Mar 31, 2015
We have audited the accompanying financial statements of M/s. SMITHS &
FOUNDERS (INDIA) LIMITED ("the Company") which comprise the Balance
Sheet as at March 31, 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 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 principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of 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 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 under Section 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 the 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 financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, 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 financial
statements.
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, 2015;
(b) In the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date
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 sought and 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 it appears from our examination of those
books;
c. The Balance Sheet, the Statement of Profit and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account;
d. In our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under section 133 of the Companies Act,
2013, read with the Rule 7 of the Companies (Accounts) Rules, 2014;
e. On the basis of written representations received from the directors
as on March 31,2015, taken on record by the Board of Directors, none of
the directors is disqualified as on March 31, 2015, from being
appointed as a director in terms of section 164 (2) of the Act;
f. With respect to the other matters 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 does not have any pending litigation which would impact
its financial position;
(ii) The Company did not have any long term contracts including
derivative contracts for which there were any material foreseeable
losses.
(iii) There were no amounts which were required to be transferred to
the Investor Education and Protection Fund by the Company
Annexure to the Independent Auditors' Report
(i) Fixed Assets
a) The Company has maintained proper records of fixed assets showing
full particulars, including quantitative details and situation of the
assets.
b) The Management has conducted physical verification of fixed assets
at reasonable intervals and no material discrepancies were noticed on
such verification.
(ii) Inventory
a) The inventory has been physically verified during the year by the
management. In our opinion the frequency of verification is reasonable.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and nature of its business.
c) The Company is maintaining proper records of inventory. There were
no material discrepancies noticed on verification between physical
stock and books of account.
(iii) Loans and Advances
The Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 189 of Companies Act, 2013. Accordingly the provisions of
clause (iii) (a) & (b) of the above said order are not applicable to
the company.
(iv) Internal Control
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, with regard to
purchase of inventory, fixed assets and for sale of goods and services.
We have not noted any continuing failure to correct major weakness in
the internal controls during the course of audit.
(v) Deposits
According to the information and explanation given to us, and based our
verification, the Company has not accepted any deposits from public
during the year and the provisions of Section 73 to 76 and the
directives of Reserve Bank of India have been complied with by the
Company.
(vi) Cost records
According to information and explanation given to us, the company is
not required to maintain cost records as per section 148 of the Act,
hence no comment is required on the same.
(vii) Statutory Dues
a) According to the records of the Company, the Company is regular in
depositing with appropriate authorities undisputed statutory dues
including provident fund, employee's state insurance, income tax, sales
tax, wealth tax, service tax, duty of customs, duty of excise, value
added tax, cess and other statutory dues applicable to it.
b) According to the records of the Company, there are no dues of income
tax or sale tax or wealth tax or service tax or duty of customs or duty
of excise or value added tax or cess which have not been deposited on
account of any dispute.
c) According to the information and explanation given to us, the
company did not have amount required to be transferred to Investors
Education and Protection Fund, hence no comment is required on the
same.
(viii) Erosion of net worth
Consequent to a one-time charge of Rs.1,15,57,079/-, being the carrying
amount of Assets whose written down value has been written off since
the useful life is nil as at 01.04.2014 pursuant to the provisions of
Companies Act, 2013, to the retained earnings / accumulated losses, the
Company's accumulated losses has exceeded fifty percent of its
net-worth at the end of the financial year. The Company has incurred
cash losses of Rs. 1,41,12,954/- during the financial year covered by
our audit and Rs. 80,00,966/- in the immediately preceding financial
year.
(ix) Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that the
company has not defaulted in repayment of dues to banks. The Company has
no dues to any other financial institution or debenture holders.
(x) According to the information and explanations given to us, the
Company has not given any guarantee for the loans taken by others from
the bank or financial institutions.
(xi) According to the information and explanations given to us, the
Company has applied the term loans for the purpose for which they were
obtained.
(xii) In our opinion and to the best of our information and according
to the explanations given to us no fraud on or by the Company have been
noticed or reported during the year.
For B N Subramanya & Co.
Chartered Accountants
Firm Reg.No.004142S
DEVENDRA NAYAK
Place: Bangalore Partner
Date: 30th May, 2015 Membership No. 27449
Mar 31, 2014
We have audited the accompanying financial statements of M /s. SMITHS
AND FOUNDERS (INDIA) LIMITED [FORMERLY KNOWN AS SHIMOGA TECHNOLOGIES
LIMITED] ("the Company") which comprise the Balance Sheet as at
March 31, 20I4, 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 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 Statement of Profit and Loss, of the loss for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date
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, 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;
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.
Annexure to the Independent Auditors'' Report
(i) Fixed Assets
a) The Company has maintained proper records of fixed assets showing
full particulars, including quantitative details and situation of the
assets.
b) The Company has a regular programme for physical verification of its
fixed assets by which the fixed assets are verified on a phased manner.
In accordance with this programme, certain fixed assets were verified
during the year and no material discrepancies were noticed on such
verification.
c) On the basis of our examination of the books and records of the
Company, and according to the information and explanations given to us,
in our opinion, there was no disposal of substantial part of fixed
assets during the year.
(ii) Inventory
a) The inventory has been physically verified during the year by the
management. In our opinion the frequency of verification is reasonable.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the company and nature of its business.
c) The Company is maintaining proper records of inventory. There were
no material discrepancies noticed on verification between physical
stock and books of account.
(iii) Loans and Advances
a) During the year, the Company has granted secured loans to parties,
covered In the register maintained under section 301 of the Act and the
same is as follows:
Number Maximum Amount
of parties Amount Involved as at 31.03.2014
1 Rs. 20,00,000/- NIL
The above loan was squared off during the year.
b) In our opinion the terms and conditions for repayment of the
principal and interest are not prejudicial to the interest of the
company.
c) Based on our scrutiny of the Company''s records and according to
information and explanation given to us, the Company has not taken any
loans, secured or unsecured from companies, firms or other parties
covered in the register maintained under section 301 of Companies Act,
1956 during the year. Accordingly provisions of clause (iii) (b) (c) &
(d) of the above said order are not applicable to the company.
(iv) Internal Control
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, with regard to
purchase of inventory, fixed assets and for sale of goods. We have not
noted any continuing failure to correct major weakness in the internal
controls during the course of audit.
(v) Particulars of contracts and arrangements required to be entered in
the register maintained under section 301 :
a) In our opinion, and according to the information and explanations
given to us, the particulars of contracts / arrangements referred to in
Section 301 of the Companies Act, 1956 have been entered in the
register required to be maintained under that Section.
(vi) Deposits
According to the information and explanation given to us, the Company
has accepted deposits from the public. The directives issued by the
Reserve Bank of India and the provisions of sections 58A and 58AA of
the Act and the rules framed there under, where applicable, have been
complied with.
(vii) Internal Audit
In our opinion, the Company has an internal audit system which is
commensurate with the size and nature of its business.
(viii) According to the information and explanation given to us, the
maintenance of cost records have been prescribed by the Centra!
Government under clause
(d) of sub-section (1) of section 209, of the Companies Act, 1956 and
the same has been maintained by the Company.
(ix) Statutory Dues :
a) According to the records of the Company, the Company is regular in
depositing with appropriate authorities undisputed statutory dues
including provident fund, employee''s state insurance, income tax, sales
tax, wealth tax, service tax, custom duty, excise duty, cess and other
statutory dues applicable to it.
b) According to the information and explanation given to us and based
on the records available, the Company had no undisputed amounts payable
in respect of provident fund, investor education and protection fund,
employees state insurance, income tax, wealth tax, sales tax, service
tax, customs duty, excise duty, cess and any other statutory dues with
the appropriate authorities as at the last day of the financial year
concerned, for a period more than six months from the date they were
payable.
c) According to the information and explanations given to us there is
no disputed dues as at 31st March 2014.
(x) Erosion of net worth :
The company does not have accumulated losses exceeding the net worth as
at the end of the financial year. The company has incurred cash losses
of Rs.80,00,966/- during the financial year covered by our audit and
Rs.9,54,615/- in the immediately preceding financial year.
(xi) Based on our audit procedures and on the information and
explanations given by the management, we are of the opinion that the
company has not defaulted in repayment of dues to banks. The Company
has no dues to any other financial institution or debenture holders.
(xii) According to the records of the Company, the Company has not
granted any loans and advances on the basis of security by way of
pledge of shares, debentures or other securities.
(xiii) In our opinion, the Company is not a Chit fund or a Nidhi or a
Mutual benefit fund or a Society. Accordingly clause 4(xiii) of the
order is not applicable.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly
clause 4 (xiv) of the Order is not applicable
(xv) According to the information and explanation given to us, the
Company has not given any guarantee for the loans taken by others from
the bank or financial institutions.
(xvi) According to the information and explanation given to us and
based on our audit procedures, the term loans availed from Bank during
the year were applied for the purposes for which they were obtained.
(xvii) According to the information and explanation given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment by the Company.
(xviii) According to information and explanations given to us, the
Company has not made any preferential allotment during the year.
(xix) Based on the examination of records and information and
explanation given to us, no debentures were issued during the year.
Hence clause 4(xix) of the Order is not applicable.
(xx) The Company has not raised any money by public issues during the
year. Accordingly clause 4(xx) of the Order is not applicable.
(xxi) In our opinion and to the best of our information and according
to the explanations given to us no fraud on or by the Company have been
noticed or reported during the year.
For B N Subramanya & Co.
Chartered Accountants
Firm Reg.No.004142S
DEVENDRA NAYAK
Place: Bangalore Partner
Date : 30th May, 2014 Membership No. 027449
Mar 31, 2012
1. We have audited the attached Balance Sheet of Shimoga Technologies
Limited as at 31 March 2012 and the Statement of Profit and Loss and
Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We have 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 (Auditor's Report) Order, 2003 as
amended by Companies (Auditors Report) (Amendment) Order, 2004,
(together the order') issued by the Government of india in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, and on the
basis of such checks of the books and records of the company as we
considered appropriate and according to the information and
explanations given to us, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. We report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
ii) in our opinion, proper books of account, as required by law have
been kept by the company so far as appears from our examination of
those books;
iii) The Balance Sheet and Statement of Profit and Loss dealt with by
this report are in agreement with the books of account.
iv) in our opinion the Balance Sheet and, Statement of Profit & Loss
and the Cash Flow Statement dealt with this report, comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 to the extent it is applicable.
v) On the basis of written representations received from the directors,
as on 31 March 2012 and taken on record by the Board of Directors, we
report that none of the directors is disqualified as on 31 March 2012
from being appointed as director in terms of clause (g) of sub-section
(1) of section 274 of the Companies Act, 1956;
vi) Attention is invited to :
a.) Point No.8 of Part I of Note 2 regarding preparation of accounts on
going concern basis although the net worth of the company has
substantially eroded and Point 9 of Part II of Note 2 regarding leasing
plant and machinery. Accordingly, the financial statements do not
include adjustments aforesaid in case the management's business plans
do not materialise.
b.) Point No.11 of Part II of Note 2 regarding the company being a sick
industrial company within the meaning of clause (o) of sub section (1)
of section 3 of the Sick industrial Companies Act, 1985, and the
company has been directed to file rehabilitation scheme with the Board
for industrial and Financial Reconstruction ('BIFR') under the
provisions of the Sick industrial Companies Act, 1985.
vii) Subject to the matters referred above, in our opinion and to the
best of information and according to the explanations given to us, the
said accounts read with the notes thereon give the information required
by the Companies Act, 1956, in the manner so required and give a true
and fair view in conformity with the accounting principles generally
accepted in india;
a) in the case of the Balance Sheet, of the state of affairs of the
company as at 31 March 2012;
b) in the case of the Statement of Profit and Loss, of the loss for the
year ended on that date;
c) in the case of the cash flow statement, of the cash flows for the
year ended on that date;
Annexure to the Auditors' Report
(as referred in paragraph 3 of our report)
i) (a) the Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets;
(b) the Company has a regular programme for physical verification of
its fixed assets by which fixed assets are verified in a phased manner.
In accordance with this programme, certain fixed assets were verified
during the year and no material discrepancies were noticed on such
verification. In our opinion, this periodicity of physical verification
is reasonable having regard to the size of the Company and the nature
of its assets;
(c) During the year, the company has not disposed off substantial /
major part of fixed assets.
ii) The company did not have inventories at any time during the year.
Consequently, the requirements regarding physical verification of
inventories, maintenance of records of inventory and discrepancies
between physical stocks and book records are not applicable to the
company for the year.
iii) (a) The Company has not granted any loans, secured
or unsecured, to companies, firms or other parties listed in the
Register maintained under Section 301 of the Companies Act, 1956,
during the period. As the Company has not granted any loans, secured or
unsecured, to parties listed in the register maintained under Section
301 of the Companies Act, 1956, clauses iii(b), iii(c), and iii(d) of
the paragraph 4 of the Order, are not applicable;
(b) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties listed in the Register maintained
under Section 301 of the Companies Act, 1956, during the period. As the
Company has not taken any loans, secured or unsecured, from parties
listed in the register maintained under Section 301 of the Companies
Act, 1956, clauses iii(f) and iii(g) of the paragraph 4 of the Order,
are not applicable;
iv) in our opinion and according to the information and explanations
given to us, there is an internal control system commensurate with the
size of the Company and the nature of its business with regards to the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit no major weakness has been noticed in
respect of these areas;
v) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that all transactions that need to be entered into the register
in pursuance of Section 301 of the Act have been so entered;
vi) The Company has not accepted any deposits from the public within
the meaning of sections 58A and 58AA of the Companies Act, 1956 and the
Rules framed there under;
vii) The company has an internal audit system, which in our opinion
needs to be strengthened;
viii) According to the information and explanation given to us, the
Central Government has not prescribed the maintenance of cost records
under Section 209(1)(d) of the Companies Act, 1956;
ix) (a) According to the records of the Company and information and
explanations given to us, the Company has been regular in depositing
undisputed statutory dues including tax deducted at source, excise
duty, sales tax/value added tax, entry tax and professional tax and
other statutory dues with the appropriate authorities during the year;
(b) According to the information and explanation given to us, and on
the basis of our examination of the books of account, there is no
undisputed dues in respect of income tax, wealth tax, sales tax,
customs duty and excise duty outstanding, as at the last day of the
financial year, for a period of more than six months since they became
payable;
(c) As at 31 March 2012, according to the records of the Company, no
dues outstanding on sales-tax, income-tax, custom duty, wealth-tax,
excise duty, cess and investor education and protection fund, on
account of any dispute.
x) in our opinion, the accumulated losses of the company at the end of
the financial year is greater than fifty percent of its net worth as at
the last day of the financial period and has incurred cash loss during
the financial year ended on that date;
xi) according to the information and explanation given to us and based
on our audit procedures, we are of the opinion that the Company, has
not defaulted in repayment of its dues to any financial institution,
bank or to debenture holder during the period;
xii) the Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities;
xiii) in our opinion, the Company is not a chit fund or a nidhi/ mutual
benefit fund/ society. Therefore, clause (xiii) of the Order is not
applicable to the Company;
xiv) in our opinion and according to information and explanations given
to us, the Company is not a dealer or trader in securities;
xv) according to the information and explanations given to us and the
records examined by us, the Company has not given any guarantees for
loans taken by others from banks or financial institutions;
xvi) according to the information and explanations given to us, no term
loan has been borrowed by the company;
xvii) based on the information and explanations given to us and on an
overall examination of the balance sheet of the Company, in our
opinion, there are no funds raised on short term basis which have been
used for long-term investment;
xviii) the Company has not made any preferential allotment of shares to
parties and the companies covered in the register maintained under
Section 301 of the Companies Act, 1956;
xix) the Company has not issued any debentures during the year;
xx) the Company has not raised any money by public issue during the
period, accordingly clause 4(xx) of the order is not applicable;
xxi) During the course of examination of the books and records of the
company, carried out in accordance with the auditing practices
generally accepted in india and according to the information and
explanation given to us, we have neither come across any instance of
fraud on or by the company for the year, nor have we been informed of
such case by management;
For Naik & Shah,
Chartered Accountants
FRN010270S
Place : Bangalore SHIRISH SHAH
Date : 28.05.2012 Partner
Membership Number : 212813
Mar 31, 2011
1. We have audited the attached Balance Sheet of Shimoga Technologies
Limited as at 31 March 2011 and the Proft and Loss Account and Cash
Flow Statement for the period ended on that date annexed thereto.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We have 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 (Auditor's Report) Order, 2003 as
amended by Companies (Auditors Report) (Amendment) Order, 2004,
(together the order) issued by the Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, and on the
basis of such checks of the books and records of the company as we
considered appropriate and according to the information and
explanations given to us, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. We report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
ii) In our opinion, proper books of account, as required by law have
been kept by the company so far as appears from our examination of
those books;
iii) The Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account.
iv) In our opinion the Balance Sheet and, Profit & Loss Account and the
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 to the extent it is applicable.
v) On the basis of written representations received from the directors,
as on 31 March 2011 and taken on record by the Board of Directors, we
report that none of the directors are disqualified as on 31 March 2011
from being appointed as a director in terms of clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956;
vi) Attention is invited to :
a.) Note No.8 of schedule 5 regarding preparation of accounts on a
going concern basis although the networth of the company has
substantially eroded and note regarding 19 of schedule 5 leasing of the
land, building and plant and machinery to Smiths & Founders (India) ltd
(formerly known as Bhagavathi Enterprises Ltd). Accordingly, the
accounts do not include adjustments aforesaid in case the managementÃs
business plans do not materialise.
b.) Note No.16 of Schedule 5 regarding the company is a sick industrial
company within the meaning of clause (o) of sub section (1) of section
3 of the Sick Industrial Companies Act 1985, and the company has filed
a draft rehabilitation scheme with the Board of Industrial and
Financial Reconstruction (ÃBIFRÃ) under the provisions of the Act the
matter is pending before the BIFR.
vii) Subject to the matters referred to above, in our opinion and to
the best of information and according to the explanations given to us,
the said accounts read with the notes thereon gives the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India;
a) in the case of the Balance Sheet, of the state of affairs of the
company as at 31 March 2011;
b) in the case of the Profit and Loss Account, of the profit for the
year ended on that date;
c) in the case of the cash flow statement, of the cash flows for the
year ended on that date;
Annexure to the Auditors' Report
Referred to in paragraph 3 of my report of even date,
i) (a) the Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets;
(b) All the fixed assets have been verified by the management during
the year and according to the information and explanation given to us,
there is a regular programme of verification which in our opinion needs
improvement and further strengthening, considering the size of the
company and nature of assets. The discrepancies noticed on physical
verification have been properly dealt with in the books of accounts;
(c) During the year, the company has not disposed off substantial/
major part of fixed assets. The company has leased its factory building
and plant and machinery in order to curtail future losses. The
assumption of going concern has been followed in view of the reasons
set forth in note no.8 of notes to accounts.
ii) The company did not have inventories at any time during the year.
Consequently,the requirements regarding physical verification of
inventories,maintenance of records of inventory and discrepancies
between physical stocks and book records are not applicable to the
company for the year.
iii) (a) The Company has not granted any loans, secured or unsecured,
to companies, firms or other parties listed in the Register maintained
under Section 301 of the Companies Act, 1956, during the period. As the
Company has not granted any loans, secured or unsecured, to parties
listed in the register maintained under Section 301 of the Companies
Act, 1956, clauses iii(b), iii(c), and iii(d) of the paragraph 4 of the
Order, are not applicable;
(b) The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties listed in the Register maintained
under Section 301 of the Companies Act, 1956, during the period. As
the Company has not taken any loans, secured or unsecured, from parties
listed in the register maintained under Section 301 of the Companies
Act, 1956, clauses iii(f) and iii(g) of the paragraph 4 of the Order,
are not applicable;
iv) In our opinion and according to the information and explanations
given to us, there is an internal control system commensurate with the
size of the Company and the nature of its business with regards to the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit no major weakness has been noticed in
respect of these areas;
v) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that all transactions that need to be entered into the register
in pursuance of Section 301 of the Act have been so entered;
vi) The Company has not accepted any deposits from the public within
the meaning of section 58A and 58AA of the Companies Act, 1956 and the
Rules framed thereunder;
vii) The company has an internal audit system,which in our opinion
needs to be improved;
viii) According to the information and explanation given to us,the
Central Government has not prescribed the maintenance of cost records
under Section 209(1)(d) of the Companies Act, 1956;
ix) (a) According to the records of the Company and information and
explanations given to us, the Company has not been regular in
depositing undisputed statutory dues including tax deducted at source,
excise duty,sales tax/value added tax, entry tax and professional tax
and other statutory dues with the appropriate authorities during the
period;
(b) According to the information and explanation given to us, and on
the basis of our examination of the books of account, the following
undisputed dues in respect of income tax, wealth tax, sales tax,
customs duty and excise duty outstanding, as at the last day of the
financial period, for a period of more than six months since they
became payable;
Name of the Statute Nature of Dues Amount
(Rs.)
Income-tax Act Tax Deducted at source/ 2,11,397
Tax collected at source
including interest.
The Central Excise Excise duty, Education 13,271
Act cess and Higher
education cess
Karnataka Sales VAT Payable including 30,729
Tax Act, Value interest
added Tax Act
Tha Karnataka Tax Entry Tax including 5,47,540
On Entry Of Goods interest
Act
Service Tax Service Tax payable 2,87,065
including interest
The Employees State ESI Payable including 8,310
Insurance Act interest
Karnataka Tax on Professional Tax Payable 3,42,337
Trades, Professionals including interest
and Callings Act,
Karnataka Professi
-onal Tax Act, 1976
Name of the Statute Due Date Date of Payment
Income-tax Act On monthly basis, Not paid
on 7th of the
following month
The Central Excise On monthly basis, Not paid
Act on 5th of the
following month
Karnataka Sales On monthly basis, Not paid
Tax Act, Value on 20th of the
added Tax Act following month.
Tha Karnataka Tax On monthly basis, Not paid
On Entry Of Goods on 20th of the
Act following month.
Service Tax On monthly basis, Not paid
on 5th of the
following month
The Employees State On monthly basis, Not paid
Insurance Act on 21st of the
following month.
Karnataka Tax on On monthly basis,
Trades, Professionals on 20th of the
and Callings Act, following month.
Karnataka Professi
-onal Tax Act, 1976
(c) As at 31 March 2011, according to the records of the company, no
dues outstanding as Sales Tax, Investor Education and Protection Fund,
Income Tax, Custom Duty, Wealth Tax, Excise Duty and Cess on account of
any dispute.
x) In our opinion, the accumulated losses of the company at the end of
the financial year is greater than fifty percent of its networth as at
the last day of the financial period and has incurred cash loss during
the financial period ended on that date;
xi) according to the information and explanation given to us and based
on our audit procedures, we are of the opinion that the Company, has
not defaulted in repayment of its dues to any financial institution,
bank or to debenture holder during the period;
xii) the Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities;
xiii) in our opinion, the Company is not a chit fund or a nidhi/ mutual
benefit fund/ society. Therefore, clause (xiii) of the Order is not
applicable to the Company;
xiv) in our opinion and according to information and explanations given
to us, the Company is not a dealer or trader in securities;
xv) according to the information and explanations given to us and the
records examined by us, the Company has not given any guarantees for
loans taken by others from banks or financial institutions;
xvi) according to the information and explanations given to us, no term
loans has been borrowed by the company;
xvii) based on the information and explanations given to us and on an
overall examination of the balance sheet of the Company, in our
opinion, there are no funds raised on short term basis which have been
used for long-term investment;
xviii) the Company has not made any preferential allotment of shares to
parties and the companies covered in the Register maintained under
Section 301 of the Companies Act, 1956;
xix) the Company has not issued any debentures during the period;
xx) the Company has not raised any money by public issue during the
period , accordingly clause 4(xx) of the order is not applicable;
xxi) During the course of examination of the books and records of the
company, carried out in accordance with the generally accepted
accounting practices in India and according to the information and
explanation given by the management, we report that no fraud on or by
the company has been noticed or reported for the period;
For Raghavendra Naik & Associates
Chartered Accountants
Firm Reg. Number : FRN010270S
Place : Bangalore T. RAGHAVENDRA NAIK
Date : 30.05.2011 Proprietor
Membership Number : 210228
Mar 31, 2010
1. I have audited the attached Balance Sheet of Shimoga Technologies
Limited as at 31st March 2010, the Profit and Loss Account and the Cash
Flow statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the companys
management. My responsibility is to express an opinion on these
financial statements based on my audit.
2. I conducted my audit in accordance with the auditing standards
generally accepted in India. Those standards require that I 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. I believe that
my audit provides a reasonable basis for my opinion.
3. As required by the Companies (Auditors Report) Order, 2003 as
amended by Companies (Auditors Report) (Amendment) Order, 2004,
(together the order) issued by the Central Government of India in terms
of sub-section (4A) of section 227 of the Companies Act, 1956, and on
the basis of such checks of the books and records of the company as I
considered appropriate and according to the information and
explanations given to me, I enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. Further to my comments in the Annexure referred to in paragraph 3
above, I report that:
i) I have obtained all the information and explanations, which to the
best of my knowledge and belief were necessary for the purposes of my
audit;
ii) In my opinion, proper books of account, as required by law have
been kept by the Company so far as appears from my examination of those
books;
Hi) The Balance Sheet, Profit and Loss account and Cash Flow statement
dealt with by this report are in agreement with the books of account.
iv) In my opinion the Balance Sheet , Profit & Loss Account and the
Cash Flow statement dealt with by this report subject to note 4(b) of
Schedule VII comply with the accounting standards referred to in
sub-section (3C) of section 211 of the Companies Act, 1956 to the
extent it is applicable.
v) On the basis of written representations received from the Directors,
as on 31st March 2010 and taken on record by the Board of Directors, I
report that none of the Directors are 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;
vi) Attention is invited to :
a) Note No.2 of Schedule VII regarding preparation of accounts on a
going concern basis even though the net worth of the Company has been
substantially eroded and leasing of the land, Building and Plant and
Machinery to Bhagavathi Enterprises Ltd, taking into account repayment
of dues to IDBI and Bank of India and the managements assessment of
improvement in the economic conditions, and the fact that manufacturing
facilities are in use and the short period of lease. Accordingly, these
accounts do not include adjustments aforesaid in case the managements
business plans do not materialise.
b) Note No.5(i) of Schedule VII regarding non- provision of penalty
proposed by sales tax authorities .
c) Note No. 7 of Schedule VII regarding non-obtaining of confirmation
of balances in the accounts of advances, deposits, some creditors and
bank accounts.
d) Note No.5(iv) of Schedule VII regarding orders passed by PF
authorities levying penalties and enhancing the taxes payable for which
the company is in the process of filing necessary applications/appeals
for reduction/deletion of demands.
The effect of (a) to (c) above could not be quantified and hence the
effect on accounts of the same could not be ascertained.
vii) Subject to the matters referred to above, and my report in the
annexure, in my opinion and to the best of information and according to
the explanations given to me, the said accounts read with the notes
thereon gives the information required by the Companies Act, 1956, in
the manner so required and give a true and fair view in confirmity 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 31st March 2010;
b) in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Annexure to the Auditors Report
Referred to in paragraph 3 of my report of even date,
i) (a) The company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b)AII the fixed assets have not been verified by the management during
the year but, according to the information and explanations given to
me, there is a regular programme of verification which, in my opinion,
is reasonable having regard to the size of the Company and the nature
of its assets. The discrepancies noticed on physical verification have
been properly dealt with in the books of account.
(c) There was no disposal of a substantial part of fixed assets during
the year. The company has leased its factory building and plant and
machinery in order to curtail future losses, gain time to negotiate
with the creditors and restart after improvement in the general
economic scenario, w.e.f. 11412009 for a period of 11 months which may
be extended upto a maximum of three years. The lease agreement has been
renewed for a further period of 11 months w.e.f. 24/05/2010. The
assumption of a going concern has been followed in view of the reasons
set forth in note no~.2 of notes to accounts Schedule VII.
ii) The Company did not have inventories at any time during the year.
Consequently, the requirements regarding physical verification of
inventories, maintenance of records of inventory and discrepancies
between physical stocks and book records are not applicable to the
company for the year.
iii) (a) During the year the Company has not granted any loans, secured
or unsecured, to Companies, firms or other parties listed in the
Register maintained under Section 301 of the Companies Act, 1956. As
the Company has not granted any loans, secured or unsecured, to parties
listed in the registers maintained under Section 301 of the Companies
Act, 1956 clauses iii(b), iii(c) and iii(d) of paragraph 4 of the order
are not applicable.
(b) During the year the Company has not taken any loans, secured or
unsecured, from companies, firms or other parties other than a director
amounting to Rs. 1 crore as listed in the Register maintained under
Section 301 of the Companies Act, 1956. The rate of interest and other
terms and conditions of the loan are not prima facie prejudcial to the
interests of the Company. The Company has been regular in payment of
interest.
(V) In my opinion and according to the information and explanations
given to me,there are adequate internal control procedures to make it
commensurate with the size of the company and the nature of its
business with regard to purchases of inventory, fixed assets and for
sale of goods and services. Further, on the basis of my examination of
the books and records of the Company, and according to the information
and explanations given to me, other than items covered in Note 5 (ii)
to 5(iv) of Schedule VII, I have neither come across nor have been
informed of any continuing failure to correct major weaknesses in the
aforesaid internal control system.
v) (a) Based on the audit procedures applied by me and according to the
information and explanations given to me, I am of the opinion that the
contracts or arrangements that need to be entered into the register
maintained under section 301 of the Companies Act, 1956 have been so
entered.
(b) In respect of transactions made in pursuance of such contracts or
arrangements exceeding Rs.5 lakhs entered into during the financial
year, because of the absence of any comparable prices for the current
year, we are unable to comment whether the transactions are made at
prevailing market prices at the relevant time.
vi) In my opinion and according to the information and explanations
given to me the Company has not accepted any deposits from the public
during the year and consequently, the directives issued by the Reserve
Bank of India, the provisions of section 58A, 58AA or any other
relevant provisions of the Companies Act, 1956 and the rules framed
thereunder are not applicable.
vii) The company has an internal audit system, which in my opinion
needs to be improved.
viii) According to the information and explanations given to me, the
Central Government has not prescribed the maintenance of cost records
under clause (d) of sub- section (1) of Section 209 of the Companies
Act, 1956 in respect of the activities carried out by the company.
ix) (a) According to the information and explanations given to me, and
on the basis of my examination of the books of account, the company has
not been regular in depositing with appropriate authorities undisputed
statutory dues including income tax deducted at source.excise duty,
sales-tax/ value added tax , service tax, entry tax, and professional
tax. Barring a few instances, the company has been regular in payment
of Provident Fund and Employees State Insurance dues.
(b) According to the information and explanations given to me, and on
the basis of my examination of the books of account, the following
undisputed dues in respect of sales tax, entry tax.service tax, income
tax deducted at source, provident fund, professional tax and employees
state insurance dues are outstanding at 31, March 2010 for a period of
more than six months from the date they became payable.
Name of the Statute Nature Amount Period to
which
of Dues (Rs.) the amount
relates
The Central Sales CST Payable including 8,801 Aug 02 to May 03
Tax Act,1956 interest on delayed 2002-03
payment 28,747
The Karnataka
Sales KST Payable including 14,053 2000-01
Tax Act, 1957 interest on delayed 1,583,914 2001-02
payment 838,995 2002-03
1,858,587 2003-04
4,131,427 2004-05
The Karnataka Tax Profession Tax Payable 320,324 Sept 04, Dec 04
on Professions,
Trade including interest on to March 09
and Callings
Act. delayed payment
The Employees
State ESI payable and 8,157 October 08 to
Insurance Act, Interest on delayed March 09 and
June 09
payment of ESI
The Provident
Fund Act, Provident Fund 72 March 09
interest on delayed May 07, June 07,
payment 3,805 August 07 &
September 07
Interest & Penal 57,792 1996-2001
Damages 55,443 2002-2005
Service Tax Service tax & 79,749 Feb 06 to Mar 09
Education Cess and July 09
on GTA including
interest on
delayed payment
The Karnataka
Tax on Entry Tax including 618,757 2001-2005
Entry of Goods
into interest on delayed 59,025 2006-07
Local Area for payment 150,495 2007-08
Consumption, 48,297 2005-06 &
2006-08
Use or sale
therein, 1979 20,000 2003-04
Penalty 50,000 2004-05
Income Tax
Act, 1961 Tax Deducted at 146,470 April 09 to
source/ Tax Collected Sept 09
at source including
interest on delayed
payment
The Karnataka
Value VAT including interest 50,660 2005-06
Added Tax Act,
2003 on delayed payment 103,267 2006-07
13,935
2007-08
6,352 2008-09
The Central
Excise and Excise duty, 8,198 Sept 08 &
March 09
Salt Act Education cess and
Secondary & Higher
Education Cess
including interest
Name of the Statute Due Date Date of
Payment
The Central Sales
Tax Act,1956 On monthly basis, Not Yet Paid
on 20th of the
following month
The Karnataka Sales
Tax Act, 1957 On monthly basis, Not Yet Paid
on 20th of the
following month
The Karnataka Tax
on Professions, Trade
and Callings Act. On monthly basis, Not Yet Paid
on 20th of the
following month
The Employees State
Insurance Act, On monthly basis, Not Yet Paid
on 21st of the
following month
The Provident Fund Act, On monthly basis, Not Yet Paid
on 20th of the
following month
including
grace days Not Yet Paid
Service Tax On monthly basis Not Yet paid
on 5th of the
following month
The Karnataka Tax on
Entry of Goods into
Local Area for
Consumption,
Use or sale
therein,1979
Penalty On monthly basis, Not Yet Paid
on 20th of the
following month
Income Tax Act, 1961 On monthly basis, Not yet paid
on 7th of the
following month
The Karnataka Value
Added Tax Act, 2003 On monthly basis, Not yet paid
on 20th of the
following month
The Central Excise and
Salt Act On the 5th of the Not yet paid
following month
c) As at 31st March 2010, according to the records of the company, the
following are the particulars of disputed dues on account of sales-tax,
income tax, customs duty, wealth tax, service tax, excise duty and cess
matters that have not been deposited.
Name of the
Statute Nature of Dues Amount Period to
(Rs.) which the Forum where
amount dispute is
pending
relates
The Karnataka
Sales Tax Act,
1957 & Sales Tax 27,775 June 02 to
Dec 02 High Court of
The Central
Sales Karnataka
Tax Act, 1956. Bangalore.
x) In my opinion, the accumulated losses of the Company at the end of
the financial year is greater than fifty per cent of its net worth. The
company has not incurred cash losses during the financial year covered
by my audit but has incurred cash losses in the immediately preceding
financial year.
xi) In my opinion and according to the information and explanations
given to me, the company has not defaulted during the year in repayment
of dues to its bankers or to any financial institution. The company has
not issued any debentures.
xii) The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii) In my opinion and according to the information and explanations
given to me , the company is not a chit fund or nidhi / mutual benefit
fund/ society. Therefore, the provisions of clause 4(xiii) of the order
are not applicable to the company.
xiv) According to the information and explanations given to me, 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.
xv) According to the information and explanations given to me, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions. Accordingly, clause 4(xv) of the order
is not applicable.
xvi) The company has not obtained any term loans during the year.
Accordingly, clause 4(xvi) of the order is not applicable.
xvii) According to the information and explanations given to me, the
cash flow statement examined by me and on an overall examination of the
balance sheet of the Company, I report that funds raised on short-term
basis have not been used for long term investment.
xviii) The Company has not made any preferential allotment of shares to
companies/firms/ parties covered in the register maintained under
section 301 of the Companies Act, 1956 during the year. Accordingly,
clause 4(xviii) of the order is not applicable.
xix) The company has not issued any debentures. Accordingly, clause
4(xix) of the order is not applicable.
xx) The Company has not raised any money by public issues during the
year. Accordingly, clause 4(xx) of the order is not applicable.
xxi) During the course of examination of the books and records of the
Company, carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations
given to me, I have neither come across any instance of fraud on or by
the Company, noticed or reported during the year, nor have I been
informed of such case by the management.
For H.R. Sudarshan & Associates
Chartered Accountants
Firm Reg. Number : 004162S
Place : Bangalore H.R.SUDARSHAN
Date : 31.05.2010 Proprietor
Membership Number : 27981