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Home > Equity Market > Katare Spinning Mills Ltd.- Auditor's Reports >

Katare Spinning Mills Ltd.- Auditor's Reports

Industry: Textiles - Spinning - Cotton Blended
BSE Code :502933
NSE Code :
Business Group:Not Applicable
LTP (Rs.) :35.8  (4.98%) [BSE]
ISIN No :INE498G01015
Face Value/M Lot :10.00/1
P/E Ratio : 0.00
Market Cap : 10.22 Cr
You can view the entire text of Auditor's Report of the company for the latest year.
Year End : 03 / 2013
1. Report on the Financial Statements

I have audited the accompanying financial statements of Katare Spinning Mills Limited Company Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

2. Management's responsibility for the financial statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to frayed or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

4. Opinion

Attention is drawn to the following:

a. As stated in Note No. 15 to the accounts, the company has included in other non-current assets a sum of Rs. 514.00 lacs as deferred interest expenditure. In the past the company had availed a term loan ICICI Bank Ltd (which was under OTS with them) which was subsequently assigned by ICICI to Kotak Mahindra Bank Ltd. Consequent upon assignment The KotakMahindra Bank Ltd. had filed suit against the company in DRAT for recovery. The company has settled the said loan with Kotak Mahindra Bank Ltd for an agreed amount of Rs. 750 lacs of which Rs. 325 lacs was deposited before DRAT and Rs. 425 lacs is paid on or before 31/05/2013 and accordingly no balance is now outstanding.

b. The company had a transferred balance in Capital Reserve of Rs. 150 lacs when the loan was settled with ICICI Bank Ltd. The said balance is row reversed from Capital Reserve and balance Rs. 600 lacs represent the amount of interest from the year 2002 to the date of settlement. The company has deferred this interest amount of Rs. 600 lacs to be written off over a period of 7 years and have accordingly charged Rs. 86 lacs to the statement of profit and loss for the year under audit and balance Rs. 514 lacs is carried as deferred revenue expenditure.

c. Trade Receivables to the extent of Rs. 19.51 lacs and other current assets/advances of Rs. 87.12 lacs aggregating to Rs. 106.63 lacs are bad for which no provision is made in the accounts as referred to in Note No. 17 and Note No.20 in the notes on accounts.

d. Had the items reported in para 4 (b) and (c) above been charged to the statement of profit and loss, the profit for the year of Rs. 19.97 lacs would have been resulted into loss of Rs. 602.66 lacs.

To that extent it has resulted into overstatement of year end net Current Assets and Reserves and Surplus by Rs. 602.66 lacs.

e. No provision is made for payment for gratuity on actuarial basis as on 31 st March 2013 hence its impact on the net profit could not be ascertained as referred to Note. No. 27(b) in the notes on accounts.

In my opinion and to the best of my information and according to the explanations given to me, except as reported in para 4(a) to (e) above, the financial statements give the information required by the Act in the manner so required and except as reported in para 4(a) to (e) above, give a true and Fairview in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2013.

b) in the case of the statement of Profit and Loss, of the profit for the year ended on that date and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, I give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, I reportthat:

a. I have obtained all the information and explanations which to the best of my knowledge and belief were necessary forthe 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 those books.

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In my opinion, except as reported in para 4(a) to (e) above the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956. .

e. On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the, Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

On the basis of such checks as I considered appropriate and according to the information and explanation given to me during the course of my audit, I report that:

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

(b) As explained to me, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies Ire noticed on such verification.

(c) In my opinion and according to the information and explanations given to me, no fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

2. (a) As explained to me, inventories have been physically verified during the year by the management at reasonable intervals.

(b) In my opinion and according to the information and explanations given to me, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In my opinion and on the basis of my examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to me and on the basis of my examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

(e) According to the information and explanations given to me and on the basis of my examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1 956. Thus sub clauses (f) & (g) are not applicable to the company.

4. In my opinion and according to the information and explanations given to me, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of my audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. a) Based on the audit procedures applied by me and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) As per information & explanations given to me and in my opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does notarises.

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

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

8. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act and I are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to me there are no outstanding statutory dues as on 31 st of March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to me, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

10. During the financial year covered by my audit the company has incurred cash loss but has not incurred cash loss in the immediately preceding financial year.

11. Based on my audit procedures and on the information and explanations given by the management, I am of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

12. According to the information and explanations given to me, the Company has not granted 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 provision of this clause of the Companies (Auditor's Report) Order, 2003 (as amended) is not applicable to the Company.

14. In my opinion, the Company is not dealing or trading in shares, securities debentures or other investment and, hence the requirements of para 4 (xiv) are not applicable to the company.

15. According to the information and explanations given to me, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on my audit procedures and on the information given by the management, I report that the company has not raised any term loans during the year.

1 7. Based on the information and explanations given to me and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013,1 have to report that no funds raised on short-term basis have been used for long-term investment by the Company.

1 8. Based on the audit procedures performed and the information and explanations given to me by the management, I have to report that the Company has not made any preferential allotment of shares during the year.

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 year.

21. Based on the audit procedures performed and the information and explanations given to me, no fraud on or by the Company has been noticed or reported during the year, nor have I been informed of such case by the management.

Place : Solapur G.M.PAWALE

Chartered Accountant

Place : 31 st May 2013 Membership No. : 032561

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