We have audited the attached Balance Sheet of KAREEMS SPUN SILK LIMITED
as at 31st March, 2009, the Profit and Loss Account and also the Cash
Flow Statement for the year ended on that date annexed thereto. 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.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
As required by the Companies (Auditors Report) Order, 2003, as
amended, issued by the Central Government of India in terms of Sub
Section (4A) of Section 227 of the Companies Act, 1956, we enclose in
the Annexure, a statement on the matters specified in paragraphs 4 and
5 of the said order.
Further to our comments in the annexure referred to above, we report
that:
i) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
ii) in our opinion, proper books of account as required by Law have
been kept by the Company in so far as it appears from examination of
those books;
iii) the Balance Sheet, the Profit and Loss account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
iv) in our opinion, the Balance Sheet, the Profit and Loss account and
the Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section 3(C) of Section 211 of
the Companies Act, 1956;
v) on the basis of written representations received from the Directors,
as on 31st March, 2009 and taken on record by the Board of Directors,
we report that none of the Directors is disqualified as on 31st March,
2009 from being appointed as a Director in terms 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
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
a) in the case of Balance Sheet, of the state of affairs of the Company
as at 31st March, 2009;
b) in the case of the Profit and Loss Account, of the Loss of the
Company for the year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 1 of our
report of even date)
i. a) The Company has maintained proper records to show full
particulars including quantitative details and situation of fixed
assets.
bj The Management have certified that the assets have been physically
verified during the year at reasonable intervals and that no material
discrepancies were noticed on such verification.
c) The Company during the year has not disposed off a substantial part
of the Fixed Assets. As such the same has not affected status of the
Company as a going concern.
2. a) The inventories have been physically vs-<:
during the year by the management. In 0ur opinion the frequency of
verification is reasonable.
b) In our opinion, the procedures of physical verification of
inventories followed by the Ý management ere reasonable and adequate in
relation to the si?e of the Company and the nature of its business.
c] The Company is maintaining proper records of inventories. 1 he
discrepancies noticed on such veriiication between the physical stock
and the book records were not material.
3. According to the information and explanations given ic us. the
Company has neither taken nor granted any ioans. secured or unsecured
to or from Company/Firm or other parties covered in the Register
maintained under Section 301 of the Companies Act. 1956 and hence the
provisions of para 4 clause (ii) (a) to (f) of the Order are not
applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and nature of its business
with regard
to the purchase of inventory, fixed assets and with regard to sale of
goods. During the course of our audit, we have not observed any
continuing failure to correct major weaknesses in internal control.
5. According to the information and explanations given to us and on
examination of the records, we are of the opinion that the particulars
of contracts or arrangements referred to in Section 301 of the
Companies Act, 1956 have been entered in the Register required to be
maintained under that section. However there are no transactions during
the year.
6. The Company has not accepted deposits from the public during the
year.
7. In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
8. The Company has made and maintained cost records as prescribed by
the Central Government under Section 209(1) (d) of the Companies Act,
1956.
9. a) Honourable Appellate Authority for Industrial
and Financial Reconstruction (AAIFR) vide its Order dated 14-03-2005
has directed the statutory authorities to waive interest and damages in
the interest of Companys successful rehabilitation. Hence your
management is advised that no provision (Provident Fund (PF)/ Employees
State Insurance (ESI)) is necessary as the liabilities stands
extinguished. .
b) According to information and explanations given to us, there are no
dues in respect of Sales Tax, Income Tax. Wealth Tax, Service Tax,
Excise duty and Cess, which have not been paid on account of dispute.
10. The accumulated losses of the Company as at the end of the year is
more than its networth. The Company has not incurred cash losses in the
year under report.
11. The Company has not defaulted in repayment of dues to Bank,
Financial Institutions and Debenture holders.
12. According to the information and explanations given to us. the
Company has not granted any loans and advances on the basis of security
by way of pledge of shares, debentures and other securities.
13. The Company is not a chit fund or a Nidhi/Mutual Benefit
Fund/Society. Therefore the provisions of clause (xiii) and (xiv) of
para 4 of the order are not applicable.
14. During the current financial year, the Company has not dealt with
or traded in shares, securities and debentures.
15. In our opinion, the Company has not given any guarantees for loans
taken by others from banks.
16. The Company has not borrowed any term loan during the year and
hence the provisions of clause (xvi) of para 4 of this order are not
applicable.
17. According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short term basis have been used for long term
investments.
18. The Company has not made any preferential allotment of shares
during the year and hence the provisions of clause (xviii) of para 4 of
this order are not applicable.
19. The Company has not issued any debentures during the year and
hence the provisions of clause (xix) of para 4 of this order are not
applicable.
20. The Company has not raised any monies by way of public issues
during the year and hence the provisions of clause (xx) of para 4 of
this order are not applicable.
21. During the course of our examination of the books of accounts
carried on in accordance with the generally accepted auditing practices
in India and according to the information and explanations given to us,
we have neither come across any instance of fraud on or by the Company
has been noticed or reported during the year nor have been informed of
such case by the management.
for and on behalf of
M/s.S.Janardhan & Associates
Chartered Accountants
BALAKRISHNA.S.BHAT
Partner
Place : Bangalore
Date : 27th July, 2009
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