Lakhani India Ltd Auditor Reports

LAKHANI INDIA LIMITED ANNUAL REPORT 2010-2011 AUDITORS REPORT To The Members of Lakhani India Limited We have audited the attached Balance Sheet of Lakhani India Limited as at March 31, 2011, and the Profit & Loss Account and Cash Flow Statement for the period 01.04.2010 to 31.03.2011 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 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 misstatements. 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 the 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 in Sub-section (4A) Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 &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 purpose 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 examinations of these books. (iii) The Balance Sheet, Profit & 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 & Loss Account Cash Flow Statement dealt with by this report comply with Accounting Standards referred to in sub-section (3C), of Section 211 of the Companies Act, 1956, (v) On the basis of the written representations received from the directors, as on 31 March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31 March, 2011 from being appointed as a director in terms 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 explanations given to us, the said financial statement read with notes thereon 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 the affairs of the Company as at 31st March, 2011. 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 flow for the year ended on that date. For RAKESH GUPTA & ASSOCIATES Chartered Accountants ICAI- Registration No. - 0571N Rakesh Gupta Place: Faridabad (Proprietor) Dated: 15th November, 2011 M. No. 80126 ANNEXURE TO AUDITORS REPORT: (Referred to in paragraph 2 of our Report of even date) 1. The nature of Companys activities during the year have been such that clauses (xii),(xiii),(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company for the year. 2. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) As informed company has program of physical verification of Fixed Assets in a phased manner. In accordance with the same, certain plants & machineries were physically verified during the year. We are informed that no material discrepancies were noticed by the management on such verification. (c) The company has not disposed off a substantial part of fixed assets during the year. (3) (a) Physical verification of inventory has been conducted during the year by the management at reasonable intervals. (b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business. (c) The company is maintaining proper records of inventory. As per information and explanations given to us, no material discrepancies has been noticed on physical verification. 4. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore provisions of clauses (iii)(b),(iii)(c),(iii)(d) of paragraph 4 of the Order are not applicable. The Company has taken unsecured loans from its directors / parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1175.78 lacs and the year end balance of loans taken was Rs.1083.53 lacs. In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions of such loans are prima-facie not prejudicial to the interest of the Company. In respect of unsecured loan taken by the Company, the loan amount is payable on demand and is interest free. (5) 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 for purchase of inventory, fixed assets and for the sale of goods. During the course of audit, we have not observed any other continuing failure to correct major weaknesses in internal controls. (6) In our opinion and according to the information and explanations given to us, the transactions that need to be entered into register in pursuance of Section 301 of the Act, have been so entered and the transactions have been made at prices, which are reasonable having regard to prevailing market prices at the relevant time. (7) The Company has not accepted deposits from the public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and the Rules framed there under. (8) There is no formal Internal Audit System prevalent in the organization. However we are informed that there are sufficient check systems commensurate with the size of company and nature of its business. (9) We have broadly reviewed the cost records of the Company under section 209 (1)(d) of the Companies Act, 1956 and are of the opinion that prime- facie the records prescribed by the Central Government have been maintained. We have not, however made detailed examination of the records. (10) According to the information and explanation given to us in respect of statutory and other dues: (a) The Company has been generally regular in depositing with appropriate authorities (subject to point no. 12 of schedule - P) undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, E.S.I, Sales Tax, Customs Duty, Excise Duty, Income Tax, Wealth Tax, Cess and any other statutory dues during the year. (b) According to the information and 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 31st March 2011 for a period of more than six months from the date they become payable. (c) According to the information and explanations given to us, there are no cases of non-deposit with the appropriate authorities of disputed dues of sales tax / income tax / excise duty/ custom duty / wealth tax and cess except as stated below:- Nature of dues Period Amount (in Rs.) Forum of pending Income Tax AY-2005-06 19,97,420/- Before ITAT Income Tax AY-2006-07 13,20,595/- Before ITAT Income Tax AY-2007-08 1,90,938/- Before CIT(A) Income Tax AY-2008-09 5,36,307/- Before CIT(A) Sales Tax FY 2006-07 28,65,435/- Appeal yet to filed Sales Tax FY 2006-07 1,06,31,238/- Appeal yet to filed (11) The Company does not have any accumulated losses as on 31st March, 2011. The Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year to the tune of Rs. 16.65 crores. (12) In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayments of dues to financial institution and banks. (13) 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. (14) In our opinion the term loans have been applied for the purpose for which they were obtained. (15) According to information and explanation given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long- term investment. (16) The Company has not made any preferential allotment of shares during the year and hence we have no comments to offer in respect of clause 4(xvii) of the companies (Auditors Report) Order, 2003. (17) No debentures have been issued by the company during the year as such no securities for the purpose has been created. (18) During the year, the Company has not raised money by public issue. (19) According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the financial year. For RAKESH GUPTA & ASSOCIATES Chartered Accountants ICAI- Registration No. - 0571N Rakesh Gupta Place: Faridabad (Proprietor) Dated: 15th November, 2011 M. No. 80126