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Auditor Report of Sheetal Diamonds Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Sheetal Diamonds Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss 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 of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

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

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

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

Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) In the case of the Profit and Loss Account, of the profit 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 Section 227(4A) of the Act since in our opinion and according to information and explanation given to us, the said order is not applicable to company.

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 and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

d) In our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956; read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. ; and

e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to Auditors'' Report

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

1. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

3. The company has not taken/granted unsecured loans, to/from companies, firms or other parties listed in the registrar maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clause 4 (iii) (b) to (d) of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and 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.

5. According to information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly provisions of clause 4 (v) (b) of the Order are not applicable.

6. According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Section 58A & 58AA of the Companies Act, 1956 and Rules framed there under are not applicable.

7. In our opinion, the Company does not have internal audit system commensurate with the size and nature of its business, but as per information and explanation given by the management there is an adequate internal control system.

8. To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of the services rendered by the Company. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

9. According to the information and explanations given to us in respect of statutory dues:

a) According to the information and explanations given to us, Company is not having any employee on whom statutory liability including Provident Fund, E.S.I.C. is applicable. Other undisputed statutory dues in respect of custom duty, excise duty, sales tax, service tax, withholding taxes, cess as applicable and any other statutory dues have been regularly deposited with the appropriate authorities. There are no arrears of Statutory Dues as on 31st March, 2014.

b) As per information given to us the Income Tax demand for A.Y. 1996-97, 1997-98 & 1998-99 along with the interest and penalty have been fully deleted by the Honorable ITAT as per the order dated 23.03.2011 & 04.05.2011. The appeal for penalty of Rs. 13,69,656/- for A.Y. 2001-01 is pending before CIT (A).

10. The clause of accumulated losses etc is not applicable to company.

11. Since no loan has been obtained from any bank by company this clause is not applicable.

12. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

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

14. The Company is not in dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) is not applicable.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore, the provisions of paragraph 4 (xv) of the said Order are not applicable to the Company.

16. In our opinion and according to the information and explanations given to us, the Company has not taken any Term loans.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that 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.

19. The Company has not issue any Debenture during the year.

20. The Company has not raised any monies by way of public issues during the year.

21. In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For Hardik H Shah & Associates Chartered Accountants (Firm Registration No. 131390W)

Sd/-

CA Hardik H Shah Proprietor Membership No. 137026

Place : Mumbai Date : 27th May, 2014


Mar 31, 2013

We have audited the accompanying financial statements of Sheetal Diamonds 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 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.

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.

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 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.

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

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

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

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

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.

Annexure to Auditors'' Report

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

1. In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

3. The company has not taken/granted unsecured loans, to/from companies, firms or other parties listed in the registrar maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clause 4 (iii) (b) to (d) of the Order are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and 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.

5. According to information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly provisions of clause 4 (v) (b) of the Order are not applicable.

6. According to the infonnation and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Section 58A & 58AA of the Companies Act, 1956 and Rules framed there under are not applicable.

7. In our opinion, the Company does not have internal audit system commensurate with the size and nature of its business, but as per information and explanation given by the management there is an adequate internal control system.

8. To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act, in respect of the services rendered by the Company. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

9. According to the information and explanations given to us in respect of statutory dues:

a) According to the information and explanations given to us, Company is not having any employee on whom statutory liability including Provident Fund, E.S.I.C. is applicable. Other undisputed statutory dues in respect of custom duty, excise duty, sales tax, service tax, withholding taxes, cess as applicable and any other statutory dues have been regularly deposited with the appropriate authorities. There are no arrears of Statutory Dues as on 31st March, 2013.

b) As per information given to us the Income Tax demand for A.Y. 1996-97, 1997-98 & 1998-99 along with the interest and penalty have been fully deleted by the Honorable ITAT as per the order dated 23.03.2011 & 04.05.2011. The appeal for penalty of Rs. 13,69,656/- for A.Y. 2001-02 is pending before ITAT.

10. The clause of accumulated losses etc is not applicable to company.

11. Since no loan has been obtained from any bank by company this clause is not applicable.

12. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

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

14. The Company is not in dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) is not applicable.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore, the provisions of paragraph 4 (xv) of the said Order are not applicable to the Company.

16. In our opinion and according to the information and explanations given to us, the Company has not taken any Term loans.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that 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.

19. The Company has not issue any Debenture during the year.

20. The Company has not raised any monies by way of public issues during the year.

21. In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For Hardik H Shah & Associates

Chartered Accountants

(Firm Registration No. 131390W)

Sd/- CA Hardik H Shah

Proprietor

Membership No. 137026

Place: Mumbai

Date : 30th May, 2013


Mar 31, 2010

We have audited the attached Balance Sheet of SHEETAL DIAMONDS LIMITED as at 31st March, 2010 and also the Profit & Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 to the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

b) In our opinion, proper books of account as required by law have been kept by the company.

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

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

e) On the basis of the written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with Other Notes give a true and fair view in conformity with the accounting principles generally accepted in India;

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; and ii. In the case of the Profit and Loss Account, of the profit of the Company for the year ended on that

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



ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph 1 of is our Report of even date of SHEETAL DIAMONDS LIMITED as at 31st March, 2010.

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

(b) The company has physically verified Fixed Assets at reasonable intervals and no material discrepancies were noticed on such verification.

(c) None of the Fixed Assets have been disposed off during the year.

2. (a) The Inventory has been physically verified by the management at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and the discrepancies noticed on verification between the physical stock and the book records were not material and the same have been properly dealt with in the books of accounts.

3. The company has not taken / granted unsecured loans, to/ from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clause 4 (iii) (b) to (d) of the Order are not applicable.

4. In our opinion, and according to explanation given to us, there is adequate internal control procedure Ocommensurate with the size of the Company and the nature of its business with regard to the purchase of inventories, fixed assets and for the sale of goods. There is no continuing failure to correct weakness in internal control.

5. According to the information and explanations given to us, we are of the opinion that there are no transactions that need be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly provisions of clause 4(v) (b) of the Order are not applicable.

6. According to the information and explanation given to us, during the year under review, the company has not accepted any Deposits from the public and hence provisions of section 58A and 58AA of the Companies Act, 1956 and Rules framed there under are not applicable.

7. The Company has no internal audit system.

8. We have been informed that the maintenance of cost records has not been prescribed by the Central Government under section 209(1) (d) of the Companies Act, 1956 for any of the products of the company.

9. a) According to the information and explanations to us, the Company is not having any employee on whom statutory liabilities including Provident Fund, E.S.I.C. is applicable. Other statutory liabilities i.e. VAT, wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other applicable statutory dues wherever applicable are deposited with appropriate authorities . There are no arrears of statutory dues as at 31st March, 2010 except Income Tax which are outstanding for a period of more than six month from the date they became payable.

b)As per information given to us there is disputed demand pending for payment in respect of Income Tax including present status for the same before Appellate authority is as per table given here under

INCOME TAX - ASSESSEES POSITION AS ON 31st MARCH, 2010

ASSESSMENT YEAR TAX INTEREST PENALITY REMARK

1996-1997 10952070.00 18036750.00 9256921.00 ITAT

1997-1998 4374905.00 6262520.00 4384903.00 ITAT

1998-1999 2357929.00 282348200 7065684.00 ITAT

2001-2002 - - 1369656.00 CIT (A)

17684904.00 27122752.00 22077164.00

10. The Clause of accumulated losses etc is not applicable to the company.

11. We have observed that the company has not defaulted in repayment of Dues to Bank, since no loan has been obtained from any Bank by the Company.

12. Company has not granted loans & Advances on the basis of security etc. hence no discrepancies thereof arise.

13. The Provisions of Nidhi / Mutual benefit Fund/ Society etc. are not applicable to the Company.

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

15. Company has not given any Guarantee for loans taken by others and hence other provision are not applicable.

16. Company has not obtained any term loan during the year from Banks / F.I. and hence application of loan, for specific purpose clause is not applicable.

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

18. No preferential Allotment of shares etc. has been made by the Company; hence other clauses are not applicable.

19. No Debentures are issued by the Company.

20. There was no raising of money by Public issue.

21. In accordance with the information and explanations given to us and, on our examination of books and records, no frauds on or by the company has been noticed or reported during the year.



For KAMLESHB. MEHTA & CO.

CHARTERED ACCOUNTANTS

Sd/-

Place : Mumbai Kamlesh B.Mehta

Date : 4th September, 2010 (Proprietor)

Member Ship No.36323


Mar 31, 2009

We have audited the attached Balance Sheet of SHEETAL DIAMONDS LIMITED as at 31st March, 2009 and also the Profit & Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 to the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

b) In our opinion, proper books of account as required by law have been kept by the company.

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

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3Q of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the Directors as on 31st March, 2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2009 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with Other Notes give a true and fair view in conformity with the accounting principles generally accepted in India;

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31s1 March, 2009; and

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

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

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph 1 of is our Report of even date of SHEETAL DIAMONDS LIMITED as at 31st March, 2009.

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

(b) The company has physically verified Fixed Assets at reasonable intervals and no material discrepancies were noticed on such verification.

(c) None of the Fixed Assets have been disposed off during the year.

2. (a) The Inventory has been physically verified by the management at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and the discrepancies noticed on verification between the physical stock and the book records were not material and the same have been properly dealt with in the books of accounts.

3. The company has not taken / granted unsecured loans, to/ from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clause 4 (iii) (b) to (d) of the Order are not applicable.

4. In our opinion, and according to explanation given to us, there is adequate internal control procedure Ocommensurate with the size of the Company and the nature of its business with regard to the purchase of inventories, fixed assets and for the sale of goods. There is no continuing failure to correct weakness in internal control.

5. According to the information and explanations given to us, we are of the opinion that there are no transactions that need be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly provisions of clause 4(v) (b) of the Order-are not applicable.

6. According to the information and explanation given to us, during the year under review, the company has not accepted any Deposits from the public and hence provisions of section 58A and 58AA of the Companies Act,. 1956 and Rules framed there under are not applicable.

7. The Company has no internal audit system.

8. We have been informed that the maintenance of cost records has not been prescribed by the Central Government under section 209(1) (d) of the Companies Act, 1956 for any of the products of the company.

9. a) According to the information and explanations to us, the Company is not having any employee on whom statutory liabilities including Provident Fund, E.S.I.C. is applicable. Other statutory liabilities i.e. VAT, wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other applicable statutory dues wherever applicable are deposited with appropriate authorities . There are no arrears of statutory dues as at 31st March, 2008 except Income Tax which are outstanding for a period of more than six month from the date they became payable.

b)As per information given to us there is disputed demand pending for payment in respect of Income Tax including present status for the same before Appellate authority is as per table given here under

INCOME TAX - ASSESSEES POSITION AS ON 31st MARCH, 2008

ASSESSMENT YEAR TAX INTEREST PENALITY REMARK

1996-1997 10952070.00 18036750.00 9256921.00 ITAT

1997-1998 4374905.00 6262520.00 4384903.00 ITAT

1998-1999 2357929.00 2823482.00 7065684.00 ITAT

2001-2002 - - 1369656.00 CIT(A)

17684904.00 27122752.00 22077164.00

10. The Clause of accumulated losses etc is not applicable to the company.

11. We have observed that the company has not defaulted in repayment of Dues to Bank, since no loan has been obtained from any Bank by the Company.

12. Company has not granted loans & Advances on the basis of security etc. hence no discrepancies thereof arise.

13. The Provisions of Nidhi/ Mutual benefit Fund/Society etc. are not applicable to the Company.

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

15. Company has not given any Guarantee for loans taken by others and hence other provision are not applicable.

16. Company has not obtained any term loan during the year from Banks / F.I." and hence application of loan, for specific purpose clause is not applicable.

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

18. No preferential Allotment of shares etc. has been made by the Company; hence other clauses are not applicable.

19. No Debentures are issued by the Company.

20. There was no raising of money by Public issue.

21. In accordance with the information and explanations given to us and, on our examination of books and records, no frauds on or by the company has been noticed or reported during the year.

For KAMLESHB. MEHTA & CO. CHARTERED ACCOUNTANTS

Sd/- Place : Mumbai Kamlesh B.Mehta

Date : 10th August, 2009 (Proprietor)

Member Ship No.36323



 
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