| We have audited the accompanying financial statements of KARMA
INDUSTRIES LIMITED, which comprise the Balance Sheet as at 31 March
2012, and the statement of Profit & Loss for the year ended on that
date, Cash Flow Statement for the year ended on that date, and a
summary of significant accounting policies and other explanatory
information annexed thereto.
Management's responsibility for the financial statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance of the company in accordance with the accounting
principles generally accepted in India including accounting standards
referred to in sub-section (3C) of section 211 of the Companies Act.
1956 ("'the Act''). 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.
Auditor's 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 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
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by 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 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 except the following:
"Company has not paid dividend of 99,00,000 till date which was
approved by shareholders in Annual General Meeting for FY 2010-11."
a. In the case of the Balance sheet, of the state of affairs of the
company as at 31st March 2012.
b. In the case of the Statement of profit and loss, of the profit for
the year ended on that date.
c. In the case of Cash Flow Statement, of the cash flow 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 ("the
order") issued by the Central Government of India in terms of sub
section (4A) of section 227 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 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
those books.
c. The Balance Sheet, Statement of Profit and Loss and cash Flow
Statement dealt with by this report is in agreement with the books of
accounts.
d. In our opinion, the Balance Sheet, Statement of Profit and Loss
comply with the accounting standards referred to in subsection (3C) of
the section 211 of the Companies Act, 1956.
e. On the basis of written representations received from the directors
as on 31st March 2012, and taken on record by the Board of Directors,
none of the directors is disqualified as on 31st March 2012 from being
appointed as a director in terms of clause (g) of subsection (1) of
section 274 of the Companies Act, 1956.
ANNEXURE TO PARA '1' OF OUR REPORT OF EVEN DATE FOR THE YEAR ENDED 31st
MARCH, 2012.
i) (a) The company has maintained proper records showing full
particulars, including quantitative details
and situation of fixed assets.
(b) All the assets have not been physically verified by the management
during the year but there is a regular program of verification 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) The Company has not disposed off any substantial part of Fixed
Assets during the year, so as to affect its going concern.
ii) (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 inventory followed by
the managements 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 taken unsecured interest free loan from 6
parties covered in the register maintain
Under Section 301 of the Companies Act, 1956. The maximum amount
involved during the year is Rs.38,32,55,000/- and the year end balance
of loan taken from such parties was Rs.30,10,75,000/- .
(b) In our opinion, and according to the information and explanations
given to us, the terms and conditions of the aforesaid loans are prima
facie not prejudicial to the interest of the Company.
(c) There is no stipulation as regards payment of principal amounts and
hence nothing is reportable under this clause.
(d) The company has given unsecured interest free loan to 4 parties
covered in the register maintain Under Section 301 of the Companies
Act, 1956. The maximum amount involved during the year is
Rs.2,45,71,800 /- and the year end balance of loan taken from such
parties was Rs.67,21,800 /.
(e) In our opinion, and according to the information and explanations
given to us, the terms and conditions of the aforesaid loans are prima
facie not prejudicial to the interest of the Company.
(f) Since there is no stipulation regarding receipt principal amount
and interest reporting under clause is not applicable.
(g) In respect of the said loans, since there is no stipulation as
regards receipt of principal amount the question of overdue amount does
not arise.
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) (a) According to the information and explanations given to us, we
are of the opinion that the transactions made in pursuance of contracts
or arrangement that need to be entered into the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations
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 and exceeding the value of rupees five lakhs in
respect of any party during the year have been made at prices which are
reasonable having regard to prevailing market prices at the relevant
time.
vi) The company has not accepted any deposit during the year from the
public and provisions of section 58-A and 58-AA of the companies Act,
1956 and the companies (Acceptance of Deposits) Rules, 1975 are not
applicable. No order has been passed by the Company Law Board.
vii) The company does not have formal internal audit system. Internal
audit is carried out by in house staff. In our opinion, there is scope
for further improvement in the internal audit system.
viii) As explain to us, the Central Government has not prescribed
maintenance or cost records under Section 209 (i) (d) of the Companies
Act, 1956, for the products of the company.
ix) (a) The company is not regular in depositing with appropriate
authority undisputed statutory dues including Income Tax, and other
statutory dues applicable to it. There has been delay in payment of
various statutory dues.
(b) There are no undisputed amounts payable in respect of Income Tax,
wealth Tax, Sales Tax, Custom duty or excise duty as on the last day of
the Financial year concerned for a period of more than six months from
the date they became payable except Self Assessment Income Tax for A.Y
2011-12 Rs. 1,05,40,649/-, Central Sales Tax Rs. 5,70,877/-, Dividend
Distribution Tax Rs.16,44,266/-, TDS on Expenses 5,76,196/-
x) In our opinion, the Company has not incurred cash losses during the
financial year covered by our audit and the immediately preceding
financial year.
xi) In our opinion and according to the information and explanations
given to us, the company has not defaulted in repayment of dues to the
Bank there are no dues payable to financial institutions.
xii) In our opinion and according to the information and explanation
given to us the Company has not granted loans and advances on the basis
of security by way of pledge of shares, debentures and other
securities.
xiii) In our opinion, the company is not a chit fund or a nidhi mutual
benefit fund / society. Therefore, the provisions of clause 4(xii) of
the Companies (Auditor's Report) Order, 2003 are not applicable to the
Company.
xiv) In our opinion, 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 (Auditor's Report) Order,
2003 are not applicable to the Company.
xv) According to information and explanation given to us the company
has not given any guarantee for loans taken by others from bank or
financial institutions hence the provisions of terms and conditions
prejudicial to the interest of the company are not applicable to the
Company.
xvi) In our opinion, the company has not raised any term loan during
the year under consideration.
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 the no funds raised on short-term basis have been used for
long-term investment. No long term funds have been used to finance
short term assets except permanent Working Capital.
xviii) According to information and explanation given to us the company
has not allotted shares during the year hence the question of
preferential allotment of shares to parties and Companies covered in
the registered maintain under section 301 of the act does not arise.
xix) According to information and explanation given to us the company
has not issued debentures hence question of creation of securities does
not arise.
xx) According to information and explanation given to us the company
has not raised money by way of public issues hence the question of
disclosure of end use of money raised by public issues does not arise.
xxi) According to information and explanation given to us no fraud on
or by the company has been noticed or reported during the year.
For AMD & CO.
Chartered Accountants
Firm Registration No. 130247W
Sd/-
Arvind M Darji
Partner
Membership No. 41748
Place : Mumbai
Date : 31St May, 2012
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