TO THE MEMBERS OF PASARI SPINNING MILLS LIMITED.
Report on the Financial Statements
We have audited the accompanying financial statements of M/s PASARI SPINNING MILLS
LTD., ("the Company"), which comprise the Balance Sheet as at March 31,
2013, 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.
Managements 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"). 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.
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
auditors 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 Companys 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.
Report on other Legal and Regulatory Requirements:
1. As required by the Companies (Auditors Report) Order, 2003 ("the
Order") 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 cash flow statement dealt with
by this Report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet and Statement of Profit and Loss, comply with the
Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act,
1956; except Accounting standard 13 & 15.
(e) On the basis of written representations 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 clause (g) of
sub-section (1) of section 274 of the Companies Act, 1956.
(f) Since the Central Government has not issued any notification as to the rate at
which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it
issued any Rules under the said section, prescribing the manner in which such cess is to
be paid, no cess is due and payable by the Company.
In our opinion and to the best of our information and according to the explanations
given to us Subject to the following :
Non confirmation of balances in respect of Sundry Debtors, Creditors and Loans
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.
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.
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.
Non provision for depletion in Market Value of Investments in shares, securities
and mutual funds, vide point no 8 in other disclosures.
Non provision towards Back billing demand raised by CESCOM aggregating to Rs
28,43,845/- of the earlier years, vide point no 9 in other disclosures.
The said Financial Statements read with the 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, 2013;
(b) In the case of the Statement of Profit and Loss, of the Loss for the year ended on
(c) In the case of the Cash Flow Statement, of the cash flows for the year ended on
||For MURALI & VENKAT
||Firms Registration Number: 02162S
|Date: 05th August 2013
||Membership Number: 27372
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 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
c) The Company has disposed major 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
c) The Company is maintaining proper records of inventory. 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. 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
is 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 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 his operation from June 2010 and all the workers are given one time
settlement. The above record are verified and as been kept 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 Provident Fund, 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 2013, for
a period of more than six months from the date they became payable.
|Name of the Statute
||Nature of the Dues
||Period to which amount relates
|Income tax act
|Karnataka Tax on Profession, Trade, Calling and Employment Act
||08-09 to 11-12
b) There are disputed liabilities with regard to Sales Tax, as on 31.03.2013
|Name of the Statute
||Nature of the Dues
||For the Year
|Central Sales Tax Act
||Central Sales Tax
|Karnataka Entry Tax Act
||Karnataka Sales Tax
|Karnataka Sales Tax Act
||Karnataka Sales Tax
|Interest @ %
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.
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 31.03.2013. 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
14. The Company is dealing or trading in Shares, Securities, Debentures and other
Investments in our opinion the company have maintained proper records.
15. In our opinion, the Company has not given any Guarantee for Loans taken by others
by bank or financial institutions.
16. In our opinion, the Company has applied the Term Loans for the purpose for which
they were obtained.
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
|Place : Bangalore
|Date : 5th August, 2013
||Membership No. 27372