Report on the Financial Statements:-
1. We have audited the accompanying financial statements of SRI
NACHAMMAI COTTON MILLS LIMITED which comprise the Balance Sheet as at
30th June 2014, 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:
2 Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance of the Company in accordance with the Accounting
Standards referred to in sub-section (3C) of Section 211 of the
Companies Act, 1956 (the Act) read with the General Circular 15/2013
dated 13th September 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
misstatement, whether due to fraud or error.
Auditor''s Responsibility:
3 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
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4 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 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 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 management, as well as evaluating the overall
presentation of the financial statements.
5 We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion. Opinion:
6 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 India:
(i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 30th June 2014;
(ii) In the case of the Statement of Profit and Loss, of the Profit for
the year ended on that date;
(iii) 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:
7 As required by the Companies (Auditor''s Report) Order, 2003 (the
Order), as amended, issued by the Central Government of India in terms
of sub-section (4A) of Section 227 of the Act, we give in the Annexure
a statement on the matters specified in paragraphs 4 and 5 of the
Order.
8 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 purpose of our
audit;
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
books;
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
account;
d. In our opinion, the Balance Sheet and Statement of Profit and Loss
comply with the Accounting Standards notified under the Companies Act,
1956 read with the General Circular 15/2013 dated 13th September 2013
of the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013 and
e. On the basis of written representations received from the directors
as on 30th June 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on 30th June 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
Section 274 of the Companies Act, 1956.
Annexure to the Independent Auditors'' Report
The Annexure referred to in paragraph 7 of our report of even date to
the members of M/s. Sri Nachammai Cotton Mills Limited (''the Company'')
for the year ended 30th June, 2014:
i) a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of fixed
assets.
b) The fixed assets have been physically verified by the management
according to a phased programme designed to cover all the items 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 programme, a portion of the fixed assets has been
physically verified by the management during the year and discrepancies
noticed on such physical verification were not material and have been
properly dealt with in books of accounts.
c) There were no sale of substantial part of fixed assets during the
year and hence the going concern of the company is not affected.
ii) a) Physical verification of inventory has been conducted at
reasonable intervals by the Management.
b) 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.
c) The company has maintained proper records of inventory and
discrepancies noticed on physical verification of inventories as
compared to book records were not material and have been appropriately
dealt with.
iii) a) During the year, the Company has not granted any loans, secured
or unsecured to parties covered in the register maintained under
Section 301 of the Companies Act, 1956 and hence sub clauses b, c & d
of clause (iii) are not applicable.
b) During the year, the company has taken unsecured loans amounting to
Rs.3,73,84,000/- from five parties including Inter Corporate Deposit of
Rs 2,39,86,000/- covered in the register maintained under Section 301
of the Act and the amount outstanding as on date is Rs.11,65,61,500/-.
The Maximum amount outstanding during the year was Rs.11,47,11,500/-.
c) The rate of interest and other terms and conditions of the unsecured
loans taken are not prima facie prejudicial to the interest of the
Company.
iv) a) In our opinion and according to the explanation and information
given to us, there are adequate internal control procedures commensurate
with the size of the Company and the nature of the business for the
purchase of inventory and fixed assets and forthe sale of goods.
b) During the course of our Audit no major weakness has been noticed in
the internal controls.
v) a) According to the information and explanations given to us, we are
of the opinion that the transactions that need to be entered into the
register maintained under Section 301 of Companies Act, 1956 have been
so entered.
b) In our opinion and according to the
information and explanations given to us, the transactions made in
pursuance of contracts or arrangements entered into the register
maintained under Section 301 of the Act and exceeding the value of
Rupees five lakhs in respect of any party during the year, which have
been made at prices which are reasonable having regard to the
Prevailing Market prices at the relevant time other than for Lease rent
amounting to Rs.1,50,00,000/- for which no comparable Market prices
were available and are considered to be of special nature as explained
by the management of the Company.
vi) In our opinion and according the information and explanations given
to us the Company has complied with the provisions of Section 58A and
58AA of the Companies Act, 1956 and the Companies [Acceptances of
Deposits] Rules 1975 with regard to the deposits accepted from the
public. Mo order has been passed by the National Company Law Tribunal
or Reserve Bank of Indian or any Court or any other Tribunal,
vii) In our opinion and according to the Information and explanations
given to us, the internal audit was carried out by an external
Chartered Accountants Is commensurate with the size of the Company and
the nature of its business.
Viii) We have broadly reviewed the books of accounts maintained by
the Company pursuant to the order made 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 prime facie the
prescribed accounts and records have been made and maintained. We have
not, however, made a detailed examination of the records with a view to
determine whether they are accurate or complete.
ix) a) According to the information and explanation given to us and
records examined by us, the company is regular in depositing ,
undisputed statutory dues Including Investor Education and Protection
Fund, Income Tax, Value Added Tax, Wealth Tax, Service-Tax and any
other statutory dues with the appropriate authorities.
b) According this information and explanation given to us, no
undisputed arrears of statutory dues were outstanding as at 30th June,
2014 for a period of more than Six months from the date they became
payable.
c) According to the information and explanation given to us, there
are no dues of Sales tax, Income tax, Customs duty, Wealth tax Excise
duty and Cess which have not been deposited on account of any dispute.
x) the Company has accumulated losses of Rs 5,47,22,670/- as at 30th
June, 2014. The Company has not incurred any cash losses as during the
financial year covered by our audit
xi) in our opinion and according to the information and explanation
given to us the Company has not defaulted in repayment of dues to any
of the banks.
xii) During the year, the Company has not granted 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 a nidhi/ mutual
benefit/society. Therefore, clause. 4(xiii) of the Companies (Auditors
Report) Order 2003 is not applicable the Company.
xiv) In our opinion and according to the Information and explanation
given to us, the Company is not dealing or trading in Shares,
Securities, debentures and other In vestments.
xv) ln our Opinion and according to the information and explanation
given to us, the Company, during the year has not given any guarantee
for loans taken by others from banks or financial Institutions,
xvi) in our opinion, and according to the information and explanations
given to us, on an overall basis, the term loans have been applied for
the purposes for which they were obtained.
xvi) 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 shorttime basis have been used for long term
investment.
xvii) The Company-has not made any preferential allotment of shares
during the year to the parties and companies covered in the Register
maintained under Section 301of the Companies Act, 1956.
xix) The Company has not issued any debentures during the financial
year and hence creation of security in respect thereof does not arise.
xx) The Company has net raised any money through public issue during
the year.
xxl) Based upon the audit procedures performed and Information and
explanations given by the management, we report that no fraud on or by
the company has been noticed or reported during the course of our Audit
For M.S.JAGANNATHAN & VISVANATHAN
Chartered Accountants
Firm Regd No: 001209S
M.J.VIJAYARAGHAVAN
Partner
Membership No.7534
Salem 21stAugust, 2014
