SANGHVI FORGING AND ENGINEERING LIMITED
ANNUAL REPORT 2011-2012
The members of
Sanghvi Forging and Engineering Ltd.
We have audited the attached Balance Sheet of Sanghvi Forging and
Engineering Ltd. as at March 31, 2012, the Profit and Loss Account and also
the cash flow statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company`s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
1. 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 the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
2. As required by the Companies (Auditor`s 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 paragraphs 4 and 5 of the said order.
3. Further to our comments in the Annexure referred to in paragraph 2
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 account, as required by the law, have
been kept by the Company, so far as appears from our examination of those
c) The Balance Sheet, the Profit & Loss Account 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 Profit & Loss Account and the
cash flow statement dealt with by this report comply with the mandatory
Accounting Standards referred to in sub-section (3C) of section 211 of the
Companies Act 1956
e) In our opinion, and based on information and explanation given to us,
none of Directors are disqualified as on March 31, 2012 from being
appointed as Directors in term of section 274(1)(g) of The Companies Act,
f) In our opinion and to the best of our information and according to the
explanations given to us, the said accounts read together with the
significant Accounting Policies and other notes thereon give the
information required by the Companies Act, 1956, in the manner so required
except for the classification of short term liability amounting to
Rs.12,678.28 thousands classified as a long term liability resulting in
understatement of short term liabilities and overstatement of long term
liabilities by the said amount and classification of capital advances
amounting to Rs.67,009.22 thousands classified as short term loans and
advances instead of long term loans and advances resulting in overstatement
of short term loans and advances and understatement of long term loans and
advances by the said amount, however it has no impact on state of affairs
of the Company except classification which are contrary to the Schedule VI
of Companies Act, and present a true and fair view in conformity with the
accounting principles generally accepted in India:
(i) In so far as it is relates to Balance Sheet, of the state of affairs of
the Company as at March 31, 2012;
(ii) In so far as it relates to the Profit & Loss Account, the profit of
the Company for the year ended on that date; and
(iii) In so far as it relates to the cash flow statement, of the cash flow
of the Company for the year ended on that date.
For Shah & Bhandari
Membership No. 046255
Date : 29/05/2012
ANNEXURE TO THE AUDITOR`S REPORT
(Referred to in paragraph 3 of our report of even date)
1 (a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of its fixed assets. The fixed
asset register is updated.
(b) As explained to us, fixed assets are physically verified by the
management at the year-end, which in our opinion, is reasonable, looking to
the size of the Company and its nature of business, and no material
discrepancies were noticed on such verification.
(c) The Company has not disposed off any substantial part of its fixed
assets during the year, which can affect the going concern.
2 (a) As explained to us, Inventories has been physically verified during
the year and at the year-end.
(b) In our opinion the procedures of 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.
(c) The Company is maintaining proper records of inventory. As informed to
us the discrepancies noticed on physical verification of stocks as compared
to book records were not Material, however, the same have been properly
dealt with in the books of account.
3 (a) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained under
section 301 of he Act. Hence, Clause (03)(a) to (d) of the Order are not
(b) The Company has taken unsecured loans from 15 parties covered in the
register maintained under section 301 of the Companies Act, 1956. The
maximum balance is Rs.417.54 Lacs (P.Y. 448.51 Lacs) and year end balance
is Rs.161.51 Lacs (P.Y. 347.22 Lacs.)
(c) In our opinion and information given to us the rate of interest and
other terms and conditions of loans taken by the Company, secured or
unsecured, are prima facie prejudicial to the interest of the Company.
(d) As per information given and explanation given to us, the payment of
interest is regular and there is no stipulation as regards to repayment of
4. 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 and
service. During the course of our audit, we have not observed any
continuing failure to correct major weakness in internal controls.
5. (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 under section 301 of the Companies Act, 1956 have been so
(b) In our opinion and according to the information and explanations given
to us, the transactions made in pursuance of contracts or arrangements
referred to in (a) above and exceeding the value in Rs.5 Lacs with the
parties during the year have been made at process which are reasonable
having regard to the prevailing market prices at the relevant time.
6. The Company has not accepted any deposits during the year from the
public, within the meaning of the provisions of Section 58A & 58AA of the
Companies Act, 1956 and rules made there under. Hence, clause (vi) of the
order is not applicable.
7. In our opinion, the Company has an internal audit system commensurate
with its size and nature of its business.
8. We are informed that the Central Government has prescribed maintenance
of cost records under Section 209(1) (d) of the Companies Act, 1956 and the
Company has maintained the prescribed cost records.
9. (a) The Company is generally regular in depositing with appropriate
authorities undisputed statutory dues including provident fund, income tax,
custom duty, excise duty and other material statutory dues applicable to
(b) According to the information and explanations given to us, there are no
undisputed amounts payable in respect of income tax, sales tax, customs
duty, excise duty, as at 31.03.2012 for a period of more than six months
from the date they became payable, except Income Tax, Service Tax and
Excise Duty dues:
Name of Statue Nature of Dues Amount Period to Forum where
(Rs.`000) which it the dispute
relates is pending
Income Tax Disallowances 856.49 A.Y. 2008-09 CIT (A)
Income Tax Disallowances 969.13 A.Y. 2009-10 CIT (A)
Central Excise Wrong availment 776.34 F.Y. 2007-08 Commissioner of
Act, 1944 of cenvat credit & Central Excise
on capital goods F.Y. 2008-09 (Appeals)
Central Excise For Reversal Of 915.36 F.Y. 2007-08, Commissioner of
Act, 1944 Credit with F.Y. 2008-09 Central Excise
respect to & (Appeals)
Service tax F.Y. 2010-11
Credit of BAS on
paid of Foreign
Central Excise Wrong availment 346.14 F.Y. 2007-08, Asst.
Act, 1944 of cenvat F.Y. 2008-09, Commissioner of
credit against F.Y. 2009-10 Central Excise
input service &
like CHA agents F.Y. 2010-11
10. The Company does not have accumulated losses at the end of the
financial year and has not incurred any cash losses in the current year.
11. Based on our audit procedures and on the information and explanation
given to us, we are of the opinion that the Company has not defaulted in
repayment of its dues to the banks. The Company has not issued any
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 of
similar nature and hence maintenance of documents and records relating to
such items are not applicable.
13. The clause (xiii) of the order is not applicable to the Company, as the
Company is not a chit fund company or nidhi/mutual benefit fund/society
14. The clause (xiv) of the order is not applicable to the Company as the
Company is not dealing or trading in shares, securities, debentures and
15. According to the information and explanations given to us, the Company
has not given any guarantee for loans taken by others from bank or
16. According to the information and explanations given to us, the term
loans were applied for the purpose for which they were obtained.
17. 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 been used for long-term investment.
18. The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under section 301
of the Companies Act, 1956. Hence clause (xviii) of the order is not
19. The Company has not issued any debentures hence clause (xix) of the
order is not applicable.
20. The Company has raised Rs.39,95,19,040/- (4722004 equity shares of
Rs.10/- each at a premium of Rs.75/- per shares) by means of public issue
during the year and funds have been utilised for the purpose for which the
issue was made.
21. To the best of our knowledge and belief and according to information
and explanation given to us no fraud on or by the Company has been noticed
or reported during the year under report.
For Shah & Bhandari
Membership No. 046255
Date : 29/05/2012.