Kanchan International Ltd Share Price Auditors Report
KANCHAN INTERNATIONAL LIMITED
ANNUAL REPORT 2011-2012
AUDITORS REPORT
We have audited the attached Balance Sheet of M/s KANCHAN INTERNATIONAL
LIMITED, as at 31st March, 2012 and also the Profit & Loss Account & the
Cash Flow of the Company 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.
We conducted our audit in accordance with the Auditing Standards generally
accepted in India. Those standards require that we plan & perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatements. An audit includes examining on a test
basis, evidence supporting the amounts and disclosures in financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003, as amended by
the Companies (Auditors Report) Amendment Order, 2004 (the Order), issued
by the Central Government of India in terms of Subsection (4A) of Section
227 of the Companies Act, 1956, and on the basis of the information and the
books and records examined by us in the normal course of the audit and to
the best of our knowledge and belief we give below our report on the
matters specified in paragraph 4 & 5 of the said order.
2. Further to our comments in the Annexure, we report that :-
(i) We have obtained all the information and explanation which to the best
of our knowledge 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 so far as it appears from our examination of those books of
accounts.
(iii) The Balance Sheet and Profit and Loss Account and Cash Flow Statement
dealt with by this comply with the mandatory Accounting standard referred
to in sub-section (3C) of the section 211 of the Companies Act, 1956.
(iv) On the basis of the written representations received from the
Individual Directors and taken on record by the Board of Directors, we
report that none of the Directors are disqualified as on 31st March, 2012,
from being appointed as a Director in the terms of clause (g) of the
subsection (1) of the section 274 of the Companies Act, 1956.
(v) Retirement benefits & Leave encashment is made on accrual basis &
charges to P&L A/c on the basis of valuation certified by Management
instead of Actuarial Valuation as required by Accounting Standard-15
Employee benefits.
(vi) Note no 1 Notes to accounts in respect of balances of Sundry
Creditors, Debtors, Loans & Advances & Deposit which are subject to
Confirmation.
(vii) Note no 14 regarding Concept of Deferred Revenue Expenditure
(viii) Note no 15 regarding Non-Provision of Liabilities in respect of Non-
Compliance of certain fiscal Statute. Amount not ascertainable.
(ix) In our opinion and to the best of our information and according to the
explanation given to us, the said financial statements read together with
the significant policies and other notes given the information required by
the Companies Act, 1956 in the manner required and subject to our comments
in Para(v)to(viii) above give a true and fair view in conformity with
accounting principles generally accepted in India in the case of the :
i] Balance Sheet of the state of affairs of the company as on 31st
March, 2012 and
ii] Profit & Loss Account of the PROFIT of the company for the year ended
on that date.
iii] Cash Flow Statement of the cash flows for the year ended on that date.
For M.B.Ladha & Company
Chartered Accountants
FR No l05503W
Mukesh Ladha
[Proprietor]
M.No. 35544
Place: Mumbai.
Date : 1st Sept, 2012
ANNEXURE TO THE AUDITORS* REPORT
i) Fixed Assets
(a) The Company has maintained proper records showing full particulars
including quantitative details and situations of fixed assets.
(b) We are informed that all the fixed assets have been physically verified
by the management during the year.
(c) According to the information and explanations given to us, Company has
not disposed off substantial part of the fixed assets during the year,
hence the going concern status of the company is not affected.
ii) Inventory
(a) In our opinion and according to the information and explanation given
to us, the inventories of the company at all its locations have been
physically verified by the management during the year.
(b) In our opinion, the procedure of physical verification of Inventory
followed by the management were found to be reasonable and adequate in
relation to the size of the Company and nature of its business.
(c) The Company is maintaining proper records of Inventories. We are
informed that the discrepancies noticed on such verification between the
physical inventories and book records were not material and they were
properly dealt with in the books of accounts.
iii) Loans/Deposit taken/ granted
(a) The Company has given deposit against use of premises to one party
listed in the Register maintained under Section 301 of the Companies Act,
1956. The Maximum amount involved during the year and the year end -balance
of such deposit is Rs 155.52 lacs Amount shown as deposit.
(b) As explained to us, the Deposit is interest free and will be repaid on
vacating the premises by the company. In our opinion the other terms and
conditions of the said Deposit given by the company are not prima faciepara
(b),(c) and (d) related loans than how we should show in audit report
prejudicial to the interest of the company.
(c) The Company has taken loan from a Company under the same management
listed in the register maintained under section 301 of the Companies Act,
1956. The Maximum amount involved during the year and the year end -balance
of such loans is Rs 30.75 lacs.
(d) As explained to us, the loans are interest free and do not carry any
stipulation as to its repayment. In our opinion the other terms and
conditions of the said loan taken by the company are not prima facie
prejudicial to the interest of the company
iv) Internal Control
In our opinion and according to the information given to us, there are
adequate internal control procedures commensurate with the size of the
Company and nature of its business with regard to purchase of plant &
machinery, equipment and other assets and for the sale of goods. We have
not come across any major weaknesses in the Internal Control.
v) Section 301
(a) The transactions that are required to be entered into Register in
pursuance of Section 301 of the Act have been so entered.
(b) The transactions for Sales & Services rendered in pursuance of
contracts or arrangements entered in the Register maintained under Section
301 of the Companies Act, 1956 and exceeding the value of Rs. Five Lacs in
respect of any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the relevant
time.
vi) Deposit from Public
The Company has not accepted any Public Deposits and hence compliance of
provisions of Section 58A, 58AA or any other provisions do not apply.
vii) Internal Audit
The Company have an internal audit system which needs to be strengthened to
commensurate with the size and nature of the Companys business.
viii) Cost Records
We have been informs d that the Central Government has not prescribed
maintenance of cost records under section 209(l)(d) of the Companies Act,
1956 in the case of the Company.
ix) Payment of Statutory Dues
The Company is generally regular in depositing undisputed statutory dues
except following Sales Tax and FBT with the appropriate authorities in
India which are as follows.
Name of Nature of Amount Period to Due date Date of
the statute the dues Rs which Payment
amount
relates
Fringe Taxes 3,22,332/- F.Y.2007-08 15/06/2007 Pending
Benefit 15/09/2007
Tax 15/12/2007
15/03/2008
Fringe Taxes 3,17,543/- F.Y.2008-09 15/06/2008 Pending
Benefit 15/09/2008
Tax 15/12/2008
15/03/2009
Sales Taxes 6,18,620/- F.Y.2010-11 21st of each Pending
Tax(CST) month
Sales Taxes 24,33,242/- F.Y.2011-12 21st of each Pending
Tax(CST) month
VAT Taxes 6,48,253/- F.Y.2010-11 21st of each Pending
month
VAT Taxes 1,53,227/- F.Y.2011-12 21st of each Pending
month
At the end of the Financial Year there are no disputed dues of Income Tax,
Sales tax, Wealth tax, Custom duty & Cess which have not been deposited.
x) Accumulated Losses / Cash Losses
The Company has accumulated losses of Rs 1,90,48,791/- as on March 31,2012.
The company has not incurred any cash losses in the current financial year
ended on 31st March, 2012
xi) Default in Repayment of Dues
According to the records of the company examined by us and the explanations
given to us, the Company has defaulted in the repayment of dues to Bank.
i. Installment of FITL Rs. 11.66 Lacs
ii. Installment of WCTL Rs. 394.50 Lacs
xii) Grant of Secured Loans & Advances
According to the information and explanations given to us ,the Company has
not granted Loans & Advances on the basis of security by way of pledge of
shares, debentures and other securities.
xiii) Special Statute-Chit Fund Companies, Nidhis/Mutual Benefit
Fund/Societies:
The provisions of any special status applicable to Chit Fund Nidhi or
Mutual Benefit Fund or Societies are not Applicable to Company.
xiv) Company dealing or Trading in Shares, Securities etc
In our opinion and according to the information and explanations given to
us, the company is not a dealer or trader in shares, securities, debentures
and other investment. Accordingly the provisions of clause 4(xiv) of the
Companies (Auditors report) Order, 2003 are not applicable to the Company.
xv) Provision of Guarantee
In our opinion and according to the information and explanations given to
us, the Company has not given any guarantee for loans taken by others from
Banks or Financial Institutions during the year.
xvi) Term Loans
In our opinion and according to the information and explanations given to
us, the Company has not obtained any Term Loans during the year.
xvii) Usage of Funds
In our opinion and according to the information and explanations given to
us and on an overall examination of the Balance Sheet and Cash Flow
Statement of the Company, the funds raised on Short-Term basis have not
been used for Long Term Investment and vice-versa.
xviii) Preferential Allotments
The Company has made a preferential allotment of 4,76,300 equity shares to
parties and companies covered in the register maintained U/S 301 of the
Act, and as per the information and explanation given to us the price at
which the shares have been issued are not prejudicial to the interest of
the company.
xix) Creation of Security for Debenture Issue
According to the information and explanations given to us, and the records
examined by us, the company has not issued any debentures during the year.
xx) Disclosure of end use of fund
The Company has raised Rs. 2,48,56,854/-by way of Application money for
25,00,000 Fully Convertible Equity Share Warrants which is used for its
purpose of meeting the working capital requirement of the company.
xxi) Frauds
Based on the audit procedures performed for the purpose of reporting the
true and fair view of the Financial Statements and as per information and
explanation given by the management, we report that no material fraud on or
by the company has been noticed or reported during the course of our audit.
For M.B.Ladha & Company
Chartered Accountants
F R No 105503W
Mukesh Ladha
[Proprietor]
M.No. 35544
Place: Mumbai
Date : 1st Sept, 2012