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Auditor Report of Sambandam Spinning Mills Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Sambandam Spinning Mills Limited ("the Company") which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the 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

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to 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 principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring and accuracy and completeness of the accounting records, 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 the 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 the internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, 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 on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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, of the state of affairs of the Company as at March 31,2015, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

As required by Section 143(3) of the Act, we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. the Balance Sheet, the 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 aforesaid financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015 from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has, in accordance with the generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its financial statements.

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses under the applicable law or accounting standards.

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure to the Independent Auditors' Report

The Annexure referred to in our report to members of Sambandam Spinning Mills Limited ("the Company) for the year ended March 31, 2015

1. In respect of its Fixed assets:

(i) the company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets.

(ii) the fixed assets were physically verified during the year by the Management in accordance with a phased programme of verification, which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals having regard to the size of the Company, nature and value of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

2. In respect of its inventories:

(i) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(ii) ln our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(iii) ln our opinion and according to the information and explanations given to us, the Company has generally maintained proper records of its inventories and no material discrepancies were noticed on such physical verification.

3. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under section 189 of the Companies Act 2013, and accordingly, the provisions of clause (iii) of paragraph 3 of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed assets and for the sale of goods and services, and during the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system.

5. According to the information and explanations given to us, the Company has not accepted any deposits from public and in respect of the deposits accepted from shareholders, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the Companies (Acceptance of Deposit) Rules, 2014.

6. In our opinion and according to the information and explanations given to us, the requirement for maintenance of cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014 specified by the Central Government of India under Section 148 of the Companies Act, 2013 are not applicable to the Company for the year under audit.

7. According to the information and explanations given to us and the books of account examined by us, in respect of statutory dues:

i)The Company has generally been regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it with the appropriate authorities during the year.

(ii) There were no undisputed amounts payable in respect of the aforesaid statutory dues outstanding as at March 31, 2015 for a period of more than six months from the date they became payable.

(iii) There are no dues of Income tax, Wealth tax and Customs duty which have not been deposited on account of any dispute with the relevant authorities. Details of dues towards excise duty, service tax and sales tax and value added tax that have not been deposited as at March 31, 2015 on account of disputes are stated below: (Nature of dues, dues, period to which the amount relates, forum where dispute is pending) - Excise duty, Rs.84,65,342, Financial year 2001-02 to 2002-03, Customs, Excise and Service tax Appellate Tribunal; Service tax, Rs.8,05,696, Financial year 2004-05 to 2007-08, Customs, Excise and Service tax Appellate Tribunal; Sales tax, Rs.6,52,044, Financial year 1991-92, Deputy Commissioner of Commercial Taxes.

(iv) The amounts required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under, have been transferred to such fund within time.

8. The company does not have accumulated losses at the end of the financial year and the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

9. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders.

10. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

11. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

12. To the best of our knowledge and belief, and according to the information and explanations given to us, and considering the size and nature of the Company's operations, no fraud of material significance on the Company or no fraud by the Company has been noticed or reported during the year.

For M.S. Krishnaswami & Rajan Chartered Accountants Firm registration No.01554S

Salem R. Krishnen-Partner May 28, 2015 Membership No.201133


Mar 31, 2014

We have audited the accompanying financial statements of Sambandam Spinning Mills Limited ("the Company") which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and loss and the 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 Section 211(3C) of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated September 13, 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 misstatements, whether due to fraud or error.

Auditors'' 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 the 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 the 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 the 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, 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, 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 section 227(4A) 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 purposes 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 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 Cash Flow Statement comply with the Accounting Standards referred to in section 211(3C) of the Companies Act 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

(e) on the basis of written representation 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 section 274(1)(g) of the Companies Act, 1956.

Annexure to the Independent Auditors'' Report

The Annexure referred to in our report to members of Sambandam Spinning Mills Limited ("the Company) for the year ended March 31, 2014

1. (i) the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

(ii) the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its fixed assets. However, no material discrepancies have been noticed during the year on such verification.

(iii) the company has not disposed off substantial part of its fixed assets during the year.

2. (i) inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

(ii) the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(iii) the company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stocks and the book records.

3. the Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Act. Thus paragraphs 4(iii) (b) to (d), (f), (g) are not applicable to the Company.

4. in our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventories and fixed assets and for the sale of goods and services. We have not observed any major weakness in the internal control system during the course of our audit.

5. (i) in our opinion and according to the information and explanations given to us, 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.

(ii) in our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (5) (i) above and exceeding Rs. 5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. the company has complied with the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to deposits accepted from public.

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

8. we have broadly reviewed the book of accounts maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government of India under section 209(1)(d) of the Companies Act, 1956 in respect of the products manufactured by the Company and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records.

9. (i) according to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

(ii) according to the information and explanations given to us, no undisputed amounts payable in respect provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues were in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

(iii) according to the information and explanations given to us, there are no material dues of Income tax, wealth tax and customs duty which have not been deposited with the appropriate authorities on account of any dispute. However, according to the information and explanations given to us, the following dues of excise duty, service tax and sales tax, have not been deposited by the Company on account of disputes, for which stay has been obtained. (Nature of dues, dues, period to which the amount relates, forum where dispute is pending) - Excise duty, Rs.84,65,342, Financial year 2001-02 to 2002-03, Customs, Excise and Service tax Appellate Tribunal; Service tax, Rs.8,05,696, Financial year 2004-05 to 2007-08, Customs, Excise and Service tax Appellate Tribunal; Sales tax, Rs.6,52,044, Financial year 1991-92, Deputy Commissioner of Commercial Taxes.

10. the company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses in the financial year and in the immediately preceding financial year.

11. the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

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 during the year.

13. in our opinion and according to the information and explanations given to us, the company is not a chit fund or a Nidhi/mutual benefit fund/society.

14. according to the information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments.

15. according to the information and explanations given to us, the company has not given any guarantees for loans taken by others from banks or financial institutions.

16. according to the information and explanations given to us, the term loans availed by the company were, prima facie, applied for the purpose for which they were obtained.

17. in our opinion and according to the information and explanations given to us, on an overall examination of the financial statements of the company, funds raised on short-term basis have, prima facie, not been used for long term investment.

18. the company has not made any preferential allotment of shares during the year.

19. the company has not issued any debentures during the year.

20. the company has not raised any money by public issues during the year.

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

For M.S. Krishnaswami & Rajan

Chartered Accountants

Firm registration No.01554S

Salem R. Krishnen-Partner

May 30, 2014 Membership No.201133


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Sambandam Spinning Mills Limited ("the Company"), which comprise the Balance Sheet as at March 31,2013, the Statement of Profit and loss and the 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 Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. 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 misstatements, whether due to fraud or error.

Auditors'' 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 the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the 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 the 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. 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, 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 31,2013;

(b) In the case of the Statement of Profit and loss, of the profit of the Company for the year ended on that date; and

(c) in the case of the Cash flow statement, of the cash flows of the Company 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 the Central Government of India in terms of section 227(4A) 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 purposes 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 section 211 (3C) of the Act;

(e) on the basis of written representation received from the directors as on March 31,2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March

31,2013 from being appointed as a director in terms of section 274(1 (g) of the Act.

Annexure to the Independent Auditors'' Report

Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that:

1. (i) the company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(ii) the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its fixed assets. However, no material discrepancies have been noticed during the year on such verification.

(iii) The company has not disposed off substantial part of its fixed assets during the year.

2. (i) inventories have been physically verified during the year by the management at reasonable intervals.

(ii) in our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(iii) in our opinion, the company is generally maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. on the basis of our examination of the books of account, the Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Act.

4. In our opinion, there is generally an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventories and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (i) based on the audit procedures applied by us, the particulars of contracts or arrangements referred to in Section 301 of the Act that needed to be entered into the register, maintained underthe said section have been so entered.

(ii) where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. the company has complied with the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from public.

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

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government of India under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (i) the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities during the year.

(ii) no undisputed amounts payable in respect of statutory dues were outstanding as at March 31,2013 for a period of more than six months from the date they became payable.

(iii) there are no dues of Income tax, wealth tax and customs duty which have not been deposited on account of any dispute. Details of dues towards excise duty, service tax and sales tax that have not been deposited on account of any dispute, for which stay has been obtained, are (Nature of dues, dues, period to which the amount relates, forum where dispute is pending)- Excise duty, Rs.84,65,342, Financial year 2001-02 to 2002-03, Customs, Excise and Service tax Appellate Tribunal; Service tax, Rs.8,05,696, Financial year 2004-05 to 2007-08, Customs, Excise and Service tax Appellate Tribunal; Sales tax, Rs.6,52,044, Financial year 1991 -92, Deputy Commissioner of Commercial Taxes.

10. the company have an accumulated losses of Rs.4,52,01,633 as at March 31, 2013 and Rs.13,62,62,625 as at March 31, 2012 and has not incurred any cash loss during the financial year ended March 31,2013 and has incurred a cash loss of Rs.10,43,45,060 in the immediately preceding financial year.

11. in our opinion, the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

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 during the year.

13. the company is not a chit fund or a Nidhi/mutual benefit fund/society. Accordingly the provisions of clause 4 (xiii) of the CARO are not applicable to the company.

14. the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xiv) of the CARO are not applicable to the company.

15. the company has not given any guarantees for loans taken by others from banks or financial institutions.

16. the term loans availed by the company were, prima facie, applied for the purpose for which they were obtained.

17. on an overall examination of the financial statements of the company, funds raised on short-term basis have, prima facie, not been used for long term investment.

18. the company has not made any preferential allotment of shares during the year.

19. the company has not issued any debentures during the year.

20. the company has not raised any money by public issues during the year.

21. based on the audit procedures performed and considering the size and nature of the company''s operations, no fraud of material significance on or by the company has been noticed or reported during the year.

For M.S. Krishnaswami & Rajan

Chartered Accountants

Registration NO.01554S

Salem Rxrishnen - Partner

May 27, 2013 Membership No.201133


Mar 31, 2012

1. We have audited the attached Balance Sheet of Sambandam Spinning Mills Limited (the Company) as at March 31, 2012, the Statement of Profit and loss and the Cash Flow Statement for the year ended on that date, both annexed thereto, (collectively referred to as the financial statements), - signed by us under reference to this report. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit In accordance with auditing and assurance standards generally accepted in India. The said 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have obtained ail the information and explanations, which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

4. In our opinion, proper books of account, as required by law, have been kept by 1he Company so far as appears from our examination of those books.

5. The financial statements dealt will by this report are in agreement with the books of account.

6. In our opinion,, the aforesaid financial statements comply in all material respects with the applicable Accounting Standards referred to in section 211 (3C) of the Companies Act, 1956 (the Act).

7. On the basis of written representation received from the directors as on March 31,2012, and taken on record by the Board of Directors, we report that none of the directors is prima facie disqualified as on March 31,2012 from being appointed as a director In terms of section 274(1 )(g) of the Act.

8 In our opinion and to the best of our information and according to 1he explanations given to us, the aforesaid financial statements read' with the Statement on Significant Accounting Policies and Notes to the Accounts, give the' information required by the Act, in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

8.1 In the case of the Balance sheet, of the state of affairs of the Company as at March 31, 2012;

8.2 In the ease of the Statement of Profit and loss, of the loss for the year Wide on that date; and &3 in the case of the Cash flow statement of the cash flows for the year ended on that date.

9. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Government of India in terms of section 227(4A) of the Companies Act, 1956, and on the basis of such checks as considered appropriate and according to the information-and explanations furnished, it is reported that:

9.1 The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. These fixed assets are being physically verified by the management under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its fixed assets. However no material discrepancies have been noticed on such verification. The company has not disposed off substantial part of its fixed assets during the year.

9.2 physical verification of inventory has been conducted at reasonable intervals by the management.

The procedures of physical verification of inventory followed by the management are reasonable and adequate In relation to the size of the company and the nature of its business. The company is maintaining proper records of its inventories and no material discrepancies were noticed on such physical verification.

9.3 The company has neither granted nor taken any loans, secured or unsecured, during the year, to/from companies, firms or other parties covered In the register maintained under section 301 of the Act.

9.4 There is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid Internal control system.

9.5 (i) The particulars of contracts or arrangements that need to be entered into a register under section 301 of the Act have been entered.

(ii) In our opinion, each of the transactions exceeding the value of Rs 5,00,000 pursuant to the aforesaid contracts/arrangement have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

9.6 The company has complied with the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from public.

9.7 The company has an internal audit system commensurate with its size and nature of its business.

9.8 On the basis of the records produced, we are of the opinion that prima facie, the cost records as per the Companies (Cost Accounting Records) Rules,2011 prescribed by the Central Government under section 209(1 )(d) of the Companies Act, 1956 have been maintained by the company. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9.9 (i) the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax customs duty, excise duty, cess and other material statutory dues, as applicable, With the appropriate authorities during the year.

(ii) No undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at the balance sheet date for a period of more than six months from the date they became payable.

(iii) There are no dues of Income tax/wealth tax, customs duty which have not been deposited on account of any dispute. Details of dues towards excise duty, service tax and sales tax that have not been deposited on account of any dispute, for which stay has been obtained, are (Nature of dues, dues, forum where dispute Is pending) - Excise duty, Rs.84,65,342, Customs, Excise and Service tax Appellate Tribunal; Service tax, Rs.8,05,696, Customs, Excise and Service tax Appellate Tribune; Sales tax, Rs.6,52,044, Deputy Commissioner of Commercial Taxes.

9.10 The company does not haves any accumulated losses as at March 31,2011 and has inquired cash loss of Rs. 10,43,45,060 during the financial year ended March 31, 2012 and has not incurred any cash losses in the immediately preceding financial year.

9.11 The company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

9.12 The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year.

9.13 The provisions of any special statute applicable to a chit fund, nidhi, mutual benefit fund/societies are not applicable to the Company.

9.14 The company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xiv) of the CARO are not applicable to the company.

9.15 The company has not given any guarantees for loans taken by others from banks or financial institutions.

9.16 The term loans availed by the company during the year, were, prima facie, applied for the purpose for which they were obtained.

9.17 Based on an overall examination of the financial statements of the company, funds raised on short-term basis have, prima facie, not been used for long term investment.

9.18 The company has not made any preferential allotment of shares during the year to any party,

9.19 The company has not Issued any debentures during the year.

9.20 The company has not raised any money by public issues during the year.

9.21 Considering the size and nature of the company's operations, no fraud of material significance on or by the company has been noticed or reported during the year.

For M.S. Krishnaswami & Rajan

Chartered Accountants

Registration No.0l654S

Salem M.K. Rajan-Partner

May 30, 2012 Membership No.4059


Mar 31, 2011

1. We have audited the attached Balance Sheet of Sambandam Spinning Mills Limited as at March 31,2011 and the Profit and loss Account and the Cash flow statement (financial statements) for the year ended on that date (the year), annexed thereto, signed by us under reference to this report. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing and assurance standards generally accepted in India. The said 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have obtained all the information and explanations, which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

4. 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.i

5. The financial statements dealt with by this report are in agreement with the books of account.

6. In our opinion, the aforesaid financial statements pomply in all material respects with the applicable Accounting Standards referred to in section 211(3C) of the Companies Act,1956 (the Act).

7. On the basis of written representation received from the directors as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is prima facie disqualified as on March 31, 2011 from being appointed as a director in terms of section 274(1 )(g) of the Act.

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read with the Statement on Significant Accounting Policies and Notes to the Accounts, give the information required by the Act, in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

8.1 in the case of the Balance sheet, of the state of affairs of the Company as at March 31, 2011;

8.2 in the case of the Profit and loss account, of the profit for the year ended on that date; and

8.3 in the case of the Cash flow statement, of the cash flows for the year ended on that date.

9. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Government of India in terms of section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

9.1 In our opinion, the Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. These fixed assets are being physically verified by the management under a phased programme of verification, which in our opinion, is reasonable having regard to the nature and value of its fixed assets, and no material discrepancies have been noticed on such verification. The Company has not disposed off substantial part of its fixed assets during the year,

9.2 Physical verification of inventory has been conducted at reasonable intervals by the management. In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on such verification as compared to the book records.

9.3 The Company has neither granted nor taken any loans, secured or unsecured, during the year to/from parties and companies listed in the register maintained under section 301 of the Act.

9.4 In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

9.5 (i) The particulars of contracts or arrangements that need to be entered into a register under section 301 of the Act have been entered.

(ii) In our opinion, each of the transactions exceeding the value of Rs.5,00,000 pursuant to the aforesaid contracts/arrangement have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

9.6 In our opinion, the Company has complied with the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from public.

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

9.8 On the basis of the records produced, we are of the opinion that prima facie, the cost records and related accounts prescribed by the Central Government under section 209( 1 )(d) of the Act have been made and maintained by the Company. However, we are not required to carry out and have not carried out any detailed examination of such records and accounts.

9.9 (i) In our opinion, the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duly, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities.

(ii) There are no dues of Income tax/wealth tax, customs duty which have not been deposited on account of any dispute. Details of dues towards excise duty, service tax and sales tax that have not been deposited on account of any dispute, for which stay has been obtained, are (Nature of dues, dues, forum where dispute is pending) - Excise duty, Rs.84,65,342, Customs, Excise and Service tax Appellate Tribunal; Service tax, Rs.8,05,696, Customs, Excise and Service tax Appellate Tribunal; Sales tax, Rs.6,52,044, Deputy Commissioner of Commercial Taxes.

9.10 The Company does not have any accumulated losses as at March 31, 2011 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

9.11 The Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

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

9.13 The provisions of any special statute applicable to a chit fund, nidhi, mutual benefit fund/societies are not applicable to the Company.

9.14 The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xiv) of the CARO are not applicable to the company.

9.15 The Company has not given any guarantees for loans taken by others from banks or financial institutions.

9.16 In our opinion, the term loans availed by the Company during the year, were, prima facie, applied for the purpose for which they were obtained.

9.17 Based on an overall examination of the financial statements of the Company, funds raised on short-term basis have, prima facie, not been used for long term investment.

9.18 The Company has not made any preferential allotment of shares during the year to any party.

9.19 The Company has not issued any debentures during the year.

9.20 The Company has not raised money by public issues during the year.

9.21 Considering the size and nature of the Company's operations, no fraud of material significance on or by the Company has been noticed or reported during the year.

For M.S. Krishnaswami & Rajan Chartered Accountants Registration No.01554S M.K. Rajan-Partner Membership No.4059

Salem May 23, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Sambandam Spinning Mills Limited as at March 31, 2010 and the relative Profit and loss Account and the Cash flow statement for the year ended on that date (the year), signed by us under reference to this report. 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.

2. We have conducted our audit in accordance with auditing and assurance standards generally accepted in India. The said Standards reauire 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

4. In our opinion, proper books of account, as reauired by law, have been kept by the Company so far as appears from our examination of those books.

5. The financial statements dealt with by this report are in agreement with the books of account.

6. In our opinion, the financial statements comply in ail material respects with the applicable Accounting Standards referred to in section 211 (3C) of the Companies Act, 1956 (the Act).

7. Based on the written representation received from the directors as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is prima facie disqualified as on March 31, 2010 from being appointed as a director in terms of section 274(1 )(g) of the Act.

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read with the Significant accounting policies and Notes to the accounts, give the information required by the Act in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

8.1 in the case of the Balance sheet, of the state of affairs of the Company as at March 31, 2010;

8.2 in the case of the Profit and loss account, of the profit for the year; and

8.3 In the case of the Cash flow statement, of the cash flows for the year.

9. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Government of India in terms of section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

9.1 In our opinion, the Company is maintaining proper records to show full particulars including quantitative details and situation of fixed assets. These fixed assets have been physically verified by the management during the year at reasonable intervals and no material discrepancies were noticed on such verification. The Company has not disposed off during the year substantial part of its fixed assets.

9.2 Physical verification of inventory has been conducted at reasonable intervals by the management. In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of inventory and no material discrepancies were noticed on such verification as compared to the book records.

9.3 The Company has neither granted nor taken any loans, secured or unsecured, during the year to/from parties and Companies listed in the register maintained under section 301 of the Act.

9.4 In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its Pusiness for the purchase of inventory and fixed assets and for the sale of goods and services. Further we have neither come across nor have Peen informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

9.5 (i) The particulars of contracts or arrangements that need to Pe entered into a register under section 307 of the Act have been entered.

(ii) In our opinion, eacn of the transactions exceeding the value of Rs.5,00,000 pursuant to the aforesaid contracts/arrangement have been made at prices which are reasonaPle having regard to the orevailing market prices at the relevant time.

9.6 In our opinion, the Company has complied with the provisions of sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from public.

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

9.8 On the basis of the records produced, we are of the opinion that prima facie, the cost records and related accounts prescribed by the Central Government under section 209(1 )(d) of the Act have been made and maintained by the Company. However, we are not required to carry out and have not carried out any detailed examination of such records and accounts.

9.9 (i) In our opinion, the Company has been regular during the year In depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities.

(ii) There are no dues of Income tax, wealth tax, service tax, customs duty which have not been deposited on account of any dispute. Details of dues towards excise duty and sales tax that have not been deposited on account of any dispute are (Nature of dues, dues, forum where dispute is pending) -Excise duty, Rs.84,65,343, Customs, Excise and Service tax Appellate Tribunal; Sales tax, Rs.6,52,044, Deputy Commissioner of Commercial taxes.

9.10 The Company does not have any accumulated losses at the end of the year and has not incurred any cash losses in the year or in the immediately preceding year.

9.11 In our opinion, the Company has not defaulted during the year in repayment of dues to any financial institution, Pank or dePenture holders.

9.12 The Company has not granted during the year loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

9.13 The provisions of any special statute applicaPle to a chit fund, nidhi, mutual benefit fund/societies are not applicable to the Company.

9.14 The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the orovisbns of clause 4(xiv) of the Order are not applicable to the Company.

9.15 The Company has not given any guarantees for loans taken by others from banks or financial Institutions.

9.16 In our opinion, the term ioans avaiiod Py the Company during the year, were, prima facie. applied for the purpose for which they were oPtained.

9.17 Based on an overall examination of the financial statements of the Company, we report that no funds raised on short-term basis have been used for long term investment.

9.18 The Company has not made during the year any preferential allotment of shares to any party.

9.19 The Company has not issued during the year any dePentures.

9.20 The Company has not raised money during the year Py public issue of shares or other securities.

9.21 No instances of fraud of material significance perpetrated on or by the Company Peen noticed or reported during the period covered by our audit.

For M S Krishnaswami & Rajan Chartered Accountants

Registration No. 01554S

Salem M.K. Rajan-Partner

May 29, 2010 Membership No.4059



 
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