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Auditor Report of Kumar Wire Cloth Manufacturing Co Ltd.

Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of Kumar Wire Cloth Manufacturing Company Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s 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.

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 the 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 the 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 the 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 31st March, 2014;

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

(c) in the case of the Cash Flow Statement, of the cash flows 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 purposes of our audit;

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

(c) the Balance Sheet, Statement of Profit and Loss and the 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 the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act;

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO MEMBERS OF M/S. KUMAR WIRE CLOTH MANUFACTURING COMPANY LIMITED FOR THE YEAR ENDED 31st MARCH, 2014.

Clause Sub Particulars

(i) (a) The company is in the process of updating records showing full particulars, including quantitative

details and situation of fixed assets.

(b) As per information provided to us, the fixed assets have been physically verified by the management at reasonable intervals and there were no material discrepancies noted during such verification.

(c ) There was no substantial disposal of fixed assets during the year.

(ii) (a) According to the information and explanations given to us, the inventories have been physically verified by the management at reasonable intervals.

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

(c) The company is maintaining proper records of inventory and as explained to us there were no material discrepancies, noticed on physical verification of inventory as compared to the book records.

(iii) (a) The Company has not granted loans to parties covered in the register maintained under section 301 of the Companies Act. Therefore, the provisions of Clause 4(iii)(b),(c) and (d) of the said Order are not applicable to the Company.

(b) The Company has taken interest free unsecured loans from one party covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans aggregated to Rs. 51,75,000/- and Rs. 45,75,000/-, respectively.

(c) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(d) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts, as stipulated, and is also regular in payment of interest, as applicable.

(iv) In our opinion and according to explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business. During

the process of audit, no major weakness has been noticed in the internal control.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the contracts or arrangements that need to be entered into the register required to be maintained under Section 301 of the Act, has been entered.

(b) In our opinion, and according to the information and explanations given to us, there are no transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees Five Lakhs in respect of any party during the year.

(vi) The Company has not accepted deposit from the public under section 58A and 58AA of the Companies Act and rules framed there under.

(vii) The company does not have any formal internal audit system.

(viii) As informed to us, there are no cost records prescribed by the central government under sec. 209(1)(d) of the Act, hence this clause is not applicable.

(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed statutory dues, including provident fund, investor education and protection fund, employees'' state insurance, income tax,sales tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to information and explanations given to us the Company is depositing undisputed statutory dues as per the scheme defined by Board for Industrial and Financial Reconstruction (BIFR) including Provident Fund, Investor education and Protection Fund Employees State Insurance Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty, Excise duty, Cess with the appropriate authorities. However as per the Draft Rehabilitation scheme sanctioned by BIFR vide its order dated February 25, 2010, following are the undisputed statutory dues as on 31St March, 2014:

Particulars Amount (Rs.)

Sales Tax 13,34,335/-

Interest on Sales Tax 59,06,618/-

CST 1,20,480/-

Interest on Income Tax 54,39,911/-

Grampanchayat Tax 1,44,859/-

(c) According to the information and explanations given to us, the dues of income tax, wealth tax, sales tax, custom duty, excise duty and cess which have not been deposited on account of dispute is as follow:

Statute Nature of Forum where dispute Period to which Amount Dues is pending the amount Involved relates (in Rs.)

Income Assessment Income Tax A.Y. 2008-09 39,782/- Tax Act dues Appellate Tribunal

Income Penalty Income Tax A.Y. 2008-09 1,27,68,676/- Tax Act Appellate Tribunal

(x) The accumulated losses of the company have exceeded fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our audit but incurred cash losses in the preceding financial years. However, The company has been declared sick by the Board for Industrial and Financial Reconstruction vide their order dated February, 21st 2006.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or banks.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares debentures and other securities.

(xiii) As the provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund societies are not applicable to the Company. Therefore, the provisions of Clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In 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 Order are not applicable to the Company.

(xv) The Company has given the guarantee of Rs.30 Lakhs for loan taken by Vishal Chairs Limited.

(xvi) The Company had not taken any term loan during the year.

(xvii) Based on the examination of documents and records made available and on the basis of information and explanations given to us, the Company has not used funds raised on short term basis for long term investments and vice versa.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act.

(xix) The Company has not issued any debentures; hence this clause does not applies.

(xx) The Company has not raised any money by public issue; hence this clause is not applicable.

(xxi) Based on the audit procedures performed and information and explanation given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For AMAR BAFNA & ASSOCIATES Chartered Accountants FRN:- 114854W

Amar Bafna Partner Membership No. 048639

Place: Mumbai Date: May 30, 2014


Mar 31, 2010

I. We have audited the attached Balance Sheet of Kumar Wire Cloth Manufacturing Company Limited as at 31st March 2010 and the Profit and Loss Account and Cash Flow Statement for the Year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

II. 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.

III. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of the said order such checks of the books of account and records of the company as we considered appropriate, we enclose in the Annexure a statement on the matters specified in the paragraph 4 and 5 of the said Order.

Further to our comments in Annexure referred to in paragraph 3 above:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit.

(b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appears from the examination of these books.

(c) The Balance Sheet and Profit and Loss Account dealt with by this report are m agreement with the books of accounts.

(d) In our opinion, the Balance Sheet and the Profit and Loss Account comply, in all material respects 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, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as at 31s1 March 2010 from being appointed as a Director under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956

(f) In our opinion and to the best of our information and explanations given to us the said accounts read with other notes thereon, gives the information required by the Companies Act, 1956 in the manner so required and gives a true and fair view:

i. In the case of the Balance Sheet of the state of affairs of the Company as at 31st March 2010.

ii. In the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date.

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

ANNEXURE TO AUDITORS REPORT RE: KUMAR WIRECLOTH MANUFACTURING COMPANY LIMITED Referred to in Paragraph 3 of our report of even dale.

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


(c) There has been no disposal of substantial part of the fixed assets during the year, which may affect the going concern status of the Company.

(ii) (a) According to information given to us, physical verification of inventories has been conducted at regular interval by the management.

(b) The procedure of physical verification followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

(c) The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) The Company has taken loans from Companies, firms or other parties, listed in the register maintained under section 301 of the Companies Act, 1956 on the terms and conditions which are not prejudicial to the interests of the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase and sale of inventories. During the course of our audit no major weaknesses have been noticed in the internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that there were no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. (b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. five Lacs and hence comment on these does not arise.

(vi) The Company has not accepted any deposit from Public and hence the question of applicability of directives issued by the Reserve Bank of India and the provisions of Section 58A and Section 58AA of the Companies Act 1956 and the Rules framed there under, does not arise.

(vii) In our opinion, based on the information and explanations given to us, the company has an Internal Audit System commensurate with its size and the nature of its business operations.

(viii)Based on the information and explanation; given to us, as explained to us, the Central Government has not prescribed maintenance of cost records.

(ix) (a)The company is regular in depositing the statutory dues to the extent applicable and there are no dues outstanding over six months which is pending except Sales Taxes dues Rs.142.40 lacs and Income Taxes Rs.98.76 lacs.

(x) The company has incurred cash losses in the financial year as well as in the previous financial year.

(xi) According to the information and explanations given to us and based on the documents and records produced 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.

(xii) In our opinion, the Company is not a Chit fund or Nidhi / Mutual benefit fund/Society. Therefore the provisions of clause 4(xiii) of Companies (auditors Report) Order, 2003 are not applicable to the Company.

(xiii)The company has not done any business in trading or dealing in shares and therefore there is no question of reporting on the same.

(xiv)According to the information and explanations given to us, the Company has not given during the year, any guarantee for loans taken by others from Banks or financial institutions. As a result, the question of our commenting whether the terms and conditions are prejudicial to the interest of the company does not arise.

(xv) In our opinion and according to the information and explanations given to us, the company has not taken any term loan during the year.

(xvi)According to the information and explanation given to us, and an overall examination of the Balance Sheet and Fund Flow Statement of the Company, we report that the company has not used funds raised on short-term basis for long-term investments. Further no long-term funds have been used for short-term assets.

(xvii)According to the information and explanations given to us, the Company has not made, during the year, any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xviii)According to the information and explanations given to us, the company has not issued any debentures during the year and therefore, no questions of creation of securities arise.

(xix)The company has not raised money from the public during the year and therefore question of reporting end use does not arise.

(xx) On the basis of our examination of the books of accounts and other relevant records and information made available to us, prima-facie we have not noticed any fraud on or by the Company, during the year. Further, the management has represented to us that no fraud on or by the Company has been reported during the year.

for J. H GHUMARA & CO.

Chartered Accountant

Place : Mumbai J. H GHUMARA

Date: 22nd July 2010. Proprietor

Member ship No. 14320.


Mar 31, 2009

I. We have audited the attached Balance Sheet of Kumar Wire Cloth Manufacturing Company Limited as at 31s1 March 2009 and the Profit and Loss Account and Cash Flow Statement for the Year ended on that date annexed thereto. These financial statements are the Responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

II. 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.

III. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, and on the basis of the said order such checks of the books of account and records of the company as we considered appropriate, we enclose in the Annexure a statement on the matters specified in the paragraph 4 and 5 of the said Order.

Further to our comments in Annexure referred to in paragraph 3 above:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit.

(b) In our opinion proper books of accounts as required by law have been kept by the company so far as it appears from the examination of these books.

(c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of accounts.

(d) In our opinion the Balance Sheet and the Profit and Loss Account comply, in all material respects 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, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as at 3T March 2009 from being appointed as a director under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956

(f) In our opinion and to the best of our information and explanations given to us the said accounts read with other notes thereon, gives the information required by the Companies Act, 1956 in the manner so required and gives a true and fair view:

i. In the case of the Balance Sheet of the state of affairs of the Company as at 31 st March 2009.

ii. In the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date.

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

ANNEXURE TO AUDITORS REPORT RE: KUMAR WIRECLOTH MANUFACTURING COMPANY LIMITED

Referred to in Paragraph 3 of our report of even date. I. (a) The Company has maintained proper fixed assets records to show full Particulars including quantitative details and situation of fixed assets.

(b) According to the information and explanations given to us, the management, during the year, has conducted physical verification of fixed assets. There were no discrepancies noticed on verification.

(c) There has been no disposal of substantial part of the fixed assets during the Year, which may affect the going concern status of the Company.

I (ii) (a) According to information given to us physical verification of inventories has been conducted at regular interval by the management.

(b) The procedure of physical verification followed by the management is Reasonable and adequate in relation to the size of the company and nature of its business.

(c) The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) The Company has taken loans from Companies, firms or other parties, listed in the register maintained under section 301 of the Companies Act, 1956 on the terms and conditions which are not prejudicial to the interests of the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase and sale of inventories. During the course of our audit no major weaknesses have been noticed in the internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that there were no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. (b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. five Lacs and hence comment on these does not arise.

(vi) The Company has not accepted any deposit from Public and hence the question of applicability of directives issued by the Reserve Bank of India and the provisions of Section 58A and Section 58AA of the Companies Act 1956 and the Rules framed there under, does not arise.

(vii) In our opinion, based on the information and explanations given to us, the company has an Internal Audit System commensurate with its size and the nature of its business operations.

(viii)Based on the information and explanations given to us, as explained to us, the Central Government has not prescribed maintenance of cost records.

(ix) (a) The company is regular in depositing the statutory dues to the extent applicable and there are no dues outstanding over six months which is pending except Sales Taxes dues Rs.157.47 lacs and Income Taxes Rs. 128.67 lacs.

(b) According to information given to us there are sales taxes dues disputed by the company as at 31" March 2009 which have not been deposited on account of a dispute as follows:



Name of the Nature of dues Amount under Periods to which Forum where statute dispute not amount relates the the dispute yet deposited is pending Rs. In Lakhs

1996-1997,

Central Sales Tax Sales tax inc luding 1997-1998, Appellate Act and Local interest and penalty 74.03 1998-1999, Authority up to Sales Tax Act as applicable 1999-2000, Commissio ners

2001-2002, leveljrib unal

(x) The company has incurred cash losses in the financial year as well as in the previous financial year.

(xi) According to the information and explanations given to us and based on the documents and records produced 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.

(xii)ln our opinion, the Company is not a Chit fund or Nidhi / Mutual benefit fund/Society. Therefore the provisions of clause 4(xiii) of Companies (auditors Report) Orde-, 2003 are not applicable to the Company.

(xiii)The company has not done any business in trading or dealing in shares and therefore there is no question of reporting on the same.

(xiv) According to the information and explanations given to us the Company has not given during the year any guarantee for loans taken by others from Banks or financial institutions. As a result, the question of our commenting whether the terms and conditions are prejudicial to the interest of the company does not arise.

(xv)ln our opinion and according to the information and explanations given to us, the company has not taken any term loan during the year.

(xvi) According to the information and explanation given to us, and an overall examination of the Balance Sheet and Fund Flow Statement of the Company, we report that the company has not used funds raised on short-term basis for long-term investments. Further no long-term funds have been used for short term assets.

(xvii) According to the information and explanations given to us, the Company has not made, during the year, any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xviii) According to the information and explanations given to us, the company has not issued any debentures during the year and therefore, no question of creation of securities arise.

(xix) The company has not raised money from the public during the year and therefore question of reporting end use does not arise.

(xx) On the basis of our examination of the books of account and other relevant records and information made available to us, prima-facie we have not noticed any fraud on or by the Company, during the year. Further, the management has represented to us that no fraud on or by the Company has been reported during the year.



for J. H GHUMARA & CO.

Charetered Accountants

Place : Mumbai, J. H. GHUMARA

Dated: 31st August, 2009 Prdprietor







 
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