1. We have audited the attached Balance Sheet of Sambandam Spinning
Mills Limited as at March 31, 2009 and the relative Profit and loss
Account and the Cash flow statement for the year ended oh that date
(the year), signed by us under reference to this report. 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.
2. We have conducted our audit in accordance with auditing and
assurance standards generally accepted in India. The said 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 the management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. We have obtained all the information and explanations which, to the
best of our knowledge and belief, were necessary for the purposes of
4. 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
5. The financial statements dealt with by this report are in agreement
with the books of account.
6. In our opinion, the financial statements comply in all material
respects with the applicable Accounting Standards referred to in
section 211 (3C) of the Companies Act, 1956 (the Act).
7. Based on the written representation received from the directors as
on March 31, 2009, and taken on record by the Board of Directors, we
report that none of the directors is prima facie disqualified as on
March 31, 2009 from being appointed as a director in terms of section
274(1 )(g) of the Act.
8. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid financial statements read
with the Significant accounting policies and Notes to the accounts,
give the information required by the Act in the mcnner so required and
also give a true and fair view, in conformity with the accounting
principles generally accepted in India:
8.1 in the case of the Balance sheet, of the state of affairs of the
Company as at March 31, 2009;
8.2 in the case of the Profit and loss account, of the loss for the
8.3 in the case of the Cash flow statement, of the cash flows for the
9. As required by the Companies (Auditors Report) Order, 2003 as
amended by the Companies (Auditors Report) (Amendment) Order, 2004
issued by the Government of India in terms of section 227(4A) of the
Companies Act, 1956, and on the basis of such checks as we considered
appropriate and according to the information and explanations given to
us, we report that:
9.1 In our opinion, the Company is maintaining proper records to show
full particulars including quantitative details and situation of fixed
assets. These fixed assets have been physically verified by the
management during the year at reasonable intervals and no material
discrepancies were noticed on such verification. The Company has not
disposed off during the year substantial part of its fixed assets.
9.2 Physical verification of inventory has been conducted at reasonable
intervals by the management. In our opinion, the procedures of
physical verification of inventory followed by the management are
reasonable and adeauate in relation to the size of the Company and the
nature of its business. The Company is maintaining proper records of
inventory and no material discrepancies were noticed on such
verification as compared to the book records.
9.3 The Company has neither granted nor taken any loans, secured or
unsecured, during the year from parties and companies listed in the
register maintained under section 301 of the Act.
9.4 In our opinion, there is an adequate internal control system
commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets and for the
sale of goods and services. Further we have neither come across nor
have been informed of any continuing failure to correct major
weaknesses in the aforesaid internal control system.
9.5 (i) The particulars of contracts or arrangements that need to be
entered into a register under section 301 of the Act have been entered.
(ii) in our opinion, each of the transactions exceeding the value .of
Rs.5,00,000 pursuant to the aforesaid contracts/arrangement have been
made at prices which are reasonable having regard to the prevailing
market prices at the relevant time.
9.6 In our opinion, the Company has complied with the provisions of
sections 58A and 58AA or any other relevant provisions of the Act and
the Companies (Acceptance of Deposit) Rules, 1975 with regard to
deposits accepted from public.
9.7 In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
9.8 On the basis of the records produced, we are of the opinion that
prima facie, the cost records and related accounts prescribed by the
Central Government under section 209(1 )(d) of the Act have been made
and maintained by the Company. However, we are not required to carry
out and have not carried out any detailed examination of such records
9.9 (i) In our opinion, the Company has been regular during the year in
depositing the 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, as applicable, with the
(ii) There are no dues of wealth tax, service tax, customs duty which
have not been deposited on account of any dispute. Details of dues
towards excise duty and sales tax that have not been deposited on
account of any dispute are (Nature of dues, dues, forum where dispute
is pending) - Income tax, Rs.94,83,130, Commissioner of Income tax
(Appeals); Excise duty, Rs.84,65,343, Customs, Excise and Service tax
Appellate Tribunal; Sales tax, Rs.6,51,921, Deputy Commissioner of
9.10 The Company does not have any accumulated losses at the end of the
year and has not incurred any cash losses in the year or in the
immediately preceding year.
9.11 In our opinion, the Company has not defaulted during the year in
repayment of dues to any financial institution, bank or debenture
9.12 The Company has not granted during the year loans and advances on
the basis of security by way of pledge of shares, debentures and other
9.13 The provisions of any special statute applicable to a chit fund,
nidhi, mutual benefit fund/societies are not applicable to the Company.
9.14 The Company is not dealing or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of
clause 4(xiv) of the Order are not applicable to the Company.
9.15 The Company has not given any guarantees for loans taken by others
from banks or financial institutions.
9.16 In our opinion, the term loans availed by the Company during the
year, were, prima facie, applied for the purpose for which they were
9.1 7 Based on an overall examination of the financial statements of
the Company, we report that no funds raised on short-term basis have
been used for long term investment.
9.18 The Company has not made during the year any preferential
allotment of shares to any party.
9.19 The Company has not issued during the year any debentures.
9.20 The Company has not raised money during the year by public issue
of shares or other securities.
9.21 No instances of fraud of material significance perpetrated on or
by the Company been noticed or reported during the period covered by
For M.S. Krishnaswami & Rajan
Salem M.K. Rajan
June 25, 2009