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Auditor Report of Amarjothi Spinning Mills Ltd.

Mar 31, 2015

I have audited the accompanying accounts and every financial statement of Amarjothi Spinning Mills Limited, which comprise the Balance Sheet as at March 31, 2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in section 133 of the Companies Act, 2013. 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.

I also state that :-

a) I have sought and obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purpose of my audit and if not, the details thereof and the effect of such information on the financial statements;

b) In my opinion, proper books of account as required by law have been kept by the company so far as appears from my examination of those books and proper returns adequate for the purposes of my audit have been received;

c) The company's balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns;

d) In my opinion, the financial statements comply with the accounting standards;

e) There are no observations or comments on the financial statements which have any adverse effect on the functioning of the company;

f) No director is disqualified from being appointed as a director under sub-section (2) of section 164;

g) There are no qualifications, reservation or adverse remark relating to the maintenance of accounts and any other matters connected therewith;

h) The company has adequate internal financial controls system in place and is effective;

In my opinion and to the best of my information and according to the explanations given to me, 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:

a) in the case of the Balance Sheet, of the STATE OF AFFAIRS of the Company as at March 31, 2015;

b) in the case of the Profit and Loss Account, of the PROFIT for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the CASH FLOWS for the year ended on that date.

As required by the Companies (Auditor's Report) Order, 2015 issued by the Ministry of Corporate Affairs, the Central Government of India under the powers conferred by sub-section (11) of section 143 of the Companies Act, 2013, I give in the Annexure a statement on the matters specified in paragraph 3 of the Order.

Annexure to Independent Auditor's Report

The Annexure referred to in paragraph above of the My Report of even date to the members of Amarjothi Spinning Mills Limited on the accounts of the company for the year ended 31st March, 2015.

On the basis of such checks as I considered appropriate and according to the information and explanation given to me during the course of my audit, I report that:

1. a) The company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) As explained to me, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

2. a) As explained to me, inventories have been physically verified during the year by the management at reasonable intervals.

b) In my opinion and according to the information and explanations given to me, 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) In my opinion and on the basis of my examination of the records, the company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. a) The company has taken unsecured loan from parties covered in the register maintained under section 189 of the Companies Act, 2013. The maximum amount involved during the year was Rs. 57.21 crores and the year-end balance of loans taken from such parties was Rs. 51.67 crores. These amounts have been brought in pursuant to the terms of sanction given by the bankers.

b) The company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

c) There is no overdue amount of loans taken from parties listed in the registers maintained under section 189 of the Companies Act, 2013.

e) According to the information and explanations given to me and on the basis of my examination of the books of account, the Company has taken unsecured loans from 4 parties listed in the register maintained under Section 189 of the Companies Act, 2013.

f) The Company has not granted any loan, secured or unsecured to companies, firms and other parties listed in the register maintained under section 189 of the Companies' Act 2013 and hence the other subsections are not applicable.

4. In my opinion and according to the information and explanations given to me, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of my audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. The Company has not accepted any deposits during the year and hence the directives issued by the Reserve Bank of India and provisions of section 73 to 76 and any other related provisions of the Companies Act, 2013 and the rules framed there under are not applicable.

6. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 148 of the Act and I am of the opinion that prima facie the prescribed accounts and records have been made and maintained.

7. a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to me there were no outstanding statutory dues as on 31st of March, 2015 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to me, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

8. The Company does not have any accumulated loss and has not incurred cash loss during the financial year covered by my audit and in the immediately preceding financial year.

9. Based on my audit procedures and on the information and explanations given by the management, I am of the opinion that, the Company has not defaulted in repayment of dues to banks.

10. According to the information and explanations given to me, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

11. Based on my audit procedures and on the information given by the management, I report that the company has applied the term loans taken for the purpose for which they were obtained.

12. Based on the audit procedures performed and the information and explanations given to me, I report that no fraud on or by the Company has been noticed or reported during the year, nor have I been informed of such case by the management.

(Sd/-) V. NARAYANASWAMI M.A., f.c.a Place : Coimbatore Chartered Accountant Date : 29.05.2015 Membership No. 023661


Mar 31, 2014

I have audited the accompanying financial statements of Amarjothi Spinning Mills Limited,("the Company") which comprise the Balance Sheet as at 31/03/2014, and the Statement of Profit and Loss cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of financial position, financial performance and cash flow of the Company in accordance with the accounting standards referred to in sub -Section (3C) of Section 211 of the Companies Act 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. The responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

Auditor''s Responsibility

My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with the standards on auditing issued by the Institute of Chartered Accountants of India. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from misstatements.

Audit involves performing procedure to obtain audit evidence about the amounts and disclosure in the financial statements. The procedure selected depend upon auditor''s judgement, including the assessment of the risk of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessment, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedure that are appropriate in the circumstances ,but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of financial statements.

I believe that audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion and to the best of my information and according to the explanations given to me, 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:

(a) in case of the Balance Sheet, of the state of affairs of the Company as at 31/03/2014;

(b) in case Statement of Profit and Loss, of the Profit for the year ended on that date; and

(c) in case of the Cash Flow Statements, of the cash flows 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 Central Government of India in terms of sub-Section (4A) of Section 227 of the Act, I give in the Annexure a statements on the matters specified in paragraphs 4 and 5 of the order.

2. As required by Section 227(3) of the Act, I report that:

a) I have obtained all information and explanations which to the best of my knowledge and belief were necessary for the purpose of my audit;

b) In my opinion proper books of account as required by Law have been kept by the Company so far as appears from my examinations of those books;

c) the Balance Sheet, Statement of Profit and Loss, and cash flow statements dealt with by this Report are in agreement with the books of account;

d) In my opinion , the Balance Sheet, Statement of Profit and Loss, and cash flow statements comply with the Accounting Standards referred to in sub-Section(3C) of Section 211 of the Companies Act,1956 , read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e) On the basis of written representations received from the directors as on 31/03/2014 and taken on record by the Board of Directors, none of the director is disqualified as on 31/03/2014, from being appointed as a director in terms of Clause (g) of sub-Section (1) of Section 274 of the Companies Act, 1956.

The Annexure referred to in paragraph 1 of my report of even date to the members of Amarjothi Spinning Mills Limited on the accounts of the Company for the year ended 31 March 2014.

On the basis of such checks as I considered appropriate and according to the information and explanation given to me during the course of my audit, I report that;

1. 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 programme of verification which, in my 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 a substantial portion of the assets during the year and hence, does not affect the going concern status of the Company.

2. a. The inventory has been physically verified during the year by the management. In my opinion, the

frequency of 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. On the basis of my examination of the records of inventory, I am of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. a. The Company has taken unsecured loan from parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.52.52 Crores and the year-end balance of loans taken from such party was Rs.52.52 crores. These amounts have been brought in pursuant to the terms of sanction given by the bankers.

b. In my opinion the rate of interest and other terms and conditions on which loans have been taken from parties listed in the registers maintained under Section 301 are not, prima facie, prejudicial to the interest of the Company.

c. The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

d. There is no overdue amount of loans taken from parties listed in the registers maintained under Section 301 of the Companies Act, 1956.

e. The Company has not granted any loan, secured or unsecured to any party covered in the register required to be maintained under Section 301 of the Companies Act, 1956.

4. In my opinion and according to the information and explanations given to me, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. In my opinion, there is no continuing failure to correct major weaknesses in the internal control system.

5. In my opinion and according to the information and explanations given to me, there are no transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the year except to the extent of unsecured loans brought in by the promoters for an amount of Rs.52.52 crores. Such amounts have been brought in pursuant to the sanction given by the bankers for the amount of secured loans taken from them.

6. The Company has not accepted any deposits from the public during the year and hence the provisions of Sections 58A and 58AA of the Companies Act 1956 or any other relevant provisions of the Act and the Reserve Bank of India Rules on the Companies (Acceptance of Deposit) Rules 1975 are not applicable to the Company for the year under review.

7. In my opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. I have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 and I am of the opinion that prima facie the prescribed accounts and record have been made and maintained. However I have not made a detailed examination to ascertain the accuracy of the statements.

9. a. According to the records of the Company, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth - tax, custom duty, service tax, excise -duty, cess and other statutory dues applicable to it.

b. According to the information and explanations given to me, no undisputed amounts payable in respect of income-tax, wealth-tax, sales-tax, customs duty, service tax and excise duty were outstanding, as at 31.03.2014 for a period of more than six months from the date they became payable.

c. According to the records of the Company, there are no dues of sales tax, income-tax, customs tax/ wealth -tax, excise duty, service tax /cess which have not been deposited on account of any dispute.

10. There are no accumulated losses of the Company as on the date of the Balance Sheet. The Company has not incurred any cash losses during the financial year covered by my audit and the immediately preceding financial year.

11. Based on my audit procedures and on the information and explanations given by the management, I am of the opinion that the Company has not defaulted in repayment of dues to banks.

12. The Company has not granted any loans on the basis of the security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or nidhi or mutual benefit fund / society and hence the provisions of Clause 4(xiii) of the Companies (Auditors Report) Order 2003 are not applicable to the Company for the year under review.

14. The Company is not dealing or trading in shares, securities, debentures or other investments and hence the provisions of Clause 4 (xiv) of the Companies (Auditors Report) Order 2003 are not applicable to the Company for the year under review.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. The term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to me and on an overall examination of the balance sheet of the Company, I report that 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 core (permanent) working capital.

18. Based on my examination of records and the information provided to me by management I report that the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act.

19. During the period covered by my audit report, the Company has not issued any debentures. The question of creation of any security in respect of debentures does not arise.

20. The Company has not raised any money by way of public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, I report that no fraud on or by the Company has been noticed or reported during the course of my audit.

V. NARAYANASWAMI, M.A., F.C.A.

Chartered Accountant

Place : Tirupur Proprietor

Date : 30.05.2014 Membership No.023661


Mar 31, 2013

I have audited the accompanying financial statements of Amarjothi Spinning Mills Limited, which comprise the Balance Sheet as at 31st March 2013 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 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.

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that I 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. 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

In my opinion and to the best of my information and according to the explanations given to me, 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:

(i) in the case of the Balance Sheet, of the STATE OF AFFAIRS of the Company as at 31 March 2013;

(ii) in the case of the Statement of Profit and Loss, of the profit 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.

1. 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 Act, I 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, I report that:

a. I have obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purpose of my audit;

b. In my opinion proper books of account as required by law have been kept by the Company so far as appears from my examination of those books;

c. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. In my opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors as on 31 March 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

The Annexure referred to in paragraph 1 of my report of even date to the members of Amarjothi Spinning Mills Limited on the accounts of the company for the year ended 31 March 2013.

On the basis of such checks as I considered appropriate and according to the information and explanation given to me during the course of my audit, I report that;

1. a. The Company has maintained proper records showing full particulars including

quantitative details and situation of fixed assets.

b. As explained to me, fixed assets have been physically verified by the management at reasonable intervals. No material discrepancies were noticed on such verification.

c. In my opinion and according to the information and explanations give to me, no fixed asset has been disposed off during the year that affect the going concern assumption.

2. a. As explained to me, inventories have been physically verified during the year by the management at reasonable intervals.

b. In my opinion and according to the information and explanations given to me, 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. In my opinion and on the basis of my examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. a. The company has taken unsecured loan from parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.48.24 Crores and the year-end balance of loans taken from such parties was Rs.48.24 crores. These amounts have been brought in pursuant to the terms of sanction given by the bankers.

b. In my opinion the rate of interest and other terms and conditions on which loans have been taken from parties listed in the registers maintained under section 301 are not, prima facie, prejudicial to the interest of the company.

c. The company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

d. There is no overdue amount of loans taken from parties listed in the registers maintained under section 301 of the Companies Act, 1956.

e. According to the information and explanations given to me and on the basis of my examination of the books of account, the Company has taken unsecured loans from 4 parties listed in the register maintained under Section 301 of the Companies'' Act 1956.

f. The Company has not granted any loan, secured or unsecured to companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956 and hence the other subsections are not applicable.

4. In my opinion and according to the information and explanations given to me, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of my audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a. Based on the audit procedures applied by me and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b. As per information & explanations given to me and in my opinion, the transaction entered into by the company with parties covered u/s.301 of the Act does not exceeds five lakhs rupees in a financial year other than unsecured loans mentioned in item no.3 of this report and a sum of Rs.58.40 lakhs paid towards purchase of lands. Such transactions are made at prevailing market prices and are comparable.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act 1956.

7. As per information & explanations given by management, the company has an internal audit system commensurate with the size and nature of its business.

8. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section(1) of section 209 of the Act and I am of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. a. According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to me there were no outstanding statutory dues as on 31st of March, 2013 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to me, there is no amounts payable in respect of Income-tax, wealth-tax, service tax, sales-tax, customs duty and excise duty which have not been deposited on account of any disputes.

V. NARAYANASWAMI, M.A., F.C.A.

Chartered Accountant

Place : Tirupur Proprietor

Date : 24.05.2013 Membership No.023661


Mar 31, 2012

1. I have audited the attached balance sheet of Amarjothi Spinning Mills Limited as at 31st March 2012, and also the profit and loss statement and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit.

2. I conducted my audit in accordance with the auditing standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. 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 managements, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 and amended by the (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956,1 enclose in theAnnexurea statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to my comments in the Annexure referred to above, I report that:

a. I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

b. In my opinion, proper books of account as required by law have been kept by the company so far as appears from my examination of those books;

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.

d. In my opinion, the Balance Sheet, Profit and Loss Statement and Cash Flow statement dealt with by 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, as on 31s* March 2012 and taken on record by the Board of Directors, I report that none of the directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. In my opinion and to the best of my information and according to the explanations given to me, the said accounts 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 31s* March 2012;

ii. In the case of the Profit and Loss Statement, of the Profit 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.

ANNEXURE TO THE AUDITOR'S REPORT:

Referred to in paragraph 3 of my report of even date,

1. 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 programme of verification which, in my 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 a substantial portion of the assets during the year and hence, does not affect the going concern status of the Company.

2. a. The inventory has been physically verified during the year by the management. In my opinion, the frequency of 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. On the basis of my examination of the records of inventory, I am of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. a. The company has taken unsecured loan from parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.30.75 Crores and the year-end balance of loans taken from such party was Rs.29.36 crores. These amounts have been brought in pursuant to the terms of sanction given by the bankers.

b. In my opinion the rate of interest and other terms and conditions on which loans have been taken from parties listed in the registers maintained under section 301 are not, prima facie, prejudicial to the interest of the company.

c. The company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

d. There is no overdue amount of loans taken from parties listed in the registers maintained under section 301 of the Companies Act, 1956.

e. The Company has not granted any loan, secured or unsecured to any party covered in the register required to be maintained under Section 301 of the Companies Act, 1956.

4. In my opinion and according to the information and explanations given to me, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. In my opinion, there is no continuing failure to correct major weaknesses in the internal control system.

5. In my opinion and according to the information and explanations given to me, there are no transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of five lakh rupees in respect of any party during the year except to the extent of unsecured loans brought in by the promoters for an amount of Rs.29.36 crores. Such amounts have been brought in pursuant to the sanction given by the bankers for the amount of secured loans taken from them.

6. The Company has not accepted any deposits from the public during the year and hence the provisions of sections 58Aand 58AAof the Companies Act 1956 or any other relevant provisions of the Act and the Reserve Bank of India Rules on the Companies (Acceptance of Deposit) Rules 1975 are not applicable to the company for the year under review.

7. In my opinion, the company has an internal audit system commensurate with the size and nature of its business.

8. I have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and I am of the opinion that prima facie the prescribed accounts and record have been made and maintained. However I have not made a detailed examination to ascertain the accuracy of the statements.

9. a. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth - tax, custom duty, service tax, excise -duty, cess and other statutory dues applicable to it.

b. According to the information and explanations given to me, no undisputed amounts payable in respect of income-tax, wealth-tax, sales-tax, customs duty, service tax and excise duty were outstanding, as at 31.03.2012 for a period of more than six months from the date they became payable.

c. According to the records of the company, there are no dues of sales tax, income- tax, customs tax/wealth -tax, excise duty, service tax /cess which have not been deposited on account of any dispute.

10. There are no accumulated losses of the company as on the date of the Balance Sheet. The company has not incurred any cash losses during the financial year covered by my audit and the immediately preceding financial year.

11. Based on my audit procedures and on the information and explanations given by the management, I am of the opinion that the company has not defaulted in repayment of dues to banks.

12. The Company has not granted any loans on the basis of the security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or nidhi or mutual benefit fund / society and hence the provisions of clause 4(xiii) of the Companies (Auditors Report) Order 2003 are not applicable to the Company for the year under review.

14. The Company is not dealing or trading in shares, securities, debentures or other investments and hence the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order 2003 are not applicable to the company for the year under review.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. The term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to me and on an overall examination of the balance sheet of the company, I report that 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 core (permanent) working capital.

18. Based on my examination of records and the information provided to me by management I report that the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. During the period covered by my audit report, the company has not issued any debentures. The question of creation of any security in respect of debentures does not arise.

20. The Company has not raised any money by way of public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, I report that no fraud on or by the company has been noticed or reported during the course of my audit.

V. NARAYANASWAMI, M.A., F.C.A.

Place : Tirupur Chartered Accountant

Date : 17.08.2012 Membership No.023661


Mar 31, 2010

1. I have audited the attached balance sheet of Amarjothi Spinning Mills Limited as at 31st March 2010, and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. My responsibility is to express an opinion on these financial statements based on my audit.

2. I conducted my audit in accordance with the auditing standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. 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 managements, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

3. As required by the Companies (Auditors Report) Order, 2003 and amended by the (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956,1 enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to my comments in the Annexure referred to above, I report that:

a. I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

b. In my opinion, proper books of account as required by law have been kept by the company so far as appears from my examination of those books;

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.

d. In my opinion, the Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by 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, as on 31" March 2010 and taken on record by the Board of Directors, I report that none of the directors is disqualified as on 31" March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. In my opinion and to the best of my information and according to the explanations given to me, the said accounts 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 31st March 2010;

ii. In the case of the Profit and Loss Account, of the Profit 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.

ANNEXURE TO THE AUDITORS REPORT: Referred to in paragraph 3 of my report of even date,

1. 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 programme of verification which, in my 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 a substantial portion of the assets during the year and hence, does not affect the going concern status of the Company.

2. a. The inventory has been physically verified during the year by the management. In

my opinion, the frequency of 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. On the basis of my examination of the records of inventory, I am of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. a. The company had taken unsecured loan from parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.26.67 Crores and the year end balance of loans taken from such party was Rs.21.27 crores. These amounts have been brought in pursuant to the terms of sanction given by the bankers.

b. In my opinion the rate of interest and other terms and conditions on which loans have been taken from parties listed in the registers maintained under section 301 are not, prima facie, prejudicial to the interest of the company.

c. The company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

d. There is no overdue amount of loans taken from parties listed in the registers maintained under section 301 of the Companies Act, 1956.

e. The Company has not granted any loan, secured or unsecured to any party covered in the register required to be maintained under Section 301 of the Companies Act, 1956.

4. In my opinion and according to the information and explanations given to me, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. In my opinion, there is no continuing failure to correct major weaknesses in the internal control system.

5. In my opinion and according to the information and explanations given to me, there are no transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of five lakh rupees in respect of any party during the year except to the extent of unsecured loans brought in by the promoters for an amount of Rs.21.27 crores. Such amounts have been brought in pursuant to the sanction given by the bankers for the amount of secured loans taken from them.

6. The Company has not accepted any deposits form the public during the year and hence the provisions of sections 58A and 58AA of the Companies Act 1956 or any other relevant provisions of the Act and the Reserve Bank of India Rules on the Companies (Acceptance of Deposit) Rules 1975 are not applicable to the company for the year under review.

7. In my opinion, the company has an internal audit system commensurate with the size and nature of its business.

8. I have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and I am of the opinion that prima facie the prescribed accounts and record have been made and maintained. However I have not made a detailed examination to ascertain the accuracy of the statements.

9. a. According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth - tax, custom duty, service tax, excise -duty, cess and other statutory dues applicable to it.

b. According to the information and explanations given to me, no undisputed amounts payable in respect of income-tax, wealth-tax, sales-tax, customs duty, service tax and excise duty were outstanding, as at 31.03.2010 for a period of more than six months from the date they became payable.

c. According to the records of the company, there are no dues of sales tax, income- tax, customs tax/wealth -tax, excise duty, service tax /cess which have not been deposited on account of any dispute, except a sum of Rs.26.89 lakhs demanded by the TNEB where the Company has gone on appeal to the Honourable High Court of Madras, which has granted a stay on the collection of amount, pending disposal of the Appeal.

10. There are no accumulated losses of the company as on the date of the Balance Sheet. The company has not incurred any cash losses during the financial year covered by my audit and the immediately preceding financial year.

11. Based on my audit procedures and on the information and explanations given by the management, I am of the opinion that the company has not defaulted in repayment of dues to banks.

12. The Company has not granted any loans on the basis of the security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or nidhi or mutual benefit fund / society and hence the provisions of clause 4(xiii) of the Companies (Auditors Report) Order 2003 are not applicable to the Company for the year under review.

14. The Company is not dealing or trading in shares, securities, debentures or other investments and hence the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order 2003 are not applicable to the company for the year under review.

15. The Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. The term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to me and on an overall examination of the balance sheet of the company, I report that 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 core (permanent) working capital.

18. Based on my examination of records and the information provided to me by management I report that the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. During the period covered by my audit report, the company has not issued any debentures. The question of creation of any security in respect of debentures does not arise.

20. The Company has not raised any money by way of public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, I report that no fraud on or by the company has been noticed or reported during the course of my audit.

Place : Tirupur V. NARAYANASWAMI, M.A., F.C.A.

Date : 09.08.2010. Chartered Accountant

Membership No.023661





 
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