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Oswal Spinning and Weaving Mills Ltd.

BSE: 500318 Sector: Industrials
NSE: OSWALSPG ISIN Code: INE716C01027
BSE LIVE 14:08 | 30 Nov Stock Is Not Traded.
NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 1.13
PREVIOUS CLOSE 1.08
VOLUME 500
52-Week high 1.13
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 10
Buy Price 0.00
Buy Qty 0.00
Sell Price 1.13
Sell Qty 111809.00
OPEN 1.13
CLOSE 1.08
VOLUME 500
52-Week high 1.13
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 10
Buy Price 0.00
Buy Qty 0.00
Sell Price 1.13
Sell Qty 111809.00

Oswal Spinning and Weaving Mills Ltd. (OSWALSPG) - Auditors Report

Company auditors report

INDEPENDENT AUDITORS

To

The Members of

OSWAL SPINNING AND WEAVING MILLS LIMITED

Report on Financial Statements

We have audited the accompanying financial statements of OSWAL SPINNING AND WEAVINGMILLS LIMITED ("the Company") which comprise the Balance Sheet as at March31 2014 the Statement of Profit and Loss and the Cash Flow Statement for the period thenended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for Financial Statements

Management is responsible for the preparation of these financial statements that give atrue and fair view of the financial position and financial performance of the Company inaccordance with the Accounting Standards referred to in sub-section (3C) of section 211 ofthe Companies Act 1956 ("the Act"). This responsibility includes the designimplementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of the accounting estimates made by management aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of matters described in the Basis for QualifiedOpinion paragraph the financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

a) in the case of the Balance Sheet of the state of affairs of the Company as at March31 2014;

b) In the case of the Statement of Profit and Loss of the profit for the period endedon that date.

c) In the case of the Cash Flow Statement of the cash flows for the period ended onthat date.

Emphasis of Matter

Without qualifying our opinion we draw attention to the following:

a) We draw attention to Note-16 to the financial statements which describes thedoubtful nature of the Trade Receivables to the extent of Rs. 9291903.00 receivable formore than 3 years against which no provision for doubtful debts has been made by thecompany. However The company is taking requisite steps to recover the amount.

b) We draw attention to Note-29 to the financial statements which describes that duringthe year the Company has changed rate of charging depreciation on cotton spinning unitfrom the rate prescribed for Continuous Process Plant to General Plant and Machinery asper rates specified in Schedule XIV of the Companies Act 1956. Consequently thedifference of Depreciation relating to earlier years amounting to Rs.12616898.42/- hasbeen provided during the year as an Exceptional Item. Had the depreciation been providedas per previous rate then the depreciation for the period on cotton spinning unit wouldhave been Rs.22566538/- instead of Rs. 9820049/-. The Company's records indicate thathad the depreciation been provided as previous rate :-

i. The Profit would have been Rs.3592603.40/- as against the reported figure of Rs.3722194.40/-.

ii. Balance of Surplus would have been Rs 59515484.20- as against the reportedfigure of Rs. 59645075.20/-.

iii. Fixed Assets (excluding Capital Work-in-progress) would have beenRs.172761591.70/- as against the reported figure of Rs.172891182.70/-.

c) We draw attention to Note-30(iii) to the financial statements which describesthat Kotak Mahindra Bank Ltd. has issued a notice under section 13(2) of the SARFAESI Act2002 demanding Rs. 63.43 crores (calculated upto 04/04/2014) from the Company in respectof various commitments defaults penalties and interest thereon which the Company hascontested illegal and without any basis before the Hon. High Court of Punjab and Haryanafor which petition has been admitted on 29/05/2014 and further proceedings under section13(4) of SARFAESI Act 2002 has been stayed.

d) We draw attention to Note-30 (iv) to the financial statements which describes thatState Bank of Patiala (SBOP) has filed an application before the Debts Recovery Tribunal(DRT) Chandigarh for recovery of an amount of Rs. 4.09 cr. (being NPV of Rs. 2.88 cr. ofCRPS of Rs. 5.38 cr. and interest thereon). These CRPS have already been issued by theCompany to the Bank. Further the Company had agreed to pay the NPV of CRPS because SBOPhad informed the Company that they had waived the amount of Rs. 5.29 cr. being interestpayable by the Company to SBOP. However later on it has transpired that instead ofwaiving this amount of Rs. 5.29 cr. SBOP has transferred the same to Kotak Mahindra BankLimited (KMBL) vide assignment agreement dated 16.11.2007 thereby misleading the Companythat they have waived the interest and thus violating the terms and conditions of theagreement that they had with the Company. On this ground the application of the bank isbeing contested by the Company in the DRT.

e) We draw attention to Note-30(v) to the financial statements which describes thatIFCI has filed an application before the Debts Recovery Tribunal (DRT) Chandigarh forrecovery of an amount of Rs. 2347.02 lacs (Rs. 1269.82 lacs being amount of FITL andbalance amount being interest thereon). IFCI has also filed a company petition with thePunjab and Haryana High Court under section 433 434 & 439 for Recovery of the abovementioned amount/winding up of the Company. The Company is contesting the application inthe DRT and Company petition in Punjab and Haryana High Court on the ground that by way ofassignment of debt IFCI has assigned/transferred the entire dues including FITL of Rs.1269.82 lacs payable by the Company to IFCI on 16.11.2007 in favour of Kotak Mahindra BankLimited vide Assignment Agreement dated 16.11.2007 and after that nothing is due andpayable by the Company to IFCI.

Report on Other Legal and Regulatory

Requirements

1. As required by the Companies (Auditor's Report) Order 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 ofthe Act we give in the Annexure a statement on the matters specified in paragraphs 4 and5 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 ourknowledge and belief were necessary for the purpose of our audit except as specificallymentioned in Point 11 of the Annexure;

b) in our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

c) the Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this Report are in agreement with the books of account;

d) In our opinion the Balance Sheet Statement of Profit and Loss and the Cash FlowStatement comply with the Accounting Standards referred to in subsection (3C) of section211 of the Companies Act 1956;

e) On the basis of written representation received from the Directors as on 31st March2014 and taken on record by the Board of Directors we report that none of the directorsare disqualified as on 31st March 2014 from being appointed as a director in terms ofclause (g) of subsection (1) of section 274 of the Companies Act 1956.

FOR DASS KHANNA & CO.
CHARTERED ACCOUNTANTS
(Firm Regn No. 000402N)
PLACE : LUDHIANA (RAKESH SONI)
DATED : 30.05.2014 PARTNER
M.NO. 83142

ANNEXURE TO THE AUDITOR’S REPORT

The Annexure referred to in paragraph 1 under the heading 'Report on Other Legal andRegulatory Requirements' of the Our Report of even date to the members of OSWAL SPINNINGAND WEAVING MILLS LIMITED on the accounts of the company for the period ended 31st March2014.

On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:

1. (a) The company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.

(b) All the assets have not been physically verified by the management during theperiod but there is a regular programme of verification which in our opinion isreasonable having regard to the size of the company and the nature of its business. Nomaterial discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us thecompany has not disposed off substantial part of fixed assets and therefore does notaffect the going concern assumption.

2. (a) As explained to us inventories have been physically verified during the periodby the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.

(c) In our opinion and on the basis of our examination of the records the Company isgenerally maintaining proper records of its inventories. No material discrepancy wasnoticed on physical verification of stocks by the management as compared to book records.

3. (a) The company has taken loan from four companies and 17 other parties covered inthe register maintained under section 301 of the Companies Act 1956. The maximum amountinvolved during the period was Rs.52710698/62 and the period end balance of loans wasRs.49110698/62

(b) The rate of interest and other term and conditions of such loans are in ouropinion prima facie not prejudicial to the interests of the Company.

(c) According to information and explanations given to us the parties from whom loansand advances in the nature of loans have been taken the interest and principal amountsare being repaid as stipulated.

(d) The company has not granted loan to companies covered in the register maintainedunder section 301 of the Companies Act 1956. So Para No. e f g are not applicable.

4. In our opinion and according to the information and explanations given to us thereis generally an adequate internal control procedure commensurate with the size of thecompany and the nature of its business for the purchase of inventories & fixed assetsand payment for expenses & for sale of goods. During the course of our audit no majorinstance of continuing failure to correct any weaknesses in the internal controls has beennoticed.

5. a) Based on the audit procedures applied by us and according to the information andexplanations provided by the management the particulars of contracts or arrangementsreferred to in section 301 of the Act have been entered in the register required to bemaintained under that section.

b) As per information & explanations given to us and in our opinion thetransactions entered into by the company with parties covered u/s 301 of the Act exceedingfive lakh rupees in a financial period have been made at prices which are prima faciereasonable.

6. The Company has not accepted any deposits from the public covered under section 58Aand 58AA of the Companies Act 1956.

7. As per information & explanations given by the management the Company has aninternal audit system commensurate with its size and the nature of its business.

8. We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the company pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under section 209 (1) (d) of the CompaniesAct 1956 and we are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have however not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company undisputed statutory dues includingProvident Fund Investor Education and Protection Fund Employees' State InsuranceIncome-tax Sales-tax Wealth Tax Service Tax Custom Duty Excise Duty cess to theextent applicable and any other statutory dues have generally been regularly depositedwith the appropriate authorities. According to the information and explanations given tous there were no outstanding statutory dues as on 31st of March 2013 for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us there is no amountspayable in respect of income tax wealth tax service tax sales tax customs duty andexcise duty which have not been deposited on account of any disputes except Sale Taxpenalty amounting to Rs.135000/- demanded in year 2000-2001 which is disputed in Sale TaxAppellate Authority.

10. The accumulated losses of the company are not more than its net worth. The companyhas not incurred cash losses during the financial period covered by our audit andimmediately preceding financial period.

11. We are unable to express an opinion on term loan from Kotak Mahindra Bank Limitedas information regarding repayment terms have not been provided to us by the company. Incase of all other term loans the company has not defaulted in repayment of dues to banks.

12. According to the information and explanations given to us the Company has notgranted loans and advances on the basis of security by way of pledge of shares debenturesand other securities.

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Thereforethe provision of this clause of the Companies (Auditor's Report) Order 2003 (as amended)is not applicable to the Company.

14. According to information and explanations given to us the Company is not tradingin Shares Mutual funds & other Investments.

15. According to the information and explanations given to us the Company has notgiven any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management wereport that the company has not raised any term loans during the period.

17. Based on the information and explanations given to us and on an overall examinationof the Balance Sheet of the Company as at 31 st March 2014 we report that no fundsraised on shortterm basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations givento us by the management we report that the Company has not made preferential allotment ofshares during the period to parties covered in the register maintained under section 301of the Act.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any money by public issue during the period.

21. Based on the audit procedures performed and the information and explanations givento us we report that no fraud on or by the Company has been noticed or reported duringthe period nor have we been informed of such case by the management.

FOR DASS KHANNA & CO.
CHARTERED ACCOUNTANTS
(Firm Regn No. 000402N)
PLACE : LUDHIANA (RAKESH SONI)
DATED : 30.05.2014 PARTNER
M.NO. 83142