Mar 31, 2014
We have audited the accompanying Financial Statements of M/s PASARI
SPINNING MILLS LIMITED, ("the Company"), which comprise the Balance
Sheet as at March 31, 2014, and the Statement of Profit and Loss and
Cash Flow Statement for the year then ended, and a Summary of
Significant Accounting Policies and other explanatory information.
Management''s Responsibility for the Financial Statements:
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act") read with general circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013. This
responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.
Auditor''s Responsibility:
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion:
In our opinion and to the best of our information and according to the
explanations given to us subject to the following:
a. Non confirmation of balances in respect of Sundry Debtors,
Creditors and Loans & Advances.
b. Non disclosure under provisions of the Micro, Small and Medium
Enterprises Development Act 2006 in the absence of details received
from suppliers, vide point no.5 in other disclosures.
c. Non provision towards sales tax arrears including penalty
aggregating to Rs.1,80,18,068 of the earlier years, vide point no.2 in
other disclosures.
d. Non provision of Employee benefits as per AS-15 issued by the
Institute of Chartered Accountants of India, non quantifiable vide
point no.7 in other disclosures.
e. Non provision for depletion in Market value of Investments in
shares, securities and mutual funds, vide point no.8 in other
disclosures.
f. Non provision towards Back billing demand raised by CESCOM
aggregating ton Rs.28,43,845/- of the earlier years, vide point no.9 in
other disclosures.
The said Financial Statements read with notes thereon give the
information required by the Act in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:
(a) In the case of the Balance Sheet, of the State of Affairs of the
Company as at March 31, 2014;
(b) In the case of the Statement of Profit and Loss, of the PROFIT for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
Report on other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor''s Report)
Order, 2003 ("the Order") as amended, issued by the Central Government
of India in terms of sub- section (4A) of section 227 of the Act, We
give in the Annexure a statement on the matters specified in paragraphs
4 and 5 of the Order.
2. As required by section 227(3) of the Act, We report that:
(a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
(c) The Balance Sheet, Statement of Profit and Loss and the Cash Flow
Statement, dealt with by this Report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
the Cash Flow Statement comply with the Accounting Standards referred
to in subsection (3C) of section 211 of the Companies Act, 1956 read
with the general circular 15/2013 dated 13th September, 2013 of the
Ministry of Corporate Affairs in respect of the Section 133 of the
Companies Act, 2013; and
(e) On the basis of written representations received from the Directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the Directors is disqualified as on March 31, 2014, from being
appointed as a Director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE TO THE AUDITORS'' REPORT The Annexure referred to in our report
to the members of M/s PASARI SPINNING MILLS LIMITED (''the Company'') for
the year ended 31st March, 2014, we report that:
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of Fixed
Assets.
(b) The Fixed Assets of the Company have been physically verified by
the Management during the year at reasonable intervals and no
discrepancies between the book records and physical verification were
noticed on such verification.
(c) The Company has not disposed off /sold a substantial portion of its
Fixed Assets during the year.
2. (a) The Inventories have been physically verified by the
Management. In our opinion, the frequency of verification is
reasonable.
(b) The procedures of physical verification of inventories followed by
the Management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. In our
opinion and according to the information and explanations given to us,
we have not come across any material discrepancies between the physical
stocks and inventory records.
3. (a) The Company has taken unsecured interest free loans from the
Directors of the Company and the company in which the Directors of the
company are the Directors of that company and except the same, there
are no other Loans, secured or unsecured from companies, firms or other
parties, taken by the Company which are listed in the Register
maintained under section 301 of the Companies Act, 1956.
(b) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties listed in the Register maintained
under section 301 of the Act, 1956.
4. In our opinion and according to the information and explanations
given to us, there are adequate Internal Control System commensurate
with the size of the Company and the nature of its business with regard
to purchases of inventories and fixed assets and payment for expenses
and for sale of goods. During the course of our audit, we have not
observed any continuing failure to correct major weakness in internal
controls.
5. In respect of particulars of contracts or arrangements and
transactions entered in the register maintained in pursuance of section
301 of the Companies Act 1956;
(a) To the best of our knowledge and belief and according to the
information and explanations given to us, particulars of contracts or
arrangements that needed to be entered into the register have been so
entered.
(b) According to the information and explanations given to us, each of
the transactions in pursuance of such contracts/ arrangements in excess
of Rs 5 Lakhs in respect of any party during the year, have been made
at prices which are reasonable having regard to the prevailing market
prices at the relevant time, where such prices are available.
6. In our Opinion and according to the information and explanations
given to us, the Company has not accepted any deposits within the
meaning of provisions of Section 58A, 58AA or any other relevant
provisions of the Companies Act, 1956 and as per The Companies
(Acceptance of Deposits) Rules, 1975.
7. In our opinion, the Company has an in house Internal Audit System,
commensurate with the size and nature of its business.
8. The Maintenance of Cost records as prescribed by the Central
Government under section 209 (1) (d) of the Companies Act, 1956 in
respect of the activities of the Company does apply to the Company, as
per the directions of the Central Government. However the company has
stopped its operation from June 2010 and all the workers are given one
time settlement. The above records are verified and have been
maintained as per act.
9. (a) The Company is generally not regular in depositing the
undisputed Statutory Dues with Appropriate Authorities and there are
undisputed and outstanding amounts payable in respect of ESI Fund,
Investor Education and Protection Fund, Income-tax, Service Tax , Sales
Tax, Cess or any other applicable taxes, Duties or Levies applicable to
the Company and its business which have remained outstanding as at 31st
March 2014, for a period of more than six months from the date they
became payable.
Name of the Statute Nature of the dues Amount due Year
ESIC ESIC 7,0,3115 2010-11
Income tax act TDS 36,654 Various years
Karnataka Tax
on profession, Professional Tax 64,000 08-09 to 11-12
trade, calling
and Employment Act
Karnataka Sales
tax Act Cess on sales 84,760 06-07 to 07-08
(b) There are disputed liabilities with regard to Sales Tax, as on
31.03.2014
Name of the Statute Nature of
the Dues Amount (Rs.) For the Year
Central Sales Tax Act Central Sales Tax 4,45,496 1999-00
5,80,226 2000-01
8,83,692 2001-02
Karnataka Entry
Tax Act Karnataka Sales Tax 46,593 1999-00
98,290 2000-01
Karnataka Sales
Tax Act Karnataka Sales Tax 4,35,196 1999-00
46,57,137 2000-01
321,0,915 2001-02
Penalty 5,000 1999-00
2,50,000 2000-01
18,35,296 2001-02
Interest @ 1/2% 3,11,968 1999-00
33,37,878 2000-01
19,18,381 2001-02
Total 18,016,068
10. The Company has accumulated losses as at the yearend which is more
than 50% of its Net worth and has not incurred cash losses during the
financial year covered by our audit.
11. In our opinion and according to the information and explanation
given to us, the Company has not defaulted in repayment of principal
dues in respect of loans borrowed from Bank as on 31.03.2014. There are
no debenture holders with the Company.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a Chit Fund or a Nidhi Mutual
Benefit Fund/ society. Therefore, the provisions of clause 4(xiii) of
the order are not applicable to the Company.
14. The Company is dealing or trading in Shares, Securities, Debentures
and other Investments in our opinion the company has maintained proper
records.
15. In our opinion, the Company has not given any Guarantee for Loans
taken by others from banks or financial institutions for the purpose
mentioned.
16. In our opinion, the Company has applied the Term Loans for the
purpose for which they were obtained. However, during the year the
Company has not obtained any Term Loan.
17. According to the information and explanations given to us and on an
overall examination of the financial statements of the Company, we
report that the funds raised on short term basis have not been used for
Long Term Investments/purposes.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to Parties
and Companies covered in the register to be maintained under section
301 of the Act.
19. The Company has no Debentures and hence reporting does not arise in
respect of creation of securities thereof.
20. The Company has not raised any monies by way of public issues
during the year.
21. According to the information and explanations given to us, no fraud
on or by the Company has been noticed or reported during the course of
our audit.
For MURALI & VENKAT
Chartered Accountants
Firm''s Registration Number: 02162S
JAYANTH A.
Place: Bangalore Partner
Date: 31st July 2014 Membership Number: 231549
Mar 31, 2012
(I) We have audited the attached Balance Sheet as at 31st March 2012,
the Profit & Loss Account and also the Cash Flow Statement of PASARI
SPINNING MILLS LTD,, for the year ended on that date. These Financial
Statements are the responsibility of the Company's Management Our
responsibility is to express an opinion on these financial statements
based on our audit.
(II) We have conducted our audit in accordance with the Auditing
Standards generally accepted in India. Those Standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
(III) We report, further in terms of the provisions of section 227 of
the Companies Act, 1956 that:
1. As required by the Companies (Auditors' Report) Order, 2003 (as
amended by the Amendment Order, 2004) issued by the Central Government
of India in terms of section 227(4A) of the Companies Act, 1956, we
give our comments on the matters specified in paragraphs 4 and 5 of the
said order to the extent as applicable to the Company in the Annexure
to this report.
2. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
3. In our opinion, proper Books of Account as required by law have
been kept by the Company so far as appears from our examination of
those Books.
4. The Balance Sheet the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the Books of
Account.
5. In our opinion, the Balance Sheet, the Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Section 211 (3C) of the Companies
Act, 1956 except for the following:
a) AS-13 Accounting for Investments - Non- recognition of diminution in
value of Investments in Shares, Securities and Mutual Funds.
b) AS-15 Employee Benefits, which are accounted on cash basis with
regard to gratuity and E.L encashment. (Refer Accounting Policy for
Retirement Benefits).
6. On the Basis of written representations received from the
Directors, as on 31st March 2012 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March 2012 from being appointed as a Director in terms of clause
(g) of sub section (1) of Section 274 of The Companies Act, 1956,
7. In our opinion and to the best of our information and according to
the explanations given to us, subject to:
a) Non confirmation of balances in respect of Sundry Debtors, Creditors
and Loans and Advances.
b) Non disclosure under Provisions of the Micro Small and Medium
Enterprises Development Act 2006 in the absence of details received
from the suppliers, vide point no. 5 in other disclosures,
c) Non provision towards Sales Tax arrears including penalty
aggregating to Rs. 1,80,16,068 of the earlier years, vide point no. 2
In other disclosures.
d) Non provision. of Employee Benefits as per AS-15 issued by Institute
of Chartered Accountants of India, non quantifiable vide point no 7 in
other disclosures.
e) Non provision for depletion in Market Value of Investments in
shares, securities and mutual funds, vide point no 8 in other
disclosures.
the said accounts read with the significant accounting policies and
notes on accounts give the information required by the Companies Act,
1956, in the manners so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2012.
ii) In the case of the Profit & Loss Account, of the Loss (after
Deferred Tax adjustments) of the Company for the year ended on that
date.
iii) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in paragraph 1 of our report of even date)
1. a) The Company has maintained proper records to show full
particulars including quantitative details and situation of all Fixed
Assets.
b) The assets of the Company have been physically verified by the
Management during the year at reasonable intervals and no discrepancies
between the book records and physical verification were noticed on such
verification.
c) The Company has sold a substantial portion of its Fixed Assets
comprising Plant and Machineries, other Electrical Equipments and
certain Vehicles during the year. Based on the information and
explanation given to us by the management, we report that, the company
has decided to completely stop the manufacturing activity and the same
shall have a bearing on the going concern status of the company.
However, the company continues its trading operations and has leased
out the factory premises.
2. a) Inventories have been physically verified by the management. In
our opinion, the frequency of verification is reasonable.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
c) The Company is maintaining records of inventory and in our opinion
the Company has to improve upon the disclosure of proper details of
inventory identification with respect to the nature of different
quality aspects. In our opinion and accordingly to the information and
explanations given to us, we have not come across any material
discrepancies between the physical stocks and inventory records.
3. In respect of the loans, secured or unsecured, granted or taken by
the company to/from companies, firm or other parties covered Register
maintained under section 301 of the companies Act, 1956. We report:
a) The Company has taken interest free unsecured loans from a company
under the same management and the maximum amount outstanding at any
time during the year is Rs 1,87,16,140/- and the yearend balance is Rs
1,87,16,140/-. As per the information and explanations given to us,
there is no stipulation mentioned as part of the terms and conditions
of the loan for the repayment of the principal amount.
b) In our opinion and according to the information and explanation
given to us, the interest free loan, as per the terms and conditions,
are not prima facie prejudicial to the interest of the Company.
c) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties listed in the Register maintained
under section 301 of the Act, 1956.
4. In our opinion and according to the information and explanations
given to us, the Company needs to strengthen its Internal Control
System commensurate with the size of the Company and the nature of its
business with regard to purchases of inventory, Fixed Assets and for
the Sale of goods.
5. In respect of particulars of contracts or arrangements and
transactions entered in the register maintained in pursuance of section
301 of the Companies Act 1956;
a) To the best of our knowledge and belief and according to the
information and explanations given to us, particulars of contracts or
arrangements that needed to be entered into the register have been so
entered.
b) According to the information and explanations given to us, each of
the transactions in pursuance of such contracts/arrangements in excess
of Rs. 5 Lakhs in respect of any party during the year, have been made
at prices which are reasonable having regard to the prevailing market
prices at the relevant time, where such prices are available,
6. In our Opinion and according to the information and explanations
given to us, the company has not accepted any deposits within the
meaning of provisions of Section 58 A, 58 AA or any other relevant
provisions of the Companies Act, 1956 and The Companies (Acceptance of
Deposits) Rule, 1975.
7. In our opinion, the company has Internal Audit System commensurate
with the size and nature of its business and the same needs to be
strengthened with regard to the Verification of Inventories.
8. The Central Government has prescribed maintenance of cost records
under section 209 (1) (d) of the Companies Act, 1956 in respect of
certain manufacturing activities of the Company. We have broadly
reviewed the accounts and records of the company in this connection and
are of opinion, that the prima- facie, the prescribed accounts and
records have been made and maintained. We have not, however, carried
out a detailed examination of the same.
9. a) The company is generally not regular in depositing the
undisputed Statutory Dues with Appropriate Authorities and there are
undisputed and outstanding amounts payable (as listed below) in respect
of Provident Fund, ESI Fund, Investor Education and Protection Fund,
Income-tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise
Duty, Cess or any other applicable taxes, Duties or Levies applicable
to the Company and its business which have remained outstanding as at
31 st March 2012, for a period of more than six months from the date
they became payable.
Name of the Statute Nature of the Amount (Rs.) Period to
Dues which
amount
relates
Provident Fund and Provident Fund 1,593,216 2011-12
Miscellaneous
Provisions Act
Employee State ESIC 467,648 2011-12
Insurance
Contribution Act
Income Tax Act TDS 11,879 2007-08
Karnataka Tax Professional 30,290 2008-09
on Profession, Tax
Trade, Callings,
and 9,760 2009-10
Employment Act 13,850 2010-11
10,100 2011-12
Total 2,136,743
b) According to the information and explanation given to us and records
of the company examined by us, the particulars of Sales Tax, Income
Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess which
have not been deposited on account of any dispute are as follows:
Name of the Statute Nature of the Amount (Rs.) For the Year
Dues
Central Sales Tax Act Central Sales 4,45,496 1999-00
Tax
5,80,226 2000-01
8,83,692 2001-02
Karnataka Entry Tax Karnataka Sales 46,593 1999-00
Act Tax
98,290 2000-01
Karnataka Sales Tax Karnataka Sales 4,35,196 1999-00
Act Tax
46,57,137 2000-01
32,10,915 2001-02
Penalty 5,000 1999-00
2,50,000 2000-01
18,35,296 2001-02
Interest <5> 1/2% 3,11,968 1999-00
33,37,878 2000-01
19,18,381 2001-02
Total 18,016,068
10. The company has accumulated losses as at the year end which is
more than 50% of its Net Worth and has incurred cash losses during the
financial year covered by our audit and also in the preceding financial
year.
11. In our opinion and according to the information and explanation
given to us, the Company has not defaulted in repayment of principal
dues in respect of loans borrowed from Bank as on 31.03.2012.There are
no debenture holders with the Company.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi mutual
benefit fund/society. Therefore, the provisions of clause 4(xiii) of
the order are not applicable to the Company.
14. The Company is dealing or trading in Shares, Securities, and other
Investments and in our opinion the Company has maintained proper
records.
15. In our opinion, the Company has not given any Guarantee for Loans
taken by others from bank or financial institutions for the purpose
mentioned.
16. In our opinion, the Company has not obtained any Term Loan during
the year.
17. According to the information and explanations given to us and on
an overall examination of the financial statements of the Company, We
report that the funds raised on short-term basis have not been used for
long-term investment.
18. The company has not made any preferential allotment made during
the reporting period.
19. The Company has no Debentures and hence reporting does not arise
in respect of creation of securities thereof.
20. The Company has not raised any monies by way of public issues
during the year.
21. According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For MURALI & VENKAT
Chartered Accountants
(G. SATISHCH ANDRA)
Partner
Membership No. 27372
ICAI Firm Registration No: 002162S
Place: Bangalore
Date: 18th August, 2012
Mar 31, 2010
(I) We have audited the attached Balance Sheet as at 31st March 2010,
the Profit & Loss Account and also the Cash Flow Statement of PASARI
SPINNING MILLS LTD,, for the year ended on that date. These Financial
Statements are the responsibility of the Companys Management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
(II) We have conducted our audit in accordance with the Auditing
Standards generally accepted in India. Those Standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
(III) We report, further in terms of the provisions of section 227 of
the Companies Act, 1956 that:
1. As required by the Companies (AuditorsReport) Order, 2003 (as
amended by the Amendment Order, 2004) issued by the Central Government
of India in terms of section 227(4A) of the Companies Act, 1956, we
give our comments on the matters specified in paragraphs 4 and 5 of the
said order to the extent as applicable to the Company in the Annexure
to this report.
2. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit.
3. in our opinion, proper Books of Account as required by law have
been kept by the Company so far as appears from our examination of
those Books.
4. The Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the Books of
Account.
5. In our opinion, the Balance Sheet, the Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in Section 211 (3C) of the Companies
Act, 1956 except for the following::
a) AS-2 Valuation of Inventories - Valuation of Finished Goods which is
not carried out on the basis of Cost or Market Value, whichever is
less. (Refer Accounting Policy for Inventories).
b) AS-13 Accounting for Investments - Non-recognition of diminution in
value compared to Market Values.
c) AS-15 Employee Benefits, which are accounted on cash basis with
regard to gratuity and E.L encashment. (Refer Accounting Policy for
Retirement Benefits).
6. On the Basis of written representations received from the
Directors, as on 31st March 2010 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st March 2010 from being appointed as a Director in terms of clause
(g) of sub section (1) of Section 274 ofThe Companies Act, 1956.
7. In our opinion and to the best of our information, d according to
the explanations given to us, subject to:
a) Non confirmation of balances in respect of Sundry Debtors, Creditors
and Loans and Advances as referred to in Note no. 2 of the notes on
account.
b) Non disclosure under Provisions of the Micro Small and Medium
Enterprises Development Act, 2006 in the absence of details received
from the suppliers vide note no. 5.
c) Non provision towards Sales Tax arrears including penalty
aggregating to Rs. 1,59,14,324 of the earlier years as referred to in
note no. 6 of the notes on account.
d) Non provision of Employee Benefits as per AS-15 issued by Institute
of Chartered Accountants of India, non quantifiable vide Note no 7 of
the Notes on Account.
e) Non provision for depletion in Market Value of Investments vide Note
no 8 of Notes on Account,the said accounts read with the significant
accounting policies and notes on accounts give the information required
by the Companies Act, 1956, in the manner so required and give a true
and fair view in conformity with the accounting principles generally
accepted in India:
i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2010.
ii) In the case of the Profit & Loss Account, of the Profit (after
Deferred Tax adjustments) of the Company for the year ended on that
date.
iii) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURETOTHE AUDITORS REPORT (Referred to in paragraph 1 of our report
of even date)
1. a) The Company has maintained proper records to show full
particulars including quantitative details and situation of all Fixed
Assets.
b) The assets of the Company have been physically verified by the
Management during the year at reasonable intervals and no discrepancies
between the book records and physical verification were noticed on such
verification.
c) The Company has not disposed off /sold a substantial portion of its
Fixed Assets during the year.
2. a) Inventorieshavebeenphysicallyverifiedbythe management. In our
opinion,-the frequency of verification is reasonable.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
c) The Company is maintaining records of inventory and in our opinion
the Company has to improve upon the disclosure of proper details of
inventory identification with respect to the nature of different
quality aspects. In our opinion and accordingly to the information and
explanations given to us, we have not come across any material
discrepancies between the physical stocks and inventory records.
3. In respect of the loans, secured or unsecured, granted or taken by
the company to/from companies, firm or other parties covered Register
maintained under section 301 of the companies Act, 1956. We report:
a) The Company has taken interest free unsecured loans from a company
under the same management and the maximum amount outstanding at any
time during the year is Rs 1,80,33,384/- and the year-end balance isRs
1,80,33,384/-. As per the information and explanations given to us,
there is no stipulation mentioned as part of the terms and conditions
of the loan for the repayment of the principal amou^,
b) In our opinion and according to the information and explanation
given to us, the interest free loan, as per the terms and conditions,
are not prima facie prejudicial to the interest of the Company.
c) The Company has not granted any loans, secured or unsecured to
companies, firms or other parties listed in the Register maintained
under section 301 of the Act, 1956.
4. In our opinion and according to the information and explanations
given to us, the Company needs to strengthen its Internal Control
System commensurate with the size of the Company and the nature of its
business with regard to purchases of inventory, Fixed Assets and for
the Sale of goods.
5. In respect of particulars of contracts or arrangements and
transactions entered in the register maintained in pursuance of section
301 of the Companies Act 1956;
a) To the best of our knowledge and belief and according to the
information and explanations given to us, particulars of contracts or
arrangements that needed to be entered into the register have been so
entered.
b) According to the information and explanations given to us, each of
the transactions in pursuance of such contracts/ arrangements in excess
of Rs 5 Lakhs in respect of any party during the year, have been made
at prices which are reasonable having regard to the prevailing market
prices at the relevant time, where such prices are available.
6. In our Opinion and according to the information and explanations
given to us, the company has not accepted any deposits within the
meaning of provisions of Section 58 A, 58 AA or any other relevant
provisions of the Companies Act, 1956 and The Companies (Acceptance of
Deposits) Rule, 1975.
7. In our opinion, the company has Internal Audit System commensurate
with the size and nature of its business and the same needs to be
strengthened with regard to the Verification of Inventories.
8. The Central Government has prescribed maintenance of cost records
under section 209 (1) (d) of the Companies Act, 1956 in respect of
certain manufacturing activities of the Company. We have broadly
reviewed the accounts and records of the company in this connection and
are of opinion, that the prima-facie, the prescribed accounts and
records have been made and maintained. We have not, however, carried
out a detailed examination of the same.
9 a) The company is generally not regular in depositing the undisputed
Statutory Dues with Appropriate Authorities an< there are undisputed
and outstanding amounts payable (as listed below) in respect of
Provident Fund, ESI Func Investor Education and Protection Fund,
Income-tax, Wealth Tax, Service Tax , Sales Tax, Customs Duty, Excise
Dut> Cess or any other applicable taxes, Duties or Levies applicable to
the Company and its business which have remainei outstanding as at 31st
March 2010, for a period of more than six months from the date they
became payable.
Amount I Period to which the
Name of the
statute Nature of the Amount Period to which the
dues Rs. amount relates
Karnataka Entry
Tax Act Entry Tax 130193 93-94
Kamataka Entry
Tax Act Penalty 54682 93-94
Karnataka Sales
Tax Act Karnataka Sales Tax 43494 95-96
Central Sales
Tax Act Central Sales Tax 1500 95-96
Penalty 3599 95-96
Karnataka Sales
Tax Act Kamataka SalesTax 17332 96-97
Central Sales
Tax Act Central Sales Tax 61420 96-97
Penalty 2362 96-97
Karnataka Sales
Tax Act Karnataka SalesTax 20604 97-98
Central Sales
Tax Act Central Sales Tax 128208 97-98
Karnataka Entry
Tax Act Entry Tax 81205 97-98
Karnataka Sales
Tax Act Karnataka Sales Tax 294261 98-99
Central Sales
Tax Act Central Sales Tax 171569 98-99
Karnataka Entry
Tax Act Entry Tax 115252 98-99
Karnataka Sales
Tax Act Karnataka Sales Tax 435196 99-00
Central Sales
Tax Act Central Sales Tax 445496 99-00
Karnataka Entry
Tax Act Karnataka Sales Tax 4657137 00-01
Central Sales
Tax Act Central Sales Tax 580226 00-01
Karnataka Sales
Tax Act Karnataka Sales Tax 1880970 01-02
Central Sales
Tax Act Central Sales Tax 883692 01-02
Karnataka Sales
Tax Act Penalty 1835296 01-02
Karnataka Sales
Tax Act Karnataka Sales Tax 698 03-04
Karnataka Sales
Tax Act Penalty 472334 99-00
Karnataka Sales
Tax Act Penalty 3592728 00-01
Karnataka Sales
Tax Act Kamataka Sales Tax 604 02-03
Central Sales
Tax Act Central Sales Tax 4266 02-03
Provident Fund &
Miscellaneous Provident Fund 1442211 Oct 07-Mar 08
Provisions Act 1879728 Apr 08-Mar 09
748970 Apr 09-Sept 09
Employees State
Insurance ESIC 380353 08-09
Contribution Act 306038 Apr 09-Sept 09
IncomeTaxAct TDS 57194 Apr 09-Sept 09
Kamataka Tax on
Profession,
Trade, Callings,
and Professional Tax 18280 Apr 09-Sept 09
Employment Act
TOTAL 20747098
9. b) There are no disputed liabilities with regard to Sales Tax,
IncomeTax, WealthTax, Service Tax, Customs Duty, Excise Duty, Cess as
on 31.03.2010.
10. The company has accumulated losses as at the year end which is
more than 50% of its Net Worth and has incurred cash losses during the
financial year covered by our audit and also in the preceding financial
year.
11. In our opinion and according to the information and explanation
given to us, the Company has not defaulted in repayment of principal
dues in respect of loans borrowed from Bank as on 31.03.2010.There are
no debenture holders with the Company.
12. The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
13. In our opinion, the Company is not a chit fund or a nidhi mutual
benefit fund/ society.Therefore, the provisions of clause 4(xiii) of
the order are not applicable to the Company.
14. The Company is dealing or trading in Shares, Securities, and other
Investments and in our opinion the Company has maintained proper
records.
15. In our opinion, the Company has not given any Guarantee for Loans
taken by others from bank or financial institutions for the purpose
mentioned.
16. In our opinion, the Company has not obtained any Term Loan during
the year.
17. According to the information and explanations given to us and on
an overall examination of the financial statements of the Company, We
report that the funds raised on short-term basis have not been used for
long-term investment.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to Parties
and Companies covered in the register to be maintained under section
301 of the Act.
19. The Company has no Debentures and hence reporting does not arise
in respect of creation of securities thereof.
20. The Company has not raised any monies by way of public issues
during the year.
21. According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For Murali & Venkat
Chartered Accountants
Date: 26-08-2010
Place: Bangalore Partner
Membership No. 27372
ICAI Firm Registration No.: 002162S