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Auditor Report of Galaxy Bearing Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Galaxy Bearings Ltd ("the Company"), which comprise the Balance Sheet as at March 31,2014, the Statement of Profit & Loss and Cash Flow Statement for the year then ended (herein after referred to as financial statements), and a summary of significant accounting policies and other explanatory information.

2. 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 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 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.

3. 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 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.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to its, the financial statements give the information required by the Act in the manner so required and gi/e 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 Profit and Loss Account, 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.

5. Report on Other Legal and Regulatory Requirements

i. 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 Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

ii. 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, 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 Casta Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the General .circular 15/2013 dated 13th September 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 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 Companies Act, 1956.

ANNEXURE Referred para 1 of our Report on Other Legal and Regulatory Requirements forJBe year ended 31st March 2014.

1. In respect of Fixed Assets:

a. The company has maiQtained proper records showing full particulars including quantitative details and situation of fixed assets.

b. As per the information and explanations given to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c. During the year, the Company has not disposed off any major/ substantial part of the plant and machinery so as to affect the going concern assumption.

2. In respect of its Inventoried:

a. As explained to us, physical Verification of the inventory was carried out at reasonable intervals by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion, and according to the information and explanation given to us, the procedure of 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, and according to the information and explanation given to us, the Company has maintained proper records of its inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material.

3. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

a. The Company has not granted any loans, secured or unsecured, to the companies, firms or other parties covered in the register, maintained under section 301 of the Companies Act, 1956, and therefore the paragraphs 4(iii)(a), (b), (c) and (d) of The Companies (Auditor''s Report) Order, 2003 are not applicable.

b. The Company has taken loan from Companies and parties covered in the register maintained under section 301 of the Companies Act, 1956. There is one such party covered in the register maintained under section 301 of the Companies Act, 1956 from whom the company has taken loans. The maximum amount involved during the year was Rs. 31.50 Lacs and the year end balance of loans taken from such parties was Rs. 31.15 Lacs.

c. In our opinion and according to the information and explanation given to us, in case of loans taken during the year, the rates of interest and other terms and conditions are prime facie not prejudicial to the interest of the Company.

d. There are no stipulated terms of repayment of loans taken by the company from the companies/firms/parties listed in the register maintai -ned under section 301 of the Companies Act, 1956, hence there is no question of repayment of loans.

4. In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

5. In respect of contracts or arrangements covered under Section 301 of the Companies Act, 1956:

a. Based on the audit procedures applied by us and according to the information and explanations provided by management, we are af the opinion that the contracts or arrangements that need to be entered into the register maintained under section 301 have been so entered.

b. In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 in respect of any parties during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion, and according to the information and explanations given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India, the provisions of Sections 58A and 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed there under are applicable.

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

8. We hstve broadly reviewed the books of accounts relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 and we 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.

9. In respect of Statutory Dues:

a. According to the information and explanations given to us, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employee''s state insurance, income-tax, sales-tax, wealth-tax, service tax, Professional Tax, custom duty, excise-duty, cess and other -statutory dues applicable to it except there were delay in few cases ofJ£eotice Tax, TDS and TCS.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, salesitax, service tax, custom duty and excise duty were outstanding, as at 31st March, 2014 for a period of more than six months from the date they became payable.

c. According to the records of the Company, there are no dues of sales tax, Income tax, wealth-tax, service tax, custom duty, excise duty, cess which have not been deposited on account of disputes.

10. The company has no accumulated losses. The Company has not incurred any cash losses during the year under review and also not incurred any cash losses in immediately preceding financial year.

11. Based on the audit procedures and on the information and explanation given by the management, we are of the opinion that company is regular in repayment of interest and installments.

12. Based on our examination of documents and records and information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the company is not a Chit Fund or Nidhi / Mutual Benefit Fund / Societies. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company. ''

14. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiii) of the companies (Auditor''s Report) Order, 2003 are not applicable to the company.

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

16. In our opinion, and according to the information and explanations given to us, the''term loans have been applied''for the purpose for which they have been acquired.

17. On the basis of an overall examination of the balance sheet and cash flow statement of the company, in our opinion and according to the information and explanations given to us, no funds raised on a short term basis are applied for longterm purpose.

18. In our opinion, and according to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. During the year covered by our audit report, the company has not issued any debentures.

20. During the year covered by our audit report, the company has not raised any money by way of Public issues.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For, J. T. Shah & Co. Chartered Accountants, [FRN. No. 109616W]

Place: Ahmedabad Date : 31/05/2014

[J.T. Shah] Partner [M. No. 3983]


Mar 31, 2010

1. We have audited the attached Balance Sheet of GALAXY BEARINGS LIMITED as at 31st March 2010, Profit & Loss Account and Cash Flow Statement of the company for the year ended on that date (together referred to as financial statements). These financial statements are the responsi- bility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Company Law Board in term of section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matter specified in paragraphs 4 and 5 of the said order.

4: Further to our comments in the Annexure referred to in para 3 above, we report that:

(i) 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;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt

with by this report are in compliance with the accounting standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956.

a) Foreign currency difference arising on Short Term Foreign Currency Mon- etary items are deferred and shown as "Foreign Currency Monetary Item Transaction Difference Account" in loans and advances, which is not in accordance with the AS-11 "The Effects of Changes in Foreign Exchange Rates", and as a result profit as well as loans and advances are overstated by Rs.30.54 Lacs. (PI. Refer Para 5 (e)(ii) of Schedule 16).

b) The Company has made provision of Gratuity Liability on the basis of contri- bution to fund managed by Life Insurance Corporation of India which is not in compliance with the Revised AS-15 "Employee benefits "which requires the actuarial valuation for the same .Further, the company has also not complied with the disclosure requirements of the AS-15 "Employee Benefits". In ab sence of the requisite information we are unable to comment its impact on the profit for the year.(PI. Refer Para 5 (f) of Schedule 16)

c) The Company has not made provision of Leave Encashment which is not in accordance with Accounting Standards 15 "Employee Benefits", the com- pany has also not complied with the disclosure requirements of the AS-15 "Employee Benefits". In absence of the requisite information we are unable to comment its impact on the profit for the year. (PI. Refer Para 5 (f) of Schedule 16).

(v) On the basis of written representations received from the directors, as on 3151 March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as directors in terms of clause (g) of sub-section (1) of section 274 of the Companies Act 1956.

(vi) We further report that, without considering items mentioned at para (iv)(b) & (c) , above the effect of which could not be determined, had the observations made by us in para (iv)(a), above been considered, the profit for the year would have been Rs. 19.34 Lacs (as against the reported profit of Rs 49.88 Lacs), Loan & Advances would have been Rs.127.71 Lacs (as against the reported figure of Rs. 158.25 Lacs) and Credit Balance in Profit & Loss Account would have been Rs.191.67 Lacs (as against the reported figure of Rs. 222.21 Lacs).

(vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to and read together with the notes thereon, give the informa- tion required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

(b) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and

(c) in the case of Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.

ANNEXURE Referred to in paragraph 3 of our report of even date for the year ended 31st March 2010.

1. In respect of Fixed Assets:

a. The company has maintained proper records showing full particulars including quanti- tative details and situation of fixed assets.

b. As per the information and explanations given to us, the fixed assets have been physi- cally verified by the management during the year in a phased periodical manner which in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c. During the year, the Company has not disposed off any major/ substantial part of the * plant and machinery so as to affect the going concern assumption.

2. In respect of its Inventories:

a. As explained to us, physical verification of the inventory was carried out at reasonable intervals by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion, and according to the information and explanation given to us, the proce- dure of 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, and according to the information and explanation given to us, the Com- pany has maintained proper records of its inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material.

3. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

a. The Company has granted loans to one party covered in the register maintained under section 301 of the Companies Act, 1956. The year end balance is amounting to Rs. 9.22 Lacs and the maximum amount involved during the year was Rs. 9.22 Lacs.

b. In our opinion and according to the information and explanations given to us, in case of loans given, the rates of interest, wherever applicable and other terms and conditions are not prima facie prejudicial to the interest of the company.

c. The company has granted interest free loans therefore the clauses (iii)(b), (iii)(c) and (iii)(d) of The Companies (Auditors Report) Order, 2003 are not applicable.

d. The Company has taken loan from Companies and parties covered in the register main- tained under section 301 of the Companies Act, 1956. There are three parties covered in the register maintained under section 301 of the Companies Act, 1956 from whom the company has taken loans. The maximum amount involved during the year was Rs. 132.59 Lacs and the year end balance of loans taken from such parties was Rs. 132.16 Lacs.

e. In our opinion and according to the information and explanation given to us, in case of loans taken during the year, the rates of interest and other terms and conditions are prime facie not prejudicial to the interest of the Company.

f. There are no stipulated terms of repayment of loans taken by the company from the companies/firms/parties listed in the register maintained under section 301 of the Com- panies Act, 1956,hence there is no question of repayment of loans.

4. In our opinion, and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

5. In respect of contracts or arrangements covered under Section 301 of the Companies Act, 1956:

a. Based on the audit procedures applied by us and according to the information and explanations provided by management, we are of the opinion that the contracts or ar- rangements that need to be entered into the register maintained under section 301 have been so entered.

b. In our opinion, and according to the information and explanations given to us, the trans- actions made in pursuance of contracts or arrangements entered in the registers main- tained under section 3.01 in respect of any parties during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion, and according to the information and explanations given to us, the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India, the provisions of Sections 58A and 58AA and any other relevant provisions of the Compa- nies Act, 1956 and the rules framed there under are applicable.

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

8. We have broadly reviewed the books of accounts relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and main- tained. We have not, however made a detailed examination of the records with a view to deter- mine whether they are accurate or complete.

9. In respect of Statutory Dues:

a. According to the information and explanations given to us, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees state insurance, income-tax, sales- tax, wealth-tax, service tax, Professional Tax, custom duty, excise-duty, cess and other statutory dues applicable to it except there were delay in few cases of TDS and TCS.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, service tax, custom duty and excise duty were outstanding, as at 31st March, 2010 for a period of more than six months from the date they became payable.

c. According to the records of the Company, there are no dues of sales tax, income tax, wealth-tax, service tax, custom duty, excise duty, cess which have not been deposited on account of disputes.

10. The company has no accumulated losses. The Company has not incurred any cash losses during the year under review and also not incurred any cash losses in immediately preceding financial year.

11. Based on the audit procedures and on the information and explanation given by the manage- ment, we are of the opinion that there was delay ranging up to 39 days in respect of interest of Rs.2.82 Lacs in repayment of interest for Term Loan to bank. The company is not liable to pay any term loan installment during the year as per rescheduled terms of the bank.

12. Based on our examination of documents and records and information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the company is not a Chit Fund or Nidhi / Mutual Benefit Fund / Societies. There- fore, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

14. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiii) of the companies (Auditors Report) Order,2003 are not applicable to the company.

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

16. In our opinion, and according to the information and explanations given to us, the term loans have been applied for the purpose for which they have been acquired.

17. On the basis of an overall examination of the balance sheet and cash flow statement of the company, in our opinion and according to the information and explanations given to us, no funds raised on a short term basis are applied for long-term purpose.

18. In our opinion, and according to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. During the year covered by our audit report, the company has not issued any debentures.

20. During the year covered by our audit report, the company has not raised any money by way of Public issues.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For, J T Shah & Company

Chartered Accountants (Firm Regd. No 109616W)

Place : Ahmedabad (J. T. Shah)

Date : 23-08-2010 Partner

[M. No. 3983]

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