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Sanathnagar Enterprises Ltd.

BSE: 509423 Sector: Infrastructure
NSE: BAKELHYLAM ISIN Code: INE367E01017
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Sanathnagar Enterprises Ltd. (BAKELHYLAM) - Auditors Report

Company auditors report

TO THE MEMBERS OF M/s. SANATHNAGAR ENTERPRISES LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of M/s. SANATHNAGARENTERPRISES LIMITED ('the Company') which comprise the Balance Sheet as at 31stMarch 2016 the Statement of Profit and Loss and the of Cash Flow Statement for the yearthen ended and notes to the Financial Statements including a summary of significantaccounting policies and other explanatory 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 preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. 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 judgments 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.

AUDITORS' RESPONSIBILITY:

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 and other applicable authoritative pronouncements issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncements requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgment 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 standalone financial statements.

OPINION:

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 and its profit and its 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 2016 ('the Order') issued bythe Central Government of India in terms of sub-section (11) of Section 143 of the Act onthe basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in the'Annexure A' a statement on the matters specified in the paragraphs 3 and 4 of the Order.

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 comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;

e) On the basis of the written representations received from the Directors as on 31stMarch 2016 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 ofSection 164 (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 B'; and

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 information and explanations givento us :

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements - Refer Clause 1 2 and 7 of Note 25 tothe financial statements.

ii. The Company does not have any Long-term contracts including derivative contractsfor which there were any material foreseeable losses. iii. No amounts were required to betransferred to the Investor Education and Protection Fund by the Company.

M/s SANATHNAGAR ENTERPRISES LIMITED

ANNEXURE 'A' TO INDEPENDENT AUDITORS' REPORT (Referred to in Paragraph (1) of ourreport of even date)

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31st March 2016 and on thebasis of such checks of the books and records of the Company as we considered appropriateand according to the information and explanations given to us we report that:

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As informed to us all fixed assets have been physically verified by the managementat reasonable intervals. No material discrepancies were noticed on such physicalverification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

ii. The inventory has been physically verified by the management. In our opinion thefrequency of verification is reasonable. Discrepancies noticed on verification have beenproperly dealt with in the books of account. iii. As the Company has not granted any loansor advances in the nature of loans to parties covered in the register maintained underSection 189 of the Act the provisions of Clause 3 (iii) of the Order are not applicableto the Company.

iv. In our Opinion and according to the information and explanations given to us asthe Company has not granted any loans or provided any guarantees or security in connectionwith any loan to any party covered under Section 185 of the Act and has not made anyinvestment during the year and on the basis of expert opinion obtained by the Company thatprovision of Section 186 are not applicable to the Company in respect of Loans madeGuarantee given or security provided by it the provisions of Clause 3 (iv) of the Orderare not applicable to the Company.

v. The Company has not accepted any deposits from the public.

vi. As informed to us the maintenance of cost records has not been prescribed by theCentral Government under Section 148(1) of the Act in respect of the activities carried onby the Company. Therefore the provisions of Clause 3(vi) of the Order are not applicableto the Company.

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company is generally regular indepositing the undisputed statutory dues including provident fund employees' stateinsurance income-tax sales tax service tax duty of customs duty of excise valueadded tax cess and any other statutory dues with the appropriate authorities.

According to the information and explanations given to us no undisputed amounts inrespect of the aforesaid statutory dues were outstanding as at the last day of thefinancial year for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise and value added taxwhich have not been deposited by the Company on account of disputes except for following:

Name of the statute Nature of dues Amount in (Rs.) in Lakhs Period to which the amount relates Forum where the dispute is pending
The Income Tax Act1961 Penalty 4581.67 April 2011 to March 2012 Commissioner of Income Tax (Appeals)

viii. As the Company has not taken any loan or Borrowings from Financial Institutionsor Banks or Governments or issued Debentures the provisions of Clause 3(viii) of theOrder are not applicable to the Company. ix. According to the records of the Company theCompany has neither raised any moneys by way of Initial Public Offer or Further PublicOffer (including debt instruments) nor obtained any term loan from banks and financialinstitutions.

Therefore the provisions of Clause 3 (ix) of the Order are not applicable to theCompany. x. Based upon the audit procedures performed and information and explanationsgiven by the management we report that neither fraud on the Company by its officers oremployees nor any fraud by the Company has been noticed or reported during the course ofour audit.

xi. As the Company has not paid or provided any managerial remuneration as definedunder Section 197 of the Act during the year the Provisions of Clause 3(xi) of the Orderare not applicable to the Company. xii. As the Company is not a nidhi company theprovisions of Clause 3(xii) of the Order are not applicable to the Company. xiii.According to the information and explanations given to us and based on our examination ofthe records of the Company transactions with related parties are in compliance withsection 177 and 188 of the Act wherever applicable and details have been disclosed in theFinancial Statements (refer Clause 8 of Note 25) as required by the applicable accountingstandards. xiv. As the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year theprovisions of Clause 3(xiv) of the Order are not applicable to the Company. xv. As theCompany has not entered into any non-cash transactions covered under Section 192 of theAct with the directors or persons connected with him the provisions of Clause 3(xv) ofthe Order are not applicable to the Company. xvi. As the Company is not required to beregistered under Section 45-IA of the Reserve Bank of India Act 1934 the provisions ofClause 3(xvi) of the Order are not applicable to the Company.

ANNEXURE 'B' TO THE AUDITORS' REPORT

Referred to in paragraph 2 (f) of the Independent Auditors' Report of even date to themembers of Sanathnagar Enterprises Limited on the standalone financial statements for theyear ended 31st March 2016.

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Act

We have audited the internal financial controls over financial reporting of M/s.SANATHNAGAR ENTERPRISES LIMITED ('the Company') as of 31st March 2016 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing down 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'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to the Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

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 deemed to beprescribed 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 Controls and both issued by the ICAI. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting were established and maintained and if such controls operated effectively in allmaterial 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' judgment 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 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 andexpenditures of the company are being made only in accordance with authorizations of themanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

Opinion

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 31st March 2016 based on theinternal control over financial reporting 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 SHANKERAND KAPANI
Chartered Accountants
FIRM REGISTRATION NO.: 117761W
JAYESH B. KAPANI
PLACE:- MUMBAI PARTNER
DATE:- 13 - MAY - 2016 MEMBERSHIP NO: - 35667