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Auditor Report of Gemini Communication Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of GEMINI COMMUNICATIONS LIMITED which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, 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

The Company's Board of Directors is responsible for the matters 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of internal financial control, 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.

Auditor's Responsibility

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 there under.

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.

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 control 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, 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 on the financial statements.

Opinion

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;

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2015;

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

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

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

a) Note 22 to the financial statements which, describes the uncertainty related to the outcome of the lawsuit filed against the Company.

b) Note 21 in the financial statement which indicates that the Company has accumulated losses and its Net worth has been fully/substantially eroded, the Company has incurred a net cash loss during the current year and previous year(s) and, the Company current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters set forth in Note 21, indicate the existence of a material uncertainty that cast significant doubt about the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.

Our opinion is not modified in respect of these matters.

Report on other Legal and Regulatory Requirements

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

a) We have sought and 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 (and proper returns adequate for the purposes of our audit have been received from the branches not visited by us)

c) The Balance Sheet, the 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 aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) The going concern matter described in sub-paragraph (b) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of written representations received from the directors as on 31 March, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015, from being appointed as a director in terms of Section 164(2) of the Act.

g) With respect to the other matters included in the Auditor's Report and to our best of our information and according to the explanations given to us :

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 22 to the financial statements

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company [or, following are the instances of delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company or there were no amounts which required to be transferred.

Report on other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) order, 2015 ("the Order"), issued by the central Government of India in terms of sub-section (11) of section 143 of Companies Act, 2015, we give in the Annexure a statement on the matters specified in paragraphs 3 an d4 of the order, to the extent applicable.

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

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

b) The Company has physically verified the fixed assets during the year which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

ii. a) The procedures of physical verification of inventories followed by the company are reasonable and adequate in relation to the size of the company and the nature of its business.

The Company maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records are not material.

iii. a) The company has granted interest free unsecured loans to subsidiary companies, covered in the register maintained under section 189 of the Companies Act, 2013. The Outstanding balance is Rs.6094.60 Lakhs. The other clauses are not applicable.

iv. In my opinion and according to the information and explanations given to me, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets, Inventories and the sale of services. The activities of the company do not involve purchase of inventory and the sale of goods. During the course of my audit, I have not observed any continuing failure to correct major weaknesses in the internal control system. However, the Company is still under the process of appointing an Internal Auditor as required under the norms of the Companies Act, 2013 and rules made thereof.

v. In my opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Therefore, the provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under, are not applicable to the Company.

vi. According to the information and explanations given to us, Rules made by the Central Government for the maintenance of cost records under Section 148 of the Act, are Not Applicable.

vii. a) The Company is generally regular in depositing undisputed statutory dues relating to provident fund, income tax deducted at source, service tax and value added tax. We are informed that the provisions of employees' state insurance, wealth tax, duty of customs, duty of excise, cess is not applicable to the company. As per the records produced before us, there are no undisputed statutory dues which were outstanding as on 31st March 2015 for a period over six months from the date of same becoming payable, expect Provident Fund, Service Tax, Tax Deducted at Source.

b) According to the information and explanations given to us, there are no statutory dues pending in respect of income tax, sales tax, value added tax, service tax, duty of customs, wealth tax, duty of excise, cess on account of any dispute.

c) According to the information and explanations given to us, no amount is required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 2013 and rules made there under.

viii. The company's accumulated losses at the end of the financial year are more than fifty per cent of its net worth and it has incurred cash losses in this financial year

ix. The Company has not repaid principle amount of Rs. 17037.30 lakhs secured borrowings from banks and has also not paid interest for the period ranging from more than 3 years Consequently Banks have declared the Assets as NPA. (Non Performing Assets).

x. In my 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.

xi. In my opinion, the term/project loans were applied for the purpose for which they were raised.

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

For V VISWANATHAN & ASSOCIATES Chartered Accountants Firm Registration No-013713S

Place: Chennai V VISWANATHAN Date: May 30, 2015 Membership No. 228990




Mar 31, 2014

I have audited the accompanying financial statements of Gemini Communication Ltd ("the Company"), which comprise the Balance Sheet as at March 31,2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 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

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that I 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion and to the best of my information and according to the explanations given to me, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

2. As required by section 227(3) of the Act, I report that:

a. I have obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purpose of my audit;

b. in my opinion proper books of account as required by law have been kept by the Company so far as appears from my 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 my opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;and

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 to the Auditors'' Report:

The Annexure referred to in the Auditors'' Report to the Members of M/s Gemini Communications Limited (the Company) for the period ended March 31,2014. I report that:

1)

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets which needs to be updated.

b. The company has a regular program of physical verification of its fixed assets. No material discrepancies are noticed on such verification.

c. Substantial parts of fixed assets have not been disposed off during the year. In my opinion, the frequency of verification is reasonable.

2)

a. The procedures of physical verification of inventories followed by the company are reasonable and adequate in relation to the size of the company and the nature of its business.

b. The Company maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records Ire not material.

3)

a. The company has granted interest free unsecured loans to subsidiary companies, covered in the register maintained under section 301 of the Companies Act, 1956. The Outstanding balance is Rs. 6304.85 Lakhs. The other clauses are not applicable.

b. The company has not taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the companies act, 1956. The other clauses are not applicable.

4) In my opinion and according to the information and explanations given to me, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets, Inventories and the sale of services. The activities of the company do not involve purchase of inventory and the sale of goods. During the course of my audit, I have not observed any continuing failure to correct major weaknesses in the internal control system.

5)

a. According to the information and explanations given to me, In my opinion that the particulars of contracts / arrangements referred to the Section 301 of the Act has been entered into the register maintained u/s 301 of the Companies Act, 1956.

b. In my opinion and according to the information and explanations given to me, the transactions made in pursuance of such contracts or arrangements have been made at prices which are responsible reasonable having regards to the prevailing market prices at the relevant time.

6) In my opinion and according to the information and explanations given to me, the company has not accepted any deposits during the year as defined under section 58A of the Companies Act, 1956.

7) The company has an internal audit system commensurate with the size and nature of its business.

8) As per the information and explanation given to me, the maintenance of cost records has not been prescribed by the Central Government under the clause (d) section 209(1) (d) of the Companies Act, 1956 for any of the services rendered by the company.

9)

a. The company is depositing, with some delays, with appropriate authorities undisputed statutory dues including provident fund, Employee State Insurance, Income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues, wherever applicable, with the appropriate authorities.

b. According to the records of the company and the information and explanations given to me, there are no disputed amounts payable in respect of Income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess Ire in arrears, as at 31st March 2014 for a period for more than six months from the date they became payable.

c. According to the information and explanations given to me, there are no dues of sales tax, wealth tax, service tax, customs duty, excise duty and cess which not have been deposited on account of any dispute.

10) In my opinion, the company has no accumulated losses as at 31st March, 2014 and has not incurred cash losses during the financial year covered under by my audit and preceding financial year.

11) In my opinion and according to the information and explanations given to me, the Company has made payments with some delay in repayment of dues to financial institution, banks or issued any debentures.

12) In my opinion and according to the information and explanations given to me, 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 my opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the company.

14) In my opinion, the company is not dealing in or trading in shares, securities, debentures, investments and other securities wherever applicable, Accordingly, the provisions of clamee4(xiv) of the Companies (Auditor''s Report) (Amendment) order, 2004 are not applicable to the company.

15) In my opinion, and according to the information and explanations given to me, the company has given corporate guarantee for loans taken by subsidiary companies from banks, the terms and conditions are not prima facie prejudicial to the interest of the company.

16) In my opinion and according to the explanations given to me, the term loans have been applied for the purpose for which they Ire raised.

17) According to the information and explanations given to me and on an overall examination of the balance sheet of the company, I report that no funds raised on short-term basis have been used long-term investment.

18) According to the information and explanations given to me, the company has made any preferential allotment of shares during the year to parties covered in the register maintained under section 301 of the Companies Act, 1956. The price at which the issue is made are not prima facie prejudicial to the interest of the company.

19) According to the information and explanations given to me, the Company has not issued any debentures during the year and security for issue of debentures does not arise.

20) According to the information and explanations given to me, the Company has not raised money by public issue during the financial year and the disclosure of end use of money raised by public issues does not arise.

21) According to the information and explanations given to me, no fraud on or by the company has been noticed or reported during the course of my audit.

For Ramanath & Co., Chartered Accountants Firm No.013721s

Place: Chennai S. Ramanath Date: May 30, 2014 Chartered Accountant Membership No: 029416


Mar 31, 2012

1. I have audited the attached Balance Sheet of M/s Gemini Communication Limited (the company) as at March 31, 2012, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date, annexed thereto, which I have signed under reference to this report. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit.

2. I have conducted the audit in accordance with auditing standards generally accepted in India. Those standards require that I 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 the management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

3. As required by the Companies (Auditor's Report) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, as amended from time to time, I enclose in the Annexure hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to my comments in the Annexure referred to in paragraph 3 above, I report that:

a. I have obtained all the information and explanations which to the best of my knowledge and belief are necessary for the purposes of my audit;

b. In my opinion, proper books of account as required by law have been kept by the company so far as appears from my examination of those books; and proper returns adequate for the purposes of my audit have been received from the branches not visited by me. The Branch Auditor's reports have been forwarded to me and have been properly dealt with.

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

d. In my opinion, the Balance sheet and the Profit and 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 to the extent applicable;

e. On the basis of written representations received from the directors and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2012 from being appointed as a director under clause (g) of sub- section (1) of section 274 of the Companies Act, 1956;

f. In my opinion and to the best of my information and according to the explanations given to me, the said accounts together with Significant Accounting Policies and 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, 2012;

ii. in the case of the Profit and Loss account, of the loss for the year ended on that date, and

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

Annexure to the Auditors' Report:

The Annexure referred to in the Auditors' Report to the Members of M/s Gemini Communication Limited (the Company) for the period ended March 31, 2012. I report that:

1. a. The Company has maintained proper records

showing full particulars, including quantitative details and situation of fixed assets which needs to be updated.

b. The company has a regular program of physical verification of its fixed assets. No material discrepancies are noticed on such verification.

c. Substantial parts of fixed assets have not been disposed off during the year. In my opinion, the frequency of verification is reasonable.

2. a. The procedures of physical verification of

inventories followed by the company are reasonable and adequate in relation to the size of the company and the nature of its business.

b. The Company maintaining proper records of inventory. The discrepancies noticed on verification between the physical stock and the book records were not material.

3. a. The company has granted interest free unsecured

loans to subsidiary companies, covered in the register maintained under section 301 of the Companies Act, 1956. The Outstanding balance is Rs. 9315.44 Lakhs. The other clauses are not applicable.

b. The company has not taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the companies act, 1956. The other clause are not applicable.

4. In my opinion and according to the information and explanations given to me, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets, Inventories and the sale of services. The activities of the company do not involve purchase of inventory and the sale of goods. During the course of my audit, I have not observed any

continuing failure to correct major weaknesses in the internal control system.

5 a. According to the information and explanations given to me, In my opinion that the particulars of contracts / arrangements referred to the Section 301 of the Act has been entered into the register maintained u/s 301 of the Companies Act, 1956.

b. In my opinion and according to the information and explanations given to me, the transactions made in pursuance of such contracts or arrangements have been made at prices which are responsible reasonable having regards to the prevailing market prices at the relevant time.

6. In my opinion and according to the information and explanations given to me, the company has not accepted any deposits during the year as defined under section 58A of the Companies Act, 1956.

7. The company has an internal audit system commensurate with the size and nature of its business.

4. As per the information and explanation given to me, the maintenance of cost records has not been prescribed by the Central Government under the clause (d) section 209(1) (d) of the Companies Act, 1956 for any of the services rendered by the company.

9. a. The company is depositing, with some delays, with appropriate authorities undisputed statutory dues including provident fund, Employee State Insurance, Income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues, wherever applicable, with the appropriate authorities.

b. According to the records of the company and the information and explanations given to me, there are no disputed amounts payable in respect of Income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess Ire in arrears, as at 31st March

2012 for a period for more than six months from the date they became payable.

c. According to the information and explanations given to me, there are no dues of sales tax, wealth tax, service tax, customs duty, excise duty and cess which not have been deposited on

account of any dispute except as under:-

ASSMT YEAR Amount

2006 - 2007 Rs.55119834

2007 - 2008 Rs.65000000

2008 - 2009 Rs.37500000

10. In my opinion, the company has no accumulated losses as at 31st March, 2012 and has not incurred cash losses during the financial year covered under by my audit and preceding financial year.

11. In my opinion and according to the information and explanations given to me, the Company has not defaulted in repayment of dues to financial institution, banks or issued any debentures.

12. In my opinion and according to the information and explanations given to me, 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 my opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) (Amendment) Order, 2004 are not applicable to the company.

14. In my opinion, the company is not dealing in or trading in shares, securities, debentures, investments and other securities wherever applicable, Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) (Amendment) order, 2004 are not applicable to the company.

15. In my opinion, and according to the information and explanations given to me, the company has given corporate guarantee for loans taken by subsidiary companies from banks, the terms and conditions

are not prima facie prejudicial to the interest of the company.

16. In my opinion and according to the explanations given to me, the term loans have been applied for the purpose for which they are raised.

1 7 According to the information and explanations given to me and on an overall examination of the balance sheet of the company, I report that no funds raised on short-term basis have been used long-term investment.

18. According to the information and explanations given to me, the company has made any preferential allotment of shares during the year to parties covered in the register maintained under section 301 of the Companies Act, 1956. The price at which the issue is made are not prima facie prejudicial to the interest of the company.

19. According to the information and explanations given to me, the Company has not issued any debentures during the year and security for issue of debentures does not arise.

20. According to the information and explanations given to me, the Company has not raised money by public issue during the financial year and the disclosure of end use of money raised by public issues does not arise.

21. According to the information and explanations given to me, no fraud on or by the company has been noticed or reported during the course of my audit. For Prop.M/s.Ramanath & Co., Chartered Accountants

S.RAMANATH

Chartered Accountant

Place: Chennai Membership No: 029416

Date: 10th August 2012 Firm No: 013721s


Mar 31, 2010

1. We have audited the attached Balance Sheet of Gemini Communication Ltd., as at 31st March, 2010, Profit and Loss Account and Cash flow statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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) Amendment Order, 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 my comments in the Annexure referred to 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 the 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 and proper returns adequate for the purposes of our audit have been received from the branches not visited by us. The Branch Auditors Reports have been forwarded to us and have been properly dealt with.

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

d. In our opinion, the Balance Sheet, Profit and Loss account and Cash flow statement dealt with on this report comply with the accounting standards referred to in sub section (3C) section 211 of the Companies Act, 1956 to the extent applicable;

e. As explained to us and based on the written representation received from the directors, and taken on record by the Board of Directors We report that none of the directors are disqualified, as on 31st March 2010 from being appointed as a director in terms of clause (g) of subsection (1) of Section 274 of the Companies Act, 1956.

Attention is invited to note 16 in notes on accounts with regards pending confirmation of balances from Sundry Creditors, Sundry Debtors, Loans & Advances, Other Current Assets and Deposits wherein the effect, if any, on the financials are not quantifiable and note no 15 with regard to non provision of disputed demands towards Excise duty and Income tax.

g. Subject to above, in our opinion and to the best of our information and according to explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India,

a. in the case of the balance sheet, of the State of Affairs of the Company as at 31st March, 2010;

b. in the case of the Profit & Loss account, of the PROFIT for the year ended on that date; and

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

ANNEXURE TO THE AUDITORSREPORT Referred to in paragraph 3 of our report of even date

1.a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets which needs to be updated.

b) All the assets have been physically verified by the Management during the year. No material discrepancies were noticed during such verification.

c) Substantial part of fixed assets have not been disposed off during the year.

2.a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3.

a) The company has granted interest free unsecured loans to Subsidiary Companies, covered in the register maintained under section 301 of the Companies Act,1956. The number of parties are four. The Amout involved is Rs. 2185.54 Lakhs and the Outstanding balance is Rs. 1822.05 lakhs. The other clauses are not applicable.

b) The company has not taken any loan , secured or unsecured ,from the Companies , firms and other parties covered in the register maintained under section 301 of the Act. The other clauses are not applicable.

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 for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, We have not observed any continuing failure to correct major weaknesses in Internal Control System.

5.

a) According the information and explanations given to us, We are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act has been entered in the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the 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 during the year as defined under section 58A of the Companies Act, 1956.

7. In our opinion, the internal audit system of the company needs to be strengthened to commensurate with the size and nature of its business.

8. As per the information and explanations given to us the maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956.

9.

(a) The company is depositing, with some delays, with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues wherever applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March, 2010 for a period of more than six months from the date they became payable except a revision of Income Tax demand Rs.5.33 Lakhs relating to A.Y. 2001 -02.

(c) According to the information and explanation given to us, there are no dues of Sales tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute except as under :-

DEMAND ASSESMENT Rs. DISPUTED YEAR (In Lakhs) BEFORE

central 2000-01 56.40 CCE(A)

excise

Incometax 2002-03 10.45 HC, Chennai

Incometax 2006-07 419.69 HC, Chennai

Incometax 2007-08 62.07 AO, Chennai Incometax 2008-09 344.31 HC/AO, Chennai

10. In our opinion, the company has no accumulated losses as at the year end. The company has not incurred cash losses during the financial year covered under by our audit and immediately preceeding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institution, bank or debenture holders.

12. In our opinion 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.

13. In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund / Society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable to the company.

14.ln our opinion, the company is not dealing in or trading in shares, securities, debentures and

other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) (Amendment) Order, 2004 are not applicable to the company.

15. In our opinion and according to the information and explanations given to us, the company has given corporate guarantee for loans taken by subsidiary companies from banks,the terms and conditions are not prima facie prejudicial to the interest of the company.

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

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the no funds raised on short-term basis have been used for long- term investment.

18. According to the information and explanations given to us, the company has made preferential allotment of shares during the year to parties covered in the register maintained under section 301 of the Companies Act,1956. The price at which the issue is made are not prima facie prejudicial to the interest of the company.

19. According to the information and explanations given to us, the company has not issued any debentures during the year and creation of security for issue of debentures does not arise.

20. According to the information and explanations given to us, the company has not raised money by public issues during the financial year and the disclosure of end use of money raised by public issues does not arise

21. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For CNGSN & ASSOCIATES

CHARTERED ACCOUNTANTS

R.THIRUMALMARUGAN

PARTNER

MEMBERSHIP NO: 200102

FIRM NO :004915S

Place: Chennai

Date: 06/09/2010



 
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