Hitkari Industries Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2010

We have audited the annexed Balance sheet of HITKARI INDUSTRIES LIMITED, as at 31st March 2010 and the Profit and Loss Account for the period ended on that date annexed thereto and the Cash flow for the year ended on that date. 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 overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. This report does includes a statement on the matters specified in paragraph 4 of the Companies (Auditors Report) Order, 2003, issued by the department of company affairs, in terms of section 227 (4A) of the companies Act, 1956.

2. Further to Our comments in the annexure referred to in paragraph 1 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 books-of accounts as required by the law have been kept by the Company so far as it appears from the examination of such books;

(c) The Balance Sheet and the Profit and Loss Account and Cash Flow Statement, dealt with by this report, are in agreement with the said books of accounts;

(d) In Our opinion the Balance Sheet and Profit & Loss Account and Cash Flow Statement comply with the accounting standards referred to in Sub Section 3(c) of Section 211 of the Companies Act, 1956.

(e) On the basis of written representation received from the directors as of March 31, 2010 and taken on record by the board of directors, We report that none of the directors is disqualified as of March 31, 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 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.

(i) In the case of the Balance Sheet, of the State of Affairs of the Company as at March 31, 2010 and;

(ii) In the case of the Profit and Loss Accounts of the Loss of the Company for the year ended on that date.

(iii) Cash flow statement, Cash Flow of the company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

1. In respect of its fixed assets:

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

(b) Fixed assets have been physically verified by the management at reasonable intervals; No material discrepancies were noticed on such verification.

(c) No substantial part of fixed assets has been disposed off during the year, and sale of fixed assets during normal course of business has not affected the going concern.

2. In respect of its inventories:

(a) Physical verification of inventory has been conducted at reasonable intervals by the management.

(b) Procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. There are no inadequacies in such procedures that should be reported.

(c) Company is maintaining proper .records of inventory. No material discrepancies were noticed on, physical verification.

3. In respect of loans granted and taken to / from parties covered in the register maintained u/s 301 of the Companies Act, 1956.

(a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the companies Act-1956.

(b) Not Applicable

(c) Not Applicable

(d) Not Applicable

(e) The company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained u/s 301 of the companies Act-1956.

(f) Not Applicable

(g) Not Applicable

4. In respect of internal control

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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of audit, We have not observed continuing failure to correct major weaknesses in internal control system.

In respect of contracts or arrangements need to be entered into a register maintained u/s 301 of the Companies Act, 1956

(a) According to the information and explanation given to us, we are of the opinion that 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.

(b) In our opinion and according to the information and explanation 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 are made at price which are reasonable having regard to prevailing market prices at the relevant time.

6. In respect of deposits from public

No deposits within the meaning of Sections 58A and 58AA or any other relevant provision of the Act and rules farmed there under have been accepted by the Company.

7. In respect of internal audit system

In our opinion, the Company has an internal audit system commensurate with its size and nature of business.

8. In respect of maintenance of cost records

We have broadly reviewed the books of accounts relating to materials, 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 u/s 209)l)(d) of the companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. In respect of statutory dues

(a) The company is regular in depositing with appropriate authorities undisputed statutory dues including provident kind, investor education protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty and other material statutory dues applicable to it.

(b) As per Annexure Attached

10. In respect of accumulated losses and cash losses

The company does not have any accumulated losses at the end of the financial year. However the company has incurred cash losses of Rs. 8,898,786.22/- in the current financial year and of Rs. 474,878.66/- in the immediately preceding financial year.

11. In respect of dues to financial institution / banks / debentures

The company has not defaulted in repayment of dues to financial institution, bank or debenture holders.

In respect of loans and advances granted on the basis of security

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 respect of provisions applicable to Chit fund

In our opinion and according to information and explanations given to us the company is not chit fund or a nidhi or mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the company.

(a) Not Applicable

(b) Not Applicable

(c) Not Applicable

(d) Not Applicable

14. In respect of dealing or trading in shares, securities, debentures and other investment According to information and explanations given to us the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the company.

15. In respect of guarantee given for loans taken by others

According to the information and explanations given to us, the company has given guarantee of Rs 4.25 Crores for loans taken by its subsidiary Terra Films Private Limited from bank or financial institutions, the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the company.

16. In respect of application of term loans

In our opinion, the term loans raised by the company during the year have been applied for the purpose for which it was raised.

17. In respect of fund used

Based on an overall examination of the Balance Sheet of the company and a review of the consolidated fund flow statement for the year, we report that no funds raised on short-term basis have been used for long-term investment.

18. In respect of preferential allotment of shares

The company has not made any preferential allotment of shares to parties and companies covered in the register maintained u/s 301 of the Act, during the year.

In respect of securities created for debentures

The company has not issued any debentures during the year. Therefore provisions of clause 4(xix) of the Order are not applicable to the company.

20. In respect of end use of money raised by public issues

The company has not raised any money from the public during the year under audit.

21. In respect of fraud

According to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the year.

Annexure detail of (ix)(b)

Related To Authority Where Case is Financial Year Disputed Amount Pending

Income Tax CIT (A)-XXVIII 2005-06 18,503,426.00



Sudhir Sunil & Co.

Firm Registration No : 08345N

Chartered Accountants

Place : New Delhi

Dated: 31st august, 2010

Per S. Kapoor

Partner

Membership No. 086840

---

Mar 31, 2009

1. We have audited the attached Balance Sheet of HITKARI INDUSTRIES LIMITED, as at 31st March, 2009, and the Profit and Loss Account for the yea/ 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 the 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 the Companies Act, 1956, we enclose in die Annex-are 3 statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. We may mention that a Partner of the Firm is relative of a Director of the Company and the said Director has no shareholding in the company.

5. 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 purposes 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 our examination of those books.

iii. The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

iv.In opinion, the Balance Sheet and the Profit & Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies act, 1956;

v. On the basis of written representations received from the Directors, as on31st March, 2009 and taken on record by the Board of Directors, we report that none,of the director is disqualified as on: 31 st March, 2009 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, thesaid accounts read together with notes thereon i.e.(a) Note No. (5) regarding non confirmation some of balances of Sundry Creditor, Debtors and Loans & Advances and non ascertainment of its effects on accounts , if any, & (b) Note No. (6) (ii) regarding the litigation of an amount of Rs.288.47 lacs and its non provision in the accounts and the cumulative impact of Note No. 6 (ii) is that loss is understated and Advances are overstated to the extent of Rs.28S.47 lacs and, all other notes on accounts and schedules annexed thereto 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 31st March, 2009; and

b) in the case of the Profit and Loss Account, of the loss for the year ended on that date.

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

Annexure referred in paragraph 3 of Auditors Report to the Members of HITKARI INDUSTRIES LIMITED on the accounts for the year ended on 31st March, 2009

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

b) All the assets have been physically verified by the management.during the year 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) In our opinion and according the information and explanations given to us no substantial part of fixed assets of the company have been disposed off during the year.

a) The inventory has been physically verified during the year by the management. In our Opinlon, the frequency of verification is reasonable.

b) The procedures of physical verification of inventories followed by the management 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 not granted loans, secured or unsecured to companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956, hence clause 4 (iii) (b)(c) & (d) of the Companies (Auditors Report) Order 2003 is not applicable. However the Company has given interest free advances of Rs.l15.40 lacs to Companies in which Managing Director and some Directors are Director.

b) The company has taken loans, unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 from two number of parties and the maximum amount involved during the year was Rs.333.49 iacs and balance as on 3 lst March, 2009 is Rs.299.05 lacs.

c) The loans are free of interest and other terms and conditions of loans taken by the company, are prima facie not prejudicial to the interest of the company.

d) The payment of the principal amount is regular wherever stipulated.

iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory & fixed assets and for to sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According,to lite information and explanations-given to us, we are of the opinion that the particulars of contracts and arrangements referred to section 3GI of the Companies Act, 1956 havebeen entered into the register maintained under that section.

b) According to the information and explanations given to us, these contracts or arrangements have been made at price which are reasonable having regajds to the prevailing market prices at the relevant time.

vi) According to the information and explanations given to us, the company has not accepted deposits covered under section 58A & 58AA and other relevant provisions of the Companies Act, 1956.

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

viii) According to the information and explanations given to us the Central Government has not prescribed the maintenance of cost records under section 209 (l)(d) of the Companies Act. 1956 for the nature of business of the company.

ix) (a) According to information and explanations given to us there were no undisputed statutory dues including provident fund, investor education protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, which were required to be deposited & were in arears as on 3 1st,March, 2009 for a period of more than six months from the date the same became payable.

(b) In our opinion and according to the information and explanations given to us, there are no dues in respect of the above except for sales tax which has not been deposited with the appropriate authorities, on account of dispute and the forum where the dispute is pending are given below:- .

Name of Nature of Dues Amount Period Forum where

Statute dispute is

pending

Delhi Sales- Sales-tax 14,583

tax Act. 1975 2004-05 Deputy

CST Act. 60,893 Commissioner

1956

Income Tax Income Tax 1,85,00,000 2006-07 CIT (Appeal)

Act 1961

x) The Company has no accumulated losses as at the end of the financial year and has incurred cash losses in current financial year and no cash losses in the immediately preceding financial year.

xi)The Company has not defaulted is; repayment of any dues to financial institutions or banks. Mo amounthas been borrowed against debentures.

xii) The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures, and other securities.

xiii) The company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) order, 2003 are not applicable to the company.

xiv) The company is not dealing is) 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 the information and explanations given to us the company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) On the basis of review of utilisation of funds on an overall basis, in our opinion, the term loans taken by the company were applied for the purpose for which the loans were obtained.

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 on short-term basis have prima facie been used for long-term investment.

xviii) The company has not during the year made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) The Company has not issued debentures during the year, hence the question of creation of security or - charge in respect of debentures issued does not arise

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

xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

for S R Kapur & Co.,

Chartered Accountants



( D K Gupta )

New Delhi: Partner

Dated: 31st Aug 2009 Membership No. 089480