AUDITORS REPORT

To
The Members of
M/S ARBITRAGE CAPITAL MANAGEMENT (P) LIMITED
We have audited the attached Balance sheet of M/S ARBITRAGE CAPITAL
MANAGEMENT (P) LIMITED, NEW DELHI as at 31st March 2003 and also the
Profit & Loss Account for the period from 10.01.2002 to 31.03.2003, 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.
1.

We conducted our audit in accordance with the accounting standards generally accepted
in India. Those standard required that the plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatements. An
audit includes examining, on a test basis evidence supporting the amounts and disclosures
in financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by the 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 Manufacturing and Other Companies (Auditors Report) Order,

1988 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

sated 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 those books of accounts.

c.

The Balance Sheet and Profit & Loss Account dealt with by this report are in
agreement with the books of accounts.

d.

In our opinion, the Profit and Loss Account and the Balance Sheet comply with
the Accounting Standards referred to in Sub-section 3 (c) of Section 211 of the
Companies Act, 1956 to the extent applicable.

e.

On the basis of written representations received from the Directors of the

Company as at March 31, 2003 and taken on record by the Board of Directors,
we report that no director is disqualified from being appointed as director of the
company 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 financial statements read together with the
significant 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:
i.

In the case of Balance Sheet, of the state of affairs of the company as at

31st March, 2003 and

ii.

In the case of Profit & Loss Account, of the loss for the period from
10.01.2002 to 31.03.2003.

For K.K.Goel & Associates

Chartered Accountants
Place : New Delhi
Date : 10.06.2003

Partner

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 2 of our report of even date)
1.

The Company has maintained proper records showing full particular including
quantitative details and situation of fixed assets on the basis of information
available. According to the information and explanations given to us, the fixed
assets of the Company have been physically verified by the management at the
end of the period and no major discrepency were noticed on such verification.

2.

None of the fixed assets of the Company have been revalued during the period.

3.

The Company has not taken any loans, secured or unsecured, from the
companies, firms or other parties as listed in the register maintained u/s 301 of
the Companies Act, 1956, or from companies under the same management as
defined under sub-section (1B) of section 370 of the Companies Act, 1956.

4.

The Company has not given any loans, secured or unsecured, to the companies,
firms or other parties as listed in the register maintained u/s 301 of the
Companies Act, 1956, or to the companies under the same management as
defined under sub-section (1B) of section 370 of the Companies Act, 1956.

5.

The Company has not given any loan or advances in the nature of loans to any
party during the period.

6.

In our opinion there is an adequate internal control procedure commensurate

with the size of the company and the nature of its business for the purchase of
goods including equipment and other assets and for sale of goods.

7.

In our opinion and according to the information and explanations given to us

there are no transactions of purchase of goods and materials and of sale of
goods, materials and services made in pursuance of contracts or arrangements
entered in the register maintained under section 301 of the Companies Act, 1956
and aggregating during the year to Rs.50,000/- (Rupees Fifty Thousand only) or
more in respect of any party.

8.

The company has not accepted any deposits from the public to which provisions
of Section- 58 A of the companies act are applicable.

9.

In our opinion the Internal Audit System of the company is commensurate with
its size and nature of its business.

10.

In our opinion and as per information and explanations given to us the

provisions of Sec-209 (1) (d) of the company Act, 1956 as to maintenance of
cost records are not applicable to the Company.

11.

In our opinion and as per information and explanations given to us provident

fund and employees state insurance act are not applicable to the company.

12.

As per information and explanations given to us no undisputed amounts payable

in respect of Income Tax, Wealth Tax, Sales Tax, Customs duty and excise duty
were outstanding as on 31.03.2003 for a period of more than 6 months from the
date of becoming payable.

13.

According to the information and explanations given to us and on the basis of

records examined by us, no personal expenses of employees or directors have
been charged to revenue account, other than those payable under Contractual
obligation or in accordance with generally accepted business practices.

14.

The company is not a sick industrial company within the meaning of clause (o)
of sub-section (1) of section (3) of the sick industrial companies (Special
provisions) Act, 1985.

15.

According to the information and explanations given to us and on the basis of

records examined by us, since the company has not been made any activity
during the period under audit and therefore the points no.3, 4, 5, 6, 12 & 14 are
not applicable to the company.

For K.K.Goel & Associates

Chartered Accountants
Place : New Delhi
Date : 10.06.2003

Partner

SCHEDULE 1
Notes on Accounts & Significant Accounting Policies
1. The previous year figures have not been given because this is the first balance
sheet of the company.
2. In the opinion of the Board.
a. All the know liabilities of the company have been provided for in the
accounts.
b. No transaction represents by book entries, are prejudicial to the interest of
the company and no personal expenses are charged to the accounts.
3. No Provision for Income Tax has been made due to loss during the period.
Accounting Policies
1. Basis of Accounting
Accounts are maintained on accrual basis of accounting.
2. Fixed Assets
Fixed Assets are capitalized at cost inclusive of expenditure incidental to
acquisition of such assets.
3. Depreciation
Depreciation on fixed assets is provided on written down value method as per
schedule XIV of the companies Act, 1956.

Place : New Delhi

Date : 10.06.2003