Report on the financial statements
We have audited the accompanying financial statements of Winsome
Textile Industries Limited, which comprise the balance sheet as at 31st
March 2013, and the statement of the profit and loss and the cash flow
statement for the year then ended, and a summary of the 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 the 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 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 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 Institute of Chartered
Accountant of India. Those standards require that we comply with the
ethical requirements and plan and perform the audit to obtain the
reasonable assurance about whether the financial statements are free
from material misstatements.
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 assessment of
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 the 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 audit opinion.
Emphasis of Matter
1) During the year 2010-11, the Company had issued and allotted
12,90,000 nos. GDR''s entitling 6,45,00,000 (now 64,50,000 equity shares
of Rs.10/- each) nos. equity shares of Re.1/- each at price of Rs.6.94
per share (including premium of Rs.5.94, now premium is Rs.59.40 on
Rs.10/- per share).
As on 31.03.2012, Rs.4,586.69 lacs (including exchange gain) was
pending to be received in India against above issue made, during the
year Rs.777.14 lacs, as explained, have been received/credited to
account of the company in India. As stated in the note no. 2.3 balance
amount of Rs. 4147.07 lacs as on 31st March 2013 (excluding amount
lying in bank outside India of Rs. 13.35 lacs) is invested outside
India with a money market fund.
2) Balances of receivable, loans and advances, trade payable and other
liabilities (read with note no. 2.4) are subject to confirmation and
reconciliation (note no 2.5(ii))
Our report is not qualified in respect of above matters.
Basis for Qualified Opinion:-
i. Attention is drawn to Note no. 2.5 (i) regarding non provision for
shortfall in recovery (amount unascertainable) against overdue debt of
Rs. 232.70 lacs as stated in the said note for which legal and other
persuasive action for recovery has been initiated, in the opinion of
the management these debts are good and recoverable as stated in the
said note and our inability to comment thereon.
We further report that the profit for the year, the balance in reserve
& surplus, receivable and profit for the year are without considering
items mentioned in (i) above, the effect of which could not be
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described under the head Basis for Qualified Opinion” paragraph, 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:
a. In the case of the balance sheet, of the state of the affairs of
the company as at 31st March 2013,
b. In case of the statement of the profit and loss, of the profit for
the year ended on that date, and
c. In case of the cash flow statement, of the cash flows for the year
ended on that date.
Report on other legal and the 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
the Annexure a statement on the, manners specified in the 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 purposes of
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
c. The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement referred to in this report are in agreement with the books of
d. In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement referred to in this report comply with the
Accounting Standards referred to in sub-section (3C) of section 211 of
Companies Act, 1956;
e. On the basis of the written representations received from the
Directors and taken on records by the Board of Directors, we report
that none of the directors of the Company is disqualified as on 31st
March 2013 from being appointed as a Director of the Company in terms
of clause (g) of sub-section (1) of section 274 of the Companies Act,
ANNEXURE TO THE AUDITORS'' REPORT
(Referred to in paragraph 1 of our Report of even date on Winsome
Textile Industries Limited for the year ended 31st March, 2013)
i. (a) The Company has maintained records in respect of fixed assets
showing full particulars including quantitative details and situation
of fixed assets except in respect of certain fixed assets (and also at
new project location), where the same are in process of compilation
(b) As per information & explanations given to us, physical
verification of the certain fixed assets are in process, according to
the regular programme of physical verification once in every three
years, in phased manner, which in our opinion is reasonable having
regard to the size of the company and the nature of its fixed assets.
(c) As per the records and information and explanation given to us,
fixed assets disposed off during the year were not substantial.
ii. (a) As explained to us, the inventories of the Company (except
stock lying with the third parties; and in transit) have been
physically verified by the management during the year.
(b) In our Opinion and according to information & explanation 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 nature of its business.
(c) According to the information and explanation given to us, we are of
the opinion that the company is maintaining proper records of
inventories (In case of process stock, records are updated on monthly
physical verification of stock). As per records and information made
available the discrepancies noticed on verification between the
physical stock and the book records were not material in relation to
the operation of the company.
iii. As per the information and explanations given to us the Company
has neither granted nor taken during the year any loans, secured or
unsecured to and from companies, firms or other parties listed in the
register maintained under section 301 of the Act. Accordingly, the
provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are
not applicable to the Company.
iv. In our opinion and according to the information and explanations
given to us, having regard to the explanation that some of the items
purchased are of special nature and suitable alternative sources do not
exist for obtaining comparable quotation or where user department has
shown specific preference, where, as explained, rates were determined
considering the quality, volume, nature of the items and market
conditions prevailing at that time, there are internal control system
commensurate with size of the company and nature of its business with
regard to the purchase of inventory, fixed assets, services and for the
sale of goods and services (read with note no. 2.2, 2.5, 2.9 & 2.18).
Based on the audit procedure performed and information & explanation
provided by the management, during the course of our audit, we have not
observed any continuing failure to correct major weaknesses in internal
control system nor been identified by the management.
v. a) According to the information and explanations provided by the
management and based on the audit procedure performed, we are of the
opinion that the particulars of the contracts or arrangements referred
to in Section 301 of the Act have been entered in the register required
to be maintained under that section; and b) In our opinion and
according to the information and explanation given to us, having regard
to para iv above, the transactions made in pursuance of such contracts
or arrangements (exceeding the value of Rs. 5 Lacs in respect of each
party during the financial year) have been made at prices which are
generally reasonable having regard to the prevailing market prices at
the relevant time. vi. According to the information and explanations
given to us, the Company has not accepted any deposits from
the public within the meaning of Section 58A and 58AA Act and the rules
framed there under and directives issued by the Reserve bank of India
and other relevant provisions of the Act. We have been informed that
no order has been passed by the Company Law Board or National Company
Law Tribunal or Reserve Bank of India or any Court or any other
Tribunal in this regard. vii. In our opinion, the Company has an
internal audit system commensurate with the size of the Company and
nature of its business. viii. We have broadly reviewed the books of
account maintained by the company as prescribed by the Central
Government for the maintenance of cost records under section 209 (1)
(d) of the Companies Act, 1956 and are of the opinion that prima facie
the prescribed records have been made and maintained. We have, however,
not made a detailed examination of the said records with view to
determine whether they are accurate and complete. ix. (a) According
to the records of the Company, the company in generally 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, Custom Duty, Excise Duty, Cess and other material statutory dues
applicable to it. According to the information and explanations given
to us, there are no undisputed statutory dues payable for a period more
than six months from the date they became payable as at 31.03.2013.
(b) According to the records and information and explanations given to
us, there are no dues in respect of Income Tax, Custom Duty, Wealth
Tax, Service Tax, Sales Tax and Cess that have not been deposited on
account of any dispute.
x. The Company does not have accumulated losses at the end of the
financial year and has not incurred any cash losses during the current
and immediately preceding previous year.
xi. In our opinion, based on the audit procedures and according to
information & explanation given to us, the Company has generally not
defaulted in repayment of dues to financial institution and banks.
xii. Based on our examination of the records and the information and
explanation given to us, the Company has not granted any loans and/or
advances on the basis of security by way of pledge of shares,
debentures and other securities.
xiii. Clause (xiii) of the order is not applicable to the company as
the company is not a Chit Fund Company or nidhi/mutual benefit
xiv. In our opinion and according to the informations and explanations
provided to us, the company is not dealing in or trading in shares,
securities, debentures and other investment.
xv. According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institution.
xvi. According to the information and explanations given to us, the
term loans were applied for the purpose for which the loans were
xvii. According to the information and explanations given to us and on
an overall examination of the financial statements, we are of the
opinion that no funds raised on short term basis have been used for
long term investment.
xviii. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties or
companies covered in the register maintained under Section 301 of the
Act in the current year.
xix. No debenture has been issued /outstanding during the year hence
the provision of clause 4 (xix) of the said order are not applicable.
xx. According to the information and explanations given to us, during
the year the Company has not raised fund through public issue.
xxi. To the best of our knowledge and belief, based on the audit
procedure performed and on the basis of information and explanations
provided by the management, no material fraud on or by the Company has
been noticed or reported during the course of the audit.
For Lodha & Co.
Firm Regn. No. 301051E
Place : New Delhi N.K. LODHA
Date : 29.05.2013 (Partner)
Membership No.: 85155