Koluthara Exports Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2010

1. We have audited the attached Balance Sheet of KOLUTHARA EXPORTS LTD. as at 31st March 2010 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed there to. 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 the 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 and as amended issued by the Central Government of India in terms of Section 227(4A) 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.

4. Further to our comments in the Annexure referred to in Para 3 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 appears from our examination of the books.

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

(d) In our opinion, the Balance Sheet and the Profit & Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, except as stated in paragraph (e)(i)below:

(e) Attention is invited to Notes in Schedule 21 and Paras of CARO

(i) Provision for short term and long term employee benefits are not made on actuarial basis and funded as recommended by AS-15 issued by the Institute of Chartered Accountants of India.

(ii) Note No.2 (i) – regarding demand from Central Excise department for Rs.22.42 lakhs for import of machinery.

(iii) Note No. 2(iii) – regarding non provision of Service Tax of Rs.80.75 lakhs.

(iv) Note No. 4 (b) (i) regarding legal suit and arbitration proceedings and the liability of Rs.116.03 lakhs.

(v) Note No. 4 (c) regarding acceptance of Deposits and loans, compliance of Rules and the legal opinion thereon.

(vi) Note No. 5 (i) and (ii) regarding the liability for receipt of subsidy from MPEDA and legal notice for repurchase of shares.

(vii) Note No. 6 (a) & (b), reg ESI arrears of Rs.1.35 lakhs and EPFdamages of Rs.4.89 lakhs No.9 (i) and (ii) reg. non- provision of Income Tax liability of Rs.42.50 lakhs, No.11 regarding non-provision of Sales Tax liability of Rs.6.90 lakhs.

(viii) Note No.7 regarding the outstanding debts 33.26 lakhs and the recoverability

(ix) Note No.13 and Para 7 regarding non-conduct of Internal Audit.

(5) Without considering the items mentioned in Para 4 above, the collective effect of which could not be determined, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Notes thereon and Paras in Annexure, 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, except stated in 4(e)(i) above:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010;

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

(iii) In the case of the Cash Flow Statement of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in Paragraph 3 of our report of even date.)

1. i) The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

ii) As informed to us the management has physically verified the fixed assets at frequent intervals, which in our opinion is reasonable having regard to the nature and volume of business and no discrepancies were noticed during such verification.

iii) During the year, the company has not disposed off substantial part of its fixed assets.

2. i) Inventories have been physically verified by the management only at the year end.

ii) As the Company is declared as sick unit and as there are no much stocks, we do not comment on the procedures of physical verification or the frequency of verification.

iii) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification have been dealt with in the books of accounts.

3. The Company has not taken or granted any loans secured or unsecured from Companies, firms or other parties covered in the Register to be maintained under Section 301 of the Companies Act, 1956.

4. The Company is a sick unit and there are no much activities. As such, we do not comment on the internal control procedures with regard to purchase of inventories and fixed assets and sale of goods.

5. According to the information and explanations given to us and the audit procedure carried out by us, we are of the opinion that the transactions that need to be entered in the Register to be maintained under Section 301 of the Companies Act, 1956 have been so entered

6. The Company has not accepted any deposit from the public except Loans from Directors for which declarations in compliance with the provisions of Section 58A of the Companies Act., 1956 and the Rules framed there under have been filed. But the company had raised a loan of Rs.15 lakhs from a party as referred to in Note No.4 (c) and as per the legal opinion received and reasons mentioned, there is no violation of the provisions of Section 58A and the Rules there under. We are unable to express any comments on the legal opinion and the matter covered therein.

7. As informed to us, the company has very limited operations during the year and due to shortage of hands and paucity of funds, no internal audit has been carried out.

8. The Central Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act., 1956 for the products of the company.

9. (i) The Company is not regular in depositing with appropriate authorities the undisputed statutory dues. The defaulted amounts as at the year end are

(a) Employees State Insurance - Rs.1.35

(b) Income Tax - Rs.42.50

(c) Sales Tax - Rs.1.27

(ii) According to the information and explanations given to us, the details of dues of Income Tax, Central Excise, Customs duty and Service Tax and Sale Tax and ESI which have not been deposited as on 31st March 2010 on account of any dispute, are given below.

Sl. No. Particulars Forum where matter is Financial year to Amount pending which Matter involved pertains (Rs.in lakhs)

1.(i) Service Tax Commissioner of Appeals 2005-2006 23.35 Central Excise, Cochin 2006-2007

(ii) Service Tax Commissioner of Appeals 2006-2007 10.17 Central Excise, Cochin 2007-2008

(iii) Service Tax Commissioner of Appeals 2007-2008 16.12 Central Excise, Cochin 2008-2009

(iv) Service Tax Joint Commissioner 2008-2009 14.60 Central Excise, Cochin

(v) Service Tax Joint Commissioner 2008-2009 16.51 Central Excise, Cochin 2009-2010

2 Customs Duty Central Excise, Customs and 1999-2000 22.42 Service Tax Tribunal, Bangalore

3.(i) Sales Tax Sales Tax Appellate Tribunal 1988-1989 5.40

(ii) - Do - - Do - 1999-2000 1.04

4 ESI due Regional Commissioner ESI 1989-2008 20.41 Corporation

10 The Company has accumulated loss at the end of the financial year exceeding its net worth and has already been declared as a sick unit by Board for Industrial and Financial Reconstruction (BIFR).

11. The Company has defaulted in the repayment of dues to Financial Institutions and Banks and the amounts outstanding in the accounts are fully overdue. But the company has been declared as a sick unit by BIFR and all payments stand suspended.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund/ Society. Therefore the provision of Clause 4 (xiii) of the Order is not applicable to the company.

14 The Company is not a dealer or trader in shares, securities, debentures or other investments and the provisions of Clause 4(xiv) of the Order are not applicable to the company.

15. In our opinion and according to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions during the year.

16. The Company has not taken any new term loans during the year.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that no funds have been raised on short-term or long-term basis during the year.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register to be maintained under Section 301 of the Act.

19. The Company has not issued any secured debentures during the year.

20. The Company has not raised any money through public issue during the year.

21. According to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

PLACE : Cochin - 16. FOR GEORGE JOHN & PRABHU

DATE : 10.08.2010 CHARTERED ACCOUNTANTS

VEDANGA R. PRABHU PARTNER

---

Mar 31, 2009

1. We have audited the attached Balance Sheet of KOLUTHARA EXPORTS LTD. as at 31st March 2009 and also die Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed there to. 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 the 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 and as amended issued by the Central Government of India in terms of Section 227(4A) 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.

4. Further to our comments in the Annexure referred to in Para 3 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 appears from our examination of the books.

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

(d) In our opinion, the Balance Sheet and the Profit & Loss Account and Cash Flow Statement comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, except as stated in paragraph (e)(i) below:

(e) Attention is invited to Notes in Schedule 21 and Paras of CARO

(i) Provision for short term and long term employee benefits are not made on actuarial basis and funded as recommended; by AS-15 issued by the Institute of Chartered Accountants of India.

(ii) Note No.2 (i) - regarding demand from Central Excise Department for Rs.22.42 lakhs for import of machinery.

(iii) Note No. 2(iii) - regarding non provision of Service Tax of Rs. 4964308.00

(iv) Note No. 4 (b) (i) regarding legal suit and arbitration proceedings and the liability of Rs.116.03 lakhs.

(v) Note No. 4 (c) regarding acceptance of Deposits and loans, compliance of Rules and the legal opinion thereon.

(vi) Note No. 5 (i) and (ii) regarding the liability for receipt of subsidy from MPEDA and legal notice tor repurchase of shares.

(vii) Note No. 6 (a) & (b), reg ESI & EPF arrears of Rs. 3.00 lakhs and 1.60 lakhs No.9 (i) ana (ii) reg. non- provision of Income Tax liability of Rs. 42.50 lakhs, No.ll regarding non-provision of Sales Tax liability of Rs.6.90 lakhs.

(viii) Note No.7 regarding the outstanding debts Rs. 35.69 lakhs and the recover- abiliry

(ix) Note No.13 and Para 7 regarding non-conduct of Internal Audit.

(5) Without considering the items mentioned in Para 4 above, the collective effect of which could not be determined, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Notes thereon and Paras in Annexure, 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, except stated in 4(e)(i) above:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31" 2009.

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

(iii) In the case of the Cash Flow Statement of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in Paragraph 3 of our report of even date.)

1. i) The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

ii) As informed to us the management has physically verified the fixed assets at frequent intervals which in our opinion is reasonable having regard to the nature and volume of business and no discrepancies were noticed during such verification.

iii) During the year, the company has not disposed off substantial part of its fixed assets.

2. i) Inventories have been physically verified by the management at the year end.

ii) As the Company is a declared sick unit and as there are no much stocks, we do not comment on the procedures of physical verification or the frequency of verification.

iii) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification have been dealt with in the books of accounts.

3. The Company has not taken or granted any loans secured or unsecured from companies, firms or other parties covered in the Register to be maintained under Section 301 of the Companies Act, 1956.

4. The Company is a sick unit and there are no much activities. As such, we do not comment on the internal control procedures with regard to purchase of inventories and fixed assets and sale of goods.

5. According to the information and explanations given to us and the audit procedure carried out by us, we are of the opinion that the transactions that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered.

6. The Company has not accepted any deposit from the public except Loans from Directors for which declarations in compliance with the provisions of Section 58A of the Companies Act., 1956 and the Rules framed thereunder have been filed. But the company had raised a loan of Rs.15 lakhs from a party as referred to in Note No.3(2)(C) and as per the legal opinion received and reasons mentioned, there is no violation of the provisions of Section 58A and the Rules thereunder. We are unable to express any comments on the legal opinion and the matter covered therein.

7. As informed to us, the company has very limited operations during the year and due to shortage of hands and paucity of funds, no internal audit has been carried out.

8. The Central Government has not prescribed maintenance of cost records under Section 209(l)(d) of the Companies Act., 1956 for the products of the company.

9.(i) The Company is not regular in depositing with appropriate authorities the undisputed statutory dues. The defaulted amounts as at the year end are

(a) Provident Fund - Rs.1.60 lakhs

(b) Employees State Insurance - Rs.3.00 lakhs

(c) Income Tax - Rs.42.501akhs

(d) Sales Tax - Rs.1.27 lakhs.

(ii) According to the information and explanations given to us, the details of dues of Income Tax, Excise and Customs Duty and Sales Tax, ESI and also Service Tax which have not been deposited as on 31* March 2009 on account of any dispute are given below.

SI Forum where Financial year Amount Particulars to which involved(Rs. No. matter is pending Matter pertains in Lakhs)

l.(i) Service Tax Commissioner of 2005-2006 23.35 Appeals Central Excise, 2006-2007 Cochin

(ii) Service Tax Commissioner of 2006-2007 10.17 Appeals Central Excise, 2007-2008 Cochin

(iii) Service Tax Joint Commissioner 2007-2008 16.12 Central Excise, Cochin

2. Customs Duty Central Excise, Customs 1999-2000 22.42 & Service Tax Tribunal Bangalore

3.(i) Sales Tax Sales Tax Appellate 1988-1989 5.40 Tribunal

(ii) -Do- -Do- 1999-2000 1.04

4 ESI due Regional Commiss ioner 1989-2008 16,18 ESI Corporation



10. The Company has accumulated loss at the end of the financial year exceeding its net worth and has already been declared as a sick unit by Board for Industrial and Financial Reconstruction (BIFR).

11. The Company has defaulted in the repayment of dues to Financial Institutions and Banks and the amounts outstanding in the accounts are fully overdue. But the company has been declared as a sick unit by BIFR and all payments stand suspended.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund/ Society. Therefore the provisions of Clause 4 (xiii) of the Order is not applicable to the company.

14 The Company is not a dealer or trader in shares, securities, debentures or other investments and the provisions of Clause 4(xiv) of the Order are not applicable to the company.

15 In our opinion and according to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions during the year.

16 The Company has not taken any new term loans during the year.

17 According to the information and explanations given to us and on an overall examination of the Balance sheet, we report that no funds have been raised on short-term or long-term basis during the year.

18 The Company has not made any preferential allotment of shares to parties and companies covered in the Register to be maintained under Section 301 of the Act.

19 The Company has not issued any secured debentures during the year.

20 The Company has not raised any money through a public issue during the year.

21. According to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

PLACE:Cochin -16. DATE :03.08.09.