To the Members of Arrow Textiles Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Arrow TextilesLimited(the Company) which comprise the Balance Sheet as at March 31 2016the Statement of Profit year then ended and a summary of significant accounting policiesand other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the Act) with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls and ensuring their operating effectiveness and the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone 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 standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act.
Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the standalone financial statementsare free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the standalone financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on thestandalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone required by the Act in the manner so required andgive a true and fair view in financial conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at 31st March 2016 itsprofit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditors' Report) Order 2016 (the Order)issued by the Central Government of India in terms of sub section (11) of Section 143 ofthe Act we give in Annexure 1 a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
(2) As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes 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 those books;
c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account;
d. In our opinion the aforesaid standalone financial statements read with Note 1 (a)thereto comply with the Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014;
e. On the basis of written representations received from the directors as on March 312016 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct;
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls we give ourseparate Report in Annexure 2;
g. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note 26(i)on Contingent Liabilitiesto the standalone financial statements;
(ii) The Company did not have any long-term contracts including derivativecontracts.Hence the question of any material foreseeable losses does not arise; (iii)There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of ArrowTextiles limited on the standalone financial statements for the year ended March 31 2016]
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) During the year the fixed assets of the Company have been physically verified bythe management and as informed no material discrepancies were noticed on suchverification. In our opinion the frequency of verification is reasonable having regard tothe size of the Company and the nature of its assets.
(c) The title deeds of immovable properties recorded as fixed assets in the books ofaccount of the Company are held in the name of the Company.
(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. As informed no materialdiscrepancies were noticed on physical verification carried out during the year.
(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability
Partnerships or other parties covered in the register maintained under Section 189 ofthe Act. Hence the provisions of Paragraph 3 (iii)(a) 3 (iii)(b) and 3 (iii)(c) of theorder are not applicable to the Company.
(iv) Based on information and explanation given to us in respect of loans investmentsguarantees and securities the Company has complied with the provisions of Section 185and 186 of the Act. (v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from the public within theprovisions of Sections 73 to 76 of the Act and the rules framed there under.
(vi) As per information and explanation given to us the Central Government hasprescribed the maintenance of cost records for a product of the Company under sub-section(1) of Section 148 of the Act and the rules framed there under and such accounts are madeand maintained.
(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax value added tax custom duty cess and any other materialstatutory dues applicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax sales taxservice tax value added tax customs duty cess and any other material statutory duesapplicable to it were outstanding at the year end for a period of more than six monthsfrom the date they became payable.
(b) In our opinion and according to the information and explanations given to us thereare no dues with respect to income tax sales tax service tax value added tax customsduty excise duty which have not been deposited on account of any dispute except for thedues in relation to income tax and Central Sales Tax as disclosed hereunder:
|Name of the Statute ||Nature of Dues ||Amount Rs in Lacs ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income tax ||1.64 ||F.Y.-2009-10 ||Appeal pending before Commissioner of Income Tax(Appeals) |
|Income Tax Act 1961 ||Income Tax ||1.72 ||F.Y.-2011-12 ||Rectification application made u/s 154 of the Act and pending before Assessing Officer. |
|Central Sales Tax ||CST Tax ||7.15 ||F.Y.-2002-03 ||Appeal pending before High Court |
(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to banks. The Company didnothaveanyoutstandingduestoanyfinancialinstitutions or debenture holders during the year.
(ix) According to the information and explanations given to us the Company has notraised money by way of public issue offer. Term loans obtained by the Company have beenapplied for the purposes for which they were raised.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.
(xi) As per the information and explanations given to us managerial remuneration hasbeen paid / provided in accordance with the requisite approvals mandated by the provisionsof Section 197 read with Schedule V to the Act.
(xii) In our opinion the Company is not a Nidhi Company. Therefore paragraph 3(xii)of the Order is not applicable to the Company.
(xiii) As per the information and explanation given to us all transactions enteredinto by the Company with the related parties are in compliance with Sections 177 and 188of Act where applicable and the details have been disclosed in the Financial Statementsetc. as required by the applicable accounting standards. (xiv) As informed the Companyhas not made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. Therefore paragraph 3(xiv) of theOrder is not applicable to the Company.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him duringthe year.
(xvi) Based on the information and explanation given to us the Company is not requiredto be registered under Section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 2 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of ArrowTextiles Limited on the standalone financial statements for the year ended March 31 2016]
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-Section 3 of Section 143 of the Companies Act 2013 (the Act)
We have audited the internal financial controls over financial reporting of ArrowTextiles Limited(the Company) as of March 31 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaininginternalfinancialcontrols based on the reporting criteria established by theCompany considering the essential components of internalcontroloverfinancial internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting (the Guidance Note) and the Standards on Auditingspecified under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both issued by the ICAI. Those Standards and the
Guidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company;(2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financialreporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by ICAI.
| ||For Amit Desai & Co |
| ||Chartered Accountants |
| ||ICAI Firm Registration No. 130710W |
| ||(Amit N Desai) |
| ||Partner |
|Mumbai: 12th May 2016 ||Membership No. 032926 |