We have audited the accompanying Financial Statements of M/s PASARI
SPINNING MILLS LIMITED, (the Company), which comprise the Balance
Sheet as at March 31, 2014, 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.
Management''s 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) read with general circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013. 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 auditor''s 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 Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity''s
internal control. 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.
In our opinion and to the best of our information and according to the
explanations given to us subject to the following:
a. Non confirmation of balances in respect of Sundry Debtors,
Creditors and Loans & Advances.
b. Non disclosure under provisions of the Micro, Small and Medium
Enterprises Development Act 2006 in the absence of details received
from suppliers, vide point no.5 in other disclosures.
c. Non provision towards sales tax arrears including penalty
aggregating to Rs.1,80,18,068 of the earlier years, vide point no.2 in
d. Non provision of Employee benefits as per AS-15 issued by the
Institute of Chartered Accountants of India, non quantifiable vide
point no.7 in other disclosures.
e. Non provision for depletion in Market value of Investments in
shares, securities and mutual funds, vide point no.8 in other
f. Non provision towards Back billing demand raised by CESCOM
aggregating ton Rs.28,43,845/- of the earlier years, vide point no.9 in
The said Financial Statements read with 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, 2014;
(b) In the case of the Statement of Profit and Loss, of the PROFIT for
the year ended on that date; and
(c) In the case of the Cash Flow Statement, of the Cash Flows for the
year ended on that date.
Report on other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor''s Report)
Order, 2003 (the Order) as amended, 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
(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, Statement of Profit and Loss and the 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
the Cash Flow Statement comply with the Accounting Standards referred
to in subsection (3C) of section 211 of the Companies Act, 1956 read
with the general circular 15/2013 dated 13th September, 2013 of the
Ministry of Corporate Affairs in respect of the Section 133 of the
Companies Act, 2013; and
(e) On the basis of written representations received from the Directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the Directors is disqualified as on March 31, 2014, from being
appointed as a Director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE TO THE AUDITORS'' REPORT The Annexure referred to in our report
to the members of M/s PASARI SPINNING MILLS LIMITED (''the Company'') for
the year ended 31st March, 2014, we report that:
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of Fixed
(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 such verification.
(c) The Company has not disposed off /sold a substantial 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
(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 inventory. In our
opinion and according 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 are 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
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
(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 in house 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 its operation from June 2010 and all the workers are given one
time settlement. The above records are verified and have been
maintained 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 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 2014, for a period of more than six months from the date they
Name of the Statute Nature of the dues Amount due Year
ESIC ESIC 7,0,3115 2010-11
Income tax act TDS 36,654 Various years
on profession, Professional Tax 64,000 08-09 to 11-12
and Employment Act
tax Act Cess on sales 84,760 06-07 to 07-08
(b) There are disputed liabilities with regard to Sales Tax, as on
Name of the Statute Nature of
the Dues Amount (Rs.) For the Year
Central Sales Tax Act Central Sales Tax 4,45,496 1999-00
Tax Act Karnataka Sales Tax 46,593 1999-00
Tax Act Karnataka Sales Tax 4,35,196 1999-00
Penalty 5,000 1999-00
Interest @ 1/2% 3,11,968 1999-00
10. The Company has accumulated losses as at the yearend which is more
than 50% of its Net worth and has not 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 31.03.2014. 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 the Company.
14. The Company is dealing or trading in Shares, Securities, Debentures
and other Investments in our opinion the company has maintained proper
15. In our opinion, the Company has not given any Guarantee for Loans
taken by others from banks or financial institutions for the purpose
16. In our opinion, the Company has applied the Term Loans for the
purpose for which they were obtained. However, during the year the
Company has not obtained any Term Loan.
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
For MURALI & VENKAT
Firm''s Registration Number: 02162S
Place: Bangalore Partner
Date: 31st July 2014 Membership Number: 231549