1. We have audited the attached Balance Sheet of The Lakshmi Mills
Company Limited, as at March 31, 2012, the Statement of Profit and Loss
and the Cash Flow Statement of the Company for the year ended on that
dated annexed thereto. These financial statements are the
responsibility of the management of the company. Our responsibility is
to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with generally accepted
auditing standards in India. These Standards require that we plan and
perform the audit to obtain reasonable assurance whether the financial
statements are prepared, in all material respects, in accordance with
an identified financial reporting framework and are free of material
misstatements. 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 statements presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor''s Report) Order, 2003
issued by the Central Government of India in terms of section 227 (4A)
of the Companies Act, 1956, we enclose in the Annexure a statement on
the matters specified in paragraphs 4 and 5 of the said Order.
4. Further, to our comments in the Annexure referred to above, we
(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
(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
(c) The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this report are prepared in accordance
with the Accounting Standards referred to in section 211 (3C) of the
Companies Act, 1956.
(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement dealt with by this report are in agreement
with the books of account.
(e) On the basis of written representations received from the directors
of the Company, as at 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 a director in terms of
clause (g) of sub-section (1) of section 274 of the Companies Act,
5. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
Notes thereon 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;
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2012;
(b) in the case of the Statement of Profit and Loss of the Loss for the
year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
company for the year ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
(Referred to in our report of even date)
i. In respect of fixed assets:
a. The Company has maintained proper records showing full particulars,
including quantitative details and situations of fixed assets.
b. Some of the fixed assets were physically verified during the year
by the management in accordance with the programme of verification,
which in our opinion provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanations given to us no material discrepancies were noticed on such
c. The fixed assets disposed off during the year, in our opinion do
not constitute a substantial part of the fixed assets of the Company
and such disposals has, in our opinion not affected the going concern
status of the Company.
ii. In respect of its inventories:
a. As explained to us, inventories were physically verified during the
year by the management at reasonable intervals.
b. In our opinion and according to the information and explanations
given to us, the procedure of physical verification of inventories
followed by the management were reasonable and adequate in relation to
the size of the Company and nature of its business.
c. In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
iii. The company has neither granted nor 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 and
hence the provisions of clauses 4 (iii) (b) to (d), (f) & (g) of the
Companies (Auditor''s Report) Order, 2003 are not applicable.
iv. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems commensurate
with the size of the Company and nature of its business for the
purchase of inventory and fixed assets and for the sale of the goods
and services. During the course of the audit, we have not observed any
continuing failure to correct major weaknesses in internal control.
v. In respect of contracts or arrangements entered in the register
maintained in pursuance of Section 301 of the Companies Act 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us: ''
a. The particulars of contracts or arrangements referred to Section
301 that needed to be entered into the register maintained under the
said section have been so entered.
b. In our opinion and according to explanations given to us, the
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.
vi. In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Section
58A and 58AA or any other relevant provisions of the Companies Act,
1956 and the Companies (Acceptance of Deposit) Rules, 1975 with regards
to the deposits accepted from the public.
vii. In our opinion, the internal audit functions carried out during
the year by Independent Chartered Accountants appointed by the
management have been commensurate with the size and nature of its
viii. We have broadly reviewed the books of account and records
maintained by the Company relating to the manufacture of textiles
pursuant to the order made by the Central Government for the
maintenance of cost records under section 209 (1) (d) of the Companies
Act 1956 and are of the opinion that prime facie prescribed accounts
and records have been made and maintained. We have, however, not made a
detailed examination of the records with a view to determining whether
they are accurate or complete.
ix. In respect of Statutory dues:
a.. According to the information and explanations given to us, the
Company has generally been 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 material
statutory dues with the appropriate authorities during the year. There
are no undisputed statutory dues which are outstanding for more than
six months as at the Balance Sheet date.
b. According to the information and explanations given to us details
of disputed tax which have not been deposited as on 31.3.2012 on
account of any dispute are given below:
Name of the
Statute Amount Period to
which Forum where
Nature of Dues Rs In
Lakhs the amount
1944 / Service Tax 2.95 1997 - 99 High Court
Act Excise Duty 1.61 1995 - 96 High Court
Cenvat 2.79 2004 - 05 Deputy Commissioner
Cenvat 1.36 2007 - 08 Asst. Commissioner
x. The company has incurred a cash loss of Rs. 1260.07 lakhs during
the financial year covered by our audit and . a cash loss of Rs. Nil
in the immediately preceding financial year. The accumulated losses at
the end of the year is Rs. 627.98 lakhs.
xi. On the basis of our audit procedures, in our opinion and according
to the information and explanations given to us the Company has not
defaulted in the payment of dues to financial institutions and Banks,
except two term loan installments to banks amounting to Rs. 117.50
lakhs and Rs. 22.00 lakhs respectively which were due and outstanding
as on 31st March, 2012 and were since repaid before the date of our
xii. The company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
Hence the provisions of this clause 4 (xii) of the Companies
(Auditor''s Report) Order, 2003 are not applicable.
xiii. The company is not a chit fund or Nidhi mutual benefit
fund/society. Therefore, the provisions of clause 4 (xiii) of the
Companies (Auditor''s Report) Order, 2003 are not applicable.
xiv. The company is not dealing in or trading in shares, securities,
debentures and other investments. Hence the provisions of clause 4(xiv)
of the Companies (Auditor''s Report) Order 2003 are not applicable to
xv. In our opinion and according to the information and explanations
given to us the company has not given any guarantee for loans taken by
others from Banks and Financial Institutions during the year.
xvi. To the best of our knowledge and belief and according to the
information and explanations given to us, in our opinion term loans
availed by the Company were, prime facie, applied by the Company during
the year for the purpose for which the loans were obtained, other than
temporary deployment pending application.
xvii According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, funds
raised on short term basis have, prime facie, not been used during the
year for long term investment.
xviii The provisions of clause 4 (xviii) (xix) and (xx) of the
Companies (Auditor''s Report) Order 2003 are not applicable since the
Company has not issued any shares or debentures during the year.
xix To the best of our knowledge and belief and according to the
information and explanations given to us, no fraud on or by the Company
was noticed or reported during the year.
For Subbachar & Srinivasan
Firm Registration No. 004083S
30th May 2012 Membership No. 200380