| We have audited the attached Balance Sheet of M/s. Sri Nandaa Spinners
Limited as at 31st March 2010 and also the Profit and Loss Account and
Cash Flow Statement for the period ended on that date annexed thereto
both of which we have signed with reference to this report. These
financial statements are the responsibility of the management of the
company. Our responsibility is to express an opinion on this financial
statement based on our audit.
1. We have conducted the audit in accordance with auditing standards
generally accepted in India. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether these
financial statements are free from any material misstatement. An audit
includes, examining on a test basis, evidence supporting the amount and
disclosure in the financial statement. An audit also includes assessing
the accounting principles used and significant estimate made by the
management as well as evaluating overall presentation of the financial
statements. We believe that our audit provides a reasonable basis for
our opinion.
2. As required by the Companies (Auditor's Report) Order, 2003 issued
by the Department of Company Affairs, in terms of section 227 (4A) of
the Companies Act, 1956, and on the basis of checks considered
appropriate we enclose in the Annexure a statement on the matters
specified in the said Order.
3. Further to our comments in the Annexure referred to in paragraph 1
above, we state that:
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of
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 such
books.
c) The Balance Sheet and the Profit and Loss Account and Cash flow
statement dealt with by this report are in agreement with the books of
account furnished to us.
d) In our opinion the Profit & Loss account, Balance Sheet and Cash
Flow statement comply with the accounting standards wherever applicable
to the Company as referred to in Subsection (3C) of Section 211 of
Companies Act, 1956
e) As per the information and explanation given to us, none of the
directors of the company are prima-facie disqualified as on 31st March
2010 from being appointed as a director under clause (g) of Sub Section
(1) of section 274 of the Companies Act.
f) In out opinion and to the best of our information and according to
the explanation given to me, the said accounts read together with the
notes attached give the information required by the companies act, 1956
in the manner, so required and give a true and fair view:
a. In so far as it relates to the balance sheet, of the Company's
state of 31st March 2010
b. In so far as it relates, to the profit and loss account of the
company, loss for the year ended on that date;
c. In the case of Cash flow statement, of the cash flows for the year
ended on that date.
1 a) Whether the company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets.
The company is maintaining proper records showing full particulars,
including quantitative details and situation of fixed assets.
b) Whether these fixed assets have been physically verified by the
management at reasonable intervals; whether any material discrepancies
were noticed on such verification and if so, whether the same have been
properly dealt with in the books of accounts.
The Management has carried out physical verification of fixed assts at
reasonable intervals. It was informed that there was no material
discrepancies were noticed on such verification.
c) If a substantial part of fixed assets have been disposed off during
the year, whether it has affected the going concern.
The company has not sold any substantial part of the fixed assets
during the year.
2 a) Whether physical verification of inventory has been conducted at
reasonable intervals by the management.
Yes, it was explained that the management carries out physical
verification of the inventory at reasonable intervals.
b) Are the procedures of physical verification followed by the
management reasonable and adequate in relation to the size of the
company and the nature of its business? If not, the inadequacies in
such procedures should be reported.
The physical verification carried out by the management is adequate in
relation to the size of the company and nature of its business.
c) Whether the company is maintaining proper records of inventory and
whether any material discrepancies were noticed on physical
verification and if so, whether the same have been properly dealt with
in the books of accounts.
To the extent we have verified, we are of the opinion that the company
is maintaining proper records of inventory and it was informed to me
that no material discrepancies were noticed on physical verification.
3. a) Has the company granted any loans, secured or unsecured to /
from companies, firms or other parties covered in the register
maintained under section 301 of the Act. If so, give the number of
parties and amount involved in the transactions and.
In our opinion, except short term interest free advance to M/s. Sri
Karthik Spinners amounting to Rs. 12.40 Lakhs and M/s. Suparnaa
Spinners Limited amounting to Rs. 100.53 Lakhs, the company has not
granted any loans, secured or unsecured to / from companies, firms or
other parties covered in the register maintained under Sec 301 of the
Act.
b) Whether the rate of interest and other terms and conditions of loans
given by the company, secured or unsecured, are prima facie prejudicial
to the interest of the company and.
In our opinion and according to the information furnished to us, the
terms and conditions of loans given by the company, secured or
unsecured, are not prejudicial to the interest of the company
c) Whether receipt of the principal amount and interest are also
regular and
In our opinion there are no covenants with regard to repayment of loan,
however the loan has been fully repaid during the year.
d) If overdue amount is more than rupees one lakh, whether reasonable
steps have been taken by the company for recovery of the principal and
interest.
NIL
e) Has the company taken any loans, secured or unsecured from
companies, firms or other parties covered in the register maintained
under section 301 of the Act. If so, give the number of parties and the
amount involved in the transactions; and
f) Whether the rate of interest and other terms and conditions of loans
taken by the company, secured or unsecured, are prima facie prejudicial
to the interest of the company; and
g) Whether payment of the principal amount and interest are also
regular.
Yes
4. Is there an adequate internal control procedure commensurate with
the size of the company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods?
Whether there is a continuing failure to correct major weaknesses in
internal control.
In our opinion and according to the information and explanations given
to us, there are adequate internal control procedures commensurate with
the size of the company, its nature of business, for the purchase of
fixed assets and for the purchase and sale of goods. Further, on the
basis of our examination of the books and records of the company we
have neither come across nor have we been informed of any continuing
failure to correct major weaknesses in the aforesaid internal control
system.
5. a) Whether the particulars of contracts or arrangements referred to
in section 301 of the Act have been entered in the register required to
be maintained under that section;
Yes, as explained by the management the aforesaid transactions were
duly recorded in the register
b) Whether transactions made in pursuance of such contracts or
arrangements have been made at prices which are reasonable having
regard to the prevailing market prices at the relevant time.
As explained by the management and to the extent we have verified, the
said transactions were only carried out in the prevailing market rates.
6. In case the company has accepted deposits from the public, whether
the directives issued by the Reserve Bank of India and the provisions
of sections 58 A and 58AA of the Act and the rules framed there under,
where applicable, have been complied with. If not, the nature of
contraventions should be stated; If an order has been passed by Company
Law Board or National Company Law Tribunal or Reserve Bank of India or
any Court or any other Tribunal whether the same has been complied with
or not
To the extent we had verified and according to the information and
explanation given to me, the company has not accepted any deposits from
the public.
7 In the case of listed companies and / or other companies having a
paid - up capital and reserves exceeding Rs.50 Lakhs as at the
commencement of the financial year concerned, or having an average
annual turnover exceeding five crore rupees for a period of three *
consecutive financial years immediately preceding the financial year
concerned, whether the company has an internal audit system
commensurate with its size and
In our opinion, the company has an Internal audit system commensurate
with its size and nature of its business.
8. Where maintenance of cost records has been prescribed by the
Central Government under clause (d) of sub - section (1) of section 209
(1) (d) of the Act, whether such accounts and records have been made
and maintained.
We have broadly reviewed the books of account maintained by the Company
in respect of products where, pursuant to the rules made by the Central
Government of India, the maintenance of cost records has been
prescribed under Clause (d) of Subsection (1) of Section 209 of the Act
and are of the opinion that prima facie, the prescribed accounts and
records have been made and maintained. We have not, however made a
detailed examination of the records with view to determine whether they
are accurate or complete.
9. a) Is the company regular in depositing undisputed statutory dues
including provident fund, investor education and protection fund,
employees' state insurance, income tax. Sales tax, wealth tax,
Service tax, custom duty, excise duty, cess and any other statutory
dues with the appropriate authorities and if not, the extent of the
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, shall be indicated by the auditor.
Undisputed statutory dues including provident fund, Sales-tax, and Cess
have been regularly deposited with the appropriate authorities though
there has been delay in few cases.
b) In case dues of sales tax / income tax Service tax / Wealth tax /
Customs duty/ Excise duty/ cess have not been deposit* on account of
any dispute, then the amounts involved and the forum where dispute is
pending may please be mentioned.
Nature Amount Period
(In Lakhs)
Central Excise 1997-1998,
Excise Duty 81.38 1998-1999,
1999-2000,
2000-2001,
2001-Feb 2002.
Cotton
Corporation of 19.13 2003-2004
India.
Tribunal has passed appeal order for re-hearing with commissioner of
central Excise, Pudhucheri.
Pending Dispute with Cotton Corporation of India is referred to
Honorable Madras High Court and the arbitration is Still pending.
10. Whether in case of a company which has been registered for a
period not less than five years, its accumulated losses at the end of
the financial year are not less than fifty per cent of its net worth
and whether it has incurred cash losses in such financial year and in
the immediately preceding financial year also.
The company's accumulated loss at the end of the financial year
amounts to Rs. 16,79,25,513.52. In our opinion the company has not
incurred any cash loss during the financial year covered by the audit
or in the immediately preceding financial year and the accumulated
losses at the end of the financial year are more than fifty percent of
its net worth.
11. Whether the company has defaulted in repayment of dues to a
financial institution or bank or debenture holders If yes, the period
and amount of default to be reported.
The company has been enjoying holiday period which ended on October
2009 after which there has been a default in repayment of Working
Capital Term Loan from M/s. South India Bank amounting to Rs. 14.42
Lakhs
12 Whether adequate documents and records are maintained in cases where
the company has granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities; if not, the
deficiencies to be pointed out
The company has not granted any loans and advances against pledge of
shares,, debentures and other securities.
13 Whether the provisions of any special statute applicable to chit
fund have been duly complied with
This Clause is not applicable being a Manufacturing Company.
In respect of nidhi / mutual benefit fund / societies:
(a) Whether the net - owed funds to deposit liability ratio is more
than 1:20 as on the date of balance sheet.
(b) Whether the company has complied with the prudential norms on
income recognition and provisioning against sub-standard / default /
loss assets;
(c) Whether the company has adequate procedures for appraisal of credit
proposals / requests, assessment of credit needs and repayment capacity
of the borrowers;
(d) Whether the repayment schedule of various loans granted by the
nidhi is based on the repayment capacity of the borrower.
14 If the company is dealing or trading in shares, securities,
debentures and other investments, whether proper records have been
maintained of the transactions and contracts and whether timely entries
have been made therein; also whether the shares, securities, debentures
and other securities have been held by the company, in its own name
except to the extent of the exemption, if any, granted under section 49
of the Act.
The company is not dealing or trading in shares, securities, debentures
and other investments.
15 Whether the company has 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.
The company has not given any guarantee for loans taken by others from
bank or financial institutions.
16 Whether the term loans were applied for the purpose for which the
loans were obtained.
The Company has not borrowed any term loan during the Financial Year.
17 Whether the funds raised on short - term basis have been used for
long - term investment and vice versa. If yes, the nature and amount is
to be indicated.
According to the information and explanation and on the over all
examination of the Balance sheet we report that no funds raised on
short basis has been used for long term investments by the Company and
vice- versa.
18. Whether the company has made any preferential allotment of shares
to parties and companies converted in the Register maintained under
Section 301 of the Act and if so whether the price at which shares have
been issued is prejudicial to the interest of the company;
No such allotment was made.
19. Whether security or charge has been created in respect of
debentures issued;
No debentures were issued.
20. Whether the management has disclosed on the end use of money
raised by public issue and the same has been verified;
No public issue has been made.
21 Whether any fraud on or by the company has been noticed or reported
during the year, If yes, the nature and the amount involved is to be
indicated.
According to the information and explanation given to me and on the
basis of examination of records, that there were no frauds noticed by
the Company during the year
Place: Coimbatore
Date: 02.08.2010. CHARTERED ACCOUNTANT
S.JEEVARAJ
No:78, Aravind | 