We have audited the attached Balance Sheet of M/s. Bannari Amman
Spinning Mills Limited as at 31.03.2012, Statement of Profit and Loss
and also the Cash Flow Statement for the year ended on that date
annexed thereto. 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.
We conducted our audit in accordance with 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
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
I. As required by the Companies (Auditor''s Report) Order 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we furnish below a statement on
the matters specified in paragraphs 4 and 5 of the said Order.
i. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
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 our opinion is reasonable having regard to the size of the company
and nature of its assets. No material discrepancies were noticed on
c. In our opinion and according to the information and explanations
given to us, the Company has not disposed off substantial part of its
fixed assets during the year.
ii. In respect of its inventories:
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 inventories. As
explained to us, there were no material discrepancies noticed on
physical verification of inventory as compared to the book records.
iii. The company has not granted/taken any loans, secured or unsecured,
to/from companies, firms or other parties covered in the register
maintained under Section 301 of the Companies Act, 1956.
iv. In our opinion and according to the information and explanations
given to us, there exists an adequate internal control system
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. During the course of our
audit, we have not observed any continuing failure to correct major
weaknesses in internal control system of the company.
v. a In our opinion and according to the information and explanations
given to us, the particulars of all contracts or arrangements that need
to be entered into the register maintained under section 301 of the
Companies Act,1956 have been so entered.
b In our opinion and according to the information and explanations
furnished to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 and exceeding the value of rupees five 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
vi. The Company has not accepted any deposits from the public.
Therefore the provisions of clause 4 (vi) of the Companies (Auditor''s
Report) Order, 2003 are not applicable.
vii. In our opinion, the company has an internal audit system
commensurate with the size and nature of its business.
viii. We have broadly reviewed cost records maintained by the company
pursuant to the Companies (cost accounting records) Rules, 2011
prescribed by the Central Government under Section 209 (1) (d) of the
Companies Act, 1956 and are of the opinion that prima facie the
prescribed cost records have been maintained. We have, however, not
made a detailed examination of the cost records with a view to
determine whether they are accurate or complete.
ix. In respect of statutory dues:
a. According to the records, 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, Service tax, Customs
Duty, Excise Duty, Cess and other material statutory dues applicable to
it. According to the information and explanations given to us, no
undisputed amounts payable in respect of aforesaid dues were
outstanding as at 31st March, 2012 for a period of more than six months
from the date of they became payable.
b. The disputed statutory dues aggregating to Rs 127.98 Lakhs that
have not been deposited on account of matters pending before
appropriate authority are as under:
Name of Nature of Amount Period to Forum where
the Statute the Dues (Rs in which the dispute is
Lakhs) amount pending
Central Excise Excise Duty 51.59 07.12.2008 to Commissioner of
Act, 1944 rebate 07.07.2009 Central Excise
Central Excise Excise Duty 55.73 07.12.2008 to The CESTAT,
Act, 1944 06.07.2009 Chennai
Central Excise Excise Duty 19.33 07.12.2008 to Commissioner of
Act, 1944 rebate 06.07.2009 Central Excise
Central Excise Excise Duty 1.33 01.04.2009 to Commissioner of
Act, 1944 30.06.2009 Central Excise
x. The Company has no accumulated losses and has not incurred any cash
losses during the financial year covered by our audit or in the
immediately preceding financial year.
xi. In our opinion and according to the information and explanation
given to us, the Company has not defaulted in repayment of dues to
financial institutions or banks.
xii. In our opinion and according to the information and explanation
given to us, no loans and advances have been granted by the Company on
the basis of security by way of pledge of shares, debentures and other
xiii. In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, clause 4(xiii) of the
Companies (Auditor''s Report) Order 2003 is not applicable to the
xiv. In our opinion, the company is not dealing or trading in shares,
securities, debentures and other investments, Therefore, clause 4(xiv)
of the Companies (Auditor''s Report) Order 2003 is not applicable to the
xv. According to information and explanations given to us, the company
has not given any guarantee for loans taken by others from banks or
xvi. In our opinion, the term loans have been applied for the purpose
for which they have been raised.
xvii. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that the no funds raised on short term basis have been used for long
xviii. 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 maintained under Section 301 of
the Companies Act, 1956.
xix. The Company has not issued any debentures during the year.
xx. The Company has not raised any money by way of public issue during
xxi. In our opinion and 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.
II. Further to the above , 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 purposes of our
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
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
d) In our opinion, the Balance Sheet, Statement of Profit and Loss 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 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 directors in terms of clause (g) of
sub-Section (1) of section 274 of the Companies Act 1956;
f) In our opinion and to the best of our information and according to
the explanations given to us, 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 31st March, 2012;
(ii) In the case of the Statement of Profit and Loss of the Loss for
the year ended on that date: and
(iii) In case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
For P N RAGAVENDRA RAO & Co.
P R VITTEL
30 May, 2012 ICAI Firm Regn. No. 003328S