We have audited the attached Balance Sheet of SURYALATA SPINNING MILLS
LIMITED, SECUNDERABAD, (A.P.) as at 31st March, 2012 and also the
Statement of Profit and Loss and the Cash Flow Statement for the year
ended on that date annexed thereto. 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.
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 misstatement. 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 statement
presentation. We believe that our audit provides a reasonable basis for
We report as follows:
1. As required by the Companies (Auditors'' Report) Order, 2003, issued
by the Government of India in terms of sub-section (4A) of Section 227
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.
Further to our comments in the Annexure referred to above, we report
2. i) We have obtained all the information and explanations, which to
the best of our knowledge and belief were necessary for the purposes of
ii) 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
iii) The Balance Sheet, the Statement of Profit and Loss and Cash Flow
statement dealt with by this report are in agreement with the books of
iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss
and Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956;
v) On the basis of the written representations received from the
directors, as on 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, 1956;
vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read in conjunction
with the Schedules annexed therewith, 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 31st March, 2012;
b) in the case of the Statement of Profit and Loss, of the Profit of
the Company for the year ended on that date and
c) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
Re: SURYALATA SPINNING MILLS LIMITED, SECUNDERABAD.
Annexure referred to in paragraph 1 of our report of even date,
1. a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
b) As explained to us, the management has physically verified most of
the fixed assets during the year and there is a regular programme of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of the assets. No material
discrepancies were noticed on such verification.
c) The plant and machinery disposed off during the year by the company
is not substantial and hence, it has not affected the going concern
status of the Company.
2. a) The Inventory has been physically verified during the year by
the Management. In our opinion, the frequency of verification is
b) In our opinion, 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. The
discrepancies noticed on physical verification between the physical
stocks and book records were not material.
3. a) The company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956.
b) In view of our comment in paragraph 3(a) above, III (b), (c) & (d)
of the aforesaid order are not applicable to the company.
e) During the year, the company has taken unsecured loans from 3
parties covered in the register maintained under section 301 of the
companies Act, 1956 and the maximum amount involved during the year was
Rs. 172.15 lakhs.
f) In our opinion the rate of interest and other terms and conditions
on which loans have been taken from the other parties listed in the
register maintained under section 301 of the Companies Act, 1956 are
not prima-facie prejudicial to the interests of the company.
g) The company is regular in payment of the principal amount and
interest thereon as stipulated.
4. 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 the nature of its business with regard
to purchase of inventory, fixed assets and with regard to sale of goods
and services. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control
5. a) In our opinion and according to the information and explanations
given to us, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 have
been entered in the register to be maintained under that section.
b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 have been made at prices which are reasonable
having regard to prevailing market prices at the relevant time.
6. 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 and other relevant provisions of the Companies Act, 1956
and the Companies (Acceptance of Deposits) Rules, 1975 with regard to
the deposits accepted from the public.
7. In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account relating to
materials, labour and other items of cost maintained by the company
pursuant to the Rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 in respect of yarn and are of the opinion that prima facie
the prescribed accounts and records have been made and maintained.
9. a) According to the records of the Company, the Company is regular
in depositing with appropriate authorities undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
Tax, Customs Duty, Excise Duty, Cess and other material statutory dues
applicable to it.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of Income Tax, Wealth Tax,
Service Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in
arrears as at 31st March, 2012 for a period of more than six months
from the date they became payable .
c) According to the records of the Company and the information and
explanations given to us, the dues of sales tax, Income Tax, Customs
Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been
deposited on account of any dispute are as follows :
Nature Amount Period to Forum
of (Rs in which where the
disputed Lakhs) the dispute
dues amount is pending
Income-tax 2.76 Asst. Commissioner
year of Income-tax
2007-08 (Appeals), Hyderbad
10. The Company has no accumulated losses at the end of the financial
year. The Company has not incurred any cash losses during the financial
year covered by our audit and immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to any
financial institutions and banks.
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. The Company is not a chit fund or a nidhi/ mutual benefit
fund/society and therefore the requirements relating to such companies
are not applicable to the Company.
14. The Company is not dealing or trading in shares, securities,
debentures and other investments.
15. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
16. In our opinion, and according to the information and explanations
given to us the term loans were applied for the purpose for which the
loans were obtained.
17. In our opinion, and according to the information and explanations
given to us the funds raised on short-term basis have not been used for
18. During the year, the Company has converted 4,00,000 share warrants
into Equity Shares of Rs.10/- at a premium of Rs.100/- each.
19. During the year, the Company has not issued any debentures and
therefore the question of creating security in respect thereof does not
20. During the year, the Company has not raised any money by public
21. Based upon the audit procedures performed and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year.
for BRAHMAYYA & CO.,
Firm Regn. No.000513S
Place: Hyderabad Partner
Date : 6th August, 2012 Membership No. 15850