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Auditor Report of Khaitan Electricals Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of KHAITAN ELECTRICALS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement and a summary of significant accounting policies and other explanatory information for the year then ended.

Management's responsibility for the financial statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

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 controls relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and 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 of the state of affairs of the Company as at 31st March, 2015 and its loss and its 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, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

i. 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.

ii. 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.

iii. 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.

iv. 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.

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

vi. With respect to the 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:

a. The Company has disclosed the impact of pending litigations on its financial position in its financial

statements - Refer Note 2.28 to the financial statements.

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

c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Statement referred to in our report of even date to the members of KHAITAN ELECTRICALS LIMITED on the financial statements for the year ended 31st March, 2015.

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

b) The fixed assets were physically verified during the year by the management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

ii) a) The inventories (excluding stocks with third parties) have been physically verified during the year by the management at reasonable intervals. In respect of inventories lying with third parties confirmation has been obtained from them.

b) In our opinion and according to the information and explanations given to us, the procedure of physical verification of stocks followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

c) On the basis of our examination, we are of the opinion that the Company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stocks and the book records.

iii) The Company has granted unsecured loan to a Company covered in the register maintained under section 189 of the Companies Act, 2013. The Company has not granted any secured / unsecured loan to firms or other parties covered in the register maintained under section 189 of the Act, 2013.

a) As informed to us, the aforesaid loan is repayable on demand. The Company is regular in payment of interest.

b) In respect of the aforesaid loan, there is no overdue amount more than Rs.1 Lakh.

iv) On the basis of the information and explanations given to us, we are of the opinion that the Company has an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have we been informed of continuing failure to correct any instance of major weaknesses in the aforesaid internal control system.

(v) The Company has not accepted any deposit within the meaning of section 73 to 76 or any other relevant provisions of the Act and the rules framed there under. The directives issued by the Reserve Bank of India are not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where pursuant to the rules made by the Central Government, the maintenance of Cost records has been prescribed under section 148(1) of the Act and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have, however, as we are not required, not made a detailed examination of such records, with a view to determine whether they are accurate and complete.

(vii) a) On the basis of our examination, undisputed statutory

dues including provident fund, employees' state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues, to the extent applicable have not generally been regularly deposited with appropriate authorities. However, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2015 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs. 1561.00 lacs that have not been deposited on account of matters pending before appropriate authorities are as under:

Name of the Statute Natute of Amount Period the Dues Rs in Lacs

Income Tax Act Income Tax 12.15 2010-11

State Sales Tax Sales Tax / 1198.35 2000-01, 2006-07 to Penalty 2012-13

The Central Excise Act Central Excise 338.03 1994-95, 1944 Duty 2000-01 to 2001-02 & 2007-08 to 2012-13

Penalty 10.00 2008-09

Finance Act, 1994 Service Tax 2.47 2011-12

Total 1561.00

Name of the Statute Forum where dispute is pending

Income tax Act Commissioner of Income tax (Appeals)

State Sales Tax AC, DC, Commissioner, Revision Board of Commercial Taxes, Tax Tribunal, High Court.

The Central Excise Act Commissioner of Central Excise, Tribunal, 1944 CESTAT Tribunal, Delhi

Finance Act 1994 Asstt. Commissioner, Service Tax

c) The amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time.

(viii) The Company's accumulated losses have exceeded 50% of its net worth at the end of the financial year. The Company has incurred cash losses during the year covered by our audit and also in the immediately preceding financial year.

(ix) Based on our audit procedure and on the basis of our information and explanations given to us, we are of the opinion that the Company has defaulted in payment of dues to banks during the year to the extent of Rs. 4737 Lacs which has been regularized upon restructuring of the dues by the banks. Further the company has defaulted in payment dues to a financial institution to the extent of Rs.146.24 Lacs, with delays ranging from 1 day to 30 months. The Company has not issued any debenture.

(x) On the basis of our examination and according to the information and explanations given to us, the Company

has not given any guarantee for loan taken by others from banks or financial institutions.

(xi) In our opinion and according to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

(xii) In our opinion 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 V. S. Rao & Co. For G. P. Agrawal & Co. Chartered Accountants Chartered Accountants F.R.No.003157S F.R.No.302082E

(CA. V. G. Tarak Nath) (CA. Rakesh Kumar Singh) Partner Partner Membership No.23302 Membership No. 66421

Kolkata Date: 29th May, 2015


Mar 31, 2014

We have audited the attached Balance Sheet of KHAITAN ELECTRICALS LIMITED as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date 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 notified under the Companies Act, 1956 ("the Act") read with the General Circular no. 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.

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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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, we 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, 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 Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular no. 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 to the Auditors'' Report

Statement referred to in our report of even date to the members of KHAITAN ELECTRICALS LIMITED on the financial statements for the year ended 31st March, 2014.

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

b) According to the information and explanations given to us, the fixed assets were physically verified by the Management in a phased periodical manner 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.

c) In our opinion, and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

ii) a) Physical verification has been conducted by the management at reasonable intervals in respect of inventory of raw materials, stores and spare parts, stock-in-process and stock-in-trade in the Company''s possession. The existence of stocks lying with third parties as at 31st March, 2014 has been substantially confirmed based on confirmations or statements of account received from such third parties. In our opinion, the frequency of physical verification is reasonable.

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

c) In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed between the physical inventory as verified and the book records were not material.

iii) a) The Company has not given any loan during the year to companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently, the provisions of para (iii) (a),(b),(c) and (d) of the Order are not applicable.

b) The Company has not taken any loan during the year from companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently, the provisions of para (iii) (e),(f) and (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the register maintained under Section 301 of the Act, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Act, and exceeding the value of Rupees Five lakhs in respect of any party during the year, except where suitable alternative sources do not exist for obtaining comparable quotations, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposit from the public within the meaning of Section 58A and 58AA of the Act and the rules framed there under.

vii) In our opinion the existing internal audit system employed by the Company is commensurate with the size of the Company and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(1)(d) of the Act. We are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, the undisputed statutory dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have been regularly deposited by the Company during the year with the appropriate authorities except for delays in many cases which were not serious. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs. 13,63,72,213/- that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Statute Nature of Amount Period the Dues (Rs)

State Sales Tax/ Sales Tax & 7,78,60,732 1994-95 to Central Sales Tax Penalty 1995-96, 2000-01 to 2011-12

State Entry Tax Entry Tax 1,56,79,730 2000-01 2006-07 to 2012-13

The Central Excise Central 3,38,03,204 1994-95, Act, 1944 Excise Duty 2000-01 to 2001-02 & 2007-08 to 2012-13

Penalty 10,00,000 2008-09

Finance Act, 1994 Service Tax 2,47,054 2011-12

Haryana Urban Extension Fee 71,03,310 1981 - 2002 Development Authority Act, 1977 Employees State ESI Contribution 6,78,183 1994-95 Insurance Act, 1948

Total 13,63,72,213

Name of the Statute Forum where dispute is pending State Sales Tax/ AC, DC, Commissioner, Revision Central Sales Tax Board of Comm. Taxes, Tax Tribunal, High Court. State Entry Tax Asstt. Commissioner The Central Excise Commissioner of Centrial Excise, Act, 1944 Tribunal, CESTAT

Tribunal, Delhi

Finance Act, 1994 Asstt. Commissioner Service Tax

Haryana Urban Administration of Haryana Development Development Authority. Authority Act, 1977 Employees State ESI Court Insurance Act, 1948

x) The Company does not have any accumulated losses as at 31st March, 2014. The company has incurred cash losses during the current year though not in the immediately preceding year.

xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to banks and financial institutions. The Company did not have any outstanding debentures during the year.

xii) Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of the security by way of pledge of shares, debentures and other securities.

xiii) As explained to us, the provisions of any special statue applicable to chit fund, nidhi, mutual benefit fund or society are not applicable to the Company.

xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. However, the Company has made investment in shares in respect of which proper records have been maintained of the transaction and contracts and timely entries have been made therein, and the shares are held by the Company, in its own name.

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) The Company has raised new term loan during the year. The term loan outstanding at the beginning of the year and those raised during the year has been applied for the purpose for which they were raised.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term purposes.

xviii) 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 Act.

xix) There are no debentures issued and outstanding at the year end.

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

xxi) According to the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For V. S. Rao & Co. For G. P. Agrawal & Co. Chartered Accountants Chartered Accountants (FR No. 003157S) (FR No. 302082E)

CA. V. G. Tarak Nath (CA. Rakesh Kumar Singh) Partner Partner Membership No.23302 Membership No. 66421

Kolkata Date: 29th May, 2014


Mar 31, 2013

Report on the financial statements

We have audited the attached Balance Sheet of KHAITAN ELECTRICALS LIMITED as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date 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

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 the management, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

Confirmation of debtors'' account balances including interest charged for delayed payments have not been obtained in many cases the impact of which, if any, on the profit, reserves & surplus and assets is not ascertainable.

Qualified Opinion

in our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, 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, 2013;

(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.

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, we 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, 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) except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, in our 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;

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 is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (gj of sub-section (1) of section 274 of the Companies Act, 1956.

Statement referred to in our report of even date to the members of KHAITAN ELECTRICALS LIMITED on the financial statements for the year ended 31st March, 2013.

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

b) According to the information and explanations given to us, the fixed assets were physically verified by the Management in a phased periodical manner 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.

c) In our opinion, and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

ii) a) Physical verification has been conducted by the management at reasonable intervals in respect of inventory of raw materials, stores and spare parts, stock-in-process and stock-in-trade in the Company''s possession. The existence of stocks lying with third parties as at 31st March, 2013 has been substantially confirmed based on confirmations or statements of account received from such third parties. In our opinion, the frequency of physical verification is reasonable.

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

c) In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed between the physical inventory as verified and the book records were not material.

iii) a) The Company has not given any loan during the year to companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently, the provisions of para (iii) (a),(b),(c) and (d) of the Order are not applicable.

b) The Company has not taken any loan duringthe year from companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently, the provisions of para (iii) (e),(f) and (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Act, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Act, except where suitable alternative sources do not exist for obtaining comparable quotations, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposit from the public within the meaning of Section 58A and 58AA of the Act and the rules framed there under.

vii) In our opinion the existing internal audit system employed by the Company is commensurate with the size of the Company and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(l)(d) of the Act. We are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, the undisputed statutory dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income- tax, sales-tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have generally been regularly deposited by the Company during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2013 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs. 940.04 lakhs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Statute Nature of Amount Period Forum where dispute is pending the Dues (Rs in lacs)

State Sales Tax/ Sales Tax 591.64 1991-92, 1993-94 AC, DC, Commissioner, Revision Central Sales Tax Penalty to 2010-11 Board of Comm. Taxes, Tax Tribunal, High Court.

Central Excise Act Central 7.37 2000-01 to Tribunal Excise Duty 2001-02

225.89 2007-08 Tribunal

24.85 2010-11 CESTAT, Delhi

Penalty 10.00 2008-09 Commissioner of Centrial Excise

Finance Act, 1994 Service Tax 2.47 2011-12 Asstt. Commissioner Service Tax

Urban Develop ment Act Extension Fee 71.03 1981-2002 Administration of Haryana Development Authority.

Employees State ESI Contribution 6.78 1994-95 ESI Court Insurance Act

Total 940.04

x) The Company does not have any accumulated losses as at 31st March 2013. The Company has incurred cash losses during the immediately preceding year though not in the current year.

xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to banks and financial institutions. The Company did not have any outstanding debentures during the year.

xii) Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of the security by way of pledge of shares, debentures and other securities.

xiii) As explained to us, the provisions of any special statue applicable to chit fund, nidhi, mutual benefit fund or society are not applicable to the Company.

xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. However, the Company has made investment in shares in respect of which proper records have been maintained of the transaction and contracts and timely entries have been made therein, and the shares held by the Company, in its own name.

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) The Company has raised new term loans during the year. The term loans outstanding at the begining of the year and those raised during the year have been applied for the purposes for which they were raised.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term purposes.

xviii) 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 Act.

xix) There are no debentures issued and outstanding at the year end.

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

xxi) According to the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For V.S. Rao & Co. For G.P. Agrawal & Co.

Chartered Accountants Chartered Accountants

(Registration No. 003157S) (Registration No. 302082E)

CA. V.G. Tarak Nath CA. Ajay Agrawal

Partner Partner

Membership No.23302 Membership No.17643

Kolkata

May 29th, 2013


Mar 31, 2010

We have audited the attached Balance Sheet of Khaitan Electricals Limited as at 31st March, 2010 and also the Profit and Loss Account of the Company for the year ended on that date, annexed thereto, and the Cash Flow Statement for the year ended on that date. 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.

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.

As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the Order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act), we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to 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 purposes of 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 and Loss Account and Cash Flow Statement dealt with by this report comply with

the accounting standards, referred to in sub-section (3C) of Section 211 of the Act, to the extent applicable ;

v) On the basis of written representations received from the Directors of the Company as on 31st 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 Director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 31st March, 2010;

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

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



AnneXUre tO the Auditors Report (Referred to in our report of even date)

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

b) According to the information and explanations given to us, the fixed assets were physically verified by the Management in a phased periodical manner 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

c) In our opinion, and according to the information and explanations given to us, no substantial part of fixed assets has been disposed of by the Company during the year.

ii) a) Physical verification has been conducted by the management at reasonable intervals in respect of inventory of raw materials, stores and spare parts, stock-in-process and stock-in-trade in the Companys possession. The existence of stocks lying with third parties as at 31st March, 2010 has been substantially confirmed based on confirmations or statements of account received from such third parties. In our opinion, the frequency of physical verification is reasonable.

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

c) In our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed between the physical inventory as verified and the book records were not material.

iii) a) The Company has given loan during the year to two companies covered in the register maintained under section 301 of the Act. The maximum amount outstanding at any time during the year including loan to one company brought forward from the previous year was Rs.811.50 lacs and the year end balance is Rs.Nil

b) In our opinion, the rate of interest and other terms and conditions on which the loan fias been given to the two companies listed in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

c) In respect of the said loans, the borrowers have been regular in the payment of the interest as stipulated. The principal amounts are repayable on demand and there is no repayment schedule. Accordingly paragraph 4 (iii)(c) of the Order is not applicable to the Company in respect of repayment of the principal amount.

d) In respect of the said loans, there were no overdue amounts of more than rupees one lakh. Accordingly paragraph 4 (iii)(d) of the Order is not applicable.

e) The Company has not taken any loan during the year from parties covered in the register maintained under section 301 of the Act. Consequently, the provisions of para (iii) (e),(f) and (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Act, have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Act, except where suitable alternative sources do not exist for obtaining comparable quotations, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposit from the public within the meaning of Section 58A and 58AA of the Act and the rules framed there under.

vii) In our opinion the existing internal audit system employed by the Company is commensurate with the size of the Company and nature of its business.

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under Section 209(l)(d) of the Act. We are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix) a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, the undisputed statutory dues in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have generally been regularly deposited by the Company during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2010 for a period of more than six months from the date of becoming payable.

b) The disputed statutory dues aggregating to Rs. 562.74 lakhs that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Nature Amount Period Forum where dispute is Statute of pending the Dues (Rs in lacs)



State Sales Tax/ Sales Tax 251.47 1991-92,1993-94 AC, DC, Commissioner, Revision Central Sales Tax Penalty to 2007-08 Board of Comm. Taxes, Tax Tribunal, High Court.

Central Excise Act Central 7.37 2000-01 Tribunal Delhi

Excise Duty 2001-02

Penalty 225.89 2007-08 Tribunal Delhi

0.20 2007-08 Commissioner of Central

Excise

Urban Development Act Extension Fee 71.03 1981-2002 Administration of Haryana Development Authority.

ESI ESI Contribution 6.78 1994-95 ESI Court

Total 562.74

x) The Company does not have any accumulated losses as at 31st March 2010 and has not incurred cash losses during the current year. The company has incurred cash losses in the immediately preceding year.

xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to banks and financial institutions. The Company did not have any outstanding debentures during the year.

xii) Based on our examination of documents and records, we are of the opinion that the Company has not granted loans and advances on the basis of the security by way of pledge of shares, debentures and other securities.

xiii) As explained to us, the provisions of any special statue applicable to chit fund, nidhi, mutual benefit fund or society are not applicable to the Company.

xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. However, the Company . has made investment in shares in respect of which proper records have been maintained of the transaction and contracts and timely entries have been made therein, and the shares hold by the Company, in its own name.

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) According to the information and explanations given to us, the Company has not taken any term loan during the year.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term purposes.

xviii) 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 Act.

xix) There are no debentures issued and outstanding at the year end.

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

xxi) According to the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For V.S. Rao & Co. For G.P. Agrawal & Co.

Chartered Accountants Chartered Accountants

(Registration No. 003157S) (Registration No. 302082E)



CA. V.G. Tarak Nath CA. Sunita Kedia

Partner Partner

Membership No.23302 Membership No.60162

Kolkata

May 29, 2010



 
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