company has not taken any loans, secured or unsecured, during the year from Companies, firms or other parties covered in the register maintained under Section 301 of the ''Act''.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, with regard to the purchase of inventories, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

5. In respect of contracts or arrangements entered in the Register maintained U/s 301 of the ''Act'' :

(a) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into the register in pursuance of Section 301 of the ''Act'', have been entered.

(b) The transactions made in pursuance of such contracts or arrangements in excess ofRs.. 5,00,000/- in respect of each party have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time or the prices at which the transactions for similar goods have been made with other parties.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the ''Act'' and the rules framed thereunder.

7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government U/s 209 (1) (d) of the ''Act'' and are of the opinion that prima facie the prescribed cost records have been made and maintained. We have not, however made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a). According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues by way of Provident Fund, Employees'' State Insurance, Sales-tax, Income-tax, Value Added Tax, Customs duty, Excise duty, Cess and other statutory dues applicable to it with the appropriate authorities.

(b). There were no disputed dues payable on account of Income-tax, Wealth tax, Customs duty, Value Added Tax, Cess and other material statutory dues at the year end, for a period of more than six months from the date they became payable. However, disputed dues in respect of Central Excise and Employees State Insurance aggregating Rs.. 37.48 lakhs have not been deposited on account of disputes which are contested in appeals and are pending before Madras High Court and Principal Labour Court, Chennai. /

10. The Company has no accumulated losses and has not incurred cash losses during this financial year and in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution/banks, during the year.

12. 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 provisions of any special statute applicable to a chit fund / nidhi / mutual benefit fund / society are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion, and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion, the term loans were applied during the year for the purpose for which the loans were obtained.

17. According to the information and explanation given to us and on an overall examination of the Balance Sheet and Fund flow statement of the Company, in our opinion, the funds raised on short term basis during the year have prima facie not been used during the year for long term investments.

18. The Company has not made any preferential allotment of equity shares during the year to companies or parties covered in the register maintained u/s 301 of the ''Act''.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by way of public issues during the year.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For RUDHRAKUMAR ASSOCIATES

Chartered Accountants

Registration No : 007033S

Chennai 600 017 R.Rudhrakumar

Date : 30th May, 2013 Proprietor

Membership No.019444


Mar 31, 2012

1. We have audited the attached Balance Sheet of Butterfly Gandhimathi Appliances Limited, as at 31 st March 2012, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. 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.

2. We conducted our audit in accordance with generally accepted auditing standards 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, evidences 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 our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure 'A' a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, 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 purposes 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 this 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 by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act, to the extent applicable;

e. On the basis of written representations received from the Directors as on 31 st March 2012 and taken on record by the Board of Directors, we report that no Director of the Company is disqualified as on 31 st March, 2012 from being appointed as a Director under clause (g) of sub-section (1) of Section 274 of the Act; and

£ In our opinion and to the best of our information and according to the explanations given to us, they said financial statements read together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India.

1) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2012.

it) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on 31st March, 2012, and

iii) in the case of Cash Flow statement, of the cash flows for the year ended on that date.

1. (a) The Company has maintained proper records showing foil particulars including quantitative details and situation of fixed assets.

(b) These fixed assets are physically verified by the management in a phased manner, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies between the book records and foe physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

2. (a) The Inventory has been physically verified by foe management during the year. In our opinion, foe frequency of verification is reasonable in relation to foe size of foe Company and foe nature of its business.

(b)In our opinion, foe procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to foe size of foe Company and foe nature of its business.

(c) On foe basis of examination of inventory records, in our opinion, foe Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records which have been properly dealt with in foe books of account were not material.

3. (a) The Company has not granted any loans, secured or unsecured, during foe year to Companies, firms or other parties, covered in foe register maintained under section 301 of the Act.

(b) The Company has not taken any loans, secured or unsecured, during foe year from Companies, firms or other parties covered in foe register maintained under Section 301 of the Act.

4. In our opinion and according to foe information and explanations given to us, there are adequate internal control systems commensurate with foe size of foe Company and the nature of its business, with regard to foe purchase of inventories, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

5. (a) In our opinion and according to foe information and explanations given to us, foe transactions that need to be entered into foe register in pursuance of Section 301 of foe Act, have been entered.

(b) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to foe prevailing market prices at foe relevant time or the prices at which the transactions for similar goods have been made with other parties.

6. The Company has not accepted any deposits from foe public within foe meaning of Section 58A and 5 8 AA of the Act and the rules framed there under.

7. In our opinion, foe Company has an internal audit system commensurate with its size and nature of its business. '

8. We have broadly reviewed foe cost records maintained by foe Company pursuant to foe Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government from this year U/s 209 (1) (d) of the 'Act' and are of the opinion that prima facie the prescribed cost records have been made and maintained.

9. (a). According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues by way of Provident Fund, Employees' State Insurance, Sales-tax, Income- tax, Value Added Tax, Customs duty, Excise duty, Cess and any other statutory dues with the appropriate authorities. ,

(b). There were no disputed dues payable on account of Income-tax, Wealth tax, Customs duty, Value Added T ax and Cess at the year end, for a period of more than six months from the date they became payable. However, disputed dues in respect of Central Excise and Employees State Insurance aggregating Rs.44.74 lakhs have not been deposited on account of disputes which are contested in appeals and are pending before Madras High Court and Principal Labour Court, Chennai.

10. The Company has no accumulated losses and has not incurred cash losses during this financial year and in the immediately preceding financial period.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institutions/banks, during the year.

12. 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 provisions of any special statute applicable to a chit fund / nidhi / mutual benefit fund / society are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion, and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. In our opinion, the term loans were applied for the purpose for which the loans were obtained.

17. According to the information and explanation given to us and on an overall examination of the Balance Sheet and Fund flow statement of the Company, in our opinion, the funds raised on short term basis during the year have not been used for long term investments.

18. The Company has not made any preferential allotment of shares during the year.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by way of public issues during the year.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For RUDHRAKUMAR ASSOCIATES

Chartered Accountants

RegistrationNo:007033S

Chennai - 600 017. R.RUDHRAKUMAR

Date: 20th July, 2012 Proprietor

Membership No.0019444


Mar 31, 2011

1. We have audited the attached Balance Sheet of Gandhimathi Appliances Limited, as at 31s1 March 2011, and the related Profit and Loss Account and Cash Flow Statement for the nine months period ended on that date annexed thereto. 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.

2. We conducted our audit in accordance with generally accepted auditing standards 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, evidences supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles user 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 our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given-to us, we give in the Annexure 'A' a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, 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 purposes 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 this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Prof it 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 Act, to the extent applicable;

e. On the basis of written representations received from the Directors as on 31 st March 2011 and taken on record by the Board of Directors, we report that no Director of the Company is disqualified as on 31st March, 2011 from being appointed as a Director under clause (g) of sub-section (1) of Section 274 of the Act. and

f. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India.

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2011.

ii) in the case of the Profit and Loss Account, of the profit of the Company for the nine months period ended on 31 st March, 2011, and

iii) in the case of Cash Flow statement, of the cash flows for the period ended on that date.

ANNEXURE 'A' TO THE AUDITORS' REPORT TO THE MEMBERS OF GANDHIMATHI APPLIANCES LIMITED

(referred to in Paragraph of 3 of our Report of even date)

1. (a) The Company has maintained proper records showing full particulars including quantitative

details and situation of fixed assets.

(b) These fixed assets are physically verified by the management in a phased manner, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the period.

2. (a) The Inventory has been physically verified by the management during the period. In our

opinion, the frequency of verification is reasonable in relation to the size of the Company and the nature of its business.

(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) On the basis of examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records which have been properly dealt with in the books of account were not material.

3. (a) The Company has not granted any loans, secured or unsecured, during the period to

Companies, firms or other parties, covered in the register maintained under section 301 of the Act.

(b) The Company has not taken any loans, secured or unsecured, during the period from Companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business, with regard to the purchase of inventories, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

5. (a) In our opinion and according to the information and explanations given to us, the transactions

that need to be entered into the register in pursuance of Section 301 of the Act, have been entered.

(b) The transactions made in pursjance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time or the prices at which the transactions for similar goods have been made with other parties. ,

6. The Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Act and the rules framed thereunder.

7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

8. In our opinion and 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 under clause (d) of sub-section (1) of section 209 of the Act, for any of the products manufactured by the Company during the period under audit.

9. According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues by way of provident fund, employees' state insurance, sales-tax, Income-tax, customs duty, excise duty and income tax deducted at source with the appropriate authorities though there has been a slight delay in few cases and to the extent' not deposited/paid as at 31st March, 2011 is Rs.Nil/- for a period exceeding six months from the date they became payable.

Payment of Income-tax for the Assessment year(s) 2010-11 and 2011 -12 has not been made, in view of proposed merger of an Associate Company Gangadharam Appliances Limited with the Company, for which, the Hon'ble Board for Industrial and Financial Reconstruction (BIFR) has granted 'in principle' approval, as the Company is advised of its entitlement to the tax benefits conferred U/s 72A of the Income-tax Act, 1961 resulting in zero tax liability for the Company for the fiscal year 2009-10 arid 2010-11 corresponding to those two assessment years. However, such tax benefits can be availed by the Company only upon BIFR passing its order duly approving the said merger.

10. The Company neither has accumulated losses as at the end of the period ended on 31st March, 2011 nor has incurred cash losses during the period and in the immediately preceding period.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to the banks, during the period.

12. We are of the opinion that the Company has maintained adequate records where the Company has granted loans and advances on the basis of security by way of pledge of shares, and other securities.

13. The provisions of any special statute applicable to a chit fund / nidhi / mutual benefit fund / society are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion, and according to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the period.

16. In our opinion, the term loans were applied for the purpose for which the loans were obtained.

17. According to the information and explanation given to us and on an overall examination of the Balance Sheet and Fund flow statement of the Company, in our opinion, the funds raised on short term basis during the period have not been used for long term investments.

18. The Company has not made any preferential allotment of shares during the period.

19. The Company has not issued any debentures during the period.

20. The Company has not raised any money by way of public issues during the period.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.

For RUDHRAKUMAR ASSOCIATES Chartered Accountants (Registration No: 007033S)

R.RUDHRAKUMAR Proprietor Membership No.0019444

Chennai-600 017. Date: 07.07.2011

 
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