TO THE MEMBERS OF NIWAS SPINNING MILLS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of NIWAS SPINNING MILLSLIMITED (the "Company") which comprises the Balance sheet as at 31stMarch 2014 the statements of Profit & Loss and cash flow statements for the year thanended and a summary of significant accounting policies and other explanatory informationwhich we have signed under reference to this report.
Management's Responsibility for the Financial Statements
The Company's Managements is responsible for the preparation of this financialStatements that give a true and fair view of the financial position financial performanceand cash flow of the company in accordance with the Accounting Standards referred to insub-section (3C) of Section 211 of the Company Act 1956 ("The Act") read withthe general circular 15/2013 dated 13th September 2013 of the Ministry of CorporateAffairs in respect of section 133 of the Companies Act 2013. This responsibility includesthe design implementation and maintenance of internal control relevant to thepresentation of financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with Standard on Auditing issued by theInstitute of Chartered Accountants of the India. Those standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatements.
An audit involves performing procedure selected depend on the auditor's judgmentincluding the assessment of the risk of material misstatements in the financialstatements whether due to fraud or error. In making those risk assessments the auditorsconsiders internal control relevant to the Company's preparation and fair presentation ofthe financial statements in order to design audit procedure that are appropriate in thecircumstances. An audit also include evaluating the appropriateness of accounting policiesused and the reasonableness of the accounting estimates made by managements as well asevaluating 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 audit opinion.
In our opinion and to the best of our information and accordance to the explanationgiven to us the accompanying financial statements give the information required by the Actin the 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 31stMarch 2014;
b. In the case of the Statement of Profit & Loss of the Loss of the Company forthe year ended on that date: and
c. In the case of the Cash Flow Statement of the Cash Flows for the year ended on thatdate.
Report on other Legal and Regulatory Requirements
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 227ofthe Act we give in the annexure a statement on the matters specified in paragraphs 4 and5 of the Order.
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;
b) In our opinion proper books of account as required by law have been kept by thecompany so far as it appears from our examination of such books;
c) The balance sheet statement of profit & loss and the cash flow statement dealtwith by this report are in agreement with the books of accounts;
d) In our opinion the balance sheet statement of profit & loss and Cash flowstatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of section 211 of the Companies Act 1956 to the extent applicable;
e) On the basis of written representation received from the directors as on 31stMarch 2014 and taken on record by the Board of Directors we report that none of theDirectors is disqualified as on 31st March 2014 from being appointed as aDirector in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act1956;
f) Since the central Government has not issued any notification as to the rate at whichthe cess is to be paid under section 441A of the Companies Act 1956 nor has it issued anyrules under the said section prescribing the manner in which such cess is to be paid nocess is due and payable by the company.
| ||For B. M. Gattani & Co. |
| ||Chartered Accountants |
|Place : Camp - Solapur ||Firm Reg. No. 113536W |
|Date : 28-05-2014 ||(B. M. Gattani) |
| ||Proprietor |
| ||Membership No. 47066 |
ANNEXURE OF THE AUDITOR'S REPORT
Referred to in paragraph 1 of our Report of even date.
1. a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.The Company has taken certain machineries on lease basis since 2004-05 and same are heldby the Company over lease from lessor.
b. All the assets have not been physically verified by the management during the yearbut there is a regular program of verification which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. As explained thereconciliation of physical inventory of plant and machinery with book records is almostover and the Company is in process of reconciliation of physical inventory with bookrecords in respect of furniture fixtures and office equipment hence materialdiscrepancies if any cannot be ascertain at this stage which in the opinion of managementwill be NIL.
c. The Company has not disposed-off substantial / major part of fixed assets during theyear except absolute/scrap asset of Rs.9.50 Lacs.
2. a. As explained to us the inventory has been physically verified during the year bythe management. In our opinion the frequency of verification is reasonable.
b. In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business.
c. In our opinion and according to the information and explanations given to us and onthe basis of examination of the records of inventory the Company is maintaining properrecords of inventory. The discrepancies noted on physical verification as compared tobooks and records were not material and have been properly dealt with in the books ofaccounts.
3. According to the information and explanations given to us the Company has takencertain loan from the parties listed in the Register maintained under Section 301 of theCompanies Act 1956. However the Company has not granted any loan [secured or unsecured]to the parties listed in the Register maintained under section 301 of the Companies Act1956 and accordingly clause 3 (i) to (iv) and clause 3 (v) to (vi) of the order is notapplicable.
4. On the basis of checks carried out during the audit and as per explanations given tous we are of the opinion that there are adequate internal control procedurescommensurate with the size of the Company and nature of its business; with regard to thepurchase of inventory and fixed assets and with regard to the sale of goods. During thecourse of our audit no major weakness has been noticed in the internal controls.
5. In respect of transactions entered in the register maintained in pursuance ofSection 301 of the Companies Act 1956:
a. Based on audit procedures applied by us to the best of our knowledge and belief andaccording to the information and explanations given to us we are of the opinion that thetransactions that needed to be entered into the register maintained under section 301 havebeen so entered.
b. According to the information and explanations given to us and excluding certaintransactions of purchase of goods and material of special nature for which alternatequotations are not available where each of such transactions is in excess of Rs.500000/- (Five Lacs) in respect of any party. In our opinion the transactions have beenmade at prices which are prima facie reasonable having regard to the prevailing prices atthe relevant time.
6. In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public and therefore the provisions of Section58A and 58AA of the Companies Act 1956 and Rules there under are not applicable to theCompany.
7. In our opinion Company does not have any formal internal audit system commensuratewith the size and the nature of its business; however we are explained that its internalcontrol systems are adequate to cover Internal Audit systems.
8. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of Cost Records under Section209(1) (d) of the Companies Act 1956 and are of the opinion that prima facie theprescribed accounts and records have been maintained.
9. a. According to the records of the Company and information and explanations given tous the Company has been regular in depositing undisputed statutory dues includingProvident Fund Employees State Insurance Income-Tax Sales Tax Wealth Tax CustomsDuty Excise Duty Cess and other statutory dues with the appropriate authorities duringthe year except an amount of Rs. 3.07 Lacs towards Contribution of P.F. not madepertaining to period May 13 to Mar 14
b. According to the records of the Company and information and explanations given tous disputed Excise Duty demands aggregating to Rs. 11.82 Lacs have not been deposited.The said dispute is pending before Appellate Tribunal. Also there is a disputed Income Taxfor the Ass.Yr 95-96 demands aggregating to Rs 10.18 lacs out of which Rs 8.05 lacs havebeen deposited / adjusted and the balance is still required to be paid.
10. The Company has accumulated losses as at the end of the year and the Company hasincurred cash losses during the current and immediately preceding financial year.
11. Based on our audit procedures and on the basis of information and explanationsgiven by the management we are of the opinion that the Company has defaulted in therepayment of dues to financial institutions banks and debenture-holders.
12. According to the information and explanations given to us the Company has notgranted any loans and advances on the basis of security by way of pledge of sharesdebentures and other securities.
13. The provisions of any Special Statute applicable to Chit Fund Nidhi or MutualBenefit Fund/ Societies are not applicable to the Company.
14. a. The Company is not in the business of dealing or trading in shares. Based on therecords examined by us and according to the information and explanations given to us weare of the opinion that the Company is maintaining proper record of the investments whichare negligible and that timely entries have been made in these records.
b. Based on our audit procedures and to the best of our knowledge and belief andaccording to the information and explanations given to us the investments includingshares and securities have been held by the Company in its own name.
15. According to the information and explanations given to us the Company has notgiven any guarantee for loans taken by others from banks and financial institutions.
16. According to the information and explanations given to us the terms loans raisedduring the year have been applied for the purpose for which they were raised.
17. According to the Cash Flow Statement and records examined by us and according tothe information and explanations given to us on overall basis funds raised on short termbasis have prima facie not been used during the year for long term investment and viceversa.
18. The Company has not made any preferential allotment to parties and companiescovered under register maintained under section 301 of the Companies Act 1956 during theyear and the question of whether the price at which the shares have been issue prejudicialto the interest of the Company does not arise.
19. According to the information and explanations given to us and the records examinedby us securities have been created in respect of the debentures issued.
20. The Company is a Sick Industrial Company within the meaning of clause (O)sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act1985.
21. The Company has not raised money by any public issues during the year and hence thequestion of disclosure and verification of end use of such money does not arise.
22. To the best of our knowledge and belief and according to the information andexplanations given to us no fraud on or by the Company was noticed or reported during theyear.
| ||For B. M. Gattani & Co. |
| ||Chartered Accountants |
| ||Firm Reg. No. 113536W |
|Place : Camp - Solapur ||(B. M. Gattani) |
|Date : 28-05-2014 ||Proprietor |
| ||Mem. No. 47066 |