We have audited the attached Balance Sheet of RSWM Limited (formerly
known as RAJASTHAN SPINNING & WEAVING MILLS LIMITED) as at 31st March,
2007, and also the Profit and Loss Account and the Cash Flow Statement
for the year ended on that date annexed thereto. These financial
statements are the responsibility of the Companys 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 misstaternent. 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
As required by the Companies (Auditors Report) Order, 2003 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 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
(i) We have obtained all the informations 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, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
(iv) In our opinion, the Balance Sheet, Profit and Loss Account 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 written representations received from the
Directors, as on 31st March, 2007, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2007 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 together with
notes thereon 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, 2007.
(b) in the case of the Profit and Loss Account, of the profit 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.
ANNEXURE TO THE AUDITORS REPORT
Annexure referred to in paragraph 3 of our report of even date to the
Shareholders of RSWM Limited (formerly known as RAJASTHAN SPINNING &
WEAVING MILLS LIMITED) on accounts for the year ended 31st March, 2007.
(i) (a) The Fixed Assets Register showing full particulars including
quantitative details and situation of the assets is being maintained.
(b) The fixed assets are physically verified by the Management in a
phased programme designed to cover all the Assets over a period of
three years, which in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. Pursuant to the said
programme, a portion of Fixed Assets has been physically verified by
the management during the year and no serious discrepancies were
noticed on such verification between the book records and physical
(c) The Company had not sold any substantial part of plant and
machinery during the year except to replace old plant and machinery for
upgradation, modernisation cum expansion plan which do not affect the
going concern status of the Company.
(ii) (a) The Inventories have been physically verified during the year
by the management. In our opinion the frequency of verification is
(b) In our opinion and according to information and explanation given
to us, the procedure of physical verification of inventory 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 and no
material discrepancies were noticed on physical verification.
(iii) (a) The Company has granted unsecured loan to one Company covered
in the register maintained under Section 301 of the Companies Act,
1956. The amount outstanding at the end of the year and the maximum
amount during the year was Rs.7.00 crore.
(b) In our opinion, in respect of unsecured loan granted, where the
covenants of repayments are on demand, the rate of interest and other
terms and conditions are not prima-facie prejudicial to the interest of
(c) The payment of interest on such loans is regular. The payment of
principal amount are also regular, wherever demanded during the year.
(d) There is no overdue amount outstanding at the Balance Sheet date.
(e) The Company had not taken any loan from any party covered in the
register maintained under Section 301 of the Companies Act, 1956.
(iv) On the basis of selective checks carried out during the course of
audit and explanations given to us, adequate internal control systems
commensurate with the size of the Company and nature of its business,
for purchase of inventory and fixed assets and for sale of goods and
services have been devised by the management and is being generally
followed. Further on the basis of our examination of the books and
records of the Company, and according to informations and explanations
given to us, we have neither come across nor have been informed of any
continuing failure to correct major weakness in the aforesaid internal
(v) (a) As per information given to us all the contracts or
arrangements that are needed to be entered into the register maintained
in pursuance of Section 301 of the Companies Act, have been recorded in
(b) On the basis of our examination and as per information and
explanation given by the management, the price of the goods and
materials purchased and / of sale of goods, materials and services made
pursuant to contracts entered in register maintained under Section 301
of the Companies Act, 1956, in respect of each party is reasonable
having regard to the prevailing market price at the relevant time.
(vi) We are explained that during the year the Company has not accepted
deposits from public to which the provisions of Section 58A of the
Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975
(vii) In our opinion, the Company has an Internal Audit System
commensurate with its size and nature of its business.
(viii) We have broadly reviewed the records including the books of
accounts made and maintained by the Company pursuant to the Rules made
by the Central Government for maintenance of Cost records under Section
209 (1) (d) of the Companies Act, 1956, and are of the opinion that
prima-facie the prescribed accounts and records have been made and
(ix) (a) Accordingto the information and explanation given to us and
the records examined by us, the Company is regular in depositing
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 any other
statutory dues with the appropriate authorities. Further, there were no
undisputed arrears of statutory dues outstanding as at 31 st March,
2007, for a period of more than six months from the date they became
(b) According to the records of the Company and information given to
us, the particulars of statutory dues of the specified Statues which
have not been deposited on account of disputes and the forum where the
dispute is pending are given hereunder:
(Rs. in lac)
I) EXCISE DUTY CESTAT 14.24
II) T.C. CESS
(a) Appellate Tribunal 30.17
(b) Honorable High Court of Rajasthan 49.49
(x) There are no accumulated losses in the Company as on 31st March,
2007. Further, the Company has not incurred any cash losses during the
financial year covered by our audit as well as in the immediately
preceding financial year.
(xi) Based on our examination of books and records of the Company and
on the basis of information and explanation given by the management the
Company has been regular in repayment of its dues to the financial
institutions or banks.
(xii) On the basis of examination of records of the Company and
information and explanation given to us, the Company has not granted
any loans and advances on the basis of security by way of pledge of
shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or nidhi / mutual
benefit fund / society. Therefore, the provisions of clause 4 (xiii) of
the Companies (Auditors Report) Order, 2003 are not applicable to the
(xiv) On the basis of examination of books and records of the Company
and information and explanation given by the management, the Company is
not dealing ortrading in shares, securities, debentures and other
(xv) As per information and explanation given by the management, the
terms & conditions on which the Company has given Guarantee for loans
taken by others from banks or financial institutions are prima-facie
not prejudicial to the interest of the Company.
(xvi) In our opinion, the term loans have been applied for the purposes
they were raised.
(xvii) According to the information and explanation given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short-term basis have been used for long term
(xviii) 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.
(xix) The Company has not issued any debentures whether secured or
unsecured during the year.
(xx) The Company has not raised any money through public issue during
the year covered by our report.
(xxi) As per the information and explanation given to us, no fraud on
or by the Company has been noticed or reported during the year covered
by our report.
For S. Bhargava Associates
Membership No.: 70964
Place : Noida
Dated :24th April, 2007