TO THE MEMBERS OF ARVIND LIMITED
Report on the Financial Statements
We have audited the accompanying standalone financial statements of ARVIND LIMITED ("theCompany") which comprise the Balance Sheet as at 31st March 2016 the Statement ofProfit and Loss the Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
The Companys 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified under
Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
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 ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements.
The procedures selected depend on the auditors judgment including the assessmentof the risks of material misstatement of the financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal financial controlrelevant to the Companys preparation of the financial statements that give a trueand fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by theCompanys Directors as well as evaluating the overall presentation of the financialstatements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid 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 of the state of affairs of the Company as at 31stMarch 2016 and its profit and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the following matters in the Notes to the financial statements a)As mentioned in Note No. 43 in respect of early adoption of Accounting Standard (AS) 30 on Financial Instruments: Recognition and Measurement issued by theInstitute of Chartered
Accountants of India and the clarification issued on Application of AS
30 the Company has measured all its Financial Assets and Liabilities at theirrespective Fair Values or at Amortised Cost except for those items whose accountingtreatment is covered by the existing accounting standards specified under Section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014. Accordingly thecarrying amount of Long Term Borrowings would have been higher by Rs 6.51 Crores (Previousyear Rs 6.98 Crores) and carrying value of Hedge Reserve would have been lower by Rs 13.46Crores (Previous year higher by Rs 8.24 Crores).
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure 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 appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss and the
Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under section 133 of the Act Read with Rule 7 of theCompanies (Accounts) Rules 2014 and Accounting Standard (AS) 30 on FinancialInstruments: Recognition and Measurement issued by the Institute of CharteredAccountants of India (ICAI);
(e) On the basis of the written representations received from the directors as on 31stMarch 2016 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".
(g) With respect to the other matters to be included in the Auditors 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements Refer Note 19 to the financial statements; ii. The Company did nothave any material foreseeable losses on any long-term contracts including derivativecontracts; iii. There has been no delay in transferring amount required to betransferred to the Investor Education and Protection Fund by the Company.
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT
Re: ARVIND LIMITED
Referred to in Paragraph 1 under the heading "Report on other legal and regulatoryrequirements" of our Independent Auditors Report of even date
(i) (a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of its fixed assets.
(b) As explained to us the fixed assets have been physically verified by themanagement during the year in accordance with a phased programme of verification which inour opinion provides for physical verification of all the fixed assets at reasonableintervals. We are informed that no material discrepancies were noticed on suchverification.
(c) The title deeds of immovable properties other than self-constructed immovableproperty (buildings) as disclosed in fixed assets to the financial statements are heldin the name of the Company except for the following:
|Nature of Property ||No. of Cases based on Block No. ||Gross Block as at 31-03-2016 Rs in Crores ||Net Block as at 31-03-2016 Rs in Crores |
|Freehold Land ||46 ||84.96 ||84.96 |
|Buildings ||6 ||1.20 ||0.88 |
(ii) As explained to us physical verification of inventory has been conducted atreasonable intervals by the management and the discrepancies noticed on verificationbetween the physical stocks and the book records were not material having regard to thesize of the Company and the same have been properly dealt with in the books of account.
(iii) The Company has not granted secured / unsecured loans to Companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Act. Consequently requirements of clause (iii) of paragraph 3 of theorder are not applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany has not advanced any loan or given any guarantee or provided any security or madeany investment covered under section 185 of the Act. However the Company has advancedloans or given guarantees or provided security or made investments covered under section186 of the Act. We are of the opinion that provisions of section 186 of the Act have beencomplied with.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of Sections 73 to76 or any other relevant provisions of the Act and rules framed thereunder. No order hasbeen passed by the Company Law Board or National Company Law Tribunal or Reserve Bank ofIndia or any Court or any other Tribunal.
(vi) We have broadly reviewed the cost records maintained by the Company as specifiedby the Central Government under sub-section (1) of Section 148 of the Companies Act 2013and are of the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete (vii) (a) The Company is generallyregular in depositing with appropriate authorities undisputed statutory dues includingProvident Fund Employees State Insurance Income Tax Wealth Tax Sales TaxService Tax Duty of Custom Duty of Excise Value added tax Cess and other materialstatutory dues applicable to it. According to the information and explanations given tous no undisputed amounts payable in respect of outstanding statutory dues were in arrearsas at March 31 2016 for a period of more than six months from the date they becamepayable.
(b) Following amounts have not been deposited as on March 31 2016 on account of anydispute :
|Nature of Statute ||Nature of the dues ||Rs in Crores ||Period to which the amount relates ||Forum where matter is pending |
|Sales Tax Act ||Sales Tax ||11.51 ||1998-99 2002-03 2003-04 2004-05 2005-06 2007-08 ||High Court(VAT & CST) |
| || ||2.23 ||2006-07 ||JCCT Appeal (VAT) |
| || ||0.90 ||2006-07 ||JCCT Appeal (CST) |
| || ||0.05 ||2002-03 2003-04 ||Appellate Tribunal |
|Central Excise Act ||Excise Duty ||9.91 ||2000-2001 2001-2002 ||High Court |
| || ||1.55 ||2000-01 2001-02 2002-03 2003-04 ||CESTAT |
| || || ||2004-05 2005-06 2008-09 || |
| || ||0.16 ||2002-03 2003-04 2005-06 ||Commissioner Appeal |
| || ||9.17 ||1999-00 2000-01 2001-02 2002-03 2008-09 ||Supreme Court |
|Customs Act ||Custom Duty ||0.72 ||1998-99 to 2006-07 ||CESTAT |
| || ||0.05 ||2005-06 2006-07 2007-08 ||Joint Commissioner |
|Finance Act ||Service Tax ||2.12 ||2004-05 2005-06 2006-07 2007- ||Additional Commissioner |
| || || ||08 2012-13 2013-14 2014-15 || |
| || ||0.37 ||2007-08 2012-13 2013-14 ||CESTAT |
| || ||0.05 ||2005-06 2006-07 ||Assistant Commissioner |
| || ||0.77 ||2013-14 2014-15 ||Principal Commissioner |
| || ||0.57 ||2004-05 2005-06 2006-07 2007- 08 2009-10 ||Commissioner |
|Income Tax Act ||Fringe Benefit Tax ||0.13 ||2005-06 ||CIT Appeal |
| ||Income Tax ||4.69 ||2000-01 2004-05 2010-11 2012-13 ||CIT Appeal |
| || ||2.11 ||2006-07 ||ITAT |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of dues to financial institutions and banks.
(ix) To the best of our knowledge and belief and according to the information andexplanations given to us the Company has not raised moneys by way of initial public offeror further public offer. However the term loans obtained during the year were primafacie applied by the Company for the purpose for which they were raised other thantemporary deployment pending application.
(x) To the best of our knowledge and belief and according to the information andexplanations given to us no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.
(xi) To the best of our knowledge and belief and according to the information andexplanations given to us managerial remuneration has been paid/ provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act.
(xii) The Company is not a Nidhi Company. Consequently requirements of clause (xii) ofparagraph 3 of the order are not applicable.
(xiii) To the best of our knowledge and belief and according to the information andexplanations given to us all transactions with the related parties are in compliance withsection 177 and 188 of the Act where applicable and the details have been disclosed in theFinancial Statements etc. as required by the applicable accounting standards.
(xiv) To the best of our knowledge and belief and according to the information andexplanations given to us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Consequently requirements of clause (xiv) of paragraph 3 of the order are notapplicable.
(xv) To the best of our knowledge and belief and according to the information andexplanations given to us the Company has not entered into any non-cash transactions withdirectors or persons connected with him.
(xvi) According to the nature of the business the Company is not required to beregistered under section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE FINANCIALSTATEMENTS OF ARVIND LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of ArvindLimited ("the Company") as of March 31 2016 in conjunction with our audit ofthe financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued 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 companys policies the safeguardingof its 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 Act.
Our responsibility is to express an opinion on the Companys 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 Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those
Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively 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 auditors judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Companys internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys 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 financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompanys assets that could have a material effect on the financial 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"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".
| ||For Sorab S. Engineer & Co. |
| ||Chartered Accountants |
| ||Firm Registration No. 110417W |
| ||CA. N. D. Anklesaria |
|Ahmedabad ||Partner |
|May 12 2016 ||Membership No. 10250 |