PASARI SPINNING MILLS LIMITED
ANNUAL REPORT 2011-2012
TO THE MEMBERS OF
PASARI SPINNING MILLS LIMITED.
(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
(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
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
6. On the Basis of written representations received from the Directors, as
on 31 st March 2012 and taken on record by the Board of Directors, we
report that none of the directors is disqualified as on 31 st 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
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
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.
For MURALI & VENKAT
Place: Bangalore (G. SATISHCHANDRA)
Date : 18th August, 2012 Partner
Membership No. 27372
ICAI Firm Registration No: 002162S
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
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 year-end 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
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
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 Dues Amount (Rs.) Period to which
Provident Fund and Provident Fund 1,593,216 2011-12
Employee State ESIC 467,648 2011-12
Income Tax Act TDS 11,879 2007-08
Kamataka Tax on Professional Tax 30,290 2008-09
Profession, Trade, 9,760 2009-10
Callings, and 13,850 2010-11
Employment Act 10,100 2011-12
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 Dues Amount (Rs.) For the Year
Central Sales Tax Act Central Sales Tax 4,45,496 1999-00
Karnataka Entry Tax Act Karnataka Sales Tax 46,593 1999-00
Karnataka Sales Tax Act Karnataka Sales Tax 4,35,196 1999-00
Penalty 5,000 1999-00
Interest @ 1/2% 3,11,968 1999-00
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
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
18. The company has not made any preferential allotment made during the
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
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
For MURALI & VENKAT
Place: Bangalore (G. SATISH CHANDRA)
Date : 18th August, 2012 Partner
Membership No. 27372
ICAI Firm Registration No: 002162S