We have audited the accompanying financial statements of Sambandam
Spinning Mills Limited (the Company) which comprise the Balance
Sheet as at March 31, 2014, the Statement of Profit and loss and the
Cash Flow Statement for the year then ended and a summary of
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 fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956 (the Act) read with the General Circular
15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013. 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 are free from
material misstatements, 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 the Institute of Chartered
Accountants of India. Those Standards require that we comply with the
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the 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, but not for the purpose of expressing an opinion on the
effectiveness of the entity''s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of the accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the
explanations given to us, 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
(a) in the case of the Balance sheet, of the state of affairs of the
Company as at March 31, 2014;
(b) in the case of the Statement of Profit and loss, of the profit for
the year ended on that date; and
(c) in the case of the Cash flow statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order), as amended, issued by the Central Government of India in
terms of section 227(4A) of the Act, we give in the Annexure a
statement on the matters specified in 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 our
(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 those
(c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
(d) in our opinion, the Balance sheet, Statement of Profit and Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
section 211(3C) of the Companies Act 1956 read with the General
Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate
Affairs in respect of Section 133 of the Companies Act, 2013;
(e) on the basis of written representation received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014 from being
appointed as a director in terms of section 274(1)(g) of the Companies
Annexure to the Independent Auditors'' Report
The Annexure referred to in our report to members of Sambandam Spinning
Mills Limited (the Company) for the year ended March 31, 2014
1. (i) the company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
(ii) the fixed assets are being physically verified under a phased
programme of verification, which, in our opinion, is reasonable having
regard to the nature and value of its fixed assets. However, no
material discrepancies have been noticed during the year on such
(iii) the company has not disposed off substantial part of its fixed
assets during the year.
2. (i) inventories have been physically verified by the management
during the year. In our opinion, the frequency of such verification is
(ii) the procedures 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.
(iii) the company is maintaining proper records of inventory. No
material discrepancies were noticed on verification between the
physical stocks and the book records.
3. the Company has neither granted nor taken any loans, secured or
unsecured, to/from companies, firms or other parties covered in the
register maintained under section 301 of the Act. Thus paragraphs
4(iii) (b) to (d), (f), (g) are not applicable to the Company.
4. in our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and the nature of its business with regard
to purchase of inventories and fixed assets and for the sale of goods
and services. We have not observed any major weakness in the internal
control system during the course of our audit.
5. (i) in our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in Section 301 of the Act have been entered in the register required to
be maintained under that section.
(ii) in our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts and
arrangements referred to in (5) (i) above and exceeding Rs. 5 lakhs
with any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the
6. the company has complied with the directives issued by the Reserve
Bank of India and the provisions of sections 58A and 58AA or any other
relevant provisions of the Act and the Companies (Acceptance of
Deposits) Rules, 1975 with regard to deposits accepted from 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 book of accounts maintained by the
Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
prescribed by the Central Government of India under section 209(1)(d)
of the Companies Act, 1956 in respect of the products manufactured by
the Company and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained. We have, however,
not made a detailed examination of the records.
9. (i) according to the information and explanations given to us and on
the basis of our examination of the records of the Company, amounts
deducted/accrued in the books of account in respect of 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 and other material
statutory dues have been regularly deposited during the year by the
Company with the appropriate authorities.
(ii) according to the information and explanations given to us, no
undisputed amounts payable in respect provident fund, investor
education and protection fund, employees'' state insurance, income tax,
sales tax, wealth tax, service tax, customs duty, excise duty and other
material statutory dues were in arrears as at March 31, 2014 for a
period of more than six months from the date they became payable.
(iii) according to the information and explanations given to us, there
are no material dues of Income tax, wealth tax and customs duty which
have not been deposited with the appropriate authorities on account of
any dispute. However, according to the information and explanations
given to us, the following dues of excise duty, service tax and sales
tax, have not been deposited by the Company on account of disputes, for
which stay has been obtained. (Nature of dues, dues, period to which
the amount relates, forum where dispute is pending) - Excise duty,
Rs.84,65,342, Financial year 2001-02 to 2002-03, Customs, Excise and
Service tax Appellate Tribunal; Service tax, Rs.8,05,696, Financial
year 2004-05 to 2007-08, Customs, Excise and Service tax Appellate
Tribunal; Sales tax, Rs.6,52,044, Financial year 1991-92, Deputy
Commissioner of Commercial Taxes.
10. the company does not have any accumulated losses at the end of the
financial year and has not incurred any cash losses in the financial
year and in the immediately preceding financial year.
11. the company has not defaulted in repayment of dues to any financial
institution, bank or debenture holders during the year.
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
during the year.
13. in our opinion and according to the information and explanations
given to us, the company is not a chit fund or a Nidhi/mutual benefit
14. according to the information and explanations given to us, the
company is not dealing or trading in shares, securities, debentures and
15. according to the information and explanations given to us, the
company has not given any guarantees for loans taken by others from
banks or financial institutions.
16. according to the information and explanations given to us, the term
loans availed by the company were, prima facie, applied for the purpose
for which they were obtained.
17. in our opinion and according to the information and explanations
given to us, on an overall examination of the financial statements of
the company, funds raised on short-term basis have, prima facie, not
been used for long term investment.
18. the company has not made any preferential allotment of shares
during the year.
19. the company has not issued any debentures during the year.
20. the company has not raised any money by public issues during the
21. according to the information and explanations given to us, no
material fraud on or by the company has been noticed or reported during
the course of our audit.
For M.S. Krishnaswami & Rajan
Firm registration No.01554S
Salem R. Krishnen-Partner
May 30, 2014 Membership No.201133