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KLG Systel Ltd.

BSE: 531269 Sector: IT
NSE: KLGSYSTEL ISIN Code: INE799A01019
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KLG Systel Ltd. (KLGSYSTEL) - Auditors Report

Company auditors report

KLG SYSTEL LIMITED ANNUAL REPORT 2010-2011 AUDITORS' REPORT To The members of KLG Systel Limited 1. We have audited the attached Balance Sheet of KLG Systel Limited (the Company) as at March 31, 2011, the related Profit and Loss Account and 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. 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 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 (Auditor's Report) Order, 2003, as amended by the Companies (Auditors' Report) (Amendment) Order, 2004 [Order] 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. 4. Further to our comments in Annexure referred to 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 purposes of our audit. (b) In our opinion, proper books of account as required by law have been maintained by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us. (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account maintained by the Company. (d) In our opinion Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. (e) On the basis of written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2011 from being appointed as a director in the 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 read together with accounting policies and notes thereon, 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: i) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011; ii) In the case of the Profit and Loss Account, of the loss incurred by 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. 117, New Delhi House B. Bhushan & Co. 27, Barakhamba Road Chartered Accountant New Delhi-110 001. By the hand of May 21, 2011 Kamal Ahluwalia Partner Membership no. 093812 Firm Regn. No. 001596N ANNEXURE TO AUDITOR'S' REPORT [Referred to in paragraph 3 of the Auditors' Report of even date to the members of KLG Systel Limited on the financial statements for the year ended March 31, 2011]. i) In respect of its fixed assets: a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. b) The fixed assets are physically verified by the management during the year. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification as compared to book records c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year. ii) In respect of its inventories: a) The inventories have been physically verified by the management during the year. In our opinion, the frequency of such 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 physical verification of inventory as compared to book records were not material. The valuation of stock has been done on the basis of physically verified quantities, therefore the shortage/excess gets automatically adjusted and the same have been properly dealt with in the books of account. iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. iv) 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, fixed assets and also for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the internal control systems. v) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956: a) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have so been entered. b) Transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi) The Company has not accepted any deposits from the public within the meaning of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under. vii) In our opinion, the Company has an internal audit system commensurate with its 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 clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 in respect of activities carried out by the Company. ix) a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the 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 statutory dues as applicable with the appropriate authorities, except for delayed deposits on few occasions during the year. No undisputed amounts payable in respect thereof were outstanding at the year end for a period of more than six months from the date they became payable. b) According to the information and explanations given to us, there are no dues of income tax, wealth tax, custom duty, excise duty, service tax and cess that have not been deposited with appropriate authorities on account of any dispute, other than the following: Nature of the Nature of Amount Period to Forum where dispute Statute dues Rs.* amount is pending relates Haryana Value Value Added 1,302,092 A.Y Excise & Taxation Added Tax Act, Tax 2003-04 Officer, Gurgaon 2003 Haryana Income tax Income Tax 601,827 FY 2007-08 Deputy Commissioner of Income Tax, New Delhi Employees State ESI 180,216 January, Employees Insurance Insurance Act, 1999 to Court, Gurgaon, 1948 December, Haryana 1999 * Amounts are net of payments made and without considering interest for the overdue period, if any, as may be levied if demand raised is upheld. x) The Company does not have accumulated losses as at March 31, 2011 but has incurred cash losses in the financial year ended on that date. There was no cash loss in the immediately preceding financial year. xi) According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of term installment of Rs.150.00 Lac to State Bank of India, which was due for repayment as on the Balance Sheet date. Other than the above, the Company has not defaulted in repayment of dues to any bank/financial institution. xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii) The provisions of any special statute applicable to chit fund/nidhi /mutual benefit fund/societies are not applicable to the Company. xiv) The Company has maintained proper records in respect of it investments and timely entries have been made in the records maintained for the purposes. The investments were/are being held by the Company in its own name. xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. xvi) In our opinion and according to the information and explanations given to us, term loans were applied for the purpose for which the loans were obtained. xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information, explanations and representation given to us by the management, we report that no short term funds have been used for long term applications. xviii) The Company has not made preferential allotment of equity shares during the year to companies and parties covered in the register maintained under section 301 of the Companies Act, 1956. xix) The Company has not issued any debentures during the year. xx) The Company has not raised any money by way of public issue during the year. xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management. 117, New Delhi House B. Bhushan & Co. 27, Barakhamba Road Chartered Accountant New Delhi-110 001. By the hand of May 21, 2011 Kamal Ahluwalia Partner Membership no. 093812 Firm Regn. No. 001596N