global stone india ltd Auditors report

GLOBAL STONE INDIA LIMITED ANNUAL REPORT 2007-2008 AUDITORS REPORT TO THE SHARE HOLDERS OF GLOBAL STONE INDIA LIMITED We have audited the attached Balance Sheet of GLOBAL STONE INDIA LIMITED as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. We conducted our audit in accordance with the Auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 2. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, eve enclose in the Annexure a statement on The matters specified in paragraphs 4 and 5.of the said Order. 3. 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 our knowledge and belief were necessary for the purposes of our audit; (ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books. (iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account. (iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; (v) On the basis of written representations received from Mr.Ramesh Chandra Soni, who is a director of Global Stone India Limited as on 31st March 2008 and taken on record by the Board of Directors, we report that he is disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; As far as other directors are concerned, on the basis of the written representations received from such directors, and taken on record by the Board of Directors, we report that none of the remaining directors is disqualified as on 315 March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. (vi) Reference is drawn to Item 3 of Schedule 0 regarding one time settlement of dues with UTI, State Bank of India & State Bank of Mysore, the effect of these settlements has not been considered in the accounts. (vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) In the case of the balance sheet, of the state of affairs of the company as at 31st March 2008; (b) in the case of the profit and loss account, of the loss for the year ended on that date; and (c) in the case of the cash flow statement, of the cash flows for the year ended on that date. For Brahmayya & Co., Chartered Accountants. (S. GOVINDA RAO) Place: Bangalore Partner Date : 30.06.2008 Membership-No. 20546 ANNEXURE TO AUDITORS REPORT 1. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. 2. All the Fixed assets have not been physically verified by the management at the end of the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of the assets. No material discrepancies were noticed on such verification. 3. The Company has not disposed off any substantial part of the fixed assets during the year. 4. The inventory has been physically verified during the year by the management. In our opinion, the frequency of. verification is reasonable. 5. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. 6. On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records. The discrepancies noticed on verification between the physical stocks and the book records were not material. 7. No loans, secured or unsecured, have been taken from/granted to Companies, Firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. 8. 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 company and the nature of its business as regards purchase of inventory, fixed assets and sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls. 9. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained under section 301 have been so entered. 10. In our opinion and according to the information and explanations given to us, there are no transactions in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956. aggregating during the year to Rs. 5,00,000 or more in respect of any party. 11. The Company has not accepted any deposits from the public, to which the provisions of Sec. 58A of the Companies (Acceptance of Deposits) Rules, 1975 are applicable. 12. In our opinion, the company has an internal audit system commensurate with the size and nature of its business. 13. As informed to us, the Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, in respect of the activities of the Company. 14. As per the records and the explanation given to us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education & Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth Tax, Service tax, Customs duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. There is no amount outstanding as on 3151 March 2008 for a period of more than six months from the (late they became payable. 15. As on 31st March 2008, according to the records of the Company and information and explanations given to. us, following are particulars of disputed dues that have not been deposited Name of statute & Amount in Period to which Forum where pending Nature of dues (Rs.lakhs) amount relates Karnataka Sales Tax Act: Sales Tax 253.26 2003-04 & 2004-05 JCCT (Appeals) KVAT ACT 2003: Sales Tax 204.87 2005-06 JCCT (Appeals) - 3 KVAT ACT, 2003: Sales Tax 235.39 2006-07 JCCT (Appeals) - 3 Custom Act,1962: Custom Duty 4.68 2003-04 & 2004-05 Commissioner (EOU) 16. The accumulated losses of the company are more than fifty percent of its net worth. The company has incurred cash loss during the financial year covered by our audit, and also in the immediately preceding financial year. 17. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has defaulted in payment of dues to financial institution and bank.. The Company has also defaulted in payment of debenture interest accrued and due Rs. 8789204/- on 31st March 2008 to the debenture holders. 18. The Company has not granted any Loans or advances on the basis of Security, by the pledge of shares, debentures and other securities. 19. The Company is not dealing or trading in shares, securities and Debentures and other Investments. 20. The Company has not given any guarantee for loans taken by others from bank or financial institutions. 21. The Company has not taken any Term Loans. 22. The Company has not used the Short Term funds for Long Term Investments and Vice Versa. 23. The Company has not made any preferential allotment of shares during the year. 24. During the period covered by our audit, the company has not issued any debentures. 25. The company has created necessary securities/charges as per debenture trust deed in respect of debentures issued and outstanding at the end of the year. 26. The company has not raised any money by public issue during the year. 27. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit. For Brahmayya & Co., Chartered Accountants. Place: Bangalore (S. GOVININDA RAO) Date : 30.06.2008 Partner Membership No. 20546