Treadsdirect Ltd Merged Auditor Reports

TREADSDIRECT LIMITED ANNUAL REPORT 2009-2010 AUDITORS REPORT We have audited the attached Balance Sheet of M/s. Treadsdirect Limited, as at March 31, 2010, the Profit and Loss Account and also 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. 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. 1. As required by the Companies (Auditors Report) Order (as amended) 2003, issued by the Central Government of India in terms of Sub Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that: 2.1 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. 2.2 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 and proper returns adequate for the purposes of our audit have been received from the Branches not visited by us. 2.3 The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and returns. 2.4 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. 2.5 On the basis of written representations received from the directors, as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2010, from being appointed in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. 2.6 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, 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 March 31, 2010 b. In the case of the Profit and Loss Account, of the profit of the Company 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 Reddy, Goud & Janardhan Chartered Accountants Firm Registration No. 003254S B. Anand Coimbatore Partner 26.05.2010 Membership No. 29146 Annexure referred to in paragraph 1 of our report of even date 1. a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. b. The assets have been physically verified by the management in accordance with a phased programme of verification, which in our opinion is reasonable, considering the size and the nature of its assets. c. The Company has not disposed off substantial part of fixed assets during the year and therefore do not affect going concern assumption. 2.a. The inventories have been physically verified during the year by the management. In our opinion the frequency of verification is reasonable. b. In our opinion, the procedures of physical verification of inventories 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 inventories. The discrepancies noticed on verification between the physical stock and the book records were not material. 3.a. The Company had not granted any loan secured or unsecured to any companies, firms or other parties as covered in the register maintained under section 301 of the Companies Act, 1956 and hence the provisions of clause (iii) (a) to clause (iii)(d) of the said Order (as amended) are not applicable. b. The Company had not taken any loan secured or unsecured from the companies, firms or other parties as covered in the register maintained under section 301 of the Companies Act, 1956 and hence the provisions of clause (iii)(e) to clause (iii)(g) of the said Order (as amended) are not applicable. 4. 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 the purchases of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control. 5. In our opinion and according to the information and explanations given to us and to the best of our knowledge and belief, a. The particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that needed to be entered into the register maintained under the said section have been so entered. b. Where such transactions are in excess of Rs.0.5 million in respect of any party during the year, the transactions have been made at prices, which are prima facie reasonable having regard to the prevailing market prices at the relevant time, except that reasonableness could not be ascertained where comparable quotations are not available having regard to the specialized nature of some of the transactions of the Company. 6. The Company has not accepted any deposits from public and hence provisions of para (vi) of the said Order (as amended) are not applicable. 7. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. 8. We have broadly reviewed the books of accounts relating to material, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of its windmill division and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete. To the best of our knowledge and belief and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other products of the Company. 9.a. According to the information and explanations given to us and books and records as produced and examined by us, in our opinion, the undisputed statutory dues including provident fund, investors education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable have been regularly deposited by the Company during the year with the appropriate authorities. b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March 2010 for a period of more than six months from the date they became payable. c. According to the information and explanations given to us, there are no dues of income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess which have not been deposited with the appropriate authorities on account of any dispute except for the following Name of the Nature of dues Amount Period to Forum where Statute (Rs.in which Amount dispute is Million) relates pending Excise Duty (i) Input credit on processing 0.28 01.07.2002 to Commissioner charges 30.04.2008 Central Excise & Customs, Kochi (ii) Cenvat credit on 0.20 01.06.2005 to CESTAT, stock transfer 30.09.2005 Chennai 10. There are no accumulated losses and the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year. 11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or to any bank. There are no debenture holders during the year. 12. We are of the opinion that the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion, the Company is not a chit fund or a Nidhi / Mutual Benefit Fund / Society. Therefore the provisions of clause (xiii) of para 4 of the Order (as amended) are not applicable. 14. In our opinion, the Company is not dealing in respect of shares and securities and hence provisions of this para are not applicable to the Company: 15. The Company has given guarantees for a sum of Rs.2,277,000 for granting of letter of credit facility to one of its subsidiary and in our opinion the terms and conditions whereof on which such facilities have been granted are not prejudicial to the interest of the company. 16. The Company has not borrowed any term loan during the year and hence the provisions of clause (xvi) of para 4 of this Order (as amended) are not applicable. 17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have prima-facie, not been used during the year for long term investments. 18. The Company has not made any preferential allotment of shares during the year and hence the provisions of clause (xviii) of para 4 of this Order (as amended) are not applicable. 19. The Company has not issued any debentures during the year and hence the provisions of clause (xix) of para 4 of this Order (as amended) are not applicable. 20. The Company has not raised any monies by way of public issues during the year and hence the provisions of clause (xx) of para 4 of this Order (as amended) are not applicable. 21. During the course of our examination of the books of accounts carried on in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have been informed of such case by the management. For Reddy, Goud & Janardhan Chartered Accountants Firm Registration No. 003254S Coimbatore B. Anand 26.05.2010 Partner Membership No.29146