We have audited the attached Balance sheet of The Sri Ganapathy Mills
Company Limited as at 31st March 2012 and the Profit and Loss account
for the year ended on that date annexed thereto and Cash Flow Statement
for the year ended on that date. 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.
1. 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 misstatements. An Audit
includes examining, on test basis evidence supporting the amounts and
disclosures in financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
2. As required by the Companies (Auditor''s Report) Order issued by the
Central Government of India in terms of Sub Section (4A) of Section 227
of the Companies Act, 1956 we enclose in the Annexure hereto a
statement on the matters specified in paragraphs 4 and 5 of the said
3. Further to our comments in the Annexure referred to in paragraph 2
and 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 has been
kept by the company so far as it appears from our examination of those
c) The Balance sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account.
d) In our opinion the Balance Sheet, Profit and Loss account and Cash
Flow Statement dealt with by this company comply with the Mandatory
Accounting Standards referred in Sub Section (3C) of Section 211 of the
Companies Act, 1956 and in accordance with the accounting standards
(AS) issued by the Institute of Chartered Accountants of India referred
to in section 227 (3(1 )(d)) of the company''s amendment ordinance 1998
with exception of non provision of gratuity (note 4a vide (AS 15) for
treatment of retirement gratuity).
e) In our opinion and based on information and explanations given to
us, none of the directors are 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 read together with
significant policies and other notes thereon give the information
required by the Companies Act 1956, in the manner so required, and
present a true and fair view, in conformity with the accounting
principles generally accepted in India:
(i) in so far as it relates to Balance Sheet, of the State of affairs
of the Company as at 31st March, 2012
(ii) in so far as it relates to the Profit and Loss Account of the
Profit of the Company for the year ended on that date: and
(iii) in so far as it relates to the Cash flow Statement, of the Cash
flows of the Company for the year ended on that date.
ANNEUXRE TO AUDITORS'' REPORT U/s 227 (4A)
(Referred to in Paragraph 2 of our report of even date)
1. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets on the
basis of available information. As explained to us, the fixed assets
have been physically verified by the management during the year in a
phased periodical manner, 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 such physical verification.
b. In our opinion, the Company has not disposed of substantial part of
its fixed assets during the year and the going concern status of the
company is not affected.
2. In respect of its inventories:
a. As explained to us, inventories have been physically verified by the
management at regular intervals during the year.
b. In our opinion and according to the information and explanations
given to us, 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 has maintained 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.
3. In respect of loans secured or unsecured granted or taken by the
company to/from companies, firms or other parties covered in the
register maintained under Section 301 of the Companies Act, 1956;
a. The Company has not granted any fresh unsecured loans and no loans
have been taken from any party other than directors during the year.
b. In our opinion and according to the information and explanation
given to us, the rate of interest and other terms and conditions are
not prima facie prejudicial to the interest of the company.
c. Since the Company has not taken any loans other than directors,
there is no question of overdue amount.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and also for the
sale of goods. During the course of our audit, we have not observed any
major weaknesses in internal controls.
5. In respect of transactions covered under Section 301 of the
Companies Act, 1956.
a. In our opinion and according to the information and explanations
given to me, the transactions made in -vv pursuance of contracts or
arrangements, that needed to be entered into the register maintained
under Section 301 of the Companies Act, 1956 have been so entered.
b. In my opinion and according to the information and explanation given
to me there are no transactions in pursuance of contracts or
arrangements entered in the register maintained during the year to
Rs.500000/- (Rupees Five Lakhs only) or more in respect of any party.
6. The Company has not accepted deposits from Public and in my opinion
and according to the explanations given to us the provisions of Section
58A and 58AA of the Companies Act, 1956 read with Companies (Acceptance
of Deposits) Rules 1975 is not applicable.
7. In our opinion the internal audit system of the company is
commensurate with its size and nature of its business.
8. The Central Government has prescribed maintenance of cost records
under section 209(1 )(d) of the Companies Act, 1956 in respect of
certain manufacturing activities of the Company. We have broadly
reviewed the accounts and records of the company in this connection and
are of the opinion, that prima-facie, the prescribed accounts and
records have been made and maintained. We have not, however made a
detailed examination of the same.
9. a) In our openion and According to the information and explanations
given to us during the year, the company is
regular in depositing the provident Fund and Employees State Insurance
dues, with the appropriate authorities. b)The disputed statutory dues
pertaining to earlier years aggregating to Rs. 82.64 lacs that have not
been deposited on account of matters pending before appropriate
authorities are as under and for which no provision had been made in
10. The Company has accumulated Losses to tune of Rs..668.81 lakhs as at
31.3.2012 and has incurred cash loss during the financial year covered
by our audit and no cash loss was incurred in the immediately preceding
11. Based on our audit procedures and according to the information and
explanations given to us, we are of the opinion that the company has
not defaulted in repayment of dues to financial institutions and banks
subject to the clause no 8 (ii) in the notes on accounts.
12. 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
13. In our opinion, the company is not a Chit fund or a Nidhi / Mutual
Benefit fund / Society. Therefore clause 4(xiii) of the companies
(Auditors Report) order 2003 is not applicable to the Company.
14. Since the Company is not Investment Company, the reporting
regarding trading of Securities, Debentures and other investments is
15. According to the information and explanations given to us and
based on the records examined by us, the Company has not given any
guarantees for loans taken by others from banks or financial
institutions during the year under review
16. The Company has hire purchase loan of Rs.. 211.50 lakhs during the
year. The term loans outstanding at the beginning of the year and those
raised during the year were applied for the purpose for which they were
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we are of
the opinion that the Company has not utilized any amount from Short
term Sources towards repayment of long term borrowings.
18. The company has not issued any debentures and hence creation of
securities in respect of the same does not arise.
19. The company has not raised any money by way of Public Issue during
20. 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 year that causes the financial statements to be materially
for M/s Krishnan and Raman
Place : Tirunelveli CA. K.V.Raman
Date : 29-08-2012 M.No. 009790