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Auditor Report of Magna Electrocastings Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of MAGNA ELECTRO CASTINGS LIMITED ("the company"), which comprise the Balance Sheet as at 31 March 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 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 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 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 the 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.

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 the sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. 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 it appears from our examination of those books.

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) 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.

f) 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 :

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 27 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.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 1 of our report on other Legal and Regulatory Requirements)

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

(b) Fixed Assets have been physically verified by the Management at reasonable intervals. No material discrepancies were noticed on such verification ;

(ii) (a) Physical verification of inventory has been conducted at reasonable intervals by the management ;

(b) 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) Company is maintaining proper records of inventory and material discrepancies, if any, noticed on physical verification have been properly dealt with in the books of account;

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

(iv) There is 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. During the course of our audit, no major weakness has been noticed in the internal control system;

(v) The Company has not accepted any deposit from the public during the year.

(vi) We have broadly reviewed the records maintained by the company pursuant to the rules made by the Central Government for the maintenance of the cost records u/s.148(1), of the Act. We are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

(vii) (a) The company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanation given to us, no undisputed arrears of statutory dues were outstanding as on 31.3.2015, for a period of more than 6 months from the date they become payable;

(b) According to the records of the company, the following are disputed statutory dues remaining unpaid :

Sl. Name of the Period to which the Nature of the Amount No. Statute Amount relates Demand disputed Rs. Rs.

1 Income Tax Asst Year Regular 4,32,198 Act, 1961 2007-08

2 Income Tax Asst Year Regular 20,65,720 Act, 1961 2008-09

Sl. Name of the Amount Forum where No. Statute paid dispute is pending

1 Income Tax Nil CIT (A) Act, 1961

2 Income Tax Nil ITAT Act, 1961

The Company does not have accumulated losses at the end of the financial year and it has not incurred cash loss in the current year and in the immediately preceding financial year ;

(c) There has been no delay in transferring amounts, required to be transferred , to the Investor Education and protection fund by the company.

(viii) The company has not defaulted in repayment of dues to financial institution or bank.

(ix) The Company has not given any guarantee for loans taken by others from bank or financial institutions;

(x) The term loan obtained by the company has been applied for the purpose for which they were availed;

(xi) Based upon the audit procedures performed and information and explanations given by the management, we report that no frauds on or by the company has been noticed or reported during the course of our audit.

For S.Krishnamoorthy & Co.

Chartered Accountants (Registration No. 001496S)

K.N.Sreedharan Place: Coimbatore Partner, Auditor Date: 28th May 2015 Membership No.12026




Mar 31, 2014

We have audited the accompanying financial statements of Magna Electro Castings Limited ("the Company"), which comprise the Balance Sheet as at March 31,2014, and 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") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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 Statement of Profit and Loss , 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) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013; 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 (Referred to in Paragraph 1 of our Report on Other Legal and Regulatory Requirements)

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

(b) Fixed Assets have been physically verified by the Management at reasonable intervals. No material discrepancies were noticed on such verification ;

(c) The company has not disposed off a substantial part of fixed assets during the year

(ii) (a) Physical verification of inventory has been conducted at reasonable intervals by the management;

(b) 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) Company is maintaining proper records of inventory and material discrepancies, if any, noticed on physical verification have been properly dealt with in the books of account;

(iii) The Company has not taken/granted any loans, secured or unsecured from/to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956;

(iv) There is 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. During the course of our audit, no major weakness has been noticed in the internal control system;

(v) (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the contracts and agreements that need to be entered into the register maintained u/s.301 of the Companies Act, 1956 have been so entered;

(b) In our opinion and according to the information and explanation 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;

(vi) The Company has not accepted any deposit from the public during the year.

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

(viii) We have broadly reviewed the records maintained by the company pursuant to the rules made by the Central Government for the maintenance of the cost records u/s.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 not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) (a) The company is regular in depositing undisputed statutory dues including Provident Fund, Investor education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. According to the information and explanation given to us, no undisputed arrears of statutory dues were outstanding as on 31.3.2014, for a period of more than 6 months from the date they become payable;

(b) According to the records of the company, the following are disputed statutory dues remaining unpaid :

Sl. Name of the Period to which the Nature of the Amount No. Statute Amount relates Demand disputed Rs.

1 Income Tax Asst Year Regular 4,32,198 Act, 1961 2007-08

2 Income Tax Asst Year Regular 20,65,720 Act, 1961 2008-09

3 Income Tax Asst Year Regular 68,48,860 Act, 1961 2009-10



Name of the Statue Amount Forum where paid dispute is Rs. pending

Income Tax Act, 1961 Nil ITAT

Income Tax Act, 1961 Nil ITAT

Income Tax Act, 1961 7,00,000 ITAT

(x) The Company does not have accumulated losses at the end of the financial year and it has not incurred cash loss in the current Year. It has not incurred cash loss in the immediately preceding financial year ;

(xi) The Company has not defaulted in repayment of dues to financial institution or bank.

(xii) During the year 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) The provisions of special statute applicable to Chit Fund, Nidhi /Mutual Benefit Fund/ Societies are not applicable to the company ;

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

(xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions;

(xvi) The Company has not availed any new term loans during the year;

(xvii) According to the information and explanation given to us and on an overall examination of the Balance sheet of the Company, no funds raised on short term basis have, prima facie, been used during the year for long term investment ;

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

(xix) During the year the Company has not issued any debentures;

(xx) During the year the Company has not raised money by public issue.;

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For S.Krishnamoorthy & Co.

Chartered Accountants (Registration No. 001496S)

K.N.Sreedharan

Place: Coimbatore Partner, Auditor

Date : 19th May 2014 Membership No.12026


Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s MAGNA ELECTRO CASTINGS LIMITED as at March 31 st, 2012, the Profit & Loss statement and the cash flow statement for the year ended as on that date annexed thereto. These financial statements are the responsibility of the management of the company. 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for ouropinion.

3. As required by the Companies' (Auditor's Report) Order, 2003, issued by the 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 paragraph 4 of the said order.

4. Furtherto ourcomments in theAnnexure 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 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, Profit & Loss statement and Cash flow statement referred to in this report are in agreement with the books of account.

d) In ouropinion, the Balance Sheet, Profit and Loss statement 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 Companies Act, 1956.

e) On the basis of written representations received from the directors individually as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the directors of the company are disqualified from being appointed as director in terms of Section 274(1 )(g) of the Companies Act 1956.

f) In ouropinion and to the best of our information, and according to the 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;

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

ii) In the case of the Profit & Loss statement, of the Profit forthe year ended on that date; and

iii) In the case of the cash flow statement, of the cash flows for the year ended on that date.

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

(b) Fixed assets have been physically verified by the management at periodic intervals. Verification of Fixed Assets, in our opinion, is reasonable having regard to the size of the company and nature of its assets. No material discrepancies have been noticed on such verification.

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

ii. (a) Physical verification of inventory has been conducted at reasonable intervals by the management.

In respect of inventory lying with the third parties, these have been confirmed by them. In our opinion the frequency of verification is reasonable.

(b) The procedure of physical verification of the inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verification of inventories as compared to book records.

iii. During the year, the company has neither granted loans to nor taken any loans from companies, firms or other parties covered in the Register maintained under sec.301 of the Companies Act.

iv. There is an adequate internal control system 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, no major weakness has been noticed in the internal control system.

v. (a) To the best of our knowledge and belief, and according to the information and explanations given to us, we are of the opinion that the transaction that need to be entered into the register in pursuance of section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanation given to us , the transactions made in pursuance of such contract or arrangement have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. The company has not accepted any deposit from the public during the year.

vii. The company has an adequate Internal Audit system commensurate with the size and nature of its business.

viii. We have been informed by the management, that no cost records have been prescribed under section 209(1) (d) of the Companies Act 1956 in respect of products manufactured by the company.

ix. (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including 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 statutory dues. According to the Information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st March, 2012 for a period of more than six months from the date they become payable.

(b) According to the records of the company, the following are disputed statutory dues remaining unpaid:

Sl. Name of the Period to which the Nature of the No. Statute Amount relates Demand

1 Income Tax Asst Year Regular Act, 1961 2007-08

2 Income Tax Asst Year Regular Act, 1961 2008-09

3 Income Tax Asst Year Regular Act, 1961 2009-10

4 Central Excise Nov'05 to Excise duty Act, 1944 Dec'06

Name of the statute Amount Amount Forum where disputed paid dispute is Rs. pending

Income Tax Act,1961 4,03,920 Nil ITAT CIT (Appeals)

Income Tax Act,1961 20,65,720 Nil CIT (Appeals)

Income Tax Act,1961 68,48,860 7,00,000 CIT (Appeals)

Central Excise Act,1994 8,07,267 Nil Assistant Commissioner of Central Excise

x. There are no accumulated losses at the end of the financial year 31st March 2012. The company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanation given to us the company has not defaulted in repayment of its dues to financial institution or bank.

xii. During the year, the company has not granted any loans and advances on the basis of security or by way of pledge of shares, debentures or other securities.

xiii. The provisions of Special Statues applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the company.

xiv. The company is not dealing or trading in shares, securities, debentures or other investments.

xv. The company has not given any guarantee for loans taken by others from banks and financial institutions.

xvi. The term loans obtained by the company have 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 Source and Application of the funds of the company, we report that funds raised on short-term basis have not been used for long-term investments by the company.

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, 1956.

xix. In our opinion and according to the information and explanations given to us the company has not issued any secured debentures during the period covered by our report.

xx. The company has not raised any funds through public issue during the year.

xxi. To the best of knowledge and belief and according to the information and explanations given to us no frauds on or by the company has been noticed or reported during the year.

For S.Krishnamoorthy & Co.

Chartered Accountants

(Registration No. 001496S)

K.N.Sreedharan

Place: Coimbatore Partner, Auditor

Date: 21.05.2012 Membership No.12026


Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s MAGNA ELECTRO CASTINGS LIMITED as at March 31st, 2010 and the Profit & Loss Account and the cash flow statement for the year ended as on that date annexed thereto. These financial statements are the responsibility of the management of the company. 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended, issued by the 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 paragraph 4 of the said order.

4. Further to our 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 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, Profit & Loss Account and Cash flow statement referred to 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 by this report 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 individually as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the directors of the company are disqualified from being appointed as director in terms of Section 274(1)(g) of the Companies Act 1956.

f) 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 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 Balance Sheet, of the state of affairs of the Company as at March 31, 2010 and ii) In the case of the Profit & Loss Account, of the Profit of the Company for the year ended on that date; and iii) In the case of the cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of 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) Fixed assets have been physically verified by the management at periodic intervals. Verification of Fixed Assets, in our opinion, is reasonable having regard to the size of the company and nature of its assets. No material discrepancies have been noticed on such verification.

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

ii. (a) Physical verification of inventory has been conducted at reasonable intervals by the management. In respect of inventory lying with the third parties, these have been confirmed by them. In our opinion the frequency of verification is reasonable.

(b) The procedure of physical verification of the inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The company has maintained proper records of inventories and no material discrepancies were noticed on physical verification of inventories as compared to book records.

iii. During the year, the company has neither granted loans to nor taken any loans from companies, firms or other parties covered in the Register maintained under sec.301 of the Companies Act.

iv. There is an adequate internal control system 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, no major weakness has been noticed in the internal control system.

v. (a) To the best of our knowledge and belief, and according to the information and explanations given to us, we are of the opinion that the transaction that need to be entered into the register in pursuance of section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of such contract or arrangement have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. The company has not accepted any deposit from the public during the year.

vii. The company has an adequate Internal Audit system commensurate with the size and nature of its business.

viii. We have been informed by the management, that no cost records have been prescribed under section 209(1)(d) of the Companies Act 1956.in respect of products manufactured by the company.

ix. (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employees state insurance, Incometax, Sales tax, Wealth tax, Service Tax, Custom duty, Excise duty, Cess and other statutory dues. According to the Information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st March 2010 for a period of more than six months from the date they become payable.

(b) According to the records of the company, the following are disputed statutory dues remaining unpaid :

Sl. Name of the Period to which the Nature of the No. Statute Amount relates Demand

1 Income Tax Ass Year Regular Act, 1961 2007-08

Name of the Statue Amount Amount Forum where disputed paid dispute is Rs. pending

Income Tax 4,32,198 Nil CIT Act, 1961 (Appeals)

x. There are no accumulated losses at the end of the financial year 31st March 2010. The company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanation given to us the company has not defaulted in repayment of its dues to financial institution or bank.

xii. During the year, the company has not granted any loans and advances on the basis of security or by way of pledge of shares, debentures or other securities.

xiii. The provisions of Special Statues applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the company.

xiv. The company is not dealing or trading in shares, securities, debentures or other investments.

xv. The company has not given any guarantee for loans taken by others from banks and financial institutions.

xvi. The term loan obtained by the company have 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 Source and Application of the funds of the company, we report that funds raised on short-term basis have not been used for long-term investments by the company.

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, 1956.

xix. In our opinion and according to the information and explanations given to us the company has not issued any secured debentures during the period covered by our report.

xx. The company has not raised any funds through public issue during the year.

xxi. To the best of knowledge and belief and according to the information and explanations given to us no frauds on or by the company has been noticed or reported during the year.

For S.Krishnamoorthy & Co. Chartered Accountants

(Registration No. 001496S)

K.N.Sreedharan

Place: Coimbatore Partner, Auditors

Date: 27.05.2010 Membership No.12026



 
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