AUDITOR TO THE MEMBERS
We have audited the attached Balance Sheet of M/S JHAVERI FLEXO INDIA LIMITED asat 31st March 2011 and the Profit and Loss Account of the Company for the period ended onthat date. These financial statements are the responsibility of the company's management.Our responsibility is to express an opinion on these financial statements based on ourreport.
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 from material misstatement. Anaudit includes examining, on test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimate made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
As required by the Companies (Auditor's Report) Order, 2003, issued by the company lawboard in terms of section 227(4A) of the Companies Act, 1956 and on the basis of suchbooks and records as were considered appropriate and according to the formation andexplanation given to us during the course of audit, we give our comments in the Annexureattached herewith.
Further to our comments in the Annexure referred to in paragraph 1 above.
(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 accounts as required by law have been kept by theCompany so far as appears from our examination of the books.
(c) The Balance Sheet and Profit and Loss Account dealt with by this report comply withthe accounting standards referred to in sub-section 3(c) of section 211 of the companiesAct 1956 and are in agreement with the books of accounts of the Company.
(d) On the basis of written representation from the directors, taken on record by theBoard of Directors, none of the directors is disqualified as on 31st March, 2011 frombeing appointed as a director under Section274 (1)(g) of the companies Act, 1956.
(e) In our opinion and to the best of our knowledge and according to the explanationsgiven to us, the said accounts together with the notes give the information required bythe Companies Act, 1956, in the manner so required and give a true and fair view:
i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch 2011;
ii) In the case of the Profit and Loss Account, of the Profit for the ended on thatdate; and
iii) In the case of Cash Flow Statement, of the Cash Flows for the year ended on thatdate
| For Bhatter & Company. |
| Chartered Accountants |
| Place: Mumbai | Daulal H Bhatter |
| Dated: 10 th May 2011 | Proprietor |
| M. No. 16937 |
| FRN: 131092W |
ANNEXURE TO THE AUDITORS' REPORT
Referred to at Paragraph 1 in our audit report on the accounts of M/S JHAVERI FLEXOINDIA LIMITED for the year ended 31st March 2011.
(i) (a) The Company has maintained proper records showing full particulars, includingquantitative details and situations of fixed assets.
(b) As per the information and explanations given to us, physical verification of fixedassets has been carried out in terms of the phased programme of verification of its fixedassets adopted by the Company and no material discrepancies were noticed on suchverification. In our opinion, the frequency of verification is reasonable, having regardto the size of the Company and nature of its business.
(c) In our opinion and according to the information and explanations given to us, thereis no substantial disposal of fixed assets during the year.
(ii) (a) As per the information furnished, the inventories have been physicallyverified during the year by the management. In our opinion, having regard to the natureand location of stocks, the frequency of the physical verification is reasonable.
(b) In our opinion and according to the information and explanations given to us,procedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. In our opinion,discrepancies noticed on physical verification of stocks were not material in relation tothe operations of the Company and the same have been properly dealt with in the books ofaccount.
(iii) (a) As per the information furnished, the Company has granted and/or takenunsecured loans to/from the parties covered in the register maintained under Section 301of the Companies Act, 1956.
(b) In respect of loans and advances in the nature of loans given by the Company toother parties, where stipulations have been made, the parties are generally repaying theprincipal amounts as stipulated and have also been regular in payment of interest whereverapplicable. In respect of loans taken from other parties, the Company is generally regularin repaying the principal and in payment of interest as stipulated. The Company has takenunsecured loan from the director, the terms and conditions of which are not prime facieprejudicial to the interests of the company. Interest free loans have been given to theemployees only who are repaying the same as stipulated.
(c) There is no overdue amount of loans taken or granted by the Company.
(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 Companyand the nature of its business with regard to purchase of inventory and fixed assets andfor the sale of goods. During the course of our audit, no major weakness has been noticedin the internal controls.
(v) (a) Based on the audit procedures applied by us and according to the informationand explanations provided by the management, we are of the opinion that the transactionsthat need to be entered into the register maintained under Section 301 have been soentered.
(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 and exceeding the value of five lakh rupees in respect of anyparty during the year have been made at prices which are reasonable having regard toprevailing market prices at the relevant time.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with thesize of the Company and the nature of its business.
(viii) Maintenance of cost records has not been prescribed by the Central Governmentunder Section 209(1)(d) of the Companies Act, 1956.
(ix) (a) According to the information and explanation given to us and the recordsexamined by us, the Company is regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund, investor education and protectionfund, income-tax, sales-tax, wealth-tax, custom duty, excise-duty, cess and otherstatutory dues wherever applicable. According to the information and explanations given tous, no undisputed arrears of statutory dues were outstanding as at 31st March, 2011 for aperiod of more than six months from the date they became payable.
(b) According to the records of the Company, the dues of sales tax, income-tax,customs, wealth-tax, excise duty, cess which have not been deposited on account ofdisputes and the forum where the dispute is pending are as under:
| Nature of the statute | Nature of the dues pending | Amount Demanded | Forum where dispute is |
| 1. Income Tax Act | Income Tax for A.Y 2000-01 (Non computation of Book Profit) | Rs.15.70 Lacs, (Paid by the Co.) | IT Tribunals, Appeal filed by the revenue dept. |
| Income Tax for A.Y 2001-02 (Penalty demand for concealment of income) | Rs. 43.61 Lacs, | IT Tribunals, Appeal filed by the company. |
| Income Tax for A.Y 2003-04 (Disallowed some expenses) | Rs. 11.66 Lacs, (Paid by the Co.) | Order received from IT Tribunals, which partially allowed but the Assessment Order from IT Department is still pending. |
| Income Tax for A.Y 2005-06 (Disallowed some expenses) | Rs. 11.77 Lacs, (Paid by the Co.) | Order received from IT Tribunals, which partially allowed but the Assessment Order from IT Department is still pending. |
| 2. Central Excise | Excise rate difference and cenvat credit taken on rejected RM. | Rs. 8.15 Lacs, (Paid by the Co.) | Commissioner Excise |
| Demand raised on claim of depreciation on cenvated goods. | Rs. 55.15 Lacs, (Remand back by the Dept.) | Commissioner Excise |
| Demand raised on non payment of excise on sale of unused cylinder. | Rs. 36.04 Lacs, (Remand back by the Dept.) | Excise Tribunal |
| Demand raised on non payment of excise on debit note on unused cylinder. | Rs. 6.06 Lacs, (Paid by the Co.) | Excise Tribunal |
| Demand raised on warehousing charge | Rs. 0.85 Lacs, (Paid by the Co.) | Commissioner Excise |
| Demand raised on short payment of Excise duty | Rs. 12.34 Lacs, (Paid by the Co.) | High court against the order of tribunal. |
| 3. Sales Tax Act | Demand raised for AY 2003-04 due to not received of C forms. | Rs. 40.12 lacs, Ordered for Remand back to the Dept. for scrutiny of C forms | Company has submitted C form, collected from customers. |
| Demand raised for AY 2004-05 on non submission of export documents/forms | Rs. 1.80 Lacs, | Appeal disposed of in favour of the company on submission of form H. |
(x) The Company has not incurred any cash losses during the financial year covered byour audit and the immediately preceding financial year.
(xi) Based on our audit procedures and the information and explanations given by themanagement, we are of the opinion that the Company has not defaulted in repayment of duesto a financial institution, bank or debenture holders.
(xii) Based on our examination of the records and that information and explanationsgiven to us, the Company has not granted any loans and/or advances on the basis ofsecurity by way of pledge of shares, debentures and other securities.
(xiii) Clause (xiii) of the Order is not applicable to the Company as the Company isnot a Chit Fund Company or nidhi / mutual benefit fund/society.
(xiv) The Company does not deal or trade shares, securities, debentures and otherinvestments.
(xv) According to the information and explanations given to us, the terms andconditions of guarantees given by the Company for loans taken by others from bank orfinancial institutions are, in our opinion, prima facie, not prejudicial to the interestof the Company.
(xvi) According to the information and explanations given to us, the term loans raisedduring the year have been applied for the purpose for which they were raised.
(xvii) According to the information and explanations given to us and on overallexamination of the Balance sheet of the company, we report that no funds raised on short-term basis have been used for long term assets. No long-term funds have been used tofinance short-term assets and hence the question of commenting of their utilization doesnot arise.
(xviii) The company has not made any preferential allotment during the year.
(xix) The Company has not issued any debentures during the year.
(xx) The Company has not raised any money by public issues during the year covered byour report.
(xxi) As per the information and explanations given to us, no fraud on or by theCompany has been noticed or reported during the year.
| For Bhatter & Company. |
| Chartered Accountants |
| Place: Mumbai | Daulal H Bhatter |
| Dated: 10 th May 2011 | Proprietor |
| M. No. 16937 |
| FRN: 131092W |