Spare Systems Limited
We have audited the attached Balance Sheet of Spare Systems Limited as at March31, 2010, the Profit & Loss Account and the Cash Flow Statement for the year ended onthat date annexed thereto. These financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financialstatements based on our audit.
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 statement. 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.
As required by the companies (Auditor's Report) Order, 2003, as amended by companies(Auditor's Report) (Amendment) Order, 2004 (together the "Order") issued by theCentral Government of India in terms of sub section (4A) of section 227 of Companies Act,1956, we give in the Annexure, a statement on the matter specified in paragraphs 4 & 5of the said order.
Further to our comments in the Annexure referred to above, we report that:
i We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of our audit;
ii. In our opinion, the Company has kept proper books of accounts as required by law sofar as appears from our examination of those books.
iii. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account and returns.
iv. In our opinion, the Balance Sheet, Profit & Loss Account and 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.
v. On the basis of written representations received from the Directors and taken onrecord by the Board of Directors, we report that none of the Directors is disqualified ason March 31, 2010 from being appointed as a Director in term of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956.
vi. In our opinion and to the best of our information and according to the explanationsgiven to us, subject to Note No. 10 in respect of interest payable to MSFC,the said accounts give the information required by the Companies Act, 1956, in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:-
a. In the case of the Balance sheet, of the state of affairs of the Company as at March31, 2010;
b. In the case of the Profit and Loss Account, of the loss of the Company for the yearended on that date; and
c. In the case of Cash Flow Statement, of the cash flows for the year ended on thatdate.
For Singhal Sanklecha & Co.
Partner M No 101710
Mumbai, June 30,2010
Annexure to Auditors' Report
Referred to in paragraph 3 of our report of even date on the Accounts for the yearended March 31, 2010 of Spare Systems Limited .
i a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. All the assets have been physically verified by the Management at the end of thefinancial year, which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. According to the information and explanations givento us, no material discrepancies were noticed on such verification.
c. As per the records and as explained to us, the Company has not disposed off anysubstantial or major portion of fixed assets during the year.
ii. a. As explained to us, the inventories held by the Company were physically verifiedduring the year by the Management at reasonable intervals.
b. In our opinion and according to the information and explanations given to us, theprocedure 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. In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories. The discrepancies noticed onverification between the physical stocks and the book records were not material.
iii. a. According to the information and explanations given to us, the Company has notgranted any loans, secured or unsecured , to companies, firms or other parties listed inthe Register maintained under section 301 of the Companies Act, 1956. Accordingly, theprovisions of clauses 4(iii) (b), (c) and (d) of the order are not applicable. b.According to the information and explanations given to us , the Company has not taken anyloans, secured or unsecured , from companies, firms or other parties listed in theRegister maintained under section 301 of the Companies Act, 1956. Accordingly, theprovisions of clauses 4(iii)(f) and (g) of the Order are not applicable.
iv. In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business with regard to the purchases of inventory, fixed assets and withregard to the sale of goods. During the course of our audit we have not observed anycontinuing failure to correct major weakness in internal controls.
v. In our opinion and according to the information and explanations given to us, thereare no contracts or arrangement referred to in section 301 of the Companies Act, 1956 thatneed to be entered in the Register required to be maintained under that section. Hence,clause (v-b) of paragraph 4 of the Order is not applicable.
vi. In our opinion and according to the information and explanations given to us, theCompany has not accepted any deposits from the public during the year to which thedirective issued by the Reserve Bank of India and the provisions of sections 58A and 58AAof the Companies Act,1956 and the rules framed there under are applicable.
vii. The Company has adequate internal check and audit procedures implemented in theCourse of the day-to-day functioning.
However, no internal audit as such has been conducted.
viii. The Company is not covered under section 209(l)(d) of the Companies Act, 1956 inrespect of maintenance of cost records.
ix. a. The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund, investor education protection fund,employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty,cess and other material statutory dues applicable to it. b. According to the informationand explanation given to us, no undisputed amounts payable in respect of income tax,wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31.3.2010for a period of more then six months from the date they became payable.
x. The Company does not have accumulated losses at the end of the financial year March31,2010. Further the Company had not incurred any cash losses during the financial yearended March 31,2010 and in the immediately preceding financial year ended March 31,2009.
xi. In our opinion and according to the information and explanations given to us, theCompany has defaulted in repayment of dues to Maharashtra State Financial Corp. [MSFC]term loan amounting Rs. 16,38,000/- & interest of Rs. 26,07,972/-.
xii. In our opinion and according to the information and explanations given to us, theCompany has not granted loans and advances on the basis of security by way of pledge ofshares, debentures & other securities.
xiii. In our opinion, the Company is not a chit fund or a niche mutual benefit fund /society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report)Order, 2003 are not applicable 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 4(xiv) of theCompanies (Auditor's Report) Order, 2003 are 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, theCompany has not raised term loans during the year under audit.
xvii. According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that the no funds raised onshort-term basis have been used for long-term investment.
xviii. The Company has not made preferential allotment of shares to parties andcompanies covered in the register maintained under section 301 of the Act during the year.
xix. The Company had not issued any debentures, during year.
xx. The Company has not raised any money from a public issue, during the year.
xxi. On the basis of the audit procedure carried out by us and information andexplanations given by the Management, we state that no fraud on or by the Company has beennoticed or reported during the course of our audit.
For Singhal Sanklecha & Co.
Partner M No 101710
Mumbai, June 30,2010