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Auditor Report of Shree Mahaganga Sugar Mills Ltd.

Mar 31, 2009

1. We have audited the attached balance sheet of Shree Mahaganga Sugar Mills Limited (the Company) as at 31st March, 2009, the profit and loss account and also the cash flow statement of the Company for the year ended on that date (all together referred to as the financial statements). 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 free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (the said Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 (The Act), we enclose in the Annexure, 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 4 above, we report that:

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

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

c. the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

d. in our opinion, the balance sheet, the profit and loss account and cash flow statement 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, and taken on record by the board of directors, we report that none of the directors are disqualified as on March 31, 2009 from being appointed as a director under 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 explanation given to us, the said financial statements, read with the notes thereon give the information required by the Companies Act, 1956, in the manner so required 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;

ii. in the case of the profit and loss account, of the loss of the Company for the year ended 31st March, 2009; and

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

Annexure to Auditors Report

(Referred to in paragraph 4 of our report to the members of SHREE MAHAGANGA SUGAR MILLS LIMITED for the year ended on 31st March, 2009)

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

(b) The fixed assets have been physically verified by the management at reasonable intervals, which in our opinion, is considered reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verifications.

(c) The Company has not disposed off a substantial part of fixed assets during the year, and accordingly, going concern is not affected.

(ii) The Company has a policy of treating motion pictures under production as inventory till the date of release/agreement whichever is earlier. Consequently, there is no tangible inventory carried by the Company. Accordingly, the provisions of Paragraph 4(ii) of the said Order are not applicable to the Company.

(iii) According to the information and explanations given to us, the Company has not taken any loan, secured or unsecured from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act 1956. Accordingly, Paragraph 4(iii) of the said Order is not applicable to the Company.

(iv) In our opinion, and according to the information and explanations given to us, the Companys internal control procedures for the purchase of inventory and for the sale of goods and services needs to be further strengthened so as to be commensurate with the size of the Company and nature of its business. In respect of purchase of fixed assets, the Company has adequate internal control procedures commensurate with the size of the Company and nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

(v) In our opinion and according to the information and explanations given to us, there are no transactions that need to be been entered in the register required to the maintained U/s. 301.

(vi) The Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of section 58A, 58AA and any other relevant provisions of the Companies Act, 1956 and the rules framed there under are applicable. Accordingly, the provisions of Paragraph 4(vi) of the said Order are not applicable to the Company. *

(vii) The Company does not has an internal audit system, commensurate with the size of the Company and the nature of its business.

(viii) As informed to us, the maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 in respect of the activities of the Company. Accordingly the provisions of Paragraph 4(viii) of the said Order are not applicable to the Company.

(ix) (a) According to the information and explanations given to us, except for delays in depositing tax deducted at source, the Company is generally regular in depositing undisputed statutory dues including provident fund, investors education and protection fund, employees state insurance, income-tax, service tax, excise duty, custom duty, cess and any other statutory dues as applicable, with the appropriate authorities during the year and there are no arrears of outstanding statutory dues as at the last day of the financial year concerned, 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 dues of sales tax, income-tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited on account of any dispute.

(x) After considering the effect of quantified qualification as stated in paragraph 3 of our report, in our opinion and according to the information and explanations given to us, the accumulated losses of the Company at the end of the financial year does not exceeds fifty percent of its net worth. The Company also does not incurred cash losses during the current financial year and also in the immediately preceding financial year.

(xi) In our opinion, and on the basis of our examination and according to the information and explanations given to us, the Company has not defaulted in repayment of its dues to financial institutions :

(xii) In our opinion, and on the basis of our examination and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of Paragraph 4(xii) of the said Order are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society.

Accordingly, the provisions of Paragraph 4(xiii) of the said Order are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Paragraph 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 given guarantee to the Company as reflected in Note no 3 to Schedule S.

(xvi) According to the information and explanations given to us and records examined by us, the term loans have been applied for the purpose for which they were raised.

(xvii) On the basis of an overall examination of the balance sheet of the Company, in*our opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long-term purposes.

(xviii) The Company has not made preferential allotment of shares to the parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of Paragraph 4(xviii) of the said Order are not applicable to the Company.

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

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

For UDAY PASAD & ASSOCIATES,

Chartered Accountants

S/d

(UDAY PASAD)

Proprietor

M. No F-46581

Place: MUMBAI

Date:01/09/2009







 
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