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Auditor Report of Sanghvi Forging & Engineering Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of SANGHVI FORGING & ENGINEERING LIMITED which comprise the balance sheet as at 31 March 2015 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

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 and presentation of these standalone financial statements that give a true and fair view of the financial position and financial performance and cash flows of the company in accordance with the Accounting principles generally accepted in India, including accounting Standards specified u/s 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone 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 u/s 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 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 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 on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the above 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:

1) in the case of the balance sheet, of the state of affairs of the company as at 31 March 2015;

2) in the case of the statement of profit and loss, of the Loss for the year ended on that date;

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

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

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 and Statement of Profit and Loss comply with the Accounting Standards referred to in section 133 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, and 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 matter 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 Note 2.25(1A) of the standalone financial statements.

ii. The Company did not have any long term contracts including derivatives contracts for which there were an material foreseeable losses;

iii. There is no such amount which is required to be transfer to the Investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under.

Annexure to the Auditor's Report

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

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

2 (a) As explained to us, Inventories has been physically verified during the year and at the year-end.

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

(c ) The company is maintaining proper records of inventory. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 The company has granted Interest free unsecured loan to a company covered in the register maintained under section 189 of the Act.

(a) As information given to us, there is no stipulation of repayment of loan. Accordingly, clause of the Order is not applicable to the company in respect of repayment of the principal amount.

(b) Since there is no stipulation of repayment of loan, clause 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 purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 73 & 74 of the Act and rules made there under.

6. We have broadly reviewed the cost records maintained by the Company pursuant to Rules prescribed by the Central Government under Section 148(1) of the Act and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty, wealth tax and other material statutory dues applicable to it. And there are no undisputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no disputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2015 except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Dues Amount (Rs. 000)

Income Tax Act, 1961 Income Tax 850.20 282.61 5000.00

Central Excise Act, 1944 Service Tax 1955.60

Central Excise Act, 1944 Service Tax 782.92

Central Sales Tax Act, 1956 Sales Tax 757.71

Central Sales Tax Act, 1956 Sales Tax 2031.44

Name of Statue Period to which Forum where the it relates dispute is pending

Income Tax Act, 1961 A.Y. 2008-09 CIT (Appeals) F.Y. 2011-12 A.Y. 2012-13

Central Excise Act, 1944 F.Y. 2007-08 CESTAT Ahmedabad F.Y. 2008-09 F.Y.2010-11 & F.Y. 2012-13

Central Excise Act, 1944 F.Y. 2007-08 Asst. Commissioner of F.Y. 2008-09 Central Excise, F.Y. 2009-10 Custom & F.Y. 2009-10 Service Tax Vadodara F.Y. 2010-11 F.Y. 2011-12 &

Central Sales Tax Act, 1956 F.Y. 2008-09 GAT, Tribunal, F.Y. 2009-10 Ahmedabad

Central Sales Tax Act, 1956 F.Y.2010-11 Asst. CCT (Appeal)

* Out of above Rs.1452.81 thousand paid under protest

(c) According to the information and explanation given to us, there is no such amount Which were required to be transferred to the Investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under.

8. The company does not have accumulated losses at the end of the financial year and has not incurred cash loss in the current year. However there is cash losses in the immediately preceding financial year.

9. Based on our audit procedures and on the information and explanation given to us by management, the company has defaulted in repayment of its loan and interest to the banks. Estimated unpaid overdue instalments and interest to banks as at March 31, 2015 aggregated to Rs.11118 thousand & Interest thereon of Rs.1767 thousand since February 2015 (P.Y. Rs.9666 thousand and interest thereon of Rs.1882 thousand since February 14).

10. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

11 According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

12. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the company has been noticed or reported during the year under report.

For Shah & Bhandari Chartered Accountants FRN: 118852W

Yogesh Bhandari Place: Vadodara Partner Date : 29.05.2015 M.No.: 046255


Mar 31, 2014

We have audited the accompanying financial statements of SANGHVI FORGING & ENGINEERING 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 notified under the Companies Act, 1956 read with General circular 15/2013 dated 13 September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of 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 the Profit and Loss Account, of the loss for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

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

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

c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with General circular 15/2013 dated 13 September

2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of Companies Act,2013

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

ANNEXURE TO THE AUDITOR''S REPORT (Referred to in paragraph 3 of our report of even date)

1 (a) The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets .The fixed asset register is updated.

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

(c ) The company has not disposed off any substantial part of its fixed assets during the year, which can affect the going concern.

2 (a) As explained to us, Inventories has been physically verified during the year and at the year-end.

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

(c ) The company is maintaining proper records of inventory. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 (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 Act. Hence, Clause (03)(a) to (d) of the Order are not applicable.

(e) The company has taken interest free unsecured loans from 14 parties (P.Y.12 parties) covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance is Rs. 375.33 Lac (P.Y. Rs. 303.46 Lac) and year-end balance is Rs. 268.70 Lac (P.Y. Rs. 303.46 Lac)

(f) In our opinion and information given to us the ,other terms and conditions of unsecured loans taken by the company, are not prima facie prejudicial to the interest of the company.

(g) As per information given and explanation given to us, there is no stipulation as regards to repayment of principal.

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 purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

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

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value in Rs. 5 Lac with the parties during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 58A & 58AA of the Companies Act, 1956 and rules made there under. Hence, clause (vi) of the order is not applicable.

7. In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty and other material statutory dues applicable to it. However there are few installments of late payment of TDS and PF during the year.

(b) According to the information and explanations given to us, there are no disputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2014 for a period of more than six months from the date they became payable, except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Due Amount Period to which it relates

Income Tax Act 1961 Income Tax 850.20 A.Y. 2008-09

928.34 A.Y. 2009-10 282.61 A.Y. 2011-12

Central Excise Act, 1944 Service Tax 915.36 f.Y. 2007-08, F.Y. 2008-09 & F.Y. 2010-11

Central Excise Act, 1944 Service Tax 346.14 F.Y. 2007-08, F.Y. 2008-09, F.Y. 2009-10 & F.Y. 2010-11

Central Excise Act, 1944 Service Tax 74.54 F.Y. 2011-12

Central Excise Act, 1944 Service Tax 520.12 F.Y. 2011-12

Central Sales Tax Act, 1956 Sales Tax 1902.23 F.Y. 2008-09 & F.Y. 2009-10

Name of Statue Forum where the dispute is pending

Income Tax Act 1961 CIT (Appeals)

Central Excise Act, 1944 Commissioner of Central Excise (Appeals)

Central Excise Act, 1944 Asst. Commissioner of Central Excise

Central Excise Act, 1944 Asst. Commissioner of Central Excise, Custom & Service Tax Vadodara-II

Central Excise Act, 1944 Additional Commissioner of Central Excise , Custom & Service Tax Vadodara-II

Central Excise Act, 1956 Asst. CCT (Appeal)

10. The company does not have accumulated losses at the end of the financial year and has incurred cash loss in the current year. However there is no cash losses in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanation given to us by management, the company has defaulted in repayment of its loan and interest to the banks. Estimated unpaid overdue interest and installments to banks as at March 31, 2014 aggregated to Rs. 115.47 lac since February 14, also in the repayment of term loan installment and interest there on amounting to Rs. 40.51 lac due in August 13 & Rs. 123.12 lac due in November 13 were paid in October 13 & January 14 respectively.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities of similar nature and hence maintenance of documents and records relating to such items are not applicable.

13. The clause (xiii) of the order is not applicable to the company, as the company is not a chit fund company or nidhi / mutual benefit fund/society.

14. The clause (xiv) of the order is not applicable to the company as the company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

17. 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 investment.

18. The company has made preferential allotment of Rs. 60,00,000/-(6,00,000 equity shares of Rs. 10 each at a premium of Rs. 27.50/- per shares) to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

19. The company has not issued any debentures hence clause (xix) of the order is not applicable.

20. The company has not raised any money by public issues hence clause (xx) of the order is not applicable to the company.

21. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the company has been noticed or report- ed during the year under report.

For SHAH & BHANDARI Chartered Accountants FRN: 118852W

(Yogesh Bhandari) Place : Vadodara Partner Date : 26-05-2014 Membership No. 046255


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of SANGHVI FORGING & ENGINEERING LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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, 2013;

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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") 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 ofaccount.

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;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

1 (a) The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets .The fixed asset register is updated.

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

(c ) The company has not disposed off any substantial part of its fixed assets during the year, which can affect the going concern.

2 (a) As explained to us, Inventories has been physically verified during the year and at the year-end.

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

(c ) The company is maintaining proper records of inventory. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 (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 he Act. Hence, Clause (03)(a) to (d) of the Order are not applicable.

(b) The company has taken unsecured loans from 12 parties (P.Y.14 parties) covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance is Rs.303.46Lacs (P.Y. Rs.347.20 Lacs) and year-end balance is Rs.303.46Lacs (P.Y. Rs.91.51 Lacs.)

(c) In our opinion and information given to us the rate of interest and other terms and conditions of loans taken by the company, secured or unsecured, are not prima facie prejudicial to the interest of the company.

(d) As per information given and explanation given to us, the payment of interest is regular and there is no stipulation as regards to repayment of principal.

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 purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

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

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value in Rs.5 Lacs with the parties during the year have been made at process which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 58A & 58AA of the Companies Act, 1956 and rules made there under. Hence, clause (vi) of the order is not applicable.

7. In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no disputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2013 for a period of more than six months from the date they became payable, except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Amount (Rs.''000) Period to which it relates Dues

Income Tax Act, 1961 Income Tax 856.49 A.Y. 2008-09

Income Tax Act, 1961 Income Tax 969.13 A.Y. 2009-10

Income Tax Act, 1961 Income Tax 848.01 A.Y. 2010-11

Central Excise Act, 1944 Excise Duty 776.34 F.Y. 2007-08 & F.Y. 2008-09

Central Excise Act, 1944 Service Tax 915.36 F.Y. 2007-08, F.Y. 2008-09 & F.Y. 2010-11

Central Excise Act, 1944 Service Tax 346.14 F.Y. 2007-08, F.Y. 2008-09, F.Y. 2009-10 & F.Y. 2010-11

Central Sales Tax Act, 1956 Sales Tax 807.10 F.Y. 2008-09

Name Forum where the dispute is pending

Income Tax Act, 1961 CIT (A)

Income Tax Act, 1961 CIT (A)

Income Tax Act, 1961 CIT (A)

Income Tax Act, 1961 Commissioner of Central Excise (Appeals)

Income Tax Act, 1961 Commissioner of Central Excise (Appeals)

Income Tax Act, 1961 Asst. Commissioner of Central Excise

Income Tax Act, 1961 Asst. CCT (Appeal)

10. The company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current year as well as in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of its dues to the banks.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities of similar nature and hence maintenance of documents and records relating to such items are not applicable.

13. The clause (xiii) of the order is not applicable to the company, as the company is not a chit fund company or nidhi / mutual benefit fund/society.

14. The clause (xiv) of the order is not applicable to the company as the company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

17. 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 investment.

18. 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. Hence clause (xviii) of the order is not applicable.

19. The company has not issued any debentures hence clause (xix) of the order is not applicable.

20. The company has not raised any money by means of public issue during the year hence clause (xx) of the Order is not applicable to the company.

21. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the company has been noticed or reported during the year under report.

For SHAH & BHANDARI Chartered Accountants

FRN: 118852W

(YOGESH BHANDARI)

Place : VADODARA PARTNER

DATE : May 28, 2013 Membership No. 046255


Mar 31, 2012

We have audited the attached Balance Sheet of Sanghvi Forging and Engineering Ltd. as at March 31, 2012, 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 Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. 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.

2. As required by the Companies (Auditor's Report) Order, 2003 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.

3. Further to our comments in the Annexure referred to in paragraph 2 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 the law, have been kept by the Company, so far as appears from our examination of those books.

c) The Balance Sheet, the Profit & Loss Account and the cash flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, the Profit & Loss Account and the cash flow statement dealt with by this report comply with the mandatory Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act 1956

e) In our opinion, and based on information and explanation given to us, none of Directors are disqualified as on March 31, 2012 from being appointed as Directors in term 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 read together with the significant Accounting Policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required except for the classification of short term liability amounting to Rs.12,678.28 thousands classified as a long term liability resulting in understatement of short term liabilities and overstatement of long term liabilities by the said amount and classification of capital advances amounting to Rs. 67,009.22 thousands classified as short term loans and advances instead of long term loans and advances resulting in overstatement of short term loans and advances and understatement of long term loans and advances by the said amount, however it has no impact on state of affairs of the Company except classification which are contrary to the Schedule VI of Companies Act, and present a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In so far as it is relates to Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(ii) In so far as it relates to the Profit & Loss Account, the profit of the Company for the year ended on that date; and

(iii) In so far as it relates to the cash flow statement, of the cash flow of the Company for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT

(Referred to in paragraph 3 of our report of even date)

1 (a) The Company has maintained proper records showing

full particulars, including quantitative details and situation of its fixed assets. The fixed asset register is updated.

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the Company and its nature of business, and no material discrepancies were noticed on such verification.

(c) The Company has not disposed off any substantial part of its fixed assets during the year, which can affect the going concern.

2 (a) As explained to us, Inventories has been physically

verified during the year and at the year-end.

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

(c) The Company is maintaining proper records of inventory. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 (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 Act. Hence, Clause (03)(a) to (d) of the Order are not applicable.

(b) The Company has taken unsecured loans from 15 parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance is Rs. 417.54 Lacs (P.Y. 448.51 Lacs) and year end balance is Rs. 161.51 Lacs (P.Y. 347.22 Lacs.)

(c) In our opinion and information given to us the rate of interest and other terms and conditions of loans taken by the Company, secured or unsecured, are prima facie prejudicial to the interest of the Company.

(d) As per information given and explanation given to us, the payment of interest is regular and there is no stipulation as regards to repayment of principal.

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 purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

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

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value in Rs. 5 Lacs with the parties during the year have been made at process which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 58A & 58AA of the Companies Act, 1956 and rules made there under. Hence, clause (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 its business.

8. We are informed that the Central Government has prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and the Company has maintained the prescribed cost records.

9. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2012 for a period of more than six months from the date they became payable, except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Dues Amount (Rs. '000)

Income Tax Act, 1961 Disallowances 856.49

Income Tax Act, 1961 Disallowances 969.13

Central Excise Act, Wrong availment of cenvat 776.34 1944 credit on capital goods

Central Excise Act, For Reversal Of Credit with 915.36 1944 respect to Service tax Credit of BAS on paid of Foreign Commission

Central Excise Act, Wrong availment of cenvat 346.14 1944 credit against input service like CHA agents etc.



Name of Statue Period to which Forum where the it relates dispute is pending

Income Tax Act, 1961 A.Y. 2008-09 CIT (A)

Income Tax Act, 1961 A.Y. 2009-10 CIT (A)

Central Excise Act, F.Y. 2007-08 & Commissioner of 1944 2008-09 Central Excise (Appeals)

Central Excise Act, F.Y. 2007-08, Commissioner of 1944 F.Y. 2008-09 & Central Excise F.Y. 2010-11 (Appeals)

Central Excise Act, F.Y. 2007-08, Asst. Commissioner of 1944 F.Y. 2008-09, Central Excise F.Y. 2009-10 & F.Y. 2010-11

10. The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current year.

11. Based on our audit procedures and on the information and explanation given to us, we are of the opinion that the Company has not defaulted in repayment of its dues to the banks. The Company has not issued any debentures.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities of similar nature and hence maintenance of documents and records relating to such items are not applicable.

13. The clause (xiii) of the order is not applicable to the Company, as the Company is not a chit fund company or nidhi/mutual benefit fund/society

14. The clause (xiv) of the order is not applicable to the Company as the Company is not dealing or trading in shares, securities, debentures and other investments.

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

16. According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

17. 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 investment.

18. 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. Hence clause (xviii) of the order is not applicable.

19. The Company has not issued any debentures hence clause (xix) of the order is not applicable.

20. The Company has raised Rs. 39,95,19,040/- (4722004 equity shares of Rs. 10/- each at a premium of Rs. 75/- per shares) by means of public issue during the year and funds have been utilised for the purpose for which the issue was made.

21. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the Company has been noticed or reported during the year under report.

For Shah & Bhandari Chartered Accountants FRN: 118852W

Yogesh Bhandari Partner Membership No. 046255

Place: VADODARA Date : 29/05/2012

 
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