TO THE MEMBERS OF ARIHANT DOMESTIC APPLIANCES LIMITED
We have audited the attached Balance Sheet of Arihant Domestic Appliances Limitedas at 31st March 2009 and the Profit and Loss Account and the Cash Flow Statement of theCompany for the year ended on that date, annexed thereto. These financial statements arethe responsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audit.
We conducted our audit in accordance with the 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 management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
1. As required by the Companies (Auditor's Report) Order, 2003, issued by the CentralGovernment in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexurea statement on the matters specified in paragraphs 4 and 5 of the said Order.
2. Further to our comments in the Annexure referred to in paragraph (3) above, wereport that:
a) We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany so far as it appears from our examination of the books.
c) The Balance Sheet and the Profit and Loss Account dealt with by this report are inagreement with the books of account.
d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement comply with the Accounting Standards referred to in sub-section (3C) of section211 of the Companies Act, 1956.
e) On the basis of the written representations received from the Directors as on 31stMarch, 2009, and taken on record by the Board of Directors, we report that, none of theDirectors is disqualified as on 31st March, 2009 from being appointed as a Director interms of clause (g) of subsection (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, the said accounts read with the notes thereon give the information requiredby the Companies Act, 1956, in the manner so required, give a true and fair view inconformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2009,
ii) in the case of the Profit and Loss Account, of the profit for the year ended onthat date, and
iii) in the case of Cash Flow Statement, of the cash flows for the year ended on thatdate.
For and on behalf of
B. K. Khare and Co.
M. No. 44097 Place: Pune
Dated: September 3, 2009
Annexure to the Auditors' Report
Referred to in paragraph 1 of our Report of even date:
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets other than Tools, Dies and Mendral. Asexplained the Company is in the process of updating the records of various Tools, Dies andMendral based on physical verification.
(b)Major assets have been physically verified by the management during the year basedon the regular program of verification which in our opinion is reasonable having regardsto the size of the company and the nature of its assets. As explained the reconciliationof physical inventory of plant and machinery with book records is nearing completion.
(c) In our opinion and according to the information and explanations given to us, asubstantial part of Fixed Assets has not been disposed off by the Company during the year.
ii. (a) The inventory, except stocks lying with third parties, has been physicallyverified by the management during the year. For stocks lying with third parties at theyear end, written confirmations have been obtained. In our opinion, the frequency of suchverification needs to be strengthened.
(b) In our opinion and according to the information and explanations given to us, theprocedures for the physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness. However, considering the size of the Company the procedure for physicalverification of inventories needs to be appropriately documented.
(c) The Company is in the process of implementation of ERP Solution - SAP R/3. Asexplained due to inadequate training/implementation process, the reports as required arenot adequately configured and therefore not made available to us. In view of this we arenot in a position to comment on the discrepancies that would have been noticed betweenphysical stock and book records.
iii. According to the information and explanation provided to us, no loans secured orunsecured have been granted to or taken from companies, firms or other parties in theregister maintained under Section 301 of the Act.
iv. In our opinion and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business with regard to purchase of inventories and fixed assets and withregard to the sale of goods and services. In our opinion and according to the informationand explanations given to us, there is no continuing failure to correct major weakness ininternal control system.
v. In respect of transaction entered in the register maintained in pursuance of section301 of Companies Act, 1956;
a. Based on audit procedures applied by us, to the best of our knowledge and belief andaccording to the information and explanations given to us, we are of the opinion that theparticulars of contracts or arrangements have been entered in the register required to bemaintained under section 301.
b. According to the information and explanations given to us and excluding certaintransaction of purchase of goods and material of special nature for which alternatequotations are not available, in our opinion, the transactions have been made at priceswhich are prima facie reasonable having regard to the prevailing market prices at therelevant time.
vi. In our opinion and according to the information and explanations given to us, theCompany has not accepted any deposits from the public. Hence, the provisions of Section58A and 58AA and any other relevant provisions of the Companies Act, 1956 and rules framedthere under are not applicable.
vii. Company has an Internal Audit System. In our opinion the scope, coverage and thefrequency of Internal Audit needs to be strengthened in order to be commensurate with thesize and nature of the Company's business.
viii. According to the information and explanations given to us, the Central Governmenthas not prescribed the maintenance of cost records under Section 209(1) (d) of the act forany of the products manufactured/services rendered by the Company.
ix. (a) According to the records of the Company and information and explanations givento us, there have been delays on several occasions in respect of payment of Income Taxdeducted at source, Profession Tax and Excise Duty. In other cases, the company has beengenerally regular in depositing undisputed statutory dues including Provident Fund,Employees' State Insurance, Sales-Tax, Customs Duty, cess and other statutory dues withthe appropriate authorities.
According to the information and explanations given to us, following are the undisputedamounts payable in respect of Income Tax, Service Tax, Wealth Tax and Bombay LabourWelfare Act which were in arrears as on 31st March 2009 for a period of more than sixmonths from the date they become payable.
|Name of Statute ||Nature of Dues ||Amount (Rs. In Lacs) |
|Income Tax ||Tax Deducted at Source & Tax Collected at Source ||4.59 |
| ||Fringe Benefit Tax AY 2008 -09 ||11.81 |
| ||Fringe Benefit Tax AY 2009-10 ||18.94 |
| ||Dividend Tax Payable. ||10.14 |
|Wealth Tax ||Wealth Tax-AY 2006-07 ||0.23 |
| ||Wealth Tax - AY 2007-08 ||0.65 |
| ||Wealth Tax-AY 2008-09 ||1.00 |
| ||Wealth Tax - AY 2009-10 ||0.43 |
|Service Tax ||GTA on Outward Transport ||1.84 |
| ||GTA on Inward Transport ||19.77 |
| ||On Import of Service ||0.86 |
|Bombay Labour Welfare Act ||Employee & Employer Contribution ||0.05 |
(b) According to the records of the Company and information and explanations given tous, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty andExcise Duty and cess, which have not been deposited on account of disputes.
x. The Company does not have accumulated losses at the end of the financial year andthe company has not incurred any cash losses in the current and the immediatelypreceding-financial year.
xi. Based on our audit procedures and on the basis of information and explanationsgiven by the management, we are of the opinion that the Company has not defaulted in thepayment of dues to its bankers or to any financial institutions.
xii. According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.
xiii. In our opinion and according to the information and explanations given to us, theCompany is not a chit fund or nidhi/mutual benefit fund/society.
xiv. (a) According to the information and explanation given to us, the Company is notdealing or trading in shares, securities, debentures and other investments.
xv. According to the information and explanations given to us, the Company has givenfollowing guarantees for loans taken by subsidiary companies and employees from banks andfinancial institutions. Considering the status of subsidiary companies and guarantee ofemployee we are of the opinion that the terms and conditions of the guarantees for loansgiven are not prejudicial to the interest of the company.
|Given in Year ||Guarantee given in favour of ||Guarantee given on behalf of ||Purpose/ Nature of transaction ||Amount (Rs. In Lacs) |
|1 2006-07 ||Saraswat Co.op Bank Ltd ||Mr. Sudhir Bapat ||Purchase of Vehicle ||20.00 |
|2 2006-07 ||Saraswat Co.op Bank Ltd ||Arihant Steel & Metal Wires Pvt. Ltd ||Term Loan & Deferred Payment Guarantee ||1,490.00 |
|3 2007-08 ||SIDBI ||M/s. Saicon Steel Pvt. Ltd ||Term Loan Facility ||400.00 |
|4 2007-08 ||M/s. Electronica Finance Ltd ||Arihant Steel & Metal Wires Pvt. Ltd ||Purchase of Machinery ||105.00 |
|5 2007-08 ||M/s. Electronica Finance Ltd ||M/s. Sankalp Forgings Pvt. Ltd. ||Term Loan Facility ||70.00 |
|6 2007-08 ||M/s. Electronica Finance Ltd ||M/s. Sankalp Forgings Pvt. Ltd. ||Hire Purchase Finance ||100.00 |
|7 2007-08 ||M/s. Electronica Finance Ltd ||M/s. Sankalp Forgings Pvt. Ltd. ||Clean Loan Finance ||15.00 |
|3 2008-09 ||Canbank Factors Limited, J.M. Road Branch ||M/s. Sankalp Forgings Pvt. Ltd. ||Sale Bill Discounting ||75.00 |
|9 2008-09 ||New India Co.op Bank Ltd, Mumbai ||Electromech Material Handling System (1) Pvt. Ltd ||Facility availed for Bill Financing ||43.00 |
|10 2008-09 ||Saraswat Co.op Bank Ltd ||M/s. Sankalp Forgings Pvt. Ltd. ||Term Loan Facility & Working Capital Loan ||1,950.00 |
|11 2008-09 ||IDBI ||M/s. Sankalp Forgings Pvt. Ltd. ||Term Loan Facility & Working Capital Loan ||1,450.00 |
|12 2008-09 ||Canara Bank, J.B. Nagar Branch, Mumbai ||M/s. Saicon Steel Pvt. Ltd ||Cash Credit ||800.00 |
xvi. To the best of our knowledge and belief and according to explanation given to us,term loan availed by the company were, prima facie applied by the company during the yearfor the purpose for which loans were obtained.
xvii. According to the Cash flow statement and records examined by us and according tothe information and explanations given to us on overall basis, funds raised on short termbasis have not been used during the year for long term purposes.
xviii. The Company has not made preferential allotment of shares to parties covered inthe register maintained under Section 301 of the Companies Act,1956 during the year andthe question where the price at which the shares have been issued is prejudicial to theinterest of the company does not arise.
xix. According to the information and explanations given to us, the company has notissued any debentures during the year.
xx. The Company has not raised any money by public issues during the year and hence thequestion of disclosure and verification of end use of such money does not arise.
xxi. To the best of our knowledge and belief and according to the information andexplanations given to us, no fraud on or by the Company has been noticed or reportedduring the course of our audit.
| ||For B.K. Khare & Co. |
| ||Chartered Accountants |
|Place : Pune ||U. B. Joshi |
|Dated : 3rd September 2009 ||Partner |
| ||Membership No.: 044097 |