Karma Industries Ltd Share Price Auditors Report
KARMA INDUSTRIES LIMITED
(FORMERLY KNOWN AS KARMA ISPAT LIMITED)
ANNUAL REPORT 2011-2012
AUDITORS REPORT
To,
The Members of
KARMA INDUSTRIES LIMITED,
(Formerly Known as KARMA ISPAT LIMITED)
We have audited the accompanying financial statements of KARMA INDUSTRIES
LIMITED, which comprise the Balance Sheet as at 31 March 2012, and the
statement of Profit & Loss for the year ended on that date, Cash Flow
Statement for the year ended on that date, and a summary of significant
accounting policies and other explanatory information annexed thereto.
Managements responsibility for the financial statements:
Management is responsible for the preparation of these financial statements
that give a true and fair view of the financial position, financial
performance of the company in accordance with the accounting principles
generally accepted in India including accounting standards referred to in
sub-section (3C) of section 211 of the Companies Act. 1956 (the Act).
This responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditors responsibility:
Our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit in accordance with the Standards
on Auditing issued by the Institute of Chartered Accountants of India.
Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures
selected depend on the auditors judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the companys preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate In the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the companys
internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting estimates
made by management, as well as evaluating the overall presentation of the
financial statements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
Opinion:
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair view
in conformity with the accounting principles generally accepted in India
except the following:
Company has not paid dividend of 99,00,000 till date which was approved by
shareholders in Annual General Meeting for FY 2010-11.
a. In the case of the Balance sheet, of the state of affairs of the company
as at 31st March 2012.
b. In the case of the Statement of profit and loss, of the profit for the
year ended on that date.
c. In the case of Cash Flow Statement, of the cash flow for the year ended
on that date. Report on other legal and regulatory requirements
1. As required by the Companies (Auditors Report) Order, 2003 (the
order) issued by the Central Government of India in terms of sub section
(4A) of section 227 of the Act, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which to the best
of our knowledge 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 the company so far as appears from our examination of those books.
c. The Balance Sheet, Statement of Profit and Loss and cash Flow Statement
dealt with by this report is in agreement with the books of accounts.
d. In our opinion, the Balance Sheet, Statement of Profit and Loss comply
with the accounting standards referred to in subsection (3C) of the section
211 of the Companies Act, 1956.
e. On the basis of written representations received from the directors as
on 31st March 2012, and taken on record by the Board of Directors, none of
the directors is disqualified as on 31st March 2012 from being appointed as
a director in terms of clause (g) of subsection (1) of section 274 of the
Companies Act, 1956.
For AMD & CO.
Chartered Accountants
Firm Registration No. 130247W
Sd/-
Arvind M Darji
Partner
Membership No. 41748
Place: Mumbai
Date : 31st May, 2012.
ANNEXURE TO PARA 1 OF OUR REPORT OF EVEN DATE FOR THE YEAR ENDED 31st
MARCH, 2012.
i) (a) The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) All the assets have not been physically verified by the management
during the year but there is a regular program of verification which in our
opinion is reasonable having regard to the size of the Company and the
nature of its assets. No material discrepancies were noticed on such
verification.
(c) The Company has not disposed off any substantial part of Fixed Assets
during the year, so as to affect its going concern.
ii) (a) The inventory has been physically verified during the year by the
management. In our opinion, the frequency of verification is reasonable.
(b) The procedures of physical verification of inventory followed by the
managements are reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and the
book records were not material.
iii) (a) The company has taken unsecured interest free loan from 6 parties
covered in the register maintain Under Section 301 of the Companies Act,
1956. The maximum amount involved during the year is Rs.38,32,55,000/- and
the year end balance of loan taken from such parties was Rs.30,10,75,000/-.
(b) In our opinion, and according to the information and explanations given
to us, the terms and conditions of the aforesaid loans are prima facie not
prejudicial to the interest of the Company.
(c) There is no stipulation as regards payment of principal amounts and
hence nothing is reportable under this clause.
(d) The company has given unsecured interest free loan to 4 parties covered
in the register maintain Under Section 301 of the Companies Act, 1956. The
maximum amount involved during the year is Rs.2,45,71,800/- and the year
end balance of loan taken from such parties was Rs.67,21,800/.
(e) In our opinion, and according to the information and explanations given
to us, the terms and conditions of the aforesaid loans are prima facie not
prejudicial to the interest of the Company.
(f) Since there is no stipulation regarding receipt principal amount and
interest reporting under clause is not applicable.
(g) In respect of the said loans, since there is no stipulation as regards
receipt of principal amount the question of overdue amount does not arise.
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 company and the nature of its business with regard to purchases
of inventory, fixed assets and with regard to the sale of goods. During the
course of our audit, we have not observed any continuing failure to correct
major weaknesses in internal controls.
v) (a) According to the information and explanations given to us, we are of
the opinion that the transactions made in pursuance of contracts or
arrangement that need to be entered into the register maintained under
section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations given
to us, the transactions made in pursuance of contracts or arrangements
entered in the register maintained under section 301 of the Companies
Act,1956 and exceeding the value of rupees five lakhs in respect of any
party during the year have been made at prices which are reasonable having
regard to prevailing market prices at the relevant time.
vi) The company has not accepted any deposit during the year from the
public and provisions of section 58-A and 58-AA of the companies Act, 1956
and the companies (Acceptance of Deposits) Rules, 1975 are not applicable.
No order has been passed by the Company Law Board.
vii) The company does not have formal internal audit system. Internal audit
is carried out by in house staff. In our opinion, there is scope for
further improvement in the internal audit system.
viii) As explain to us, the Central Government has not prescribed
maintenance or cost records under Section 209(i)(d) of the Companies Act,
1956, for the products of the company.
ix) (a) The company is not regular in depositing with appropriate authority
undisputed statutory dues including Income Tax, and other statutory dues
applicable to it. There has been delay in payment of various statutory
dues.
(b) There are no undisputed amounts payable in respect of Income Tax,
wealth Tax, Sales Tax, Custom duty or excise duty as on the last day of the
Financial year concerned for a period of more than six months from the date
they became payable except Self Assessment Income Tax for A.Y 2011-12
Rs.1,05,40,649/-, Central Sales Tax Rs. 5,70,877/-, Dividend Distribution
Tax Rs.16,44,266/-, TDS on Expenses 5,76,196/-
x) In our opinion, the Company has not incurred cash losses during the
financial year covered by our audit and the immediately preceding financial
year.
xi) In our opinion and according to the information and explanations given
to us, the company has not defaulted in repayment of dues to the Bank there
are no dues payable to financial institutions.
xii) In our opinion and according to the information and explanation given
to us the Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
xiii) In our opinion, the company is not a chit fund or a nidhi mutual
benefit fund/society. Therefore, the provisions of clause 4(xii) of the
Companies (Auditors 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 the Companies (Auditors Report) Order, 2003 are not
applicable to the Company.
xv) According to information and explanation given to us the company has
not given any guarantee for loans taken by others from bank or financial
institutions hence the provisions of terms and conditions prejudicial to
the interest of the company are not applicable to the Company.
xvi) In our opinion, the company has not raised any term loan during the
year under consideration.
xvii) According to the information and explanations given to us and on an
overall examination of the balance sheet of the company, we report that the
no funds raised on short-term basis have been used for long-term
investment. No long term funds have been used to finance short term assets
except permanent Working Capital.
xviii) According to information and explanation given to us the company has
not allotted shares during the year hence the question of preferential
allotment of shares to parties and Companies covered in the registered
maintain under section 301 of the act does not arise.
xix) According to information and explanation given to us the company has
not issued debentures hence question of creation of securities does not
arise.
xx) According to information and explanation given to us the company has
not raised money by way of public issues hence the question of disclosure
of end use of money raised by public issues does not arise.
xxi) According to information and explanation given to us no fraud on or by
the company has been noticed or reported during the year.
For AMD & CO.
Chartered Accountants
Firm Registration No. 130247W
Sd/-
Arvind M Darji
Partner
Membership No. 41748
Place: Mumbai
Date : 31st May, 2012.