CPEC Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2014

We have audited the accompanying financial statements of CPEC Ltd, which comprise the Balance Sheet as at 31st March, 2014 the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 and in accordance with the accounting principles generally accepted in India. 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 the disclosures in the financial statements The procedures selected depend on the auditor''s 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 Company''s 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 Company''s interna control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 aforesaid 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, subject to Note to Schedule 2 forming part of balance sheet;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) 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 purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, one of the directors Mr. Alim Jamal Shamji is disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

(f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

(i) (a) The company has freehold Land at Bhachau, Gujrat and furniture and fixtures (on rented office premises) as fixed assets and required records of the same are properly maintained,

(b) As explained to us, all the fixed assets have been physically verified by the management.

(c) The company has not disposed of fixed assets during the year.

(ii) (a) There is no opening and closing inventory hence this clause is not applicable.

(iii) (a) As informed to us, the company has granted advances in the nature of Loans to an Associate Company and to Subsidiary Companies. The maximum amount outstanding is Rs.390.67 lakhs and closing outstanding balance is Rs.390.67 lakhs.

(b) There is no stipulation for payment of interest. The other terms and Conditions of such loans are in our opinion, prima facie not prejudicial to the interest of the company.

(c) The payment of principal amount is on demand.

(d) There is no stipulation of principal repayment. Hence there is no overdue amount.

(e) As informed to us, the company has taken Loan from a Director. The maximum amount outstanding is Rs. 1.42 lakhs and closing outstanding balance is Rs. 1.37 lakhs.

(f) There is no stipulation for payment of interest, payment of principal amount is on demand. The other terms and Conditions of such loans are in our opinion, prima facie not prejudicial to the interest of the company.

(g) There is no stipulation of principal repayment. Hence there is no overdue amount.

(iv) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business. During the course of our audit no major weakness has been observed in the internal controls.

(v) There are no contracts or arrangements with persons referred to in section 301 of the Companies Act and hence the clause is not applicable.

(vi) In our opinion and according to the information and explanation given to us, the Company has not accepted any public deposits within the meaning of sections 58 and 58AA of the Companies Act, 1956 and the rules framed there under.

(vii) In our opinion, the company does not have an adequate internal audit system commensurate with size and nature of its business.

(viii) As informed to us, the maintenance of cost records has not been prescribed by the Central Government under clause (d) o1 sub-section (1) of section 209 of the Act.

(ix) (a) The company is regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales-tax, Custom Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities during the year except the following:

Statutory Dues Amount

1. Income Tax (o/s for more than 6 months) for A.Y. 11-12 33521316

2. Service Tax (o/s for less than 6 months) for F.Y. 12-13 3054669

(b) According to the information and explanations given to us, there are no dues payable on account of disputes with regards to sales tax, income tax, custom tax, wealth tax, excise duty, cess.

(x) The company does not have accumulated losses at the end of the financial year and it has incurred cash losses during the financial year covered by our audit but has not incurred cash loss in the preceding financial year.

(xi) The company has not defaulted in repayment of dues to financial institutions or bank or debenture holders.

(xii) According to the information and explanations given to us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The company is not Chit fund or a Nidhi or Mutual benefit fund or society. Therefore the provisions of any special statutes are not applicable to the company.

(xiv) According to the information and explanations given to us the company does not deal or trade in shares, securities, debentures and other investments and hence this clause is not applicable.

(xv) The company has given corporate guarantee for loan of Rs. 3830 lakhs taken by the associate company for solar project, the terms and conditions are not prejudicial to the interest of the company.

(xvi) The company has not raised any term loans.

(xvii) In our opinion and overall examination of the Balance Sheet of the company, we report that funds raised on Short term basis have not been used for long term investment.

(xviii) The company has not made any preferential allotment of shares during the year to parties and companies covered in the Register as per Section 301 of the Act.

(xix) The company has not issued any debentures.

(xx) The company has not raised any money through a public issue during the year.

(xxi) Based on the audit procedures applied and information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For D. B. Bhanushali & Co. CHARTERED ACCOUNTANTS (FIRM REGISTRATION NO 118951W)

D. B. Bhanushali Place: Mumbai Partner Date : May 14, 2014 (Membership No. 42844)

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Mar 31, 2010

1 We have audited the attached Balance Sheet of CPEC LIMITED, as at 31st March 2010 and also the Profit and Loss account and 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.

2. We have conducted our audit in accordance with auditing standards generally, accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether financial statements are free of material statements. An audit includes, examining on 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 presentation of the financial statements. 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 the Companies Act, 1956, we enclose in the Annexure a Statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to comments in the Annexure referred to above, we report that:

a. We have obtained all the informations 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 our examination of the books of accounts.

c. The Balance Sheet and the Profit & Loss Account dealt with by this Report are in agreement with the Books of Accounts.

d. In our opinion, the Balance Sheet, the Profit & 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.

e. On the basis of written representations received from the directors, as on 31s1 March 2010, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31s march 2010, from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. In our opinion and to die best of our information and according to the explanations given to us, the said accounts read with the 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 :

* In the case of the Balance Sheet of the state of affair of the company as at 31slMarch, 2010;

* In the case of Profit & Loss account of the loss for the year ended on that date, and

* In the case of cash flow statement of the cash flow for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

(i) (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification 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 sold part of the fixed assets and given on rent machineries excluding Leasehold factory building at Lalbaug and vehicles to its subsidiary comapny CPEC Engineering Pvt. Ltd. which is carrying on the manufacturing activity. On sale of the assets and transfer of business to subsidiary, the company does not have any fixed assets except factory building, office equipment and electrical installations.

(ii) (a) The inventory has been physically verified during the year by the management at reasonable intervals. In our opinion the frequency of the verification is reasonable.

(b) In our opinion the procedures of physical verification of inventory follow by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion the company has maintained proper records of its inventory and no material discrepancies were noticed on physical verification.

(d) The closing inventory is nil due to sale of inventory to its. subsidiary company CPEC Engineering Pvt. Ltd.

(iii) (a) As informed to us, the company has granted advances in the nature of Loans to companies in which Directors are interested as listed in register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding is Rs. 437.88 lakhs and closing outstanding balance is Rs. 267.87 lakhs.

(b) The company has taken loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301. The maximum amount outstanding is Rs. 2,25.83 lakhs and the closing balance is Rs. 76.11 lakhs.

(c) There is no stipulation for payment of interest. The other terms and conditions of such loans are in our opinion, prima facie not prejudicial to the interest of the company.

(d) The payment of principal amount is on demand.

(e) There is no stipulation of principal repayment. Hence there is no overdue amount.

(iv) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for the puchase of inventory and fixed assets and for the sale of goods. During the course of our audit no major weakness has been observed in the internal controls.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all transactions trhat need to entered in to the registers in pursuance of section 301 of the Act have been so entered.

(b) In our opinion and according to the information and explanation given to us entered in the register maintained under section 301 of the companies act 1956 and exceeding the value of 5 lacs in respect of such parties during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) In our. opinion and according to the information and explanation given to us, the company has not accepted any public deposits with in the meaning of sections 58 and 58AA of the companies act, 1956 and the rules framed there under.

(vii) In our opinion, the company has an adequate internal audit system commensurate with the size and the nature of its business.

(viii) As informed to us, the maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub - section (1) of section 209 of the Act.

(xi) (a) The company is regular in depositing undisputed statutory dues including, Provident Fund, Employees State Insurance, Income - tax, Sales - tax, Custom Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities during the year.

b) According to the information and explanations given to us, there are no dues payable on account of disputes with regards to sales tax, income tax, custom tax, wealth tax, excise duty, cess.

(x) The company has no accumulated losses at the end of the financial year but it has incurred cash losses in such financial year and not in the financial year immediately preceding such financial year.

(xi) . According to the information and explanations given to us the company has not defaulted in repayment of dues to a financial institution or bank.

(xii) According to the information and explanations given to us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii)The company is not Chit fund or a Nidhi or Mutual benefit fund or society. Therefore the provisions of any special statutes are not applicable to the company.

(xiv) According to the information and explanations given to us the company does not deal or trade in shares, securities, debentures and other investments and hence this clause is not applicable.

(xv) The company has given guarantee for term loan taken by subsidiarycompanies CPEC Eng. Pvt. Ltd. of Rs. 5.37 crores and Cardcom (I) in losses and hence incase the term loan is not paid by subsidiaries or assets coverage is not adequate the guarantee liability might crystallize. In view of this the said guarantee is prejudicial to the interest of the company to the extent of banks outstanding liability.

(xvi) On the basis of records examined by us, we have to state that the company has Prime Facie applied the term loans for the purpose for which they were obtained.

(xvii) In our opinion and 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.

(xviii) The company has not made any preferential allotment of shares during the year to parties and companies covered in the Register maintained under section 301 of the Act.

(xix) The company has not issued any debentures.

(xx) The company has not raised any money through a public issue during the year.

(xxi) Based on the audit prpcedures applied and information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

FOR VEDULA VLJAY AND RAMANATHAN

Chartered Accountants

(S.VEDULA) Place : Mumbai Partner

Date : 29th May, 2010 MSh.NO.38150

Firm Regd. J06742w