To the Members of HINDOOSTAN MILLS LIMITED Report on the Financial Statements
We have audited the accompanying financial statements of
HINDOOSTAN MILLS LIMITED ("the Company") which comprise the Balance Sheetas at 31st March 2017 the Statement of Profit and Loss and the Cash Flow Statement forthe year then ended and a summary of the significant accounting policies and otherexplanatory information.
Management's Responsibility for the 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 preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Amendment Rules 2016. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgements andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records 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.
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 theauditor's judgement including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
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: (a) in the case of the Balance Sheet of the stateof affairs of the Company as at March 31 2017; (b) in the case of the Statement of Profitand Loss of the loss 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 onthat date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's 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 the Annexure "A" a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by section 143(3) of the Act we report that: (a) W e have sought andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit; (b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; and Loss (c) the Balance Sheet the Statement of Profit andthe Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount; (d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Amendment Rules 2016;
(e) On the basis of the written representations received from the directors as on 31stMarch 2017 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164(2) of the Act; (f) W ith respect to the adequacy of the internal controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in Annexure "B"; and (g) W ith respect to theother matters to be included
Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Amendment Rules 2017 in our opinion and to the best of our information and according tothe explanations given to us:
(i) The company has disclosed the pending litigations on its financial position in itsfinancial statements Refer to NoteNo. 27B Point No. III(A) III(B) and III(C) of othernotes to the financial statements.
(ii) The Company does not have any contracts including derivative contracts for whichthere could be any material foreseeable losses and hence the question of making provisionfor such losses does not arise.
(iii) There has been no delay in transferring required to be transferred to theInvestor Education and Protection Fund by the Company. (iv) The Company has providedrequisite in its financial statements as to holdings as well as dealing in Specified BankNotes during the period from 8th November 2016 to 30th December 2016 and the same are inaccordance with the books of account maintained by the Company. Refer Note No. 15.1 of thefinancial statements.
Annexure A to the Auditors' Report
Annexure referred to in paragraph 1 of our report on Other Legal and RegulatoryRequirements of even date
(i) ( T a) he Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our the opinion providesfor physical verification of all the fixed assets at reasonable intervals. According tothe information and explanations given to us no material discrepancies were noticed onsuch verification. of (c) According to the information and explanations given to us and onthe basis of our examination of the records of the company the title deeds of LeaseholdLand are held in the name of the company. (ii) As explained to us inventories werephysically verified -term during the year by the management at reasonable intervals and nomaterial discrepancies were noticed on physical verification. Further Inventory lyingwith third party processors as on 31st March 2017 aggregating to Rs 70.04 lakhs (previousyear Rs. 63.95 lakhs) were not verified for amount which confirmations have beenobtained.
(iii) The Company has not granted loans to parties covered in the register maintainedunder section 189 of the Act. Thus paragraph 3(iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany: (a) Has complied with the provisions of section 186 of the Act with respect tothe investments made.
(b) The provisions of section 185 of the Act are not applicable to it.
(v) The Company has not accepted any deposits from the public. Thus paragraph 3 (v) ofthe Order is not applicable. (vi) W e have broadly reviewed the books of accounts andrecords maintained by the Company relating to the manufacture of textiles pursuant to theOrder made by the Central Government for the maintenance of Cost Records under Sub Section1 of Section 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been so made and maintained. We have however notmade a detailed examination of the accounts and records with a view to determining whetherthey are accurate or complete.
(vii) In respect of statutory dues:
(a) According to the information and explanations given to us the Company has beengenerally regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income-tax Sales-Tax Wealth Tax Service Tax Duty ofCustoms Duty of Excise Value Added Tax Cess and any other statutory dues as applicablewith the appropriate authorities during the year.
(b) According to the information and explanations given to us statutory duesaggregating to Rs. 159.14 lakhs which have not been deposited as on March 31 2017 onaccount of disputes are given below:
|Name Of Statute ||Nature of dues ||Amount (Rs. in lakhs) (Gross) ||Period to which the dues relate ||Forum Where dispute is pending |
|Income Tax Act1961 ||Income Tax dues ||3.12 ||A.Y. 2007-08 ||Commissioner of Income Tax. |
| || ||1.94 ||A.Y. 2010-11 ||Commissioner of Income Tax. |
| || ||3.94 ||A.Y. 2014-15 ||Commissioner of Income Tax. |
|Central Excise Act ||Excise Duty ||4.06 ||1977-2002 ||Dy. Commissioner of Central Excise. |
| || ||2.49 || ||Joint Commissioner of Central Excise |
| || ||27.78 || ||Asst. Commissioner of Central Excise |
| || ||51.87 ||1994-1998 ||Commissioner of Central Excise. |
| || ||20.10 ||1996-2003 ||CESTAT |
|Maharashtra Sales Tax and Central Sales Tax ||Sales Tax & Central Sales Tax ||22.69 ||2000-01 & 2002-03 ||Dy. Commissioner of sales-tax (Appeal)-I |
|Maharashtra Sales Tax on the transfer of property in goods involved in the execution of the work contract (Reenacted) Act 1989 ||Work contract Tax ||21.15 ||1990-91 to 2000-01 ||Dy. Commissioner of sales-tax (Appeal)-I |
(viii)Based on our audit procedures and according to the information and explanationsgiven to us we are of the opinion that the Company has not defaulted in repayment of duesto its banks.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Thus paragraph3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.
(xi) The Company has paid/provided managerial remuneration which is in accordance withthe provisions of section 197 read with Schedule V of the Companies Act 2013.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Thus paragraph 3(xii) of the Order is not applicable.
(xiii)According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by AccountingStandard 18.
(xiv)According to the information and explanations give to us and based on ourexamination of the records of the Company during the year the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the
Company the Company has not entered into non-cash transactions with directors orpersons connected with him. Accordingly paragraph 3(xv) of the Order is not applicable.
(xvi)According to the information and explanations given to us and based on ourexamination of the records of the Company it is not required to be registered undersection 45-IA of the Reserve Bank of India Act 1934.
Annexure - B to the Auditors' Report
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 HINDOOSTANMILLS LIMITED ("the Company") as of 31 March 2017 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's 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 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 Act.
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 Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial control over financial reporting was establishedand maintained and if such controls operated effectively in all material respects. Ouraudit involves performing procedures to obtain audit evidence about the adequacy of theinternal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement 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 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditure of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of theCompany's 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 operating effectively as at 31March 2017 based on the internal control suchinternalfinancial over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the ICAI.
| ||For M. A. Parikh & Co. |
| ||Chartered Accountants |
| ||(Firm's Registration No. 107556W) |
| ||MUKUL M. PATEL |
|Place: Mumbai ||Partner |
|Date: 9th May 2017 ||Membership No. 032489 |