Annual Report 2010-2011 - Gammon India

A nnexure to the A uditors' report
(r eferred to in pA r AGr A ph 5 of our report of even d Ate)
(i) (a) The Company is maintaining proper records showing particulars, including quantitative details and situation of fixed
assets;
(b) The Company has a regular program for physical verification of its fixed assets which in our opinion is reasonable
having regard to the size of the Company and the nature of its assets and operations. In accordance with this
programme, the management during the current year has physically verified significant fixed assets and no material
discrepancies have been identified on such verification.
(c) The Company has not disposed off any substantial part of the fixed assets.
(ii) (a) The Company is primarily a construction company having work sites spread all over India and Abroad. The records of
materials, stores are maintained at the respective sites, which have been verified by the management during the year
at reasonable intervals. In respect of its manufacturing operations the stock of finished goods, stores, spare parts and
raw materials has been physically verified by the management at reasonable intervals during the year.
(b) In our opinion and according to the information and explanations given to us, the procedure of physical verification
of stock followed by the management is reasonable and adequate in relation to the size of the Company and the
nature of its business.
(c) The discrepancies noticed between the physical stocks and books stocks were not material and the valuation of stock
has been done on the basis of physically verified quantity. Therefore Shortage/Excess automatically get adjusted and
the same is properly dealt in the books of accounts.
(iii) (a) The Company has during the year granted unsecured loans to 2 party covered in the register maintained under
Section 301 of the Companies Act, 1956. The maximum amount involved during the year was ` 160.92 crores and
at the end of the year balance of loans granted to such parties was ` 160.92 crores.
(b) In our opinion the rate of interest, wherever charged, and the other terms and conditions of such loans are not
prima-facie prejudicial to the interest of the Company.
(c) There are no stipulations for the repayment of principal and the interest, wherever charged. The outstanding interest
receivable as at 31st March 2011 was ` 23.79 crores.
(d) The Company has not taken any loans from 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 is a reasonable internal control
procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventory and
fixed assets and for the sale of goods and services which has scope for further improvement. We have however not come
across any continuing failure to correct major weaknesses in internal control.
(v) (a) In our opinion and according to the information and explanations given to us the transactions that need to be
entered into a register in pursuance of Section 301 of the Act have been so entered.
(b) All the transactions have been made at prices which are reasonable having regard to the prevailing market prices at
the relevant time and the nature of services rendered by such parties.
(vi) The Company has not accepted any deposits from the public during the year under review and consequently the directives
issued by the Reserve Bank of India and the provisions of Sections 58A and 58AA of the Act and the rules framed there
under are not applicable. We are further informed that no orders have been passed by the Company law board in the
case of the Company requiring compliance.
(vii) In our opinion the internal audit system is presently commensurate with the size and nature of its business.
(viii) According to the information and explanations given to us, the Central Government has prescribed the maintenance of
cost records under Section 209 (1) (d) of the Companies Act, 1956 with respect to the Branch’s Conductor Division and
that the Branch has maintained such accounts and records. No examination of such records has been carried out by us.
(ix) (a) The Company is generally regular in depositing Provident Fund, Employees State Insurance, Income tax, wealth tax
and sales tax dues with the appropriate authorities observed on a test check basis except for many cases of delays
observed in deposit of TDS, service tax and PF at sites.
A NNUAL R EPORT I 2010/11
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