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Pasari Spinning Mills

BSE: 521080|ISIN: INE604F01010|SECTOR: Textiles - Spinning - Cotton Blended
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« Mar 14
Auditor's Report (Pasari Spinning Mills) Year End : Mar '15
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, 2015, 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:
 
 The Company''s Board of Directors is responsible for the matters stated
 in Section 134(5) of the Companies Act 2013 (The Act) with respect to
 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 principles generally
 accepted in India, including the Accounting Standards specified under
 Section 133 of the Act, read with Rule 7 of the Companies (Accounts)
 Rules, 2014.
 
 This responsibility also includes maintenance of adequate accounting
 records in accordance with the provisions of the Act for safeguarding
 the assets of the Company and for preventing and detecting frauds and
 other irregularities; selection and application of appropriate
 accounting policies; making judgments and estimates that are reasonable
 and prudent; and design, implementation and maintenance of adequate
 internal financial controls, that were operating effectively for
 ensuring the accuracy and completeness of the accounting records,
 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.
 
 Auditor''s Responsibility:
 
 Our responsibility is to express an opinion on these financial
 statements based on our audit. We have taken into account the
 provisions of the Act, the accounting and auditing standards and
 matters which are required to be included in the audit report under the
 provisions of the Act and the Rules made there under.
 
 We conducted our audit in accordance with the Standards on Auditing
 specified under Section 143(10) of the Act. 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 the 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
 that give a true and fair view in order to design audit procedures that
 are appropriate in the circumstances, but not for the purpose of
 expressing an opinion, whether the company has in place an adequate
 internal financial controls system over financial reporting and the
 operating effectiveness of such controls.  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 that we have obtained is sufficient
 and appropriate to provide a basis for our audit opinion on the
 Financial Statements.
 
 Emphasis on the Matters:
 
 We draw attention to the following matters in the Notes to the
 financial statements:
 
 a) Notes-2 of Notes to Account: The Company has discontinued its
 production operations from the end of June 2011. The Company has no
 intention to continue the production operations henceforth and has
 decided to lease out the Factory premises. The Company has not made any
 sales during the current year.
 
 b) Note-3: Notes to Account: During the year, the company involved in
 buying and selling of shares of other companies through share market
 which is not the main objects of the business of the Company for which
 it was incorporated.
 
 c) Notes-8 of Notes to Account: Non disclosure under provisions of the
 Micro, Small and Medium Enterprises Development Act 2006 in the absence
 of details received from suppliers.
 
 d) Notes-10 of Notes to Account: No provision of Employee benefits has
 been made which need to be made as per AS-15 issued by the Institute of
 Chartered Accountants of India, non quantifiable.
 
 e) Notes-11 of Notes to Account: No provision is made for depletion in
 Market value of Investments in shares, securities and mutual funds.
 
 f) Non confirmation of balances in respect of Sundry Debtors, Creditors
 and Loans & Advances.
 
 Opinion:
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the Financial Statements 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, of the state of affairs of the Company as at 31 March 2015 and
 its Profit & Loss a/c and its 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, 2015 (the
 Order) as amended, issued by the Central Government of India in terms
 of sub-section (11) of section 143 of the Companies Act 2013, We give
 in the Annexure a statement on the matters specified in paragraphs 3
 and 4 of the Order to the extent applicable.
 
 2.  As required by section 143(3) of the Act, We report that:
 
 (a) We have sought and obtained all the information and explanations
 which to the best of our knowledge and belief were necessary for the
 purpose of our 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 those
 books;
 
 (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
 account;
 
 (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 133 of the Act, read with Rule 7 of
 the Companies (Accounts) Rules, 2014.
 
 (e) On the basis of written representations received from the Directors
 as on March 31, 2015, and taken on record by the Board of Directors,
 none of the Directors are disqualified as on March 31, 2015, from being
 appointed as a Director in terms of section 164(2) of the Companies
 Act, 2013.
 
 (f) With respect to the other matters to be included in the Auditor''s
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rule, 2014, in our opinion and to the best of our information and
 according to the explanation given to us:
 
 (a) The company does not have any pending litigations to disclose in
 the financial statements.
 
 (b) There are no material foreseeable losses assessed during the year
 and hence no provision is required to be made at the reporting date by
 the Company, as required under the applicable Law or accounting
 standards, for material foreseeable losses, if any, on long term
 contracts including derivative contracts.
 
 With respect to the above two points, we draw attention to the
 following matters in the Notes to the financial statements:
 
 i.  Notes-4 of Notes to Accounts: Wherein, the Company has raised a
 demand on Cotton Corporation of India for Rs. 180 Lacs with respect to
 Price variation for purchase of Cotton from the Cotton Corporation of
 India. The same has been denied by the Cotton Corporation of India and
 the dispute is under Arbitration for settlement. This dispute pertains
 to the earlier years.
 
 ii.  Notes-5 of Notes to Accounts: The Loans and Advances of
 Rs.50,38,879/- paid to cotton suppliers which is in dispute and
 pertaining to earlier years.
 
 iii. Notes-9 of Notes to Accounts: No provision is made towards sales
 tax arrears including penalty aggregating to Rs.1,80,18,068 of the
 earlier years.
 
 iv. Notes-12 of Notes to Accounts: No provision is made towards Back
 billing demand raised by CESCOM aggregating to Rs.28,43,845/- of the
 earlier years.
 
 (c) The company does not have any amounts to be transferred to Investor
 Education and Protection Fund.
 
 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,
 2015, we report that:
 
 1.  (a) The Company has not maintained proper records
 
 to show full particulars including quantitative details and situation
 of all Fixed Assets.  (b) The Fixed Assets of the Company have not been
 physically verified by the Management during the year at reasonable
 intervals.
 
 2.  The company does not have any trading inventory, hence no physical
 verification has been carried out.  However, the Company has the
 opening Stores and Spares for which no physical verification report is
 made available with respect to quantitative details.
 
 3.  In respect of the loans, secured or unsecured, granted by the
 company to companies, firm or other parties, covered under Register
 maintained under section 189 of the companies Act, 2013:
 
 We draw your attention to Notes-6 of Notes to Accounts, wherein, during
 the year, the Company has given an amount of Rs. 30,34,000/- to M/s.
 Pasari Exports Limited. The transactions have been covered under
 related parties and M/s. Pasari Exports Limited holds more than 50% of
 the shareholding of M/s. Pasari Spinning Mills.
 
 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 inventory, Fixed Assets and for the Sale of goods and
 Services. However, since the Company has discontinued its commercial
 operation in 2010- 11, the company has not effected any purchases of
 inventory, Fixed Assets and for the Sale of goods and Services During
 the course of our audit, we have not observed any continuing failure to
 correct major weakness in internal controls.
 
 5.  The company has not accepted any deposit from the public as per the
 provisions of sections 73 to 76 or any other relevant provisions of the
 Companies Act and the rules framed there under.
 
 6.  The Maintenance of Cost records as prescribed by the Central
 Government under section 148 (1) of the Companies Act, 2013 in respect
 of the activities of the Company does not 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.
 
 7.  (a) The Company is not regular in depositing the
 
 undisputed Statutory Dues with Appropriate Authorities and there are
 certain disputed 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 2015, for a period of more than six months
 from the date they became payable.  The following are the details of
 disputed amounts;
 Name of the              Nature of       Amount         Year
 Statute                  the dues        due
 
 ESIC                     ESIC            7,03,115       2010-11
 
 Income tax act           TDS             36,654         Various years
 Karnataka Tax on   
 profession, trade,
 
 calling and Employ -     Professional    64,000         08-09 to
 ment Act                 Tax                            11-12
 
 Karnataka Sales          Cess on         84,760         06-07 to
 tax Act                  sales                          07-08
 
 
 Name of the          Nature of        Amount         For the 
 statute              the Dues        (Rs.)           Year
 
 
 Central Sales          CST         4,45,496         1999-00
 
 Tax Act                            5,80,226         2000-01
 
                                    8,83,692         2001-02
 
 Karnataka Entry       KVAT           46,593         1999-00
 
 Tax Act                              98,290         2000-01
 
                                    4,35,196         1999-00
 
                                   46,57,137         2000-01
 
                                   32,10,915         2001-02
 
 Penalty             CST and 
                     KVAT              5,000         1999-00
 
                                    2,50,000         2000-01
 
                                   18,35,296         2001-02 
 
 iNTEREST            CST and 
                     KVAT           3,11,968         1999-00
 
                                   33,37,878         2000-01
  
                                   19,18,381         2001-02 
 
 Total                           1,80,16,068 
 
 8.  The Company is in existence for more than 5 years and has
 accumulated losses as at the year end; and has also incurred a cash
 losses during the financial year.
 
 9.  In our opinion and according to the information and explanation
 given to us, the Company has defaulted in repayment of principal dues
 in respect of Term Loan borrowed from Syndicate Bank as on 31.03.2015.
 There are no debenture holders with the Company.
 
 10.  The Company has not given any guarantee for loans taken by others
 from the Banks or Financial Institutions.
 
 11.  In our opinion and according to the information and explanation
 given to us, the Company has borrowed Term Loans from Syndicate Bank in
 2012 for the purpose of settlement to labour.
 
 12.  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.
 
 For MURALI & VENKAT
 
 Chartered Accountants
 
 CH. RANGA RAO
 
 Partner
 
 Membership Number: 222091
 
 Firm''s Registration Number: 002162S
 
 Place: Bangalore
 
 Date: 19th August, 2015
Source : Dion Global Solutions Limited
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