(iii) in the case of 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 our report of even date)
I. a) The company has maintained proper records showiing full
particulars of quantitative details and situation of fixed assets.
b) As explained to us, physical verification of a major portion of
fixed assets as at March 31, 2008 was conducted by the management
during the year. In our opinion, the frequency of physical verification
is reasonable. We are informed that no material discrepancies were
noticed on such verification.
c) According to information and explanations given to us, during the
year, the company has not disposed off any substantial/major part of
fixed assets.
II. a) As explained to us, the inventory has been physically verified
at the year end 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 inventory
followed by the management are reasonable and adequate in relation to
the size of the company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us and on the basis of our examination of the records of
inventory, the company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared
to the book records were not material and have been properly dealt with
in the books of accounts.
III. a) The company has taken loan from two companies covered in the
register maintained under section 301 of the Companies Act, 1956. The
closing balance have been aggregating to Rs.75 lacs. In our opinion,
the rate of interest and other terms and condition on which loans have
been taken from companies listed in the register maintained under
section 301 of the Companies Act, 1956 are not prima facie, prejudicial
to the interest of the company. There are no repayment during the year
and there are no overdue amount of loans taken from the companies
covered in the register maintained under section 301 of the Companies
Act, 1956.
b) The company has not granted any loans during the year to parties
covered in the register maintained under section 301 of the Companies
Act, 1956. Sub-clause (b), (c), (d) of the sub- para 4 of the order are
not applicable.
IV. 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 the purchase of inventory, fixed assets and
with regard to the sale of goods and services. During the course of
our audit, no major weakness has been noticed in the internal controls.
V. In respect of contract or arrangement entered in the register
maintained in pursuance of section 301 of the Companies Act, 1956.
a) Based on audit procedures applied by us, to the best of our
knowledge and belief and according to the information and explanations
given to us, we are of the opinion that the particulars of contracts
and arrangements that need to be entered into the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered into the register in pursuance of section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lacs in
respect of any party during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.
VI. In our opinion and according to the information and explanations
given to us, the company has complied with the provisions of sections
58A and 58AA of the Companies Act, 1956 and the rules framed
thereunder, with regard to deposits accepted from the public. As
informed to us no order has been passed by the Company Law Board,
National Tribunal, Reserve Bank of India or any other Court or
Tribunal.
VII. In our opinion the company has an internal audit system
commensurate with its size and the nature of its business.
VIII. We have broadly reviewed the books of account maintained by the
company in respect of products where, pursuant to the rules made by the
Central Government of India, the maintenance of cost records have been
prescribed under clause (d) of sub-section (1) of section 209 of the
Act and are of the opinion that the prima facie, the prescribed
accounts and records have been made and maintained. We have not,
however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
IX. a) According to the information and explanations given to us and
according to the books and records have been produced and examined by
us, in our opinion, the company is generally regular in depositing
undisputed statutory dues including provident fund, investor education
and protection fund, employee state insurance, income tax, sales tax,
wealth tax, service tax, VAT, customs duty, excise duty, cess and other
statutory dues with the appropriate authorities during the year.
Further no undisputed statutory dues are outstanding as on March
31,2008 for a period of more than six months from the date they became
payable.
b) According to the information and explanations given to us, following
are the particulars of disputed dues that have not been deposited:
Nature of Nature Amount
statute of dues Rupees
in lacs
Gujarat Sales Tax Sales Tax 27.77
Act, 1969
The Central Excise Excise Duty 1,162.13
and Salt Act, 1944
The Income Income-tax 2.90
Tax Act, 1961
The Income Income-tax 6.45
Tax Act, 1961
The Income Income-tax 2.44
Tax Act, 1961
Period to Forum where dispure
which the is pending
amount
relates
2002-03 Gujarat Sales Tax Appellate Tribunal
2002-03 Commissioner of Central Excise
Asst. Year Gujarat High Court
1988-89
Asst. Year Gujarat High Court
1996-97
Asst. Year Commissioner of Income-tax
2003-04 (Appeals)
X. The accumulated losses of the company exceed the net worth at the
end of the financial year. The - company has incurred cash losses
during the financial year covered by our audit as well as immediately
proceeding such financial year.
XI. According to the information and explanations given to us, the
company has defaulted in repayment of dues to banks and financial
institutions. The details of which are as follows:
(Rupee in lacs)
Period of default Principal Interest Total
Within the year under review 3.006.09 283.12 3,289.21
Since prior to the
year under review 1,270.00 210.00 1,480.00
Total 4,276.09 493.12 4,769.21
Refer note no.9 of schedule 18 (B) to the balance sheet, regarding
additional liability due to withdrawal of corporate debt restructuring
package.
XII. 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.
XIII. In our opinion the company is not a chit fund, nidhi or mutual
benefit fund/ societies. Therefore, clause 4 (xiii) of the Companies
(Auditors Report) Order, 2003 is not applicable to the company.
XIV. In our opinion and according to the information and explanations
given to us, the company is not a dealer or trader in shares,
securities, debentures and other investments. Therefore, clause 4 (xiv)
of the Companies(Auditors Report) Order, 2003 is not applicable to the
company.
XV. According to the information and explanations given to us, in our
opinion, the terms and conditions on which the company has given
guarantee for loan taken by others from banks or financial institutions
are not prima facie prejudicial to the interests of the company.
XVI. The company has not raised any new term loan during the year. The
term loans outstanding at the beginning of the year were applied for
the purposes for which they were raised.
XVII. According to the information and explanations given to us and on
an overall examination of the balance sheet of the company, there are
no funds raised on a short-term basis which have been used for long-
term basis.
XVIII. The company has not made any preferential allotment to parties
and companies covered under register maintained under section 301 of
the Companies Act, 1956 during the year and hence the question of
whether the price at which the shares have been issued is prejudicial
to the interest of the company does not arise.
XIX. According to the information and explanations given to us and the
records examined by us, no debentures have been issued hence the
question of creating security does not arise.
XX. The company has not raised money by any public issues during the
year and hence the question of disclosure and verification of end use
of money does not arise.
XXI. During the course of our examination of the books and records of
the company, carried out in accordance with the generally accepted
auditing practices in India, and to the best of our knowledge and
belief and according to the information and explanation given to us, no
fraud on or by the company was noticed or reported during the year, nor
have been informed of such case by the management.
For Dhirailal Shah & Co.
Chartered Accountants
Pravin R. Shah
Place: Ahmedabad Partner
Date : April 30, 2008 Membership no.: 5390