Report on the Financial Statements
We have audited the accompanying financial statements of M/s PASARI
SPINNING MILLS LTD., (the Company), which comprise the Balance Sheet
as at March 31, 2013, 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). 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. 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
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Report on other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order) 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 cash flow
statement dealt with by this Report are in agreement with the books of
(d) In our opinion, the Balance Sheet and Statement of Profit and Loss,
comply with the Accounting Standards referred to in subsection (3C) of
section 211 of the Companies Act, 1956; except Accounting standard 13 &
(e) On the basis of written representations received from the Directors
as on March 31, 2013, and taken on record by the Board of Directors,
none of the Directors is disqualified as on March 31, 2013, from being
appointed as a Director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
(f) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
In our opinion and to the best of our information and according to the
explanations given to us Subject to the following :
- Non confirmation of balances in respect of Sundry Debtors, Creditors
and Loans and Advances.
- Non disclosure under Provisions of the Micro Small and Medium
Enterprises Development Act, 2006 in the absence of details received
from the suppliers, vide point no. 5 in other disclosures.
- Non provision towards Sales Tax arrears including penalty aggregating
to Rs. 1,80,16,068 of the earlier years, vide point no. 2 in other
- Non provision of Employee Benefits as per AS-15 issued by Institute
of Chartered Accountants of India, non quantifiable vide point no 7 in
- Non provision for depletion in Market Value of Investments in shares,
securities and mutual funds, vide point no 8 in other disclosures.
- Non provision towards Back billing demand raised by CESCOM
aggregating to Rs 28,43,845/- of the earlier years, vide point no 9 in
The said Financial Statements read with the 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, 2013;
(b) In the case of the Statement of Profit and Loss, of the Loss for
the year ended on that date;
(c) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
1. a) The Company has maintained proper records to show full
particulars including quantitative details and situation of all 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
c) The Company has disposed major portion of its Fixed Assets during
2. 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 inventory. In our
opinion and accordingly 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 is 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 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 his operation from June 2010 and all the workers are given one
time settlement. The above record are verified and as been kept as per
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 Provident
Fund, 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 2013, for a period of more than six months
from the date they became payable.
b) There are disputed liabilities with regard to Sales Tax, as on
10. The Company has accumulated losses as at the year end which is
more than 50% of its Net worth and has 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 31.03.2013. 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 have
maintained proper records.
15. In our opinion, the Company has not given any Guarantee for Loans
taken by others by bank or financial institutions.
16. In our opinion, the Company has applied the Term Loans for the
purpose for which they were obtained.
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 our audit.
For MURALI & VENKAT
Place : Bangalore (G. SATISHCHANDRA)
Date : 5th August, 2013 Partner
Membership No. 27372