1. I have audited the attached balance sheet of Amarjothi Spinning
Mills Limited as at 31st March 2012, and also the profit and loss
statement and the cash flow statement for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the company''s management. My responsibility is to express an opinion
on these financial statements based on my audit.
2. I conducted my audit in accordance with the auditing standards
generally accepted in India. Those Standards require that I plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material mis-statement. 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 managements, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for
3. As required by the Companies (Auditor''s Report) Order, 2003 and
amended by the (Auditor''s Report) (Amendment) Order, 2004, issued by
the Central Government of India in terms of sub-section (4A) of section
227 of the Companies Act, 1956,1 enclose in theAnnexurea statement on
the matters specified in paragraphs 4 and 5 of the said order.
4. Further to my comments in the Annexure referred to above, I report
a. I have obtained all the information and explanations, which to the
best of my knowledge and belief were necessary for the purposes of my
b. In my opinion, proper books of account as required by law have been
kept by the company so far as appears from my examination of those
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 my opinion, the Balance Sheet, Profit and Loss Statement and
Cash Flow statement dealt with by this report comply with the
accounting standards referred to in sub- section (3C) of section 211 of
the Companies Act, 1956;
e. On the basis of written representations received from the
directors, as on 31s* March 2012 and taken on record by the Board of
Directors, I 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;
f. In my opinion and to the best of my information and according to
the explanations given to me, the said 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 31s* March 2012;
ii. In the case of the Profit and Loss Statement, of the Profit for
the year ended on that date; and
iii. In the case of the Cash Flow statement, of the Cash Flows for the
year ended on that date.
ANNEXURE TO THE AUDITOR''S REPORT:
Referred to in paragraph 3 of my report of even date,
1. a. The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
b. All the assets have not been physically verified by the management
during the year but there is a regular programme of verification which,
in my opinion, is reasonable having regard to the size of the company
and the nature of its assets. No material discrepancies were noticed
on such verification.
c. The company has not disposed off a substantial portion of the
assets during the year and hence, does not affect the going concern
status of the Company.
2. a. The inventory has been physically verified during the year by
the management. In my opinion, the frequency of verification is
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. On the basis of my examination of the records of inventory, I am of
the opinion that the company is maintaining proper records of
inventory. The discrepancies noticed on verification between the
physical stocks and the book records were not material.
3. a. The company has taken unsecured loan from parties covered in the
register maintained under section 301 of the Companies Act, 1956. The
maximum amount involved during the year was Rs.30.75 Crores and the
year-end balance of loans taken from such party was Rs.29.36 crores.
These amounts have been brought in pursuant to the terms of sanction
given by the bankers.
b. In my opinion the rate of interest and other terms and conditions
on which loans have been taken from parties listed in the registers
maintained under section 301 are not, prima facie, prejudicial to the
interest of the company.
c. The company is regular in repaying the principal amounts as
stipulated and has been regular in the payment of interest.
d. There is no overdue amount of loans taken from parties listed in
the registers maintained under section 301 of the Companies Act, 1956.
e. The Company has not granted any loan, secured or unsecured to any
party covered in the register required to be maintained under Section
301 of the Companies Act, 1956.
4. In my opinion and according to the information and explanations
given to me, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business with regard to purchase of inventory, fixed assets and with
regard to the sale of goods and services. In my opinion, there is no
continuing failure to correct major weaknesses in the internal control
5. In my opinion and according to the information and explanations
given to me, there are no transactions made in pursuance of contracts
or arrangements entered in the registers maintained under section 301
and exceeding the value of five lakh rupees in respect of any party
during the year except to the extent of unsecured loans brought in by
the promoters for an amount of Rs.29.36 crores. Such amounts have been
brought in pursuant to the sanction given by the bankers for the amount
of secured loans taken from them.
6. The Company has not accepted any deposits from the public during
the year and hence the provisions of sections 58Aand 58AAof the
Companies Act 1956 or any other relevant provisions of the Act and the
Reserve Bank of India Rules on the Companies (Acceptance of Deposit)
Rules 1975 are not applicable to the company for the year under review.
7. In my opinion, the company has an internal audit system
commensurate with the size and nature of its business.
8. I have broadly reviewed the books of account relating to materials,
labour and other items of cost maintained by the company pursuant to
the Rules made by the Central Government for the maintenance of cost
records under section 209 (1) (d) of the Companies Act, 1956 and I am
of the opinion that prima facie the prescribed accounts and record have
been made and maintained. However I have not made a detailed
examination to ascertain the accuracy of the statements.
9. a. According to the records of the company, the company is regular
in depositing with appropriate authorities undisputed statutory dues
including provident fund, investor education and protection fund,
employees'' state insurance, income-tax, sales-tax, wealth - tax,
custom duty, service tax, excise -duty, cess and other statutory dues
applicable to it.
b. According to the information and explanations given to me, no
undisputed amounts payable in respect of income-tax, wealth-tax,
sales-tax, customs duty, service tax and excise duty were outstanding,
as at 31.03.2012 for a period of more than six months from the date
they became payable.
c. According to the records of the company, there are no dues of sales
tax, income- tax, customs tax/wealth -tax, excise duty, service tax
/cess which have not been deposited on account of any dispute.
10. There are no accumulated losses of the company as on the date of
the Balance Sheet. The company has not incurred any cash losses during
the financial year covered by my audit and the immediately preceding
11. Based on my audit procedures and on the information and
explanations given by the management, I am of the opinion that the
company has not defaulted in repayment of dues to banks.
12. The Company has not granted any loans on the basis of the security
by way of pledge of shares, debentures and other securities.
13. The Company is not a chit fund or nidhi or mutual benefit fund /
society and hence the provisions of clause 4(xiii) of the Companies
(Auditors Report) Order 2003 are not applicable to the Company for the
year under review.
14. The Company is not dealing or trading in shares, securities,
debentures or other investments and hence the provisions of clause 4
(xiv) of the Companies (Auditors Report) Order 2003 are not applicable
to the company for the year under review.
15. The Company has not given any guarantee for loans taken by others
from bank or financial institutions.
16. The term loans have been applied for the purpose for which they
17. According to the information and explanations given to me and on
an overall examination of the balance sheet of the company, I report
that no funds raised on short-term basis have been used for long-term
investment. No long-term funds have been used to finance short-term
assets except core (permanent) working capital.
18. Based on my examination of records and the information provided to
me by management I report that the company has not made preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Act.
19. During the period covered by my audit report, the company has not
issued any debentures. The question of creation of any security in
respect of debentures does not arise.
20. The Company has not raised any money by way of public issue during
21. Based upon the audit procedures performed and information and
explanations given by the management, I report that no fraud on or by
the company has been noticed or reported during the course of my audit.
V. NARAYANASWAMI, M.A., F.C.A.
Place : Tirupur Chartered Accountant
Date : 17.08.2012 Membership No.023661