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Auditor Report of Thambbi Modern Spinning Mills Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of THAMBBI MODERN SPINNING MILLS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the Significant Accounting Policiesand other explanatory information.

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 flowsof the Company in accordance with the accounting principles generally accepted in India, including theAccounting 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 inaccordance with the provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and design, implementationand maintenance of adequate internal financial controls, that were operating effectively for ensuringthe accuracy and completeness of the accounting records, relevant to the preparation and presentationof 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 theRules made thereunder.

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 theaudit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.

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 dueto fraud or error. In making those risk assessments, the auditor considers internal financial controlrelevant to the Company's preparation of the financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financial controlssystem over financial reporting and the operating effectiveness of such controls. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the Company's Directors, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour 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 Aforesaid 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 31st March, 2015, its Loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements of the Company, which describes the uncertainty related to the outcome of the law suit filed against the Company.

Note no 6.2 regarding non ascertainment of overdue amounts and non-provision of interest due if any, due to micro, small and medium enterprises.

Report on Other Legal and Regulatory Requirements

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 the written representations received from the directors as on 31st March, 2015 Taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 sub-section 11 of Section 143 of the Companies Act, we give in the Annexure a statement on the matters specified in Paragraph 3 of the Companies (Auditors Report) Order 2015.

(g) 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 disclosed the impact of pending litigations on its financial position.

Note no 10.4 in respect of demand of Rs 98.76 lakhs raised by assistant commissioner of income tax and pending before ITAT

ii. The Company does not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. As per the information and explanation furnished to us, there is no amount 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.

Annexure to the Auditors' Report

The Annexure referred to in our report to the members of THAMBI MODERN SPINNING MILLS LTD for the year Ended on 31st March 2015. We report that:

S.No. Particulars

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

(b) The management has physically verified the fixed assets of the company during the year. No material discrepancies were noticed on such verification.

(ii) Since the company does not have any inventory at the end of the year, the clause ii(a)(b)and(c) are not applicable.

(iii) 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.

(iv) In our opinion and according to the information and explanation given to us, there exists an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of fixed assets and for rendering of services. The activities of the company do not involve purchase of inventory and sale of goods. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in Internal Control System.

(v) According to the information and explanation given to us, the Company has not accepted any deposits from the Public.

(vi) According to the information and explanation given to us, the Central Government has not prescribed the maintenance of cost records under Sub- section 1 of Section 148 of the Companies Act, 2013.

(vii) (a) The company is regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities to the extent applicable and there are no arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable.

b)According to the information and explanation given to us and as per the records of the Company examined by us, the disclosed amount are not paid on account of pending dispute

1) Entry tax on purchase of car amounting to Rs 4.65 lakhs pending before the high court of Chennai.

2) Sales tax dues amounting to Rs 712 lakhs pending before sales tax tribunal.

3) Income tax due of Rs 98.76 lakhs for AY 2011-12 which is contested and pending before CIT (Appeals).

(c) as per the information and explanation furnished to us, there is no amount 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.

(viii) The Company has accumulated losses at the end of the Financial Year and it has incurred cash losses in the Financial Year and in the immediately preceding Financial Year.

(ix) The company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.

(x) The company has not given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company.

(xi) The Company has availed term loan during the Financial Year and applied the same for the purpose for which the loans were obtained.

(xii) During the course of our examination of books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have not come across any fraud on or by the company, noticed or reported during the year, nor have been informed of such case by the management.

for Sankaran & Krishnan Chartered Accountants FRN 003582S M.Balachandran Partner Place : Salem Membership number: 016271 Date : 28.05.2015






Mar 31, 2014

We have audited the accompanying financial statements of M/s.Thambbi Modern Spinning Mills Ltd., which comprise the Balance Sheet as at 31 March 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

The Company''s 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 notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 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 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 Company''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 subject to Note No.6.2 regarding non-ascertainment of overdue amounts and non-provision of interest due if any, due to Micro, Small and Medium Enterprises In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 loss 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 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, 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e) On the basis of the written representations received from the directors as on March 31, 2014, 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 Act.

ANNEXURE TO THE AUDITOR''S REPORT

i) a) In our opinion, the company is maintaining proper records to show full particulars including quantitative details and situation of Fixed Assets.

b) As explained to us, these fixed assets have been physically verified by the management during the year at reasonable intervals and no material discrepancies were noticed in such verification.

c) During the year the company sold 31012 sq.ft, of land of Unit I for an amount of Rs.465.31 lakhs.

The company also sold some machinery of Unit III for an amount of Rs.152.69 lakhs. The company continues to be a going concern after these transaction.

ii) a) Inventories have been physically verified by the Management, at reasonable intervals.

b) 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.

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such verification as compared to the book records.

iii) The company has not taken / granted any loans, secured or unsecured from / to companies, firms or other parties listed in the register maintained under Section 301 of the Act during the year.

iv) In our opinion there is an adequate Internal Control System commensurate with the size of the company and nature of business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit no major weaknesses have been noticed in the Internal Control System.

v) a) In our opinion and according to the information and explanations provided to us, there are no contracts or arrangements, that need to be entered in the register maintained under section 301 of the Act.

b) In our opinion, and according to the information and explanations given to us, the Company has not sold goods, materials and services exceeding Rs.5,00,000 to any party listed in the register maintained under section 301 of the Act.

vi) The Company has not accepted any deposits from Public during the year and hence the clause relating to acceptance of Fixed Deposits is not applicable.

vii) In our opinion, the Company has an adequate Internal Audit System commensurate with the size and nature of its business.

viii) 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 under Section 209 (1) (d) of the Act and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix) a) In our opinion and according to the information and explanations provided to us, there are no undisputed statutory dues as at 31.03.2014, outstanding for a period exceeding 6 months from the date they became payable.

b) As per the information and explanations provided to us there are no disputed statutory dues outstanding as on 31.03.14, except towards

(i) entry tax on purchase of car amounting to Rs.4.65 lakhs pending before the High Court of Chennai.

(ii) Sales Tax dues amounting to Rs.7.12 lakhs pending before Sales Tax Tribunal.

(iii) Income Tax due of Rs.98.77 lakhs for Asst. Year 2011 - 12 which is contested and pending before CIT (Appeals).

x) As on 31.03.2014 the accumulated loss is more than Equity plus Reserves. The company has incurred cash loss during the year and in the immediately preceding Financial Year.

xi) The company has not availed any Term Loan during the year except a short term borrowings of Rs.150 lakhs on security of 4.01 acres of land repayable in one lumpsum installment in May 2014. Hence the clause regarding repayment / default is not applicable.

xii) In our opinion and according to the information and explanations provided to us, 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.

xiii) The Company is not a Chit, Nidhi / Mutual Benefit Fund/Society and hence the clause relating to the same is not applicable.

xiv) The Company is not dealing or trading in shares, securities, debentures and other investments.

xv) In our opinion, the company has not given guarantees for loans taken by others from banks or financial institutions.

xvi) Since no term loan has been availed during the year the clause regarding utilization is not applicable.

xvii) On an overall examination of the financial statements of the Company, we are of the opinion that no funds raised on short term basis have been used for long term investment.

xviii) There has been no preferential allotment of shares by the Company during the year, to any party.

xix) The Company has not issued any debentures during the year.

xx) The Company has not raised any money by public issue of shares or other securities during the year.

xxi) According to the information and explanations given to us, no material frauds on or by the company has been noticed or reported during the year.

For SANKARAN & KRISHNAN Chartered Accountants Firm Registration No: 003582S

M. BALACHANDRAN Place : Chennai Partner Date : 30th May 2014 Membership No. 16271


Mar 31, 2012

We have audited the attached Balance Sheet of M/S.THAMBBI MODERN SPINNING MILLS LIMITED, for the year ended 31st March 2012 and the Profit and Loss Account and also the cash flow statement of the Company for the year ended on that date, annexed thereto. 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.

We conducted our audit in accordance with 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 from 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above. 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 the books.

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

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

e. There are no observations/comments which has adverse effect on the functioning of the company.

f. In our opinion and according to the information and explanations given to us the Directors of this company are not disqualified from being appointed as director under clause (g) of sub section (1) of section 274 of the Companies Act 1956.

g. In our opinion and to the best of our information and according to the explanations given to us, the accounts read with the Notes thereon and subject to

I. Note No.5.1 regarding amount due to SSI Units exceeding 1 lakh for more than 30 days.

II. Note No.5.2 with regard to non-ascertainment of overdue amount as on 31.3.2012 and non-provision of interest to Micro, Small & Medium Enterprises for the year ended 31.3.2012.

III. Non-provision of liability towards Electricity Tax of Rs.30.11 lakhs (Refer Note No.5.3).

Give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view :

I) In the case of the Balance Sheet , of the state of affairs of the Company as at 31st March 2012

II) In the case of the Profit and Loss Account, of the LOSS for the year ended 31st March 2012

III) In the case of Cash Flow Statement, of the cash flow for the year ended 31 st March 2012.



ANNEXURE TO THE AUDITORS REPORT

i) a) In our opinion, the company is maintaining proper records to show full particulars including quantitative details and situation of Fixed Assets.

b) These fixed assets have been physically verified by the management during the year at reasonable intervals and no material discrepancies were noticed in such verification.

c) During the year the company had disposed-off land measuring 34400 sq.ft for Rs.34.45 lakhs and also certain old machinery for Rs.82.79 lakhs.

ii) a) Inventories have been physically verified by the Management, at reasonable intervals.

b) 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.

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such verification as compared to the book records.

iii) The company has not taken / granted any loans, secured or unsecured from / to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act 1956.

iv) In our opinion, there is an adequate Internal Control System commensurate with the size of the company and nature of business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal system.

v) a) In our opinion, and according to the information and explanations provided to us, there are no contracts or arrangements, that need to be entered in the register maintained under section 301 of the Companies Act, 1956.

b) In our opinion, and according to the information and explanations given to us, the Company has not sold goods, materials and services exceeding Rs.5,00,000 to any party listed in the register maintained under section 301 of the Companies Act, 1956.

vi) The Company has not accepted any deposits from Public during the year and hence the clause relating to acceptance of Fixed Deposits is not applicable.

vii) In our opinion, the Company has an adequate Internal Audit System commensurate with its size and nature of business.

viii) As per the information and explanations furnished to us, the company has maintained the cost records as prescribed by the Central Government under Sec.209 (1) (d) of the Companies act, 1956.

ix)a) In our opinion and according to the information and explanations provided to us, there are no undisputed statutory dues as at 31.03.2012, outstanding for a period exceeding 6 months from the date they became payable.

b) As per the information and explanations provided to us there are no disputed statutory dues outstanding as on 31.03.12, except towards

i. entry tax on car purchase of Rs.4.65 lakhs pending before the High Court of Chennai.

ii. Electricity Tax of Rs.30.11 lakhs which is pending for filing writ petition before the High Court of Chennai.

x) As on 31.03.2012 the accumulated loss is more than Equity plus Reserves. The company has also incurred cash loss during the year and not incurred cash loss during the previous Financial Year.

xi) Company has taken Term Loan from a Bank and has not defaulted in repayment of dues during the Financial Year. The company has no Debentures.

xii) 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.

xiii) The Company is not a Chit, Nidhi / Mutual Benefit Fund/Society.

xiv) The Company is not dealing or trading in shares, securities, debentures and other investments.

xv) In our opinion, the company has not given guarantees for loans taken by others from banks or financial institutions.

xvi) The company has borrowed term loan during the year and utilized the same for the purpose for which it is obtained.

xvii) 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.

xviii) There has been no preferential allotment of shares by the company during the year, to any party.

xix) The company has not issued any debentures, during the year.

xx) The company has not raised any money by public issue of shares or other securities during the year.

xxi) According to the information and explanations given to us, no frauds on or by the company has been noticed or reported during the year.

For SANKARAN & KRISHNAN

CHARTERED ACCOUNTANTS

Firm Registration No: 003582S

Chennai M.BALACHANDRAN

Partner

30th May 2012 Membership No. 16271


Mar 31, 2010

WE have audited the attached Balance Sheet of M/S.THAMBBi MODERN SPINNING MILLS LIMITED, for the year ended 31st March 2010 and the Profit and Loss Account and also the cash flow statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 from 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, We enclose in the Annexure, a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above. 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 the books.

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

d) In our opinion the Balance Sheet, Profit & Loss account and Cash Flow Statement comply with the Accounting Standards referred to in subsection 3C of section 211 of the Companies Act, 1956, except AS 22 with regard to Deferred Tax Asset (Refer Note No. 10)

e) There are no observations/comments which has adverse effect on the functioning of the company.

f) In our opinion and according to the information and explanations given to us the Directors of this company are not disqualified from being appointed as director under clause (g) of sub section (1) of section 274 of the Companies Act 1956.

g) Since the Government has not notified the rate at which Cess payable U/s 441 A, the details of amount of cess has not been paid / provided.

h) In our opinion and to the best of our information and according to the explanations given to us, the accounts read with the Notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view :

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010 ii) In the case of the Profit and Loss Account, of the PROFIT for the year ended 31st March 2010 iii) In the case of Cash Flow Statement, of the cash flow for the year ended 31st March 2010.

ANNEXURE TO THE AUDITORS REPORT

i) a) In our opinion, the company is maintaining proper records to show full particulars including quantitative details and situation of Fixed Assets.

b) These fixed assets have been physically verified by the management during the year at reasonable intervals and no material discrepancies were noticed in such verification.

c) No substantial part of Fixed Assets has been disposed off during the year.

ii) a) Inventories have been physically verified by the Management, at reasonable intervals.

b) 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.

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such verification as compared to the book records.

iii) The company has not taken / granted any loans, secured or unsecured from / to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act 1956.

iv) In our opinion, there is an adequate Internal Control System commensurate with the size of the company and nature of business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal system.

v) a) In our opinion, and according to the information and explanations provided to us, there are no contracts or arrangements, which need to be entered in the register maintained under section 301 of the Companies Act, 1956.

b) In our opinion, and according to the information and explanations given to us, the Company has not sold goods, materials and services exceeding Rs.5,00,000 to any party listed in the register maintained under section 301 of the Companies Act, 1956.

vi) The Company has not accepted any deposits from Public during the year and hence the clause relating to acceptance of Fixed Deposits is not applicable.

vii) In our opinion, the Company has an adequate Internal Audit System commensurate with its size and nature of business.

viii) As per the information and explanations furnished to us, the company has maintained the cost records as prescribed by the Central Government under Sec.209 (1) (d) of the Companies act, 1956.

ix) a) In our opinion and according to the information and explanations provided to us, there are no undisputed statutory dues as at 31.03.2010, outstanding for a period exceeding 6 months from the date they became payable.

b. As per the information and explanations provided to us there are no disputed statutory dues outstanding as on 31.03.10, except towards entry tax on car purchase of Rs.4.65 lakhs pending before the High Court of Chennai.

x) The accumulated losses of the company at the end of the Financial Year are more than 50% of its net worth. The Company has not incurred cash losses during the year and in the immediately preceding financial year.

xi) The Company has taken Term Loan from a Bank and has not defaulted in repayment of dues during the Financial Year. The company has no Debentures.

xii. 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.

xiii. The Company is not a Chit, Nidhi / Mutual Benefit Fund/Society.

xiv. The Company is not dealing or trading in shares, securities, debentures and other investments.

xv. In our opinion, the company has not given guarantees for loans taken by others from banks or financial institutions.

xvi. The company has borrowed term loan during the year and utilized the same for the purpose for which it is obtained.

xvii) 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.

xviii) There has been no preferential allotment of shares by the company during the year, to any party.

xix) The company has not issued any debentures, during the year.

xx) The company has not raised any money by public issue of shares or other securities during the year.

xxi) According to the information and explanations given to us, no frauds on or by the company has been noticed or reported during the year.

For SANKARAN & KRISHNAN

Chartered Accountants

Firm Rigistration No: 003582S

M. BALACHANDRAN

Chennai Partner

04th June 2010 Membership No.16271

 
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