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Auditor Report of MRF Ltd.

Sep 30, 2014

We have audited the accompanying Financial Statements of MRF LIMITED (''the Company'') which comprise the Balance Sheet as at 30th September, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and the 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. 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 judgement, 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 Company''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 Companies Act,1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the State of Affairs of the Company as at 30th September, 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 of the Company 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 Companies Act 1956, 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 Companies Act 1956, 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 & Loss 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 as on 30th September, 2014 and taken on record by the Board of Directors and on the basis of examination of the records of the company, we report and certify that none of the Directors is disqualified as on 30th September, 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 INDEPENDENT AUDITORS'' REPORT (Referred to in our report of even date to the members of MRF LIMITED as at and for the year ended 30th September, 2014).

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

b) As explained to us, the fixed assets have been physically verified by the management, at reasonable intervals, in accordance with a phased programme of verification, which in our opinion, is reasonable, considering the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification;

c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

ii) a) The inventory has been physically verified by the management during the year at reasonable intervals, except for materials lying with third parties, where confirmations are obtained;

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

c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii) a) 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, Clauses 4(iii) (b) to (d) of the Order are not applicable.

b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, Clauses 4(iii) (f) & (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) Based on the audit procedures applied by us and according to the information, explanations and representations given to us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time.

vi) The Company has complied with the directives issued by the Reserve Bank of India and provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed thereunder with regard to deposits accepted from the Public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

viii) We have broadly reviewed the Books of Account maintained by the Company as prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of the accounts and records.

ix) a) According to the information and explanations given to us, 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, Customs Duty, Excise Duty, Cess and other statutory dues with appropriate authorities. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 30th September, 2014 for a period of more than six months from the date they became payable;

b) According to the information and explanations given to us, the details of disputed sales tax, customs duty, excise duty, cess and income tax which have not been deposited as at 30th September 2014 on account of any dispute, are as under:

Statute and nature of Financial year to Forum where Rs. dues which the matter the dispute is Crore pertains pending

CENTRAL SALES TAX ACT, 1956 & VAT LAWS

Sales tax / VAT and 2000-01,2002-03 , Appellate 7.67 penalty 2003-04,2005-06 to Commissioner 2011-12

1993-94 to 1995-96, Appellate 11.81 1997-98 to 2007-08, Tribunal 2009-10 & 2010-11

1996-97 High Court 0.04 1996-97, 2000-01 & Supreme 0.59 2001-02 Court

CUSTOMS ACT, 1962

Customs Duty and 2003-04 Appellate 0.16 penalty Tribunal

1992-93 to 1994-95 High Court 74.89

CENTRAL EXCISE ACT, 1944

Excise duty and 1997-98, 1998-99 & Appellate 0.09 penalty 2005-06, Commissioner

1993-94, 1999- Appellate 0.74

2000 to 2004-05 & Tribunal 2008- 09

2001-02 Supreme 0.06 Court

INCOME TAX, 1961

Income Tax 2000-01 to 2003-04, High Court 9.33 2009-10 & 2010-11

ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION

Cess on own power 2010-11 to 2013-14 High Court 5.19

x) The Company has no accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of its dues to banks and debenture holders.

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

xiii) The provisions of any special statute 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. Accordingly, requirements of Clause 4(xiv) of the said order are not applicable to the Company.

xv) According to the information and explanations given to us and the representation made by the management the Company has given guarantees for loan taken by its subsidiary companies from banks. In our opinion, the terms and conditions of the said guarantees are not prima facie prejudicial to the interest of the company.

xvi) On the basis of the records examined by us, and relying on the information compiled by the Company for correlating the funds raised to the end use of term loans, the Company has, prima facie, applied the term loans for the purposes for which they were obtained.

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

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) The Company has created security in respect of the Debentures issued.

xx) The Company has not raised any money by way of public issues during the year. Hence the requirements of clause 4(xx) of the said Order are not applicable to the Company.

xxi) On the basis of our examination and according to the information and explanations given to us, considering the size of the Company and nature of its business, no fraud by the Company and no significant fraud on the Company, has been noticed or reported during the year.

For Sastri & Shah For M. M. Nissim & Co.

Chartered Accountants Chartered Accountants

Firm Regn. No. 003643S Firm Regn. No. 107122W

(C. Sri Ram) (Dhiren Mehta)

Partner Partner

Mem. No. 005897 Mem. No. 109883

Chennai, Dated 26th November, 2014


Sep 30, 2013

Report on the Financial Statements

We have audited the accompanying Financial Statements of MRF LIMITED (''the Company'') which comprise the Balance Sheet as at 30th September, 201 3, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and the 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, 1 956. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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 Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th September, 2013;

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

c) i n 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 Companies Act, 1956, 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 Companies Act, 1956 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 dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1 956;

e) On the basis of written representations received from the Directors as on 30th September, 2013 and taken on record by the Board of Directors and on the basis of examination of the records of the Company, we report and certify that none of the Directors is disqualified as on 30th September, 2013 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1 956.

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in our report of even date to the members of MRF LIMITED as at and for the year ended 30th September, 201 3)

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

b) As explained to us, the fixed assets have been physically verified by the management, at reasonable intervals, in accordance with a phased programme of verification, which in our opinion, is reasonable, considering the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification;

c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

ii) a) The inventory has been physically verified by the management during the year at reasonable intervals, except for materials lying with third parties, where confirmations are obtained;

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

c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii) a) 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, 1 956. Accordingly, Clauses 4(iii) (b) to (d) of the Order are not applicable.

b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, Clauses 4(iii) (f) & (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) Based on the audit procedures applied by us and according to the information, explanations and representations given to us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1 956 exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time.

vi) The Company has complied with the directives issued by the Reserve Bank of India and provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

viii) We have broadly reviewed the Books of Account maintained by the Company as prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1 956, and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of the accounts and records.

ix) a) According to the information and explanations given to us, 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, customs duty, excise duty, cess and other statutory dues with appropriate authorities. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 30th September, 201 3 for a period of more than six months from the date they became payable;

b) According to the information and explanations given to us, the details of disputed sales-tax, customs duty, excise duty and income-tax which have not been deposited as at 30th September 201 3 on account of any dispute, are as under:

Statute and nature of Financial year to Forum where Rs. dues which the matter the dispute is Crore pertains pending

CENTRAL SALES TAX ACT, 1956 & VAT LAWS

Sales tax / VAT and 2002-03,2005-06, Appellate 7.05 penalty 2006-07, 2007-08, Commissioner 2008-09, 2009-10 & 2010-11

1992-93,1995-96, Appellate 12.70 1997-98,1998-99, Tribunal 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2006-07, 2007-08, 2008-09, 2009-10& 2010-11

1996-97 High Court 0.04

1996-97,2000-01 Supreme 0.59 & 2001-02 Court

CUSTOMS ACT, 1962

Customs Duty and 2003-04 Appellate 0.16 penalty Tribunal

1992-93 to 1994-95 High Court 74.89

CENTRAL EXCISE ACT, 1944

Excise duty and penalty 1997-98,1998-99, Appellate 0.50 2005-06, 2006-07, Commissioner 2009-10& 2010-11

1993-94,1999- Appellate 0.63 2000 to 2004-05 Tribunal

2001-02 Supreme 0.06 Court

INCOME TAX, 1961

Income Tax 2002-03 & 2004-05 High Court 4.51

ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION

Cess on own power 2003-04 to 2012-13 High Court 5.15

x) The Company has no accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of its dues to banks and debenture holders.

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

xiii) The provisions of any special statute 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. Accordingly, requirements of Clause 4(xiv) of the said order are not applicable to the Company.

xv) According to the information and explanations given to us and the representation made by the management, the Company has given guarantee for loan taken by one of its subsidiary companies from a bank. In our opinion, the terms and conditions of the said guarantee is not prima-facie prejudicial to the interest of the Company.

xvi) On the basis of the records examined by us and relying on the information compiled by the Company for correlating the funds raised to the end use of term loans, the Company has, prima- facie, applied the term loans for the purposes for which they were obtained.

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

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, 1 956.

xix) The Company has created security in respect of the Debentures issued.

xx) The Company has not raised any money by way of public issues during the year. Hence the requirements of Clause 4(xx) of the said Order are not applicable to the Company.

xxi) On the basis of our examination and according to the information and explanations given to us, considering the size of the Company and nature of its business, no fraud, on or by the Company, has been noticed or reported during the year

For Sastri & Shah For M. M. Nissim and Co.

Chartered Accountants Chartered Accountants

Firm Regn. No. 003643S Firm Regn. No. 107122W

C. Sri Ram N. Kashinath

Partner Partner

Mem. No. 005897 Mem. No. 36490

Chennai, Dated 28th November, 2013


Sep 30, 2010

1. We have audited the attached Balance Sheet of MRF Limited as at 30th September, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the 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 prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatement. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of Companies Act, 1956 and according to the information and explanations given to us during the course of the audit and on the basis of such checks as were considered appropriate, we enclose in the Annexure, a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph (3) above, we report that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of audit;

ii) in our opinion, proper Books of Account as required by law have been kept by the Company so far as appears from our examination of those Books;

iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the Books of Account;

iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the requirements of the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) on the basis of the written representations received from the directors as on 30th September, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th September, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and

vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and also 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 30th September, 2010;

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

c) i n 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) As explained to us, the fixed assets have been physically verified by the management, at reasonable intervals, in accordance with a phased programme of verification, which in our opinion, is reasonable, considering the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification;

c) The Company has not disposed of any substantial part of its fixed assets so as to affect its going concern status.

ii) a) The inventory has been physically verified by the management during the year at reasonable intervals, except for materials lying with third parties, where confirmations are obtained;

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

c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii) a) 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, clauses 4(iii) (b) to (d) of the Order are not applicable.

b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses 4(iii) (f) and (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanation given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) Based on the audit procedures applied by us and according to the information, explanations and representations given to us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time.

vi) The Company has complied with the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 with regard to deposits accepted from the Public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

viii) We have broadly reviewed the Books of Account maintained by the Company as prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of the accounts and records.

ix) a) According to the information and explanations given to us, 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, Customs Duty, Excise Duty, Cess and other statutory dues with appropriate authorities. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 30th September, 2010 for a period of more than six months from the date they became payable;

b) According to the information and explanations given to us, the details of disputed sales tax, customs duty, excise duty and income tax which have not been deposited as at 30th September, 2010 on account of any dispute, are as under:

Statute and nature of Financial year to Forum where Rs. dues which the matter the dispute is Crore pertains pending

Central Sales Tax Act, 1956 & VAT Laws

Sales taxA/AT and 1992-93,1999- Appellate 0.49 penalty 2000,2000-01, Commissioner 2002-03 to 2004-05

1994-95,1995-96, Appellate 1.82 1997-98 to 2004-05 Tribunal & 2006-08

1993-94,1995-96, High Court 0.23 1997-98 & 1998-99

1996-97, 2000-01 to Supreme Court 0.54 2002-03

Customs Act, 1962 Customs Duty and 2003-04 Appellate 0.16 penalty Tribunal

1992-93 to 1994-95 High Court 74.89 Central Excise Act, 1944

Excise Duty and 1997-98, 1998-99 & Appellate 0.09 penalty 2006-07 Commissioner

1993-94, 1996-97 to Appellate 7.06 2005-06 Tribunal

1997-98 to 2000-01 High Court 0.15 2001 -02 Supreme Court 0.06

Income Tax, 1961

Income Tax 1998-99,1999-2000 Appellate 12.26 & 2005-06 Commissioner

x) The Company has no accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of its dues to banks.

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

xiii) The provisions of any Special Statute 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. Accordingly, requirements of Clause 4(xiv) of the said order are not applicable to the Company.

xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

xvi) On the basis of the records examined by us, and relying on the information compiled by the Company for correlating the funds raised to the end use of term loans, we have to state that, the Company has, prima-facie, applied the term loans for the purposes for which they were obtained.

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

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 during the year.

xix) The Company has not issued any debentures during the year. Accordingly, requirements of clause 4(xix) of the said Order are not applicable to the Company.

xx) The Company has not raised any money by way of public issues during the year. Hence the requirements of clause 4(xx) of the said Order are not applicable to the Company.

xxi) On the basis of our examination and according to the information and explanations given to us, considering the size of the Company and nature of its business, no fraud, on or by the Company, has been noticed or reported during the year.

For Sastri & Shah For M. M. Nissim and Co.

Chartered Accountants Chartered Accountants

Firm Regn. No. 0036435 Firm Regn. No. 107122W

C. R. Kumar N. Kashinath

Partner Partner

Mem. No. 26143 Mem. No. 36490

Chennai, Dated 25th November, 2010


Sep 30, 2009

1. We have audited the attached Balance Sheet of MRF Limited as at 30th September, 2009, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. - We conducted our audit in accordance with the 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 prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatement. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of Companies Act, 1956 and according to the information and explanations given to us during the course of the audit and on the basis of such checks as were considered appropriate, we enclose in the Annexure, a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph (3) above, we report that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of audit;

ii) in our opinion, proper Books of Account as required by law have been kept by the Company so far as appears from our examination of those Books;

iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the Books of Account;

iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the requirements of the Accounting Standards referred to in sub- section (3C) of Section 211 of the Companies Act, 1956;

v) on the basis of the written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th September, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 and

vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with Note No. I (Q) in the notes forming part of the accounts, in respect of changes in accounting policies relating to provision for warranty and change in the basis of providing depreciation, resulting in the profit for the year and the reserves being stated lower by Rs. 37 Crore and read together with other notes thereon, give the information required by the Companies Act, 1956 in the manner so required and also 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 30th September, 2009;

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

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

ANNEXURE TO THE AUDITORS REPORT

(Referred to in 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) As explained to us, the fixed assets have been physically verified by the management, at reasonable intervals, in accordance with a phased programme of verification, which in our opinion, is reasonable, considering the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification;

c) The Company has not disposed of any substantial part of its fixed assets so as to affect its going concern status.

ii) a) The inventory has been physically verified by the management during the year at reasonable intervals, except for materials lying with third parties, where confirmations are obtained;

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

c) The Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii) a) 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, clauses 4(iii) (b) to (d) of the Order are not applicable.

b) The Company has not taken any loans, secured or unsecured from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses 4(iii) (f) and (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanation given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) Based on the audit procedures applied by us and according to the information, explanations and representations given to us, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time.

vi) The Company has complied with the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 with regard to deposits accepted from the Public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

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

viii) We have broadly reviewed the Books of Account maintained by the Company as prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima-facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed examination of the accounts and records.

ix) a) According to the information and explanations given to us, 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, Customs Duty, Excise Duty, Cess and other statutory dues with appropriate authorities. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 30th September, 2009 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, the details of disputed sales tax, customs duty, excise duty and income tax which have not been deposited as at 30th September, 2009 on account of any dispute, are as under:

Statute & Financial year to Forum where Rs. Nature of Dues which the matter the dispute is Crore pertains pending

Central Sales Tax Act & Local Sales Tax Acts

Sales tax and 1992-93,1999-2000, Appellate 0.74 penalty 2000-01,2002-03, Commissioner to 2007-08

1984-85,1985-86, Appellate 2.88

1987-88,1988-89, Tribunal

1990-91, 1993-94, to 2004-05

1989-90 to 1998-99, High Court 4.86 2003-04 & 2004-05

1996-97,2000-01 Supreme Court 0.54 to 2002-03

Customs Act

Customs Duty 2003-04 Appellate 0.16 and penalty Tribunal

1992-93 to 1994-95 High Court 77.89

Central Excise Act

Excise duty and 1997-98,1998-99 Appellate 0.09 penalty & 2006-07 Commissioner

1993-94,1999-2000 Appellate 4.47 to 2005-06 Tribunal

1997-98 & 1999-2000 High Court 0.15

Income Tax 1998-99,1999-2000 Appellate 3.36 & 2005-06 Commissioner

x) The Company has no accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of its dues to banks.

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

xiii) The provisions of any Special Statute 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. Accordingly, requirements of Clause 4(xiv) of the said Order are not applicable to the Company.

xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

xvi) On the basis of the records examined by us, and relying on the information compiled by the Company for correlating the funds raised to the end use of term loans, we have to state that, the Company has, prima-facie, appl ied the term loans for the purposes for which they were obtained.

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

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 during the year.

xix) The Company has not issued any debentures during the year. Accordingly, requirements of clause 4(xix) of the said Order are not applicable to the Company.

xx) The Company has not raised any money by way of public issues during the year. Hence the requirements of clause 4(xx) of the said Order are not applicable to the Company.

xxi) On the basis of our examination and according to the information and explanations given to us, considering the size of the Company and nature of its business, no fraud of material significance, on or by the Company, has been noticed or reported during the year.

For Sastri & Shah For M.M. Nissim and Co.

Chartered Accountants Chartered Accountants

C. R. Kumar N. Kashinath

Partner Partner

Mem. No. 26143 Mem. No. 36490

Chennai, Dated 21st December, 2009

 
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