To the Members of Daikaffil Chemicals India Ltd.
1. We have audited the attached Balance Sheet of DAIKAFFIL CHEMICALS INDIA LIMITED asat March 31, 2Q12 and also the Profit and Loss Account and the Cash Flow Statement for theyear ended on that date annexed thereto. These financial statements are the responsibilityof the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditors' Report) Order 2003, issued by the CentralGovernment of India in terms of Section 227(4A) of the Companies Act 1956, we enclose inthe 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, we reportthat:
(a) we have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany so far as appears from our examination of the books;
(c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report com ply with the Accounting Standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956 except the Accounting Standard 28'Impairment of Assets ", as provision for loss on impairment in carrying amount ofassets is not made as the same is not ascertained.
(e) on the basis of written representations received from the Directors as on March 31,2012, and taken on record by the Board of Directors, we report that none of the directorsare disqualified as on March 31,2012 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 explanationsgiven to us, subject to note no. 31 relating to provision for impairment of assets, theaccounts read with other notes thereon, give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India;
(i) In the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31,2012 and;
(ii) In the case of the Profit and Loss Account, of the Profit for the year ended onthat date.
(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.
For GAURANG MERCHANT & CO.
Firm Reg. No. 103111W
Mumbai: 24 August, 2012
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 3 of our report of even date.
(i) a. Records showing full particulars including quantitative details and situation offixed assets have not been maintained adequately by the Company.
b. As explained to us, the fixed assets have been physically verified by the managementonce during the year and in our opinion the frequency of verification is reasonable. Nomaterial discrepancies were noticed on such physical verification.
c. In our opinion, the Company has not disposed off substantial part of fixed assetsduring the year and the going concern status of the Company is not affected.
(ii) a. As explained to us, the inventories have been physically verified by themanagement during the year at reasonable intervals.
b. In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
c. The Company has maintained proper records of the inventories. The discrepanciesnoticed on verification between the physical stocks and the book records were not materialin relation to the size of the Company and the same have been properly dealt with in thebooks of account.
(iii) a. According to the information and explanations given to us, the Company has notgranted / taken any loans, secured or unsecured to / from Companies, firms or otherparties covered in the register maintained under section 301 of the Companies Act, 1956.
b. As the Company has not granted / taken any loans, secured or unsecured to/fromCompanies, firms or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956, provisions of clauses (iii)(b), (iii)(c) and (iii)(d) of Para 4of the Order are not applicable.
(iv) In our opinion and according to the information and explanations given to us,having regard to the explanation that certain services rendered are of a special natureand suitable alternate sources do not exist for obtaining comparative quotations for thesame, there are adequate internal control procedures commensurate with the size of theCompany and the nature of its business for the purchase of inventory, fixed assets and forthe sale of goods. During the course of our audit no major weakness has been noticed inthe internal controls.
(v) a. According to the information and explanations given to us, we are of the opinionthat transactions that needed to be entered into the register maintained under section 301of the Companies Act, 1956, have been so entered,
b. In our opinion and according to the information and explanations given to us, thetransactions for items purchased / sold, services rendered/obtained in pursuance ofcontracts or arrangements entered in the register maintained under Section 301 of theCompanies Act, 1956 and exceeding the value of Five Lakhs Rupees in respect of any partyduring the year are of a special nature and suitable alternate sources do not exist forobtaining comparative quotations.
(vi) The Company has not accepted any deposits during the year from the public withinthe meaning of provisions of Section 58Aand 58AAof the Companies Act 1956 and rules madethere under. Hence clause (vi) of the Order is not applicable.
(vii) According to the information and explanations given to us, in our opinion, theCompany has an internal audit system commensurate with its size and nature of itsbusiness.
(viii) We are informed that the Central Government has not prescribed maintenance ofcost records under Section 209 (1) (d) of the Companies Act, 1956.
(ix) a. According to the information and explanations given to us and the records ofthe Company examined by us, in our opinion, the Company has generally been regular indepositing undisputed statutory dues, including Provident Fund, Investor Education andProtection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, CustomsDuty, Excise Duty, cess and any other statutory dues with the appropriate authorities.
b. According to the information and explanation given to us and the records of theCompany examined by us, there are no disputed amounts in case of dues of sales tax/incometax/custom duty/wealth tax/excise duty/cess and hence the clause (ix)(b) of Para 4 of theOrder is not applicable.
(x) The Company does not have any accumulated losses at the end of the financial yearand has not incurred cash losses during the financial year covered by our audit and in theimmediately preceding financial year.
(xi) In our opinion and according to the information and explanation given to us, theCompany has not defaulted in the repayment of dues to banks. There are no dues tofinancial institutions and debenture holders.
(xii) According to the information and explanations given to us, the Company has notgranted loans or advances on the basis of security by way of pledge of shares, debenturesand other securities.
(xiii) In our opinion the Company is not a Chit fund Company or nidhi/mutual benefitfund/society. Therefore the provisions of Clause (xiii) of Para 4 of the Order is notapplicable to the Company.
(xiv) In our opinion the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of Clause (xiv) of Para 4 ofthe Order is not applicable to the Company.
(xv) In our opinion, and according to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the year.
(xvi) In our opinion, and according to the information and explanations given to us,the term loans have been applied for the purposes for which they have been obtained.
(xvii) According to the information and explanations given to us and on an overallexamination of the Balance Sheet of the Company, in our opinion, no funds raised on shortterm basis have been used for long term investment.
(xviii) The Company has not made any preferential allotment of shares to parties andcompanies covered in the Register maintained under Section 301 of the Companies Act, 1956,during the year.
(xix) The Company has not issued any debentures during the year.
(xx) The Company has not raised monies by public issues during the year.
(xxi) Based upon the audit procedures performed and information and explanations givenby the management, we report that no fraud on or by the company has been noticed orreported during the course of our audit.
For GAURANG MERCHANT & CO.
Firm Reg. No. 103111W
Membership No. 17345
Mumbai: 24th, August, 2012