Home  »  Company  »  Enkei Wheels (India)  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Enkei Wheels (India) Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Enkei Wheels (India) Limited ('the Company') which comprise the Balance Sheet as at March 31, 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 & Company's management are 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.

This responsibility also includes maintenance of adequate accounting records in accordance with the Act for safeguarding of the assets of the Company and for prevention and detection of fraud and other regularities, selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent and design, implementation and maintenance of 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

3. 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.

4. 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 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 auditor considers internal financial controls relevant to the Company's preparation of the financial statements that give 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 in place an adequate internal financial control system over financial reporting and operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Board of Directors & Company's management as well as evaluating the overall presentation of the financial statements.

5. 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

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 March 31, 2015, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

7. We draw attention to note 2.16 of the attached financial statements, "Assets/facilities retired from active use and held for re-work/disposal are classified separately as 'Assets held for Disposal'. In such situations, impairment loss is charged to the statement of Profit and Loss, in the year in which the loss is crystalised and quantified with ease.''

During the year, the management of Company has physically verified its fixed assets. However, the exercise of comparison & reconciliation of assets with its book records, the technical documentation in respect of their useful lives etc. has been

stated to be under process.

The Company's management is of the view that the above would not result in any additional amount of provision (over and above the amount of depreciation already provided) either on account of impairment or otherwise, in the financial statements for the year ended March 31, 2015.

In the absence of the details, we have relied upon management representations.

Our opinion is not modified respect of these matters.

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 in terms of section 143 (11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the said Order.

9) As required by section 143 (3) of the Act, we report that:

(a) Except for the matter described under 'Emphasis of Matter' in paragraph above and for the reasons stated therein 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 it appears from our examination of those books;

(c) The Balance Sheet, the Statement of Profit and 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, in all material aspects, 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 March 31,2015 and taken on record by the Board of Directors, none of the directors of the Company is disqualified as on 31st 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 the explanations given to us :

i. The Company has in accordance with the generally accepted accounting practice disclosed the impact of pending litigations on its financial position in its financial statements. Also refer Note 32(k) of the financial statements.

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

iii. The provisions as to transferability of amount to the Investor Educator and Protection Fund are not applicable to the Company for the year under audit.

Referred to in Paragraph 8 under the heading 'Report on Other Legal and Regulatory Requirements of our report of even date on the financial statements of Enkei Wheels (India) Limited('the Company') for the year ended March 31, 2015)

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 state that:

(i) (a) The Company is maintaining records showing particulars including quantitative details and situation of fixed assets

However, the asset numbering exercise, documentation / certification of useful lives of assets etc. are stated to be under process.

(b) As informed to us, the management of the Company has physically verified its fixed assets during the year. However, comparison and reconciliation of the assets with its book records are stated to be under process and therefore we are unable to comment on whether material discrepancies, if any have been noticed on such physical verification of fixed assets.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified

by the Company's management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) In our opinion and on the basis of our examination of records, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the accounts.

(iii) In our opinion and according to the information and explanations given to us, during the year, 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 Companies Act, 2013. Hence, the provisions of clause (iii) (a) & (b) of paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us and having regaurd to special nature of some capital goods which are imported and for which comparable alternative quptations are not available, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. However, in our opinion, the existing internal control system needs to be strengthened in respect of fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) In our opinion and according to the information and explanations given to us, the Company, has not accepted any deposit within the meaning of Provisions of section 73 to 76 of the Act and rules framed there under and does not have any unclaimed deposits. Hence, the provisions of clause (v) of paragraph 3 of the Order are not applicable to the Company.

(vi) In our opinion and according to the information and explanations given to us, the requirement for maintenance of cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014 specified by the Central Government of India under section 148 of the Companies Act, 2013 are not applicable to the Company year under audit, though Company has voluntarily made and maintained cost records.

(vii) (a) According to the information and explanations given to us and as per records of the Company, the Company is

generally regular in depositing undisputed statutory dues including provident fund, income-tax, wealth-tax, service tax, duty of customs, duty of excise, sales-tax, value added tax, cess and other material statutory dues as applicable to it with the appropriate authorities during the year.

(b) According to the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues referred above were in arrears as at 31st March 2015 for a period of more than six months from the date on which those became payable.

(c) According to the information and explanations given to us, there are no dues of income-tax, wealth-tax, service tax, duty of customs, duty of excise, sales-tax, value added tax, cess which have not been deposited on account of any dispute other than reported below.

Particulars : Value Added Tax

Period to which the amount relates : 2010-11

Amount involved (Rs.) : 53,428,525/-

Forum where dispute : Joint Commr.of Sales Tax (Appeals) 2, Pune

d) The provisions as to transferring the amount to Investor Education and Protection Fund under the Companies Act, 1956 (1 of 1956) are not applicable to the Company for the year under audit.

(viii) The Company has accumulated losses as at the end of the financial year, which in our opinion and according to information and explanations given to us, are not more than fifty percent of its net worth. However, the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the banks during the year and did not have any amount default outstanding to the financial institutions or debenture holders.

(x) 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 institutions during the year. Therefore, the provisions of clause (x) of paragraph 3 of the Order are not applicable to the Company.

(xi) In our opinion and according to the information and explanations given to us the term loans have been applied, on an overall basis, for the purposes for which those were obtained.

(xii) During the course of our examination of books and records of the Company carried out in accordance with auditing standards generally accepted in India, and to the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For Asit Mehta & Associates Chartered Accountants Registration No. 100733W

Sanjay S. Rane Partner Membership No.100374

Place : Pune Date : May 23, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Enkei Wheels (India) Limited (''the Company'') which comprise the Balance Sheet as at March 31, 2014, 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 principles generally accepted in India including the accounting standards notified under the Companies Act, 1956 (''the Act'') and accounting standards issued by the Institute of Chartered Accountants of India to the extent it does not contradict any other accounting standard notified under the Act, read with the General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s 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 misstatement.

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 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 auditor considers 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 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

1) In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(ii) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

2) (a) We draw attention to sub-note under Note 17 to the financial statements: ''''the balances reported in respect of trade receivables are subject to confirmations /reconciliations from the customers. In the absence of party confirmations, and reconciliations, we have relied upon management confirmation to the effect that all receivable are good and realisable in the ordinary course of the Company''s business.

(b) We draw attention to sub-note 2.16 of Note1 to the financial statements: ''''Impairment loss is charged to the statement of Profit and Loss, in the year in which the loss is crystallised and quantified with ease. Further, exercise the asset verification, determination of their useful lives, impairement etc., if any has remained to be carried out by the Company on an extensive basis covering all its assets.In context we have relied upon management confIrmation to the effect there is no loss of material amount which has remain to be provided for over and above the loss accounted during the year under audit.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

3) As required by the Companies (Auditor''s Report) Order, 2003, (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act (here in after referred to as "Order") 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 statement on the matters specified in paragraphs 4 and 5 of the Order.

4) As required by section 227(3) of the Act, 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 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement read with statement of accounting policies dealt with by this report comply in all material respects, with the accounting standards notified under the Companies Act, 1956 (''the Act'') and accountings standerd issued by the institute of Chartered Accountants of India to the extent it does not contradict any other accounting standard notified under the Act read with the General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

(e) On the basis of written representations received from the directors, as on March 31,2014 and taken on record by the Board of Directors, none of the directors of the Company is disqualified as on March 31,2014 from being appointed as a director, in terms of clause (g) of sub-section (1) of Section 274 of the Act.

ANNEXURE TO INDEPENDENT AUDITOR''S REPORT

(Referred to in Paragraph 3 under the heading ''Report on Other Legal and Regulatory Requirements of our report of even date on the financial statements of Enkei Wheels (India) Limited (''the Company'') for the year ended March 31, 2014).

(i) (a) The Company is maintaining records showing particulars including quantitative details and situation of fixed assets.

However, the asset numbering exercise and determination of useful lives of assets have remained to be certified and documented by the Company.

(b) As informed to us, some part of the fixed assets has been physically verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification covering all fixed assets. As per information given to us, no material discrepancies were noticed on physical verification of some part of the fixed assets. We have relied upon management confirmation in the absence of specific details.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, 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) In our opinion and on the basis of our examination of records, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the accounts.

(iii) (a) In our opinion and according to the information and explanations given to us, during the year, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (a) (b) (c) (d) the Order are not applicable to the Company.

(b) In our opinion and according to the information and explanations given to us, during the year, the Company has not taken any loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act. However, unsecured loans taken in the earlier years from its overseas holding & promoter company are outstanding as at the end of the year. The maximum amount involved during the year and the year-end balance of such loans aggregated to Rs. 62,35,98,001/-.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans taken by the Company from its overseas holding & promoter company in earlier years are prima facie not prejudicial to the interest of the Company.

(d) In our opinion and according to the information and explanations given to us, the principal amount/s of unsecured loans taken by the Company from its overseas holding & promoter company are not fallen due for repayment by the end of the financial year. The payment of interest is regular.

(iv) In our opinion and according to the information and explanations given to us, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. However, in our opinion, the existing internal control system needs to be further strengthened particularly in respect of the fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) (a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Act have been entered.

(b) In our opinion and according to the information and explanations given to us having regard to special nature of some Capital goods imported for which comparable quotations are not available, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of rupees five lakhs in respect of each party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of sections 58A, 58AA of the Act and rulesframed there under.

(vii) In our opinion, the Company has internal audit system commensurate with its size and nature of its business.

(viii) 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 under section 209(1) (d) of the Act and are of the opinion that prima facie, the prescribed cost records have been made and maintained. We, however, have not made detailed examination of the records with a view to determine whether they are accurate and complete.

(ix) (a) According to the records of the Company, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Profession Tax, Income-tax, Wealth-tax, Sales-tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues as applicable to it.

(b) According to the information and explanation given to us, there are no dues payable by the Company under Employees'' State Insurance Scheme and Investor Education and Protection Fund

(c) According to the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid statutory dues were in arrears and outstanding as at March 31, 2014 for a period of more than six months from the date those became payable.

(d) According to the information and explanations given to us, there are no dues, to the extent applicable, of Income- tax, Sales-tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and cess which have not been deposited on account of any dispute.

(x) Post-demerger, the financial year March 31, 2014 is the fifth year of operations of the Company. The Company has accumulated losses as at the end of the financial year, which in our opinion, are not more than fifty percent of its net worth. However, the Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our examination of records and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any of the banks or financial institutions or debenture holders during the year.

(xii) Based on our examination of records and according to the information and 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. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

(xiii) The Company is not a chit fund or nidhi/mutual benefit fund/society and therefore provisions of clause 4 (xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) the Order are not applicable to the Company.

(xv) 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 institutions during the year. Accordingly, the provisions of clause 4 (xv) of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us the term loans have been applied, on an overall basis, for the purposes for which those were obtained.

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, in our opinion, no funds raised on short-term basis have prima facie been used for long-term investment.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4 (xviii) of the Order are not applicable to the Company.

(xix) The Company has not issued any debentures during the year and does not have any debentures outstanding as at the beginning and as at end the year. Accordingly, the provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) The Company has not raised any money by way of public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud of material amount on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Asit Mehta & Associates Chartered Accountants Registration No. 100733W

Sanjay S. Rane (Partner) Membership No. 100374

Place : Pune Date : 26th May, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Enkei Wheels (India) Limited (''the Company'') which comprise the Balance Sheet as at March 31, 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 principles generally accepted in India including the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 (''the Act''). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s 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 misstatement.

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 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 auditor considers 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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

1) In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements 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:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

(ii) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

2) (a) We draw attention to sub-note under Note 17 to the financial statements:The balances reported in respect of trade receivables are subject to confirmations /reconciliations from the customers at large. We are informed that all receivables are good and realisable in the ordinary course of the Company''s business. In the absence of party confirmations, we have relied upon management confirmation in respect of the same.

(b) We draw attention to Note 2.7 of statement of accounting policies: Fixed assets/facilities retired from active use and held for re-work/disposal have been classified separately as ''Assets held for disposal'' in the Balance Sheet and depreciation has not been charged on the same. The Company has not worked out deterioriation, if any, in the values of those assets and thus are stated at the values appearing in the books. We have relied upon management confirmation in respect of the same.

Our opinion is not qualified in respect of these matters.

3) As required by the Companies (Auditor''s Report) Order, 2003, (as amended) (''the Order'') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4) As required by section 227(3) of the Act, 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 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act;

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

(f) Since the Central Government has not issued any notification as to the rate at which cess is to be paid under section 441A of the Companies Act, 1956 nor it has issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

(Referred to in Paragraph 3 under the heading ''Report on Other Legal and Regulatory Requirements of our report of even date on the financial statements of Enkei Wheels (India) Limited (''the Company'') .for the year ended March 31, 2013).

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 state that:

(i) (a) The Company is maintaining records showing quantitative details and situation of fixed assets. However, asset numbering exercise has remained to be completed. The liability in case of stamp duty, conveyances etc. in respect of immovable properties received on demerger from Alicon Castalloy Ltd. (erstwhile Enkei Castalloy Ltd.) on 01.04.2009, has now been crystallized and as informed to us, will be paid shortly before its due date.

(b) As informed to us, some part of the fixed assets has been physically verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification thereby book values of all its fixed assets could be compared and reconciled with the results of physical verification. We are informed that the discrepancies noticed on physical verification of the fixed assets have been properly dealt with in the books of account.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, 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 needs to improve its inventory records so as to cover all details of each transaction and for each item of the stock. The closing inventory is established only on the basis of year-end physical verification.

(iii) (a) In our opinion and according to the information and explanations given to us, during the year, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, the provisions of clause (iii) (a) (b) (c) (d) of paragraph 4 of the Order are not applicable to the Company.

(b) In our opinion and according to the information and explanations given to us, during the year, the Company has not taken any loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. However, unsecured loans taken in the earlier years from its overseas holding & promoter company are outstanding as at the end of the year. The maximum amount involved and the year-end balance outstanding was Rs. 61,22,56,001/-.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans taken by the Company from its overseas holding & promoter company in earlier years are prima facie not prejudicial to the interest of the Company.

(d) In our opinion and according to the information and explanations given to us, the principal amount/s of unsecured loans taken by the Company from its overseas holding & promoter company are not fallen due for repayment by the end of the financial year. The payment of interest is regular.

(iv) In our opinion and according to the information and explanations given to us, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. However, in our opinion, the existing internal control system needs to be suitably strengthened particularly in respect of its fixed assets including capital work-in-process. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) (a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such 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 each party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, to the extent information available with the Company.

(vi) The Company has not accepted any deposits from the public. Therefore, the provisions of clause (vi) of paragraph 4 of the Order are not applicable to the Company

(vii) The Company has internal audit system commensurate with its size and nature of its business which needs to be suitably strengthened as a part of its overall internal control system.

(viii) In our opinion and according to the information and explanations given to us, the cost records required to be maintained under section 209(l)(d) of the Companies Act, 1956 have been made and maintained. We, however, have not made detailed examination of the records.

(ix) (a) According to the records of the Company, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Profession Tax, Workmen Compensation, Income- tax, Wealth-tax, Sales-tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues as applicable to it.

During the year, the Company has admitted custom duty liability including interest as worked out by the DGCEI, Regional Unit, Pune in respect raw material imported under Advance Authorisation Licences received at the time of de-merger. Of the total liability, custom duty of Rs.77,50,691/- and interest of Rs.7,85,20,569/- have remained to be paid to the government authorities as at close of the financial year.

(b) According to the information and explanation given to us, there are no dues payable by the Company under Employees'' State Insurance Scheme and Investor Education and Protection Fund

(c) According to the records of the Company and according to the information and explanations given to us, no

undisputed amounts payable in respect of the aforesaid statutory dues were in arrears and outstanding as at March 31, 2013 for a period of more than six months from the date those became payable other than custom duty of Rs.77,50,691/- and interest of f''7,85,20,569/- as referred in para (a) above.

(d) According to the information and explanations given to us, there are no dues, to the extent applicable, of Income- tax, Sales-tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and cess which have not been deposited on account of any dispute.

(x) Post-demerger, the year ended March 31, 2013 is the fourth year of operations of the Company. The Company has accumulated losses as at the end of the financial year. However, the Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the banks and financial institutions. The Company has not borrowed money in the form of debentures.

(xii) Based on our examination of records and according to the information and 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) The Company is not a chit fund or nidhi/mutual benefit fund/society and therefore provisions of clause (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003, as amended are not applicable to the Company.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

(xv) 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 institutions. Therefore, the provisions of clause (xv) of paragraph 4 of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us and on overall examination of the Balance Sheet read with notes thereon of the Company, the term loans have prima-facie been applied for the purposes for which they were obtained.

(xvii) In our opinion and according to the information and explanation given to us and on overall examination of the Balance Sheet read with notes thereon of the Company, no funds raised on short-term basis have prima facie been used for long-term investment.

(xviii) During the year, the Company has made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act, on conversion of 39,13,950 compulsorily convertible preference shares into equity shares, earlier issued on preferential basis. Accordingly, 5,21,860 equity shares of face value of Rs. 5/- each at a premium of Rs. 70/- each have been allotted to the overseas holding/promoter company, viz. Enkei Corporation, Japan. The said allotment is in compliance with SEBI Regulations and listing Agreement. In our opinion and according to the information and explanation given to us, the price at which shares have been issued is not prejudicial to the interest of the Company.

xix) The Company has not issued debentures during the year. The Company also did not have any debentures outstanding as at the end the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud of material amount on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.



For Asit Mehta & Associates

Chartered Accountants

Registration No. 100733W





Sanjay S. Rane

(Partner)

Membership No. 100374

Place : Pune

Date : May 21, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Enkei Wheels (India) Limited (the Company) as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company 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 auditing standards generally accepted in India. Those standards require that we plan and perform audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, (as amended by DCA Notification G.S.R. 766(E), dated November 25, 2004) 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.

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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards (AS) referred to in sub-section (3C) of Section 211 of the Companies Act,1956, except AS-ll-'The Effects of changes in Foreign Exchange Rates'.

Foreign currency monetary liabilities including loans, payable to group companies have not been restated by the Company at the year-end closing rate. The accounting treatment is not in compliance of the provisions of the Accounting Standard (AS-11) -'The Effects of changes in Foreign Exchange Rates'.The effect of non-compliance of the provisions on the Statement of Profit and Loss of the year has not been quantified by the Company as explained in note no.2.9 of the accounts.

Further, group payables (including old balances) are stated to be in the process of reconciliation by the Company.

e) On the basis of written representations received from the directors as on March 31,2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2012 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 together with significant accounting policies and notes thereon and subject to para (d) above 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:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2012;

(ii) In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT

(Referred to in paragraph 3 of our report of even date)

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 state that: (reference of the phrase 'during the year' hereinafter should be read and understood as 'during the year ended 31st March 2012')

(I) (a) The Company is maintaining records showing quantitative details and situation of fixed assets. However, asset numbering exercise is stated to be under compilation. Further, legal formalities including payment of stamp duty, conveyances etc. in respect of immovable properties received on demerger from Alicon Castalloy Ltd. (erstwhile Enkei Castalloy Ltd.) on 1st April 2009 are yet to be completed by the Company.

(b) As informed to us, some part of the fixed assets has been physically verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification thereby book values of all its fixed assets could be compared and reconciled with the results of physical verification. We are informed that the discrepancies noticed on physical verification of the fixed assets have been properly dealt with in the books of account.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, 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. However, in our opinion, the procedures need to be further strengthened so that slow and non-moving inventories can be identified and adjusted for losses.

(c) The Company needs to improve its inventory records so as to cover all details of each transaction and for each item of the stock. The closing inventory is established only on the basis of year-end physical verification.

(iii) (a) In our opinion and according to the information and explanations given to us, during the year, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) (b), (c) and (d) of the Order are not applicable.

(b) In our opinion and according to the information and explanations given to us, during the year, the company has not taken any loan, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. However, the Company had taken unsecured loans from its overseas promoter company in earlier years which have remained outstanding as at the end of the year where the year-end balance is Rs.547,111,754/-.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans taken by the Company from its overseas promoter company in earlier years are prima facie not prejudicial to the interest of the Company.

(d) The principal amount/s of unsecured loan/s taken by the Company from its overseas promoter Company is not yet due for repayment by the end of the financial year. The payment of interest is regular.

(iv) In our opinion and according to the information and explanations given to us, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. However, in our opinion, the existing internal control system needs to be further strengthened particularly in respect of fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered.

(b) According to the information and explanations given to us, the transactions made in pursuance of such 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 prima facie reasonable having regard to the prevailing market prices at the relevant time, to the extent that such comparative prices are available and where items purchased/sold are of special nature for which suitable alternative sources do not exist.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public during the year. We are informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

(vii) The Company has internal audit system commensurate with its size and nature of its business which needs to be further strengthened as a part of its overall internal control system.

(viii) In our opinion and according to the information and explanations given to us, the cost records required to be maintained under section 209(l)(d) of the Companies Act, 1956 have been made and maintained. We, however, have not made detailed examination of the records.

(ix) (a) Based on verification of records and information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Workmen Compensation, Income-tax, Sales-tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues as applicable.

According to the information and explanation given to us, there are no dues payable by the Company under Employees' State Insurance Scheme and Investor Education and Protection Fund.

According to the information and explanation given to us, no undisputed amounts payable in respect of the aforesaid statutory dues were in arrears and outstanding as at March 31, 2012 for a period of more than six months from the date those became payable.

(b) According to the information and explanations given to us, there are no dues, to the extent applicable, of Income-tax, Sales-tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and cess which have not been deposited on account of any dispute.

(x) Post-demerger, the year ended March 31, 2012 is third year of operations of the Company. The Company has accumulated losses as at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to the banks and financial institutions. The Company has not borrowed money in the form of debentures.

(xii) Based on our examination of records and according to the information and 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) The Company is not a Chit Fund or Nidhi Mutual benefit Fund/Society and therefore provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003, as amended are not applicable to the Company.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments.

(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 banks or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us and on overall examination of the Balance Sheet read with notes thereon of the Company, the term loans have prima-facie been applied for the purposes for which they were obtained.

(xvii) In our opinion and according to the information and explanation given to us and on overall examination of the Balance Sheet read with notes thereon of the Company with notes annexed to, no funds raised on short-term basis have prima facie been used for long-term investment.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act other than conversion of 9,251,250 compulsorily convertible preference shares into equity shares, earlier issued on preferential basis to its overseas promoter company. Accordingly 1,233,500 equity shares of Face value of Rs. 5/- each at a premium of Rs. 70/- each have been allotted to the overseas promoter company, viz. Enkei Corporation, Japan. The said allotment is in compliance with clause 40A of the Listing Agreement. In our opinion and according to the information and explanation given to us, the price at which shares have been issued is not prejudicial to the interest of the Company.

(xix) The Company has not issued debentures during the year. The Company also did not have any debentures outstanding as at the end the year.

(xx) The Company has not raised any money byway of public issue during the year.

(xxi) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud of material amount on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Asit Mehta & Associates Chartered Accountants FirmRegnNo. 100733W

Sanjay. Rane (Partner) Membership No. 100374

Place: Pune Date: 21st May 2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of Enkei Wheels (India) Limited (the Company) as at 31st March, 2010 and the Profit and Loss Account for the period ended on that date both 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.

Pursuant to the Scheme of Arrangement (de-merger) sanctioned by the Hon'ble High Court of Bombay, the Wheel Division of Enkei Castalloy Limited (ECL) was de-merged into Enkei Wheels (India) Limited (EWIL) with effect from end of the day of 31st March 2010. However, since the Scheme had provided for transfer and vesting of all assets and liabilities of the Wheel Division of ECL to EWIL w.e.f. the appointed date and which is 01.04.2009, the balances as of 01.04.2009, as identified and mutually agreed by the managements of the respective companies have been carried forward in the accounts of the respective companies.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, (as amended by DCA Notification G.S.R. 766(E), dated November 25, 2004) 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 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 unless stated otherwise;

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 such books unless stated otherwise;

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

d) In our opinion, the Balance Sheet and the Profit & Loss Account dealt with by this report comply in all material respects with the Accounting Standards (AS) referred to in sub-section (3C) of Section 211 of the Companies Act,1956, unless stated otherwise in notes to accounts;

e) On the basis of written representations received from the directors as at 31st March 2010 and taken on record by the Board of Directors, we report that none of the Directors was disqualified as at 31st March, 2010 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 together with and subject to 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:

(I) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010 and

(ii)In the case of the Profit and Loss Account, of the loss for the period ended on that date

(Referred to in paragraph 3 of our report of even date)

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 state that:

(I) (a) The Company is maintaining records showing details and situation of fixed assets. However, asset numbering exercise is stated to be under compilation. Pending completion of legalities, the assets of the demerged undertaking have been transferred to the Company at the values which were appearing in the books of the demerged Company as on the appointed date, i.e. 01.04.2009.

(b) As informed to us, fixed assets (more appropriately listed in Schedule A of the Scheme of Arrangement (de-merger)) have been verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification by which book values could be reconciled with physical tangible assets.

(c) A substantial part of the fixed assets has not been disposed off during the year.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management at the end the period covered by the audit.

(b)In our opinion and according to the information and explanations given to us, 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 which needs to be further strengthened to quickly identify slow/non moving inventories, stock held by others etc. if any.

(c) The Company needs to improve its inventory records so as to contain all details of each transaction and for each item of the stock. The closing inventory is established on the basis of year-end physical verification.

(iii) (a) In our opinion and according to the information and explanations given to us, during the period, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties that would require to be listed in the register maintained under section 301 of the Companies Act, 1956.

(b) In our opinion and according to the information and explanations given to us, during the period, the Company has taken unsecured loan from its foreign collaborator shareholder of JPY 200 mio equivalent to Rs. 900.69 lakhs. The same along with loan taken in earlier year has remained outstanding at the end of the year, where the aggregate amount involved is Rs. 2363.50 lakhs. Other than this, the Company has not taken any loans secured or unsecured, from companies, firms or other parties that would require to be listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) According to the information and explanations given to us, there exists internal control procedures commensurate with the size of Company and the nature of its business. with regard to purchase of inventory, fixed assets and for the sale of goods. However, in our opinion, the existing system needs to be strengthened particularly in respect of documentation and record keeping. However, no major weakness was noticed in internal control system during the period.

(v) (a) According to information and explanations given to us, among others, the Company is in the process of entering the particulars of contracts or arrangements in the register required to be maintained under section 301 of the Companies Act, 1956 and thus could not be made available to us for our verification.

(b) According to the information and explanations given to us, the transactions in pursuance of such contracts or arrangements and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, to the extent that such comparative prices are available.

(vi) The Company has not accepted any deposits from the public during the period.

(vii) Post-demerger, the financial year.2009-10, has only been the first year of operations of the Company, it did not have full-fledged internal audit system.

(viii) According to the information and explanations given to us and on verification of records, the Company has initiated the exercise of maintaining the cost records required to be maintained under section 209(1) (d) of the Companies Act, 1956.

(ix) (a) Based on verification of records and information and explanations given to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of statutory dues including Provident Fund, Workmen Compensation, Income tax, Value Added Tax, Custom Duty, Excise Duty and Service Tax.

(b) According to the information and explanations given to us, there are no dues payable by the Company under the Employees State Insurance Scheme and Investor Education and Protection Fund.

(c) According to the information and explanation given to us, no undisputed materials amounts payable in respect of the statutory dues referred above were in arrears as at 31st March 2010 for the period more than six months from the date they became payable.

(d) According to the information and explanations given to us, there are no dues, to the extent applicable, of Sales-tax,/ Income- tax//Customs Duty/ Wealth Tax / Excise Duty /Cess, which have not been deposited on account of any dispute.

(x) The Company has accumulated losses as at the end of the financial period under audit. However, the Company has not incurred cash losses during the period covered by our audit.

(xi) Based on our audit procedures and on the information and explanations given by the management, the Company has not defaulted in repayment of dues to the banks. The Company has not borrowed money in the form of debentures.

(xii) Based on our examination of records and according to the information and 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) The Company is not a chit/nidhi/mutual benefit fund/society and therefore provisions of clause 4 (xiii) of the Order are not applicable to the Company.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us and on overall examination of the Balance Sheet of the Company, we report that, the term loans have been applied for the purpose for which they were obtained.

(xvii) According to the information and explanation given to us, management representations and on overall examination of the balance sheet of the Company, we are of the opinion that no funds raised on short-term basis have prima facie been used for long- term investment.

(xviii) During the period under audit, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. However, during the current financial year, the Company has allotted convertible preference shares to its foreign collaborator shareholder which was pending for allotment on the balance-sheet date.

(xix) The Company did not have any outstanding debentures at the end the period under audit.

(xx) The Company has not raised any money by public issues during the period under audit.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Asit Mehta & Associates

Chartered Accountants

Firm Regn No. 100733W

Sanjay S. Rane (Partner)

Membership No. 100374

Place: Shikhrapur,

Date : 04.08.2010

Find IFSC