Home  »  Company  »  Pasari Spinning  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Pasari Spinning Mills Ltd.

Mar 31, 2014

We have audited the accompanying Financial Statements of M/s PASARI SPINNING MILLS LIMITED, ("the Company"), which comprise the Balance Sheet as at March 31, 2014, 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''s Responsibility for the Financial Statements:

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 ("the Act") read with general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of 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.

Auditor''s Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we 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, 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 the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion:

In our opinion and to the best of our information and according to the explanations given to us subject to the following:

a. Non confirmation of balances in respect of Sundry Debtors, Creditors and Loans & Advances.

b. Non disclosure under provisions of the Micro, Small and Medium Enterprises Development Act 2006 in the absence of details received from suppliers, vide point no.5 in other disclosures.

c. Non provision towards sales tax arrears including penalty aggregating to Rs.1,80,18,068 of the earlier years, vide point no.2 in other disclosures.

d. Non provision of Employee benefits as per AS-15 issued by the Institute of Chartered Accountants of India, non quantifiable vide point no.7 in other disclosures.

e. Non provision for depletion in Market value of Investments in shares, securities and mutual funds, vide point no.8 in other disclosures.

f. Non provision towards Back billing demand raised by CESCOM aggregating ton Rs.28,43,845/- of the earlier years, vide point no.9 in other disclosures.

The said Financial Statements read with notes thereon 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, 2014;

(b) In the case of the Statement of Profit and Loss, 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.

Report on other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor''s Report)

Order, 2003 ("the Order") as amended, issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, We 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, 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 law have been kept by the Company so far as appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss 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, Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in subsection (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 the Section 133 of the Companies Act, 2013; and

(e) On the basis of written representations received from the Directors as on March 31, 2014, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2014, from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS'' REPORT The Annexure referred to in our report to the members of M/s PASARI SPINNING MILLS LIMITED (''the Company'') for the year ended 31st March, 2014, we report that:

1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Fixed Assets.

(b) The Fixed Assets of the Company have been physically verified by the Management during the year at reasonable intervals and no discrepancies between the book records and physical verification were noticed on such verification.

(c) The Company has not disposed off /sold a substantial portion of its Fixed Assets during the year.

2. (a) The Inventories have been physically verified by the Management. In our 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) The Company is maintaining proper records of inventory. In our opinion and according to the information and explanations given to us, we have not come across any material discrepancies between the physical stocks and inventory records.

3. (a) The Company has taken unsecured interest free loans from the Directors of the Company and the company in which the Directors of the company are the Directors of that company and except the same, there are no other Loans, secured or unsecured from companies, firms or other parties, taken by the Company which are listed in the Register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not granted any loans, secured or unsecured to companies, firms or other parties listed in the Register maintained under section 301 of the Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate Internal Control System commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and payment for expenses and for sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. In respect of particulars of contracts or arrangements and transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956;

(a) To the best of our knowledge and belief and according to the information and explanations given to us, particulars of contracts or arrangements that needed to be entered into the register have been so entered.

(b) According to the information and explanations given to us, each of the transactions in pursuance of such contracts/ arrangements in excess of Rs 5 Lakhs 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, where such prices are available.

6. In our Opinion and according to the information and explanations given to us, the Company has not accepted any deposits within the meaning of provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and as per The Companies (Acceptance of Deposits) Rules, 1975.

7. In our opinion, the Company has an in house Internal Audit System, commensurate with the size and nature of its business.

8. The Maintenance of Cost records as prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956 in respect of the activities of the Company does apply to the Company, as per the directions of the Central Government. However the company has stopped its operation from June 2010 and all the workers are given one time settlement. The above records are verified and have been maintained as per act.

9. (a) The Company is generally not regular in depositing the undisputed Statutory Dues with Appropriate Authorities and there are undisputed and outstanding amounts payable in respect of ESI Fund, Investor Education and Protection Fund, Income-tax, Service Tax , Sales Tax, Cess or any other applicable taxes, Duties or Levies applicable to the Company and its business which have remained outstanding as at 31st March 2014, for a period of more than six months from the date they became payable.

Name of the Statute Nature of the dues Amount due Year

ESIC ESIC 7,0,3115 2010-11

Income tax act TDS 36,654 Various years

Karnataka Tax on profession, Professional Tax 64,000 08-09 to 11-12 trade, calling and Employment Act

Karnataka Sales tax Act Cess on sales 84,760 06-07 to 07-08

(b) There are disputed liabilities with regard to Sales Tax, as on 31.03.2014

Name of the Statute Nature of the Dues Amount (Rs.) For the Year

Central Sales Tax Act Central Sales Tax 4,45,496 1999-00

5,80,226 2000-01

8,83,692 2001-02

Karnataka Entry Tax Act Karnataka Sales Tax 46,593 1999-00

98,290 2000-01

Karnataka Sales Tax Act Karnataka Sales Tax 4,35,196 1999-00

46,57,137 2000-01

321,0,915 2001-02

Penalty 5,000 1999-00

2,50,000 2000-01

18,35,296 2001-02

Interest @ 1/2% 3,11,968 1999-00

33,37,878 2000-01

19,18,381 2001-02

Total 18,016,068

10. The Company has accumulated losses as at the yearend which is more than 50% of its Net worth and has not incurred cash losses during the financial year covered by our audit.

11. In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of principal dues in respect of loans borrowed from Bank as on 31.03.2014. There are no debenture holders with the Company.

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.

13. In our opinion, the Company is not a Chit Fund or a Nidhi Mutual Benefit Fund/ society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the Company.

14. The Company is dealing or trading in Shares, Securities, Debentures and other Investments in our opinion the company has maintained proper records.

15. In our opinion, the Company has not given any Guarantee for Loans taken by others from banks or financial institutions for the purpose mentioned.

16. In our opinion, the Company has applied the Term Loans for the purpose for which they were obtained. However, during the year the Company has not obtained any Term Loan.

17. According to the information and explanations given to us and on an overall examination of the financial statements of the Company, we report that the funds raised on short term basis have not been used for Long Term Investments/purposes.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to Parties and Companies covered in the register to be maintained under section 301 of the Act.

19. The Company has no Debentures and hence reporting does not arise in respect of creation of securities thereof.

20. The Company has not raised any monies by way of public issues during the year.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For MURALI & VENKAT Chartered Accountants

Firm''s Registration Number: 02162S

JAYANTH A.

Place: Bangalore Partner

Date: 31st July 2014 Membership Number: 231549


Mar 31, 2012

(I) We have audited the attached Balance Sheet as at 31st March 2012, the Profit & Loss Account and also the Cash Flow Statement of PASARI SPINNING MILLS LTD,, for the year ended on that date. 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.

(II) We have conducted our audit in accordance with the 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 the disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

(III) We report, further in terms of the provisions of section 227 of the Companies Act, 1956 that:

1. As required by the Companies (Auditors' Report) Order, 2003 (as amended by the Amendment Order, 2004) issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, we give our comments on the matters specified in paragraphs 4 and 5 of the said order to the extent as applicable to the Company in the Annexure to this report.

2. 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.

3. In our opinion, proper Books of Account as required by law have been kept by the Company so far as appears from our examination of those Books.

4. The Balance Sheet the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the Books of Account.

5. In our opinion, the Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except for the following:

a) AS-13 Accounting for Investments - Non- recognition of diminution in value of Investments in Shares, Securities and Mutual Funds.

b) AS-15 Employee Benefits, which are accounted on cash basis with regard to gratuity and E.L encashment. (Refer Accounting Policy for Retirement Benefits).

6. On the Basis of written representations received from the Directors, as on 31st March 2012 and taken on record by the Board of Directors, we 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,

7. In our opinion and to the best of our information and according to the explanations given to us, subject to:

a) Non confirmation of balances in respect of Sundry Debtors, Creditors and Loans and Advances.

b) Non disclosure under Provisions of the Micro Small and Medium Enterprises Development Act 2006 in the absence of details received from the suppliers, vide point no. 5 in other disclosures,

c) Non provision towards Sales Tax arrears including penalty aggregating to Rs. 1,80,16,068 of the earlier years, vide point no. 2 In other disclosures.

d) Non provision. of Employee Benefits as per AS-15 issued by Institute of Chartered Accountants of India, non quantifiable vide point no 7 in other disclosures.

e) Non provision for depletion in Market Value of Investments in shares, securities and mutual funds, vide point no 8 in other disclosures.

the said accounts read with the significant accounting policies and notes on accounts give the information required by the Companies Act, 1956, in the manners 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 2012.

ii) In the case of the Profit & Loss Account, of the Loss (after Deferred Tax adjustments) of the Company for the year ended on that date.

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 1 of our report of even date)

1. a) The Company has maintained proper records to show full particulars including quantitative details and situation of all Fixed Assets.

b) The assets of the Company have been physically verified by the Management during the year at reasonable intervals and no discrepancies between the book records and physical verification were noticed on such verification.

c) The Company has sold a substantial portion of its Fixed Assets comprising Plant and Machineries, other Electrical Equipments and certain Vehicles during the year. Based on the information and explanation given to us by the management, we report that, the company has decided to completely stop the manufacturing activity and the same shall have a bearing on the going concern status of the company. However, the company continues its trading operations and has leased out the factory premises.

2. a) Inventories have been physically verified by the management. In our 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) The Company is maintaining records of inventory and in our opinion the Company has to improve upon the disclosure of proper details of inventory identification with respect to the nature of different quality aspects. In our opinion and accordingly to the information and explanations given to us, we have not come across any material discrepancies between the physical stocks and inventory records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/from companies, firm or other parties covered Register maintained under section 301 of the companies Act, 1956. We report:

a) The Company has taken interest free unsecured loans from a company under the same management and the maximum amount outstanding at any time during the year is Rs 1,87,16,140/- and the yearend balance is Rs 1,87,16,140/-. As per the information and explanations given to us, there is no stipulation mentioned as part of the terms and conditions of the loan for the repayment of the principal amount.

b) In our opinion and according to the information and explanation given to us, the interest free loan, as per the terms and conditions, are not prima facie prejudicial to the interest of the Company.

c) The Company has not granted any loans, secured or unsecured to companies, firms or other parties listed in the Register maintained under section 301 of the Act, 1956.

4. In our opinion and according to the information and explanations given to us, the Company needs to strengthen its Internal Control System commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, Fixed Assets and for the Sale of goods.

5. In respect of particulars of contracts or arrangements and transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956;

a) To the best of our knowledge and belief and according to the information and explanations given to us, particulars of contracts or arrangements that needed to be entered into the register have been so entered.

b) According to the information and explanations given to us, each of the transactions in pursuance of such contracts/arrangements in excess of Rs. 5 Lakhs 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, where such prices are available,

6. In our Opinion and according to the information and explanations given to us, the company has not accepted any deposits within the meaning of provisions of Section 58 A, 58 AA or any other relevant provisions of the Companies Act, 1956 and The Companies (Acceptance of Deposits) Rule, 1975.

7. In our opinion, the company has Internal Audit System commensurate with the size and nature of its business and the same needs to be strengthened with regard to the Verification of Inventories.

8. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the company in this connection and are of opinion, that the prima- facie, the prescribed accounts and records have been made and maintained. We have not, however, carried out a detailed examination of the same.

9. a) The company is generally not regular in depositing the undisputed Statutory Dues with Appropriate Authorities and there are undisputed and outstanding amounts payable (as listed below) in respect of Provident Fund, ESI Fund, Investor Education and Protection Fund, Income-tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty, Cess or any other applicable taxes, Duties or Levies applicable to the Company and its business which have remained outstanding as at 31 st March 2012, for a period of more than six months from the date they became payable.

Name of the Statute Nature of the Amount (Rs.) Period to Dues which amount relates

Provident Fund and Provident Fund 1,593,216 2011-12 Miscellaneous Provisions Act

Employee State ESIC 467,648 2011-12 Insurance Contribution Act

Income Tax Act TDS 11,879 2007-08 Karnataka Tax Professional 30,290 2008-09 on Profession, Tax Trade, Callings, and 9,760 2009-10

Employment Act 13,850 2010-11

10,100 2011-12

Total 2,136,743

b) According to the information and explanation given to us and records of the company examined by us, the particulars of Sales Tax, Income Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess which have not been deposited on account of any dispute are as follows:

Name of the Statute Nature of the Amount (Rs.) For the Year Dues

Central Sales Tax Act Central Sales 4,45,496 1999-00 Tax

5,80,226 2000-01

8,83,692 2001-02

Karnataka Entry Tax Karnataka Sales 46,593 1999-00 Act Tax

98,290 2000-01

Karnataka Sales Tax Karnataka Sales 4,35,196 1999-00 Act Tax

46,57,137 2000-01

32,10,915 2001-02

Penalty 5,000 1999-00

2,50,000 2000-01

18,35,296 2001-02

Interest <5> 1/2% 3,11,968 1999-00

33,37,878 2000-01

19,18,381 2001-02

Total 18,016,068

10. The company has accumulated losses as at the year end which is more than 50% of its Net Worth and has incurred cash losses during the financial year covered by our audit and also in the preceding financial year.

11. In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of principal dues in respect of loans borrowed from Bank as on 31.03.2012.There are no debenture holders with the Company.

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.

13. In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the Company.

14. The Company is dealing or trading in Shares, Securities, and other Investments and in our opinion the Company has maintained proper records.

15. In our opinion, the Company has not given any Guarantee for Loans taken by others from bank or financial institutions for the purpose mentioned.

16. In our opinion, the Company has not obtained any Term Loan during the year.

17. According to the information and explanations given to us and on an overall examination of the financial statements of the Company, We report that the funds raised on short-term basis have not been used for long-term investment.

18. The company has not made any preferential allotment made during the reporting period.

19. The Company has no Debentures and hence reporting does not arise in respect of creation of securities thereof.

20. The Company has not raised any monies by way of public issues during the year.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For MURALI & VENKAT Chartered Accountants

(G. SATISHCH ANDRA) Partner Membership No. 27372 ICAI Firm Registration No: 002162S

Place: Bangalore

Date: 18th August, 2012


Mar 31, 2010

(I) We have audited the attached Balance Sheet as at 31st March 2010, the Profit & Loss Account and also the Cash Flow Statement of PASARI SPINNING MILLS LTD,, for the year ended on that date. 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.

(II) We have conducted our audit in accordance with the 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 the disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

(III) We report, further in terms of the provisions of section 227 of the Companies Act, 1956 that:

1. As required by the Companies (AuditorsReport) Order, 2003 (as amended by the Amendment Order, 2004) issued by the Central Government of India in terms of section 227(4A) of the Companies Act, 1956, we give our comments on the matters specified in paragraphs 4 and 5 of the said order to the extent as applicable to the Company in the Annexure to this report.

2. 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.

3. in our opinion, proper Books of Account as required by law have been kept by the Company so far as appears from our examination of those Books.

4. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the Books of Account.

5. In our opinion, the Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except for the following::

a) AS-2 Valuation of Inventories - Valuation of Finished Goods which is not carried out on the basis of Cost or Market Value, whichever is less. (Refer Accounting Policy for Inventories).

b) AS-13 Accounting for Investments - Non-recognition of diminution in value compared to Market Values.

c) AS-15 Employee Benefits, which are accounted on cash basis with regard to gratuity and E.L encashment. (Refer Accounting Policy for Retirement Benefits).

6. On the Basis of written representations received from the Directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a Director in terms of clause (g) of sub section (1) of Section 274 ofThe Companies Act, 1956.

7. In our opinion and to the best of our information, d according to the explanations given to us, subject to:

a) Non confirmation of balances in respect of Sundry Debtors, Creditors and Loans and Advances as referred to in Note no. 2 of the notes on account.

b) Non disclosure under Provisions of the Micro Small and Medium Enterprises Development Act, 2006 in the absence of details received from the suppliers vide note no. 5.

c) Non provision towards Sales Tax arrears including penalty aggregating to Rs. 1,59,14,324 of the earlier years as referred to in note no. 6 of the notes on account.

d) Non provision of Employee Benefits as per AS-15 issued by Institute of Chartered Accountants of India, non quantifiable vide Note no 7 of the Notes on Account.

e) Non provision for depletion in Market Value of Investments vide Note no 8 of Notes on Account,the said accounts read with the significant accounting policies and notes on 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 & Loss Account, of the Profit (after Deferred Tax adjustments) of the Company for the year ended on that date.

iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURETOTHE AUDITORS REPORT (Referred to in paragraph 1 of our report of even date)

1. a) The Company has maintained proper records to show full particulars including quantitative details and situation of all Fixed Assets.

b) The assets of the Company have been physically verified by the Management during the year at reasonable intervals and no discrepancies between the book records and physical verification were noticed on such verification.

c) The Company has not disposed off /sold a substantial portion of its Fixed Assets during the year.

2. a) Inventorieshavebeenphysicallyverifiedbythe management. In our 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) The Company is maintaining records of inventory and in our opinion the Company has to improve upon the disclosure of proper details of inventory identification with respect to the nature of different quality aspects. In our opinion and accordingly to the information and explanations given to us, we have not come across any material discrepancies between the physical stocks and inventory records.

3. In respect of the loans, secured or unsecured, granted or taken by the company to/from companies, firm or other parties covered Register maintained under section 301 of the companies Act, 1956. We report:

a) The Company has taken interest free unsecured loans from a company under the same management and the maximum amount outstanding at any time during the year is Rs 1,80,33,384/- and the year-end balance isRs 1,80,33,384/-. As per the information and explanations given to us, there is no stipulation mentioned as part of the terms and conditions of the loan for the repayment of the principal amou^,

b) In our opinion and according to the information and explanation given to us, the interest free loan, as per the terms and conditions, are not prima facie prejudicial to the interest of the Company.

c) The Company has not granted any loans, secured or unsecured to companies, firms or other parties listed in the Register maintained under section 301 of the Act, 1956.

4. In our opinion and according to the information and explanations given to us, the Company needs to strengthen its Internal Control System commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, Fixed Assets and for the Sale of goods.

5. In respect of particulars of contracts or arrangements and transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956;

a) To the best of our knowledge and belief and according to the information and explanations given to us, particulars of contracts or arrangements that needed to be entered into the register have been so entered.

b) According to the information and explanations given to us, each of the transactions in pursuance of such contracts/ arrangements in excess of Rs 5 Lakhs 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, where such prices are available.

6. In our Opinion and according to the information and explanations given to us, the company has not accepted any deposits within the meaning of provisions of Section 58 A, 58 AA or any other relevant provisions of the Companies Act, 1956 and The Companies (Acceptance of Deposits) Rule, 1975.

7. In our opinion, the company has Internal Audit System commensurate with the size and nature of its business and the same needs to be strengthened with regard to the Verification of Inventories.

8. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the company in this connection and are of opinion, that the prima-facie, the prescribed accounts and records have been made and maintained. We have not, however, carried out a detailed examination of the same.

9 a) The company is generally not regular in depositing the undisputed Statutory Dues with Appropriate Authorities an< there are undisputed and outstanding amounts payable (as listed below) in respect of Provident Fund, ESI Func Investor Education and Protection Fund, Income-tax, Wealth Tax, Service Tax , Sales Tax, Customs Duty, Excise Dut> Cess or any other applicable taxes, Duties or Levies applicable to the Company and its business which have remainei outstanding as at 31st March 2010, for a period of more than six months from the date they became payable.

Amount I Period to which the

Name of the statute Nature of the Amount Period to which the dues Rs. amount relates

Karnataka Entry Tax Act Entry Tax 130193 93-94

Kamataka Entry Tax Act Penalty 54682 93-94

Karnataka Sales Tax Act Karnataka Sales Tax 43494 95-96

Central Sales Tax Act Central Sales Tax 1500 95-96

Penalty 3599 95-96

Karnataka Sales Tax Act Kamataka SalesTax 17332 96-97

Central Sales Tax Act Central Sales Tax 61420 96-97

Penalty 2362 96-97

Karnataka Sales Tax Act Karnataka SalesTax 20604 97-98

Central Sales Tax Act Central Sales Tax 128208 97-98

Karnataka Entry Tax Act Entry Tax 81205 97-98

Karnataka Sales Tax Act Karnataka Sales Tax 294261 98-99

Central Sales Tax Act Central Sales Tax 171569 98-99

Karnataka Entry Tax Act Entry Tax 115252 98-99

Karnataka Sales Tax Act Karnataka Sales Tax 435196 99-00

Central Sales Tax Act Central Sales Tax 445496 99-00

Karnataka Entry Tax Act Karnataka Sales Tax 4657137 00-01

Central Sales Tax Act Central Sales Tax 580226 00-01

Karnataka Sales Tax Act Karnataka Sales Tax 1880970 01-02

Central Sales Tax Act Central Sales Tax 883692 01-02

Karnataka Sales Tax Act Penalty 1835296 01-02

Karnataka Sales Tax Act Karnataka Sales Tax 698 03-04

Karnataka Sales Tax Act Penalty 472334 99-00

Karnataka Sales Tax Act Penalty 3592728 00-01

Karnataka Sales Tax Act Kamataka Sales Tax 604 02-03

Central Sales Tax Act Central Sales Tax 4266 02-03

Provident Fund & Miscellaneous Provident Fund 1442211 Oct 07-Mar 08

Provisions Act 1879728 Apr 08-Mar 09

748970 Apr 09-Sept 09

Employees State Insurance ESIC 380353 08-09

Contribution Act 306038 Apr 09-Sept 09

IncomeTaxAct TDS 57194 Apr 09-Sept 09 Kamataka Tax on Profession,

Trade, Callings, and Professional Tax 18280 Apr 09-Sept 09 Employment Act

TOTAL 20747098

9. b) There are no disputed liabilities with regard to Sales Tax, IncomeTax, WealthTax, Service Tax, Customs Duty, Excise Duty, Cess as on 31.03.2010.

10. The company has accumulated losses as at the year end which is more than 50% of its Net Worth and has incurred cash losses during the financial year covered by our audit and also in the preceding financial year.

11. In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of principal dues in respect of loans borrowed from Bank as on 31.03.2010.There are no debenture holders with the Company.

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.

13. In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/ society.Therefore, the provisions of clause 4(xiii) of the order are not applicable to the Company.

14. The Company is dealing or trading in Shares, Securities, and other Investments and in our opinion the Company has maintained proper records.

15. In our opinion, the Company has not given any Guarantee for Loans taken by others from bank or financial institutions for the purpose mentioned.

16. In our opinion, the Company has not obtained any Term Loan during the year.

17. According to the information and explanations given to us and on an overall examination of the financial statements of the Company, We report that the funds raised on short-term basis have not been used for long-term investment.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to Parties and Companies covered in the register to be maintained under section 301 of the Act.

19. The Company has no Debentures and hence reporting does not arise in respect of creation of securities thereof.

20. The Company has not raised any monies by way of public issues during the year.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For Murali & Venkat

Chartered Accountants

Date: 26-08-2010
Place: Bangalore Partner

Membership No. 27372 ICAI Firm Registration No.: 002162S

 
Subscribe now to get personal finance updates in your inbox!