Auditors1) We have audited the attached Balance Sheet of EMCO Limited as at 31st March2010, related Profit and Loss Account and the Cash Flow statement for the year ended onthat date annexed thereto. These financial statements are responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.
2) We have conducted our audit in accordance with the auditing standards generallyaccepted in India. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by the management, as well asevaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.
3) As required by the Companies (Auditors’ Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) ofsection 227 of the Companies Act, 1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.
4) Further to our comments in the Annexure referred to above, we report that:
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 those books;
c. The Balance Sheet, Profit and Loss Account and the 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 the Cash FlowStatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of section 211 of the Companies Act, 1956;
e. On the basis of written representations received from the directors, as on 31stMarch 2010 and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on 31st March 2010 from being appointed as a director interms 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 explanationsprovided to us, the said financial statements read with the notes thereon, give theinformation required by the Companies Act, 1956, in the manner so required and give a trueand 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 31stMarch 2010; ii. in the case of Profit and Loss Account, of the profit for the year endedon that date; and iii. in case of the Cash Flow Statement, of the cash flows for the yearended on that date.
For P. RAJ & CO.
Chartered Accountants
P. S. Shah
Proprietor
Membership No. 44611
Firm Registration No. 108310W
Mumbai, 26th May 2010
Annexure referred to Auditors’ Report
(Referred to in paragraph 3 of our report of even date)
1) The Company has maintained proper records showing full particulars, includingquantitative details and situation of fixed assets.
The fixed assets have been physically verified by the management as per a phasedprogramme of verification. In our opinion, the frequency of verification is reasonablehaving regard to the size of the Company and the nature of its fixed assets. Thediscrepancies noticed on such verification were not material and have been properly dealtwith in the books of accounts.
Fixed assets disposed off during the year were not substantial and therefore do notaffect the going concern assumption.
2) The management has conducted physical verification of inventory at reasonableintervals. In respect of stocks lying with the third parties, confirmation for most of thestocks has been received.
In our opinion, the procedures of physical verification of inventory followed by themanagement are reasonable and adequate in relation to the size of the Company and thenature of its business.
The Company is maintaining proper records of inventory. The discrepancies noticed onverification between physical inventories and the book records were not material inrelation to the operations of the Company and the same have been properly dealt with inthe books of account.
3) According to the information and explanations provided to us and as per the recordsexamined by us, as on 31st March 2010, Company has granted unsecured interest free loansamounting to Rs. 4,645.48 lakh to three of its wholly owned subsidiaries covered in theregister maintained under section 301 of the Companies Act, 1956. The maximum balanceoutstanding during the year amounted to Rs. 9,419.86 lakh.
In our opinion, other terms and conditions of such loan are prima facie not prejudicialto the interest of the Company.
In the absence of terms of repayment, we are not able to comment on the regularity ofthe repayment of loans.
As per information and explanations provided to us, the Company has not taken anyloans, secured or unsecured from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.
4) In our opinion and according to the information and explanations provided to us,there are adequate internal control procedures commensurate with the size of the Companyand the nature of its business, for the purchase of inventory, fixed assets and for thesale of goods and services. During the course of our audit, no major weakness has beennoticed in the internal controls.
5) Based on the audit procedures applied by us and according to the information andexplanations provided by the management, we are of the opinion that all the particulars ofcontracts or arrangements that need to be entered into the register maintained undersection 301 of the Companies Act, 1956 have been so entered.
In our opinion and according to the information and explanations provided to us, thetransactions made in pursuance of such contracts or arrangements have been made atreasonable prices having regard to the prevailing market prices at the relevant time.
6) In our opinion and according to the information and explanations provided to us, theCompany has not accepted any deposits from the public.
7) In our opinion the Company has an internal audit system commensurate with the sizeand nature of its business.
8) We have broadly reviewed the books of accounts maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under section209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have, however not made adetailed examination of the records with a view to determine whether they are accurate orcomplete.
9) According to the information and explanations provided to us and on the basis of ourexamination of the books of accounts, the Company has been generally regular in depositingundisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Employees' State Insurance, Income-tax, Customs Duty, Wealth Tax, Sales Tax, ServiceTax, Excise Duty, Cess and other statutory dues during the year with the appropriateauthorities. As on 31st March 2010, there are no undisputed dues payable for a period ofmore than six months from the date they became payable.
As at 31st March 2010, according to the records of the Company and the information andexplanations given to us, the following are the particulars of disputed dues on account ofSales Tax, Income Tax, Excise Duty, Service Tax and Cess that have not been deposited:
| Name of Statute | Nature of Dues | Amount (Rupees in lakhs) | Period to which the amount relates | Forum where the dispute is pending |
| Sales Tax Act | Levy of Sales Tax on Excise Duty on Deemed Export | 18.53 | 1992-93 | Assistant Commissioner of Sales Tax |
| Sales Tax Act | Non-submission of Statutory Forms | 12.49 | 2000-01 | Assistant Commissioner of Sales Tax |
| Central Excise Act | Interest on Differential Duty | 21.63 | 2004-09 | CESTAT |
| Central Excise Act | Interest on Wrong Utilization of Cenvat Credit | 5.00 | 2007-08 | The Commissioner of Central Excise (Appellant) |
| Service Tax | Service Tax on Erection and Commissioning | 1.74 | 1999-02 | CESTAT |
| Service Tax | Service Tax on Erection and Commissioning | 44.28 | 2005-06 | Additional Commissioner of Central Excise |
| Income Tax Act | Disallowance of Expenses | 90.56 | 2006-07 | Commissioner of Income Tax (Appeals) |
| Income Tax Act | Disallowance of Expenses | 0.73 | 2006-07 | Commissioner of Income Tax (Appeals) |
| Income Tax Act | Non Credit of Taxes and Interest | 18.39 | 2006-07 | Assistant Commissioner of Income Tax |
10) The Company does not have accumulated losses at the end of the financial year andit has not incurred cash losses in the current and immediately preceding financial year.
11) Based on our audit procedures and as per the information and explanations providedby the management, we are of the opinion that, the Company has not defaulted in repaymentof dues to any financial institution or bank or to debenture holders as at the BalanceSheet date.
12) Based on our audit procedures and according to the information and explanationsprovided to us, the Company has not granted loans and advances on the basis of security byway of pledge of shares, debentures and other securities.
13) In our opinion and according to the information and explanations provided to us,the nature of activities of the Company does not attract the provisions of clause 4(xiii)of the Companies (Auditors’ Report) Order, 2003.
14) In our opinion, the Company is not dealing in or trading in shares, debentures andother investments.
Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the Company.
15) According to the information and explanations provided to us and the recordsexamined by us, the Company has given guarantee for loan taken by its wholly ownedsubsidiary from bank. In our opinion, terms and conditions of guarantee given is notprejudicial to the interest of the Company.
16) According to the information and explanations provided to us and the recordsexamined by us, in our opinion, the term loans were applied by the Company for the purposefor which they were obtained.
17) According to the information and explanations provided to us and on an overallexamination of the balance sheet and cash flow statement of the Company, in our opinion,the funds raised on short term basis have not been used for long-term investment.
18) According to the information and explanations provided to us and on the basis ofrecords examined by us, the Company has made a preferential allotment of shares to partycovered in the register maintained under section 301 of the Companies Act, 1956. In ouropinion, the price at which shares have been issued is not prejudicial to the interest ofthe Company 19) According to the information and explanations provided to us and therecords examined by us, the Company has created security and charge in respect ofdebentures issued.
20) The Company has not raised any money through a public issue during the year.
21) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations providedby the management, we report that no fraud on or by the Company has been noticed orreported during the course of our audit.
For P. RAJ & CO.
Chartered Accountants
P. S. Shah
Proprietor
Membership No. 44611
Firm Registration No. 108310W
Mumbai, 26th May 2010