Sri Jayalakshmi Spinning Mills Ltd Auditor Reports

SRI JAYALAKSHMI SPINNING MILLS LIMITED ANNUAL REPORT 2003-2004 AUDITORS REPORT TO The MEMBERS OF SRI JAYALAKSHMI SPINNING MILLS LIMITED 1. I have audited the attached Balance Sheet of SRI JAYALAKSHMI SPINNING MILLS LIMITED as at 30th June, 2004 and also the Profit & Loss Account for the 15 months period ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. My responsibility is to express an opinion on these financial statements based on my audit. 2. I conducted my audit in accordance with auditing standards generally accepted in India. Those standards require that l 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 management , as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. 3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of Companies Act, 1956 , I enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. 4. Further to my comments in the annexure referred to in paragraph (3) above, I report that: a) I have obtained all the information and explanations which to the best of my knowledge and belief were necessary for the purpose of my audit: b) In my opinion, proper books of account as required by law have been kept by the Company, so far as appears from my examination of these books of the Company: c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the Books of account of the Company. d) In my opinion the Balance Sheet and Profit and Loss Account complies with the mandatory Accounting Standards referred in section 211(3C) of the Companies Act, 1956. e) In my opinion, as per the information provided by the company, none of the Directors are disqualified from being appointed as Director under clause (g) of sub section (1) of section 274 f) Attention is drawn to item No 9 of Schedule 20- Notes On Accounts regarding non provision of interest on loans. g) In my opinion and to the best of my information and according to the explanation given to me, the said accounts, read together with the schedules, accounting policies and notes thereon give the information required by the Companies Act.1956 in the manner so required and give a true and fair view: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th June,2004: and (ii) in the case of the Profit and Loss Account, of the PROFIT of the Company for the 15 months period ended on that date. G.V. SURYANARAYANA MURTHI CHARTERED ACCOUNTANT PLACE : GUNTUR DATE : 02.08.2004 ANNEXURE TO AUDIT REPORT Referred to in paragraph (3) of my report of even date. 1. The Company has maintained proper records showing full particulars including details and situation of fixed assets. 2. The fixed assets have been physically verified by the management at reasonable intervals of time during the year on a periodical basis, which in my opinion is reasonable, having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification. 3. According to the information and explanations given to me, a substantial /major part of Fixed Assets has not been disposed off by the company during the year . 4. The stock of goods have been physically verified by the management at reasonable intervals of time. 5. In my opinion and according to the information and explanations given to me the procedures of physical verification of stocks followed by the Management are reasonable and adequate, considering the size of the company and nature of its business. 6. In my opinion and according to the information and explanations given to me and on the basis of my examination of records, the company is maintaining proper records and no material discrepancies have been noticed on physical verification of stocks as compared to book balance in so far as appears from my examination of the books. 7. According to the information and explanations given to me, the company has not taken any loans to the Companies, Firms or Other parties listed in the register maintained under Section 301 of the Companies Act, 1956. 8. According to the information and explanations given to me, the company has not granted any loans to the Companies, Firms or Other parties listed in the register maintained under Section 301 of the Companies Act, 1956. 9. The company has not given any loans or advances in the nature of loans. 10. According to the information and explanations given to me, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods . During the course of my audit, no major weakness has been noticed in the internal controls 11. According to the information explanations given to me, the transactions made in pursuance of contracts or arrangements , that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered. 12. According to the information explanations given to me, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance of Section 301 of Companies Act, 1956. and exceeding the value of Rs. 5,00,000/- in respect of each party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. 13. The Company has not accepted any deposit from the public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and the Rules made thereunder. 14. I 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 am of the opinion that, prima facie, the prescribed accounts and records have been maintained. (I have not carried out a detailed examination of the same). 15. According to the information and explanations given to me and the records of the company examined by me , the company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund , Income Tax , Sales Tax , Customs Duty , Excise Duty and other material statutory dues as applicable with the appropriate authorities. According to the information and explanations given to me, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 30th June 2004, for a period of more than six months from the date of becoming payable . 16. The Company does have accumulated losses has at 30th June 2004. and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year . 17. According to the information and explanations given to me and the records of the company examined by me, the company has defaulted in repayment of dues to financial institutions and banks. However , the company had filed for One Time Settlement proposal with the financial institutions and banks. The Company had received in principle sanction of the OTS Scheme from the financial institutions and bank . 18. According to the information and explanations given to me , the company has not granted any loans and advances on the basis of security by way of pledge of shares , debentures and other securities. 19. The provisions of any special statute applicable to chit fund / mutual benefit fund / societies are not applicable to this company. 20. In my opinion, the company is not a dealer or trader in shares, securities, debentures and other investments . 21. As the company is not dealing or trading in shares, securities, debenture and other investments, paragraph (xiv) of the Companies (Auditors Report ) Order, 2003 is not applicable to the company for the year. 22. The company has not raised any new term loans during the year. The term loans outstanding at the beginning of the year have been applied for the purposes for which they were raised . 23. According to the information and explanations given to me and overall examination of the Balance Sheet of the company , I report that no funds raised on a short term basis which have been used for long term investment and vice versa. 24. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act during the year and therefore paragraph 4 (xvii) of the order is not applicable. 25. The company has not issued any debentures during the year and therefore paragraph 4 (xix ) of the order is not applicable 26. The company has not raised any money by public issues during the year and therefore paragraph 4 (xx) of the order is not applicable. 27. During the course of my examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to me, I have neither come across any instance of fraud on or by the company, noticed or reported during the year , nor have I been informed of such case by the management. PLACE : GUNTUR G.V. SURYANARAYANA MURTHI DATE : 02.08.2004 CHARTERED ACCOUNTANT