Skylead Chemicals Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2010

We have audited the attached Balance Sheet of SKYLEAD CHEMICALS LIMITED as at 31.3.2010 and Profit & Loss Account and 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 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, 2003 as amended by the Companies (Auditors Report) (Amendment) Order 2004 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 2 and 3 of the said Order.

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 explanation 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 the law have been kept by the Company so far as appears from our examination of such books;

c) The Balance Sheet, Profit & 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, Profit & Loss Account and Cash Flow Statement dealt with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956:

e) As per the information furnished to us, none of the directors of the company is disqualified from being appointed as director under 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 read with the notes thereon, subject to our Note No.3 regarding non-provisions of interest of Rs.48,64,0007- & Note No.4 Regarding Non-provision of gratuity of Rs. 12,21,808/-, 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.

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

ii) In the case of the Profit and Loss Account of the company LOSS for the year ended on that date; and

iii) In the case of Cash Flow Statement, of 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).

(i) In respect of its fixed assets:

(a) The Company is still in the process of complying fixed assets records to show full particulars, including quantitative details and situation of fixed assets.

(b) The physical verification of the fixed assets was conducted by the management, but since the fixed assets records are still under compilation no comparison with the books records have yet been made. According to the information and explanation given to us, no material discrepancies have noticed on such verification.

(ii) In respect of inventories;

(a) The inventory has been physically verified during the year by the management. In our opinion, 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) in respect of the loans, secured or unsecured taken or granted from/to directors and other parties covered in the Register maintained under U/s.301 of the Companies Act, 1956, according to information and explanation given to us:

(a) The company has granted unsecured loan to 1 director of the company covered under the register maintained U/s. 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 129.32 lacs and the year-end balance of loans taken from such parties was of Rs. 128.44 lacs.

(b) In our opinion, the rate of interest and other terms and conditions on which loans have given to the director covered under the register maintained under section 301 of the Companies Act,1956 are not prima facie, prejudicial to the interest of the company.

(c) As there are no stipulation as regard to repayment of such loan, the question of receipt of the principal amount does not arise..

(d) As there are no stipulation as regard to repayment of such loan, the question of overdue amount of loans does not arise..

(e) The company has not taken unsecured loans from any director, companies or other parties listed in the register maintained u/s.301 of the Act during the financial year

(f) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from the companies and other parties listed in the register maintained under section 301 of the Companies Act,1956 are not prima facie, prejudicial to the interest of the company.

(g) The parties are regular in repaying the principal and interest amounts as stipulated.

(iv) 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 purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) In respect of the transactions to be entered in the register maintained u/s.301 of the Companies Act:

(a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained U/s.301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, there is no transactions made in pursuance of contracts or arrangements entered in the register are maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. five lacs in respect of any party during the year.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any public deposit. Therefore, question of compliance with the provisions of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptances of Deposits) Rules, 1975 does not arise. No order has been passed by the Company Law Board.

(vii) The company does not have any formal internal audit system in view of there being adequate internal check and internal control system commensurate with the size of the company and nature of its business.

(viii) The Central Government has not prescribed for maintenance of cost records U/s. 209 (1)(d) of the companies Act, 1956. Therefore, we have no comment under clause 4 (xiii) of the Companies (Auditors Report) Order, 2003.

(ix) The company has accumulated losses at the end of the year amounting to Rs. 2275.32 lacs which is more than fifty percent of its net worth and incurred cash loss during the year amounting to Rs.113.09 lacs and of Rs.247.80 lacs in the immediately preceding financial year. In arriving at the accumulated losses and net worth as above, we have not considered the quantification which has been qualified in the audit report of the years to which these losses pertain.

(x) In our opinion, and according to the information and explanations given to us, the company has defaulted in repayment of dues to a financial institution and bank. The overdue amount payable to the G.S.F.C. since from 01-10-2003 is of Rs.355.87 lacs and I.D.B.I, since from 01-10-2002 is of Rs.1130.78 lacs. According to information and explanation given to us, the company has not defaulted in repayment of any due to a bank or debenture holders.

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

(xii) The company is not a chit fund or 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.

(xiii) The company is not dealing in 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.

(xiv) Accordingly to information and explanation given to us, the company has given corporate guarantee to Gujarat Industrial Investment Corporation Ltd., on behalf of M/s. Skylink Chemicals Pvt. Ltd. for the amount of loan disbursed to them amounting to Rs.73.06 lacs. As informed to us, the terms and conditions of the said loan are not prejudicial to the interest of the company.

(xv) In our opinion, the term loans have been applied for the purpose for which they were raised.

(xvi) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the no funds raised on short-term, basis have been used for long-term investments. No long term-funds have been used to finance short-term assets except permanent working capital.

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

(xviii) According to the information and explanations given to us, the company has not issued any debentures during the year under report. Therefore, the provisions of clause 4(xix) of the Order are not applicable.

(xix) The company has not raised any money by public issue during the year. Therefore, we have no comment under clause 4(xx) of the Order.

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



For S. MANDAWAT & CO. Chartered Accountants FRN : 1180330W

(Subhash K. Mandawat) Partner. M.No. 102708

Place: Ahmedabad Dated: 02.09.2010.