The Members of Prakash Woollen Mills Limited,
1. We have audited the attached Balance Sheet of Prakash Woollen Mills Limited as at 31st March, 2010 and also the Profit and Loss Account for the year ended on that dateannexed thereto, and the Cash Flow statement for the year ended on that date. Thesefinancial statements are the responsibility of the company's management. Ourresponsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 as amended by Companies(Auditor's Report) (Amendment) Order 2004 (together the Order) issued by the CentralGovernment of India in terms of sub-section (4a) of section 227of the Companies Act, 1956,and on the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us, we give in theAnnexure, a statement on the matters specified in paragraphs 4 and 5 of the said order.
4. Further to our comments in the Annexure refered to in paragraph 3 above, we reportthat:
(i) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our audit;
(ii) In our opinion, proper books of accounts as required by law have been kept by thecompany so far as appears from our examination of those books;
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;
(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the accounting standards (AS) referred to insub-section (3C) of section 211 of the Companies Act, 1956;
(v) On the basis of the written representations received from the directors, as on 31stMarch, 2010, and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on 31st March 2010 from being appointed as a director interms 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 theexplanations given to us, the said financial statements, read together with the othernotes in sechedule 14 give the information required by the Companies Act, 1956, in themanner so required and give true and fair view in conformity with the accountingprinciples generally accepted in India:
a) In the case of Balance Sheet, of the state of affairs of the company as at 31stMarch 2010;
b) In the case of the Profit and Loss Account of the PROFIT for the year ended on thatdate; and
c) In the case of Cash Flow statment, of the cash flows for the year ended on thatdate.
| ||For Agarwal Pawan Kumar & Co. |
| ||Chartered Accountants |
|Place : Moradabad ||(PAWAN KUMAR) |
|Date : 29.06.2010 ||(Prop.) |
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in paragraph(3) thereof)
(1) (a) The company is maintaining proper records showing full particulars, includingquantitative details and situation of fixed assets.
(b) These fixed assets have been physically verified by the management at reasonableintervals; and no material discrepancies were noticed on such verification.
(c) In our opinion, and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed off by this company during theyear.
(2) (a) As per information given to us, the physical verification of inventory has beenconducted at reasonable intervals by the management.
(b) In our opinion, the procedures of physical verification of inventory followed bythe management are reasonable and adequate in relation to the size of the company and thenature of its business.
(c) On the basis of our examination of the inventory records, in our opinion thecompany is maintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to book records were not material.
(3) (a) The company has not granted any unsecured loan to companies, firms or otherparties covered in the register maintained under section 301 of the Act.
Consequently clause (3)(b), (3)(c), and (3)(d) are not applicable
(e) The company has taken unsecured loans, from two firm / company covered in theregister maintained under section 301 of the Act. Balance outstanding was on Balance Sheetdate was Rs. 36.39 acs.
(f) In our opinion the rate of interest and other terms and conditions of loans givenor taken by the company, secured or unsecured , are prima facie not prejudicial to theinterest of the company.
(g) The payment of the principal amount and interest are also regular.
(4) In our opinion and according to the information and explanation given to us, thereis an adequate internal control system commensurate with the size of the company and thenature of its business, for the purchase of inventory and fixed assets and for the sale ofgoods and services. Corrective measures are taken to remove weaknesses in internal controlsystem as and when noticed.
(5) (a) In our opinion and according to the information and explanations given to us,particulars of contracts or arrangements that need to be entered into a register inpursuance of section 301 of the Act have been entered.
(b) In our opinion transactions made in pursuance of such contracts or arrangementshave been made at prices which are reasonable having regard to the prevailing marketprices at the relevant time.
(6) The company has accepted deposits from the public. In our opinion and according tothe information and explanation given to us, the company has complied with the provisionsof section 58A and 58AA of the Companies Act'1956 and Companies acceptance of DepositsRules 1975 with regard to the deposits accepted through private circulation.
(7) In our opinion, the company has an internal audit system commensurate with its sizeand nature of its business.
(8) Pursuant to the rules made by the Central Government for the maintenance of costrecords under Section 209(1 )(d) of the Companies Act, 1956, in respect of the Company'sproducts to which the said rules are made applicable and we are of the opinion thatprima-facie the prescribed records have been made and maintained. We have not, however,made a detailed examination of the said records.
(9) (a) According to the information and explantions given to us and the records of thecompany examined by us, in our opinion, the company is generally regular in depositingundisputed statutory dues including provident Fund, Income Tax, Sales Tax, Wealth Tax,Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with theappropriate authories.
(b) According to the information and expiations given to us and the records of thecompany examined by us, there are no dues of Income Tax, Sales Tax, Wealth Tax, ServiceTAx, Custom Duty, Excise Duty and Cess which have not been deposited on account of anydispute except the following:
The company has received a show cause notice from the Excise Department demanding Rs.58.03 lacs as excise duty payable by the company. The company has deposited Rs. 44.61 lacswith the department under protest. The case is pending before settlement commission.
EPFO has demanded Rs. 38.95 lacs. The management of the company has contested thedemand of EPFO. An appeal has been pending before hon'ble EPF appellate tribunal Lucknow.
(10) The company has been registered for a period more than five years, and it has notincurred cash losses in such financial year and in the immediately preceding financialyear.
(11) According to the records of the Company examined by us and the information andexplanations given to us,the company has not defaulted in repayment of dues to a financialinstitution or bank or debenture holders.
(12) The company has not granted loans and advances on the basis of securety by way ofpledge of shares, debentures and other securities.
(13) The provisions of any special statute applicable to chit fund are not applicableto the company.
(14) The company is not dealing or trading in shares, securities, debentures and otherinvestments.
(15) In our opinion and according to the information given, the company has not givenany guarantee for loans taken by others from bank or financial institutions, the terms andconditions whereof are prejudicial to the interest of the company.
(16) In our opinion and according to the information and explanations given to us onoverall basis the term loans have been applied for the purposes for which they wereobtained.
(17) On the basis of overall examination of the balance sheet of the company, in ouropinion, and according to the information and explanations given to us, there are no fundsraised on a short term basis which have been used for long term investment.
(18) The company has not made any preferential allotment of shares to parties andcompanies covered in the Register mantained under section 301 of the Act.
(19) No debentures were issued.
(20) No money were raised by public issues during the year.
(21) No fraud on or by the company has been noticed or reported during the year.
| ||For Pawan & Co. |
| ||Chartered Accountants |
|Place : Moradabad ||(PAWAN KUMAR) |
|Date : 29.06.2010 ||(Prop.) |