Mascon Global Ltd Auditor Reports

MASCON GLOBAL LIMITED ANNUAL REPORT 2010-2011 AUDITORS REPORT To The Members of Mascon Global Limited. 1. We have audited the attached Balance Sheet of M/s. MASCON GLOBAL LIMITED, Chennai, as at 30th June 2011 and also the Profit and Loss Account and Cash Flow Statement of the Company for the period 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. 2. 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 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. 3. 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 Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said Order, to the extent applicable. 4. Further to our comments in the Annexure referred to above, 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 it appears from the examination of the books. c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by the report are in agreement with the books of account. d. In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in conformity with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. e. In our opinion, on the basis of written representations from the Directors taken on record by the Board of Directors of the Company, we report that, no director is disqualified from being appointed as Director of the Company, under Clause (g) of subsection (1) of Section 274 of Companies Act, 1956. f. We draw attention to the following: I. The Company has suffered substantial losses during the period. II. The Company has experienced substantial reduction in turnover. III. The Company was unable to remit the statutory liabilities, IV. Recovery/winding up proceedings had been initiated by Banks /institutions, vide Note No.4 (Sch 18). V. The Management is yet to present its concrete plan to mitigate these liabilities which is greater than the currently expected cash flows from business and any committed or contracted sources of funds of the company. These concerns raise doubt about the companys ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. VI. Note No.3(a) and 3(c) (Sch 18) regarding the dues outstanding on FCCB and non provision of interest on unsecured loans. VII. Note No. 10(c) regarding the accounting of foreign tax dues. VIII. Note No. 10(d) regarding non payment of dues to Gratuity Fund (Life Insurance Corporation). Attention is invited to Note No.6(c-ii) of (Sch 18) regarding management assessment of the carrying value of its investments by the company, in its subsidiary companies (other than MGL-A), on which, we are unable to express our opinion on the quantum of impact into the profit and loss account, for want of information from the management relating to current market value of the investments, investees assets/receivables and expected cash flow from the investment. Attention is also invited to Note No.7(b) and Note No.8 (Sch 18) regarding non receipt of confirmations from Debtors, Creditors, Loans and advances and from some of its Bankers. As a result thereof, we have placed reliance on the balances shown in the books of the company, effect on revenue is not ascertained, pending receipt of confirmation and reconciliation thereon, In our opinion and to the best the of our information and according to the explanations given to us, the said accounts read with the notes thereon, subject to para (f) to (h) above, 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 30th June 2011, b) In the case of the Profit and Loss Account, of the LOSS of the company for the period ended on that date; and c) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that date. For M/s. G. BALU ASSOCIATES Firm Regn. No.000376S CHARTERED ACCOUNTANTS G. Balasubramanyan Place: Chennai Partner Date : March 29, 2012 Membership No.7628 ANNEXURE TO THE AUDITORS REPORT Statement referred to in paragraph 3 of our Report of even date to the Members of M/s. Mascon Global Limited, on the accounts for the period ended 30th June 2011. i) In respect of Fixed assets: a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets, which needs to be updated. b) The fixed assets have been physically verified by the management in a phased manner in accordance with a programme of verification which, in our opinion is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification. c) The Company has during the year has retired substantial portion of its fixed assets. In view of our observation made in our Report at Para 4.f([i] to [v]) above, we are unable to comment on the going concern status of the company in this regard. ii) The Company did not have any Inventories and accordingly, the provisions of clause 4(ii) of the Order is not applicable to the Company for the year. iii) a) The Company, during the year has not taken any loans secured or unsecured from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies, Act, 1956. b) The Company, during the year, has not granted secured or unsecured loan to Companies, Firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets and with regard to sale of goods/services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system. v) a) The particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, have been entered in the register required to be maintained under that section; and b) The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi) The Company has not accepted any deposits from the public. vii) In our opinion, the company has an adequate Internal Audit System commensurate with the size and nature of its business, which need to be strengthened. viii) The Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products of the Company. ix) In respect of statutory dues: a) According to the records of the company there were delays in the remittances of Provident und, ESI, Service Tax and Tax deducted at Source in India. Also TDS of Rs.28,839,627/-, PF of Rs.34,350,735/- and Professional Tax of Rs.3,015,982/-, outstanding as at the year end, remains to be paid as on date. b) According to the records of the company and based on the information and explanations offered thereon, there were no undisputed statutory amounts payable as at 30th June 2011 for a period of more than six months from the date they became payable, except for US State Taxes payable amounting to Rs.712,224/-, Indian Income Tax payable to the extent of Rs.28,198,810/- for A.Y.2009-10, TDS of Rs. 15,511,433/-, PF of Rs.19,184,932/- and Professional tax of Rs.2,976,212/-. c) According to the records of the company and based on the information and explanations offered thereon, the disputed statutory dues that have not been paid as on 30th June 2011, on account of disputed matters pending before appropriate authorities is as given under: Name of the Nature of Forum where dispute is Assessment Rupees Statute dues pending year in lakhs Income Tax Income tax Income tax Appellate 2002-03 97.4 Act 1961 Tribunal Income Tax Appellate 2006-07 5784 Tribunal Income Tax Appellate 2007-08 412.6 Tribunal Commissioner of 2004-05 1675.46 Income Tax (Appeals) x) The companys accumulated losses are more than fifty percent of its net worth. The company has incurred cash losses during the financial year covered by our audit and also in the immediately preceding financial year. xi) In our opinion and according to the information and explanations given to us, the company has during the year, defaulted in repayment of dues to any financial institutions/bank, as follows: Particulars Period of Delays Amount (in Rs.) (Approximated) Banks: Principal dues 2008-09 Rs. 116,538,960 2009-10 Rs. 388,536,170 2010-11 Interest dues Quarter ended Dec 2008 Rs. 1,930,585 Quarter ended Mar 2009 Rs. 2,295,085 Quarter ended Jun 2009 Rs. 10,718,160 Quarter ended Sep 2009 Rs. 12,655,288 Quarter ended Dec 2009 Rs. 13,988,700 Quarter ended Mar 2010 Rs. 36,109,495 Quarter ended Jun 2010 Rs. 36,537,367 Quarter ended Sep 2010 Rs. 37,828,235 Quarter ended Dec 2010 Rs. 43,330,401 Quarter ended Mar 2010 Rs. 40,138,132 Quarter ended Jun 2011 Rs. 42,737,632 xii) The company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities. xiii) The company is not a Chit fund, Nidhi or mutual benefit fund or Society. xiv) The company is not dealing or trading in shares, securities, debentures or other investments. xv) The company, has given a guarantee for loan taken by a company from bank, the terms and conditions thereof are not prejudicial to the interests of the company. xvi) The company has not taken any term loans during the year, and hence the question of application of the same does not arise for the year. 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 no funds raised during the year, on short term basis, have been used for long term investments. xviii) According to the information and explanations given to us, the company has not, during the year made any preferential allotment of shares to parties and companies covered in the Register maintained under Sec.301 of the Companies Act, 1956. xix) The company has not issued any debentures during the year. xx) The company has not raised any money from the public issue during the year. xxi) According to the information and explanations given to us, a fraud on or by the company during the year, has not been noticed or reported during the year. For M/s. G. BALU ASSOCIATES Firm Regn. No.000376S CHARTERED ACCOUNTANTS G. Balasubramanyan Place: Chennai Partner Date : March 29, 2012 Membership No.7628