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Auditor Report of Miven Machine Tools Ltd.

Mar 31, 2014

We have audited the attached Balance Sheet of Miven Machine Tools Limited ("the Company"), Hubli as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the period 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 15/2013 dated September 13, 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 fair presentation of the financial statements that 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 entity''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 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.

Basis of Qualified Opinion :

We have relied on the representation of the Company that the amount due from a customer as referred to in note 21 (iii) of Rs. 1,457,586/- is good of recovery and no provision is required in respect of the claims made by the customer of Rs.7,348,629/-. Pending completion of legal proceedings and in view of uncertainties involved, we are unable to form any opinion on the matter. Effect of any shortfall in provision for doubtful debts due to the above on the financial statements 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 effects of the matters described in the Basis of Qualified Opinion paragraph, the said financial statements give the information as 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. Emphasis of Matter:

Attention of the members is invited to note 32 of the financial statement regarding reasons for preparing the financial statements of the Company on going concern basis, not with standing the fact that networth of the Company is completely eroded. The appropriateness of the said basis is interalia dependent on the Company''s ability to execute sale orders and the support of the Company''s bankers and the Holding Company. We have also relied on the representation of the Company in this respect.

Annexure Referred to in PARA 1 under the heading "Report on other legal and regulatory requirements" of our report of even date to the members of MIVEN MACHINE TOOLS LIMITED

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

b. These assets have been physically verified by the management as per programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Discrepancies noticed on such verification have been appropriately adjusted in the books of account.

c. In our opinion, there are no substantial disposal of fixed assets during the year and hence clause 4(i)(c) of the Order is not applicable.

2. a) Inventories other than those lying with the third parties have been physically verified during the year by the management. In our opinion, the frequency of the verification is reasonable.

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

c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory in respect of raw materials and components, finished goods and material lying with the third parties. Work in progress at the factory is as per the physical inventory. Material lying with third parties amounting to Rs.510,678/- included in raw materials and components are subject to confirmation. The discrepancies noticed on verification between physical stocks and book records other than work in progress at the factory were not material. Discrepancies in respect of work in progress, if any, are not ascertainable.

3. a) The Company has taken loans from a Director of the Company Rs.3,775,000/-, its holding Company Rs.9,308,841/-and Companies in which Directors are interested Rs.34,270,128/-. The terms and Conditions of such loans are prima facie, not prejudicial to the interest of the Company. The maximum amount due and outstanding at the end the year from all the parties was Rs.47,353,969/-. There are no stipulations for repayment of the above loan and there is no interest obligation on loan from directors and certain companies in which directors are interested. However, there were delays in repayment of interest to parties stated above for certain months and were in arrears to an extent of Rs.5,313,369 as at March 31,2014.

b. The Company has not granted any loans to companies covered in the register maintained under section 301 of the Act hence clause 4 (iii) (a) to (d) of the Order is not applicable

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to sale of goods & services, purchase of goods and fixed assets during the year. We have not observed any, continuing failure on the part of the Company to correct major weakness in internal control.

5. a. According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered during the year, into the register maintained under section 301 of the Act have been so entered.

b. 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 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. However, these materials are customised to the requirements of the Company and there are no similar transactions with third parties to confirm the same.

6. The Company has not accepted any deposits from the public during the year as referred to in sections 58A & 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975, hence clause 4 (vi) of the Order is not applicable.

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

8. We have broadly reviewed the Cost Records maintained by the Company as prescribed by the Central Government under clause (d) of sub section (1) of 209 of the Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not made a detailed examination to ensure their accuracy or completeness.

9. a. According to the information and explanation given to us there were delays in depositing with appropriate authorities undisputed statutory dues relating to Employee Provident Fund, Employees'' State Insurance, Income Tax deducted at Source and Property Tax. However, there were no material delays in remittance of value added tax, Excise duty, Service tax, Customs duty, sales tax or other applicable statutory dues of material value. According to the information and explanations'' given to us, remittances to Investor Education and Protection Fund and Wealth Tax are not applicable.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Sales Tax, Provident Fund, Investor Protection Fund, Employees State Insurance, Customs Duty, Excise Duty, Service Tax, Cess or other statutory dues of material value were in arrears, as at March 31, 2014 for a period of more than six months from the date on which they became payable except for interest on fringe benefit tax for the assessment year 2008 - 09 amounting to Rs.51,467/-.

c. According to the information and explanation given to us there are no dues in respect of Sales Tax, Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute. As detailed in Note 21 (v) of the financial statements property tax and penalty relating to prior years amounting to. Rs.25,128,186/- has not been provided or deposited pending finalisation of the matter.

10. In our opinion, the accumulated losses of the Company are more than fifty percent of its net worth. The Company has incurred cash losses of Rs. 15,038,290 /- in respect of year under report and Rs.11,178,000/- in respect of the preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment instalment of Rs.1,197,697 on term loan and interest of Rs.587,628 for the month of February and March 2014 to a bank. The Company has not taken any loans from financial institutions or issued any debentures.

12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence clause 4 (xii) of the Order is not applicable to the Company.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

14. In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the Order is not applicable to the Company.

15. The Company has not given guarantees for loans taken by others from banks or financial institutions and hence clause 4(xv) of the Order is not applicable.

16. According to the information and explanations given to us and in our opinion, the term loan taken from the bank during the year was utilised for the purpose for which the same was taken.

17. According to the information and explanations given to us and on an overall examination of the balance sheet and cash flows of the Company, we report that funds raised on short-term basis have been used for long term investment during the year to an extent of Rs.26,234,093/-.

18. According to the information and explanations given to us, the Company has not issued any capital during the year. Accordingly paragraph 4(xviii) of the Order is not applicable.

19. According to the information and explanations given to us, there are no debentures issued by the Company and hence clause 4(xix) of the Order, regarding creation of securities is not applicable.

20. The Company has not made any public issue during the year and hence clause 4(xx) of the Order regarding end use of money is not applicable.

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

For B.K. Ramadhyani & Co Chartered Accountants Firm Registration No. 002878 S

C.A, C. R. DEEPAK Partner Membership No. 215398

Date: May 29th, 2014 Place: Pune


Mar 31, 2012

1. We have audited the attached Balance Sheet of Miven Machine Tools Limited ("the Company"), Hubli as at March 31, 2012, the Statement of Profit & Loss and Cash Flow Statement for the year, ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 as amended, ("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 to the best of our knowledge and belief, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. a) We have relied on the representation of the Company

that the amount due from a customer as referred to in note 20 (iii) of Rs. 1,457,586 is good of recovery and no provision is required in respect of the claims made by the customer of Rs. 7,348,629. Pending completion of legal proceedings and in view of uncertainties involved, we are unable to form any opinion on the matter. Effect of any shortfall in provision for doubtful debts due to the above on the financial statements is not ascertainable.

b) Without qualifying our report attention of the members is invited to note 31 of the financial statement regarding reasons for preparing the financial statements of the Company on going concern basis, notwithstanding the fact that its networth of the Company is completely eroded. The appropriateness of the said basis is interalia dependent on the Company's ability to execute sale orders and the support of the Company's bankers and the Holding Company. We have also relied on the representation of the Company in this respect.

5. 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 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 and Statement of Profit & Loss dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet and statement of Profit and Loss, dealt with by this report comply in all material aspects of the mandatory accounting standards referred to in sub-section (3C) of section 211 of the Act.

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

f) In our opinion and to the best of our information and according to the explanations given to us the said accounts read with notes give the information as 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;

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

ii) In the case of the Statement of Profit & Loss, the loss 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

(As referred to in Para 3 of our Report to the Members of Miven Machine Tools Limited, Hubli)

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

b) These assets have been physically verified by the management as per programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Discrepancies noticed on such verification have been appropriately adjusted in the books of account.

c) In our opinion, there are no substantial disposal of fixed assets during the year and hence clause 4(i)(c) of the Order is not applicable.

2. a) Inventories other than those lying with the third parties have been physically verified during the year by the management. In our opinion, the frequency of the verification is reasonable.

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

c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory in respect of raw materials and components, finished goods and material lying with the third parties. Work in progress at the factory are as per the physical inventory. Material lying with third parties amounting to Rs. 443,063 included in raw materials and of components are subject to confirmation. The discrepancies noticed on verification between physical stocks and book records other than work in progress at the factory were not material. Discrepancies in respect of work in progress, if any, are not ascertainable.

3. a) In our opinion the rate of interest and other terms and conditions on which loan of Rs. 93,08,841 from its holding Company, Rs. 35,00,000 from a director and Rs. 40,00,000 from certain companies in which directors are interested, covered in the register maintained under section 301 of the act. and outstanding as at March 31, 2012 are not, prima facie prejudicial to the interest of the Company. There are no stipulations for repayment of the above loan and there is no interest obligation on loan from directors and certain companies in which directors are interested. However, there were delays in repayment of interest to Holding Companies for certain months and were in arrears to an extent of Rs.1,852,086 as at March 31, 2012.

b) The Company has not granted any loans to companies covered in the register maintained under section 301 of the Act. hence clause 4(iii)(a) to (d) the Order is not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to sale of services, purchase of fixed assets and sale of fixed assets during the year. There were no purchase and sale of inventory during the year. We have not observed any continuing failure on the part of the Company to correct major weakness in internal control.

5. a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered during the year into the register maintained under section 301 of the Act. have been so entered.

b) 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 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. However, these materials are customised to the requirements of the Company and there are no similar transactions with third parties to confirm the same.

6. The Company has not accepted any deposits from the public during the year as referred to in sections 58A & 58AA of the Act. hence clause 4(vi) of the Order is not applicable.

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

8. We have broadly reviewed the Cost Records maintained by the Company as prescribed by the Central Government under clause (d) of sub section (1) of 209 of the Act. and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not made a detailed examination to ensure their accuracy or completeness.

9. a) According to the information and explanation given

to us there were delays in depositing with approprivate authorities undisputed statutory dues relating to Employee Provident Fund, Employees' State Insurance, Income Tax deducted at Source, and Property Tax. However, there were no material delay in remittance of Value Added Tax, Excise Duty, Service Tax, Customs Duty, Sales Tax or other applicable statutory dues of material value. According to the information and explanations given to us, remittances to Investor Education and Protection Fund, Wealth Tax are not applicable.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Sales Tax, Provident Fund, Investor Protection Fund, Employees State Insurance, Customs Duty, Excise Duty, Service Tax, Cess or other statutory dues of material value were in arrears, as at March 31, 2012 for a period of more than six months from the date on which they became payable except for Fringe Benefit Tax of Rs. 2,16,976/- and property tax payable to local authorities, amounting to Rs. 3,17,972 has not been remitted as referred in note 20 (v) of the financial statements.

c) According to the information and explanation given to us there are no dues in respect of Sales Tax, Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute. As detailed in Note 20 (v) of the financial statements property tax and penalty relating to prior years amounting to Rs. 2,11,79,774 has not been provided or deposited pending finalisation of the matter.

10. In our opinion, the accumulated losses of the Company are more than fifty percent of its net worth. The Company has incurred cash losses of Rs. 73,27,359 in respect of year under report and Rs. 58,63,980 in respect of the preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of term loan to a bank. There are no loans from financial institutions or debentures.

12. The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence clause 4(xii) of the Order is not applicable to the Company.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, clause 4(xiii) of the Order is not applicable to the Company.

14. In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, clause 4(xiv) of the Order is not applicable to the Company.

15. The Company has not given guarantees for loans taken by others from banks or financial institutions and hence clause 4(xv) of the Order is not applicable.

16. According to the information and explanations given to us and in our opinion, the term loan taken from the bank during the year was utilised for the purpose for which the same was taken.

17. According to the information and explanations given to us and on an overall examination of the balance sheet and cash flows of the Company, we report that funds raised on short-term basis have been used for long term investment during the year to an extent of Rs. 1,10,58,912.

18. According to the information and explanations given to us, the Company has not issued any capital during the year. Accordingly paragraph 4(xviii) of the Order is not applicable.

19. According to the information and explanations given to us, there are no debentures issued by the Company and hence clause 4(xix) of the Order, regarding creation of securities is not applicable.

20. The Company has not made any public issue during the year and hence clause 4(xx) of the Order regarding end use of money is not applicable.

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

For B. K. Ramadhyani & Co. Chartered Accountants Firm Registration No. 002878 S

C. R. DEEPAK Partner Membership No. 215398

B.K. Ramadhyani & Co., Chartered Accountants 4B, Chitrapur Bhavan, 8th Main, 15th Cross, Malleshwaram, Bangalore-560 055.

Place : PUNE Date : 13th August, 2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of Miven Machine Tools, Limited, Hubli as at 31st March 2010, the Profit and Loss Account and also the 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.

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

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

4. a. We have relied on the representation of the Management that the amount due from a-customer referred to in note 1(c) of Schedule R of Rs. 14.58 lakhs are good of recovery and no provision is required in respect of claims made by the customer of Rs.73.49 lakhs. Pending completion of legal proceedings and in view of uncertainties involved, we are unable to form any opinion on the matter. Effect of any shortfall in provision for doubtful debts due to the above on the financial statements is not ascertainable.

b. Without qualifying our report attention of the members is invited to Note number 3 of Schedule R regarding reasons for preparing the financial statements of the company on going concern basis, notwithstanding the fact that its networth is completely eroded. The appropriateness of the said basis is interalia dependent on the Companys ability to execute sale orders and the support of. the companys Bankers and the Holding Company. We have also relied on the representation of the Company in this respect.

c. Without qualifying our report we draw attention to Note 6 of Schedule R regarding purchases to an extent of Rs. 477,108 for the year under report and , cumulatively Rs. 627,773 and Sales to an extent of Rs. 3,240,553 and cumulatively Rs. 47,12,227 from a company in which a director is interested is subject to the approval of Central Government under section 297 of the Companies Act, 1956.

5. Further to our comments in the Annexure refferred to above, we report that:

a. We have obtained all the information and explanations, -which to the best of our knowledge and belief were necessary for the purposes of 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 and Loss account and cash flow statement dealt with by this report are in agreement with the books of account. "

d. In our opinion, the Balance Sheet, Profit & Loss Account and cash flow statement dealt with by this report comply in all material aspect 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 31st March 2010 and taken on record by the board of directors, we .report that none of the directors is disqualified as on 31 st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with the notes give the information required by the Companies Act, 1956, in the manner so required and subject to para 4(a) above, give a true and fair view in conformity with the accounting principles generally accepted in India;

i. In the case of the balance sheet, of the state of affairs of the Company as at 31.3.2010; and

ii. In the case of the profit and loss account, of the loss for the year ended on that date.

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

ANNEXURE TO AUDITORS REPORT (As referred to in para 3 of our report to the Members of Miven Machine Tools Ltd., Hubli)

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

b. The fixed assets have been physically verified by the management during the year as per the programme of varification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c. During the year, there has been no sale/disposal of fixed assets, therefore para 4(1 )(c) of the Order is not applicable.

2. a. Inventories other than those lying with third parties have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c. In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory in respect of Raw materials and Components, Finished Goods and material with third parties. Work in Progress at the factory is as per physical inventory. Material with third parties included in Raw material and Components are subject to confirmation to an extent "of Rs.2.77 lakhs. The discrepancies noticed on verification between the physical stocks and book records other than work-in-progress at the factory were not material. Discrepancies in respect of work in progress are not ascertainable.

3. a. To the best of our knowledge, the company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, sub clauses (b), (c) and (d) of the order are not applicable.

b. In our opinion, the rate of interest and other terms and conditions on which loan of Rs.93.87 Lakhs, including 34.87 lakhs taken during the year, from the holding Company, a party covered in the register maintained under Secion 301 of the Companies Act, 1956 and outstanding as at the balance sheet date are not, prima facie, prejudicial to the interests of the company. There are no stipulation for repayment of loan, however there were delay/s in payment of interest in certian months and was in arrears to the extent of Rs. 2.11 lakhs as at the end of the year.

4. In our opinion and according to the informatbh and explanations given to us, there are adequate internal control procedures commensurate v. in the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

5. a. According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been, so entered.

b. 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 Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. However, these materials are customised to the requirements of the Company and there are no similar transactions with third parties to confirm the same.

6. The Company has not accepted any deposits from public, hence in our opinion, the provisions of Section 58A and 58AA arid the Companies Act, 1956 and the Rules made there under are not applicable. Accordingly, provisions of paragraph (vi) are not applicable.

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

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Governrrient for the maintenance of cost records under clause (d) of subsection (1) of Sec.209 of Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records to determine whether they are accurate or complete.

9. a. According to the information and explanation given to us there are delays in some months in depositing with appropriate authorities undisputed statutory dues relating to Employee Provident Fund, Employees State Insurance, Income Tax deducted at Source, Service Tax and Property Tax. However, there were no material delay in remittance of value added tax, Excise duty & sales tax or other applicable statutory dues of material value. According to the information and explanations given to us, remittances to Investor Education and Protection Fund, Customs duty and Wealth Tax ar$ not applicable. To the best of our knowledge and according to the Company, Cess payable under Section 441A of the Companies Act, 1956 has not been notified, consequently the company has neither provided nor paid the same.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of jncome Tax, Wealth Tax, Service Tax, Sales Tax, Provident Fund, Investor Protection Fund, Employees State Insurance, Customs Duty, Excise Duty, Service Tax, Cess or other statutory dues of material value were in arrears, as at 31.3.2010 for a period of more than six months from the date on which they became payable. However Property Tax payable to Local Authorities, amounting to Rs. 3.18 Lakhs has not been remitted as referred to in Note 1 (e), Schedule. R of the accounts.

c. According to the information and explanations given to us, there are no dues in respect of Sales Tax, Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute. As detailed in note 1 (e) of schedule R property tax and penalty relating to prior years amounting to Rs. 1,69,87,774/- has not been provided or deposited pending finalisation of the matter.

10. In our opinion, the accumulated losses of the Company are more than fifty percent of its net worth. The Company has incurred cash losses of Rs.78.72 lakhs in respect of year under report and Rs. 74.85 lakhs in respect of the proceeding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of term loan to a bank. There are no loans from financial institutions or debentures.

12. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or. a nidhi/mutual benefit fund/society. Therefore, the provisions of paragraph 4(xiii) of the Order are not applicable to the Company.

14. fn our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of paragraph 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks or financial institutions.

16. According to the information and explanations given to us and in our opinion, the term loan taken from the bank during the year was utilised for the purpose for which the sam6 was taken. Therefore, the provisions of paragraph 4(xvi) of the Order are not applicable to the comopany.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet and cash flows of the Company, we report that funds raised on short-term basis have not been used for long term investment during the year.

18. The Company has not made any issue of capital during the year and hence provision of paragraph 4(xviii) of the Order regarding preferential allotment are not applicable.

19. According to the information and explanations given to us, there are no debentures issued by the company and hence provisions of paragraph 4(xix) of the Order regarding creation of securities are not applicable,

20. There were no public issues during the year and hence provisions of paragraph 4(xx) of the Order regarding end use of money are not applicable.

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

For B. K. Ramadhyani & Co.,

Chartered Accountants

B.K.Ramadhyani & Co., Firm Reg. No.002878S

Chartered Accountants (C.R.KRISHNA)

4B, Chitrapur Bhavan, Partner

8th Main, 15th Cross, Membership No.27990

Malleswaram, Place: Hubli

BANGALORE - 560 055 Date: 6th August 2010



 
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