| 1. We have audited the attached Balance Sheet of HARBOR NETWORK
SYSTEMS LIMITED as at 31st March, 2010 and also 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 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 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 misstatements. An audit
includes (a) examining, on a test basis, evidence to support the
financial statement amounts and disclosures in the financial statements
(b) assessing the accounting principles used in the preparation of
financial statements (c) assessing significant estimates made by
management in the preparation of the financial statements and (d)
evaluating overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors' Report) Order, 2003 issued
by the Central Government in terms of section 227(4A) of the Companies
Act, 1956, we enclose in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph
(3) above and subject to notes as below and read with other notes
thereon we report that:
a) Note No. 3 regarding non-provision in diminution in the value of
investment amounting to Rs. 97, 00,000/- in erstwhile subsidiary
Company Goldhammer Securities Limited.
b) Note No. 10 and 11 regarding non-provision of the interest on loan
amount of Rs. 24, 96,960/- from Punjab & Sind Bank and Rs.24, 80,409/-
from Priya Ltd. as these parties have filed cases in the court for
recovery. No provision for interest has been made due to disputed
nature of transactions.
5. 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..
6. 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 the
books of the Company.
7. The Balance Sheet and Profit and Loss Account referred to in this
report are in agreement with the books of account of the Company.
8. In our opinion, the accounts comply with the Accounting Standards
referred to in Section 211(3C) of the Companies Act, 1956;
9. On the basis of written representations received from the
directors, as on 31st March, 2010, and taken on record by the Board of
Directors, in our opinion, none of the directors is disqualified from
being appointed as director u/s Section 274(1 )(g) of the Companies
Act, 1956;
10. Subject to the foregoing and other notes in Schedule J, in our
opinion and to the best of our information and according to the
explanations given to us, the said Balance Sheet and Profit and Loss
Account read together 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:
i. in the case of Balance Sheet, of the state of affairs of the
Company as at 31st March 2010 and
ii. in the case of 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 Auditors' Report
(Referred to in paragraph 1 of our report of even date on the accounts
of Harbor Network Systems Limited for the year ended 31st March 2010).
In terms of the information and explanations given to us and the books
and records examined by us in the normal course of audit and to the
best of our knowledge and belief, we state as under:-
1. The Company has maintained proper records showing full particulars
including quantitative details and situation of Fixed Assets. These
fixed assets were physically verified by the Management during the
year. The frequency of the verification is considered reasonable having
regard to the size of the Company and nature of its assets. We have
been informed that no discrepancies were noticed on such physical
verification. Substantial parts of fixed assets have not been disposed
off during the year, which will affect its status as going concern.
2. The stocks of shares have been physically verified by the
management during the year and no discrepancies have been noticed on
physical verification between the physical stocks and book records. We
are informed that no material discrepancies between physical stocks and
book records were noticed on such verification.
3. The procedures of physical verification of stocks followed by the
management are reasonable and adequate in relation to the size of the
Company and nature of its business. The Company is maintaining proper
records of inventory. There were no discrepancies between physical
stocks and book records.
4. In our opinion valuation of stocks is fair and proper in accordance
with normally accepted accounting principles and is on the same basis
as in earlier year.
5. The Company has neither granted nor taken any Loans, secured or
unsecured, to/from companies, firms or other parties covered in the
Register maintained under section 301 of the Companies Act, 1956.
6. In respect of loans and advances in the nature of loans given by
the Company, in the absence of terms as to repayment of principal
amounts and payment of interest on such loans/deposits, we are not able
to comment in respect thereof.
7. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of inventory and fixed assets and for
sale of goods.
8. In our opinion and according to the information and explanations
given to us, there are no transactions of purchase and sale of goods,
materials or services exceeding the value of five lakh rupees in the
financial year in respect of any party covered in the Register
maintained under section 301 of the Companies Act, 1956.
9. The Company has not accepted any deposits from the public under the
provisions of section 58A of the Companies Act, 1956 and the rules
framed there under and the directives issued by Reserve Bank of India
and the provisions of Non Banking Financial Companies (Reserve Bank)
directions 1977.
10. The Company has no formal Internal Audit system.
11. The Central Government has not prescribed the maintenance of cost
records by the Company under section 209(1) (d) of the Companies Act,
1956 for any of its products.
12. According to the information and explanations given to us, the
provisions of the Employees' Provident Fund and Miscellaneous
Provisions Act, 1952 and Employees State Insurance Scheme, 1948 are not
applicable to the Company.
13. According to the information and explanations given to us, no
undisputed amounts payable in respect of wealth tax, custom duty and
excise duty were outstanding as at 31st March, 2010 for a period of
more than six months from the date they became payable. Professional
tax disputes were settled and paid in amnesty.
14. The Company has registered cash losses for the last 10 years,
however the accumulated losses are less than 50% of its net worth.
15. There was a claim by Punjab & Sind Bank against the Company
towards invocation of Bank Guarantee. However the Company had contested
the claim successfully with the appropriate authorities. Punjab & Sind
Bank has filed an appeal against the said order with the Appellate
authority which remains pending. (Ref Note No. 11 of Schedule 'J').
16. The Company is not dealing or trading in shares, debentures,
securities or other investments.
17. The Company is not a chit fund, nidhi or mutual benefit
fund/society.
18. The Company has not given any guarantee for loans taken by others
from bank or financial institutions.
19. The Company has not availed any term loan during the current
financial year.
20. According to the information and explanations given to us and on
an overall examination of the Balance Sheet and the Cash Flow statement
of the Company, we report that no funds raised on short-term basis have
been used for long term investment. No long -term funds have been used
to finance short term assets except permanent working capital.
21. In our opinion and according to the information and explanations
given to us, the Company has not made any preferential allotment of
shares during the year to parties and companies covered in the register
maintained u/s 301 of the Companies Act 1956.
22. The Company has not issued any debentures during the year, and
accordingly the question of creating security in respect thereof does
not arise.
23. The Company has not made any public issue during the year and
accordingly the question of disclosing the end use of money raised by
public issue does not arise.
24. According to the information and explanation given to us, no fraud
on or by the Company has been noticed or reported during the course of
our audit.
For and on behalf of
MEHTA & PARMAR
Chartered Accountants
(UDAI S. PARMAR)
Partner
Memb. No. 36540
Mumbai:
Date: 01-09-2010
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