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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 Sanathnagar Enterprises Limited Report on the Ind AS FinancialStatements

We have audited the accompanying Ind AS financial statements of Sanathnagar EnterprisesLimited ("the Company") which comprise the Balance Sheet as at 31st March2017 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Cash Flow and the Statement of Changes in Equity for the year then ended andsignificant accounting policies and other explanatory information.

Management's Responsibility for the Ind AS 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 Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (‘Ind AS') prescribedunder Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements basedon 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 of the Ind AS financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Ind AS financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial controls relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the financialposition of the Company as at 31st March 2017 and its financial performance includingother comprehensive income its cash flows and the changes in equity for the year ended onthat date.

Other Matter

The comparative financial information of the Company for the year ended 31st March2016 and the transition date opening balance sheet as at 1st April 2015 included in theseInd AS financial statements are based on the previously issued statutory financialstatements prepared in accordance with the Companies (Accounting Standards) Rules 2006audited by the predecessor auditor whose report for the year ended 31st March 2016 and31st March 2015 dated May 13 2016 and April 30 2015 respectively expressed anunmodified audit opinion on those financial statements as adjusted for the differences inthe accounting principles adopted by the Company on transition to the Ind AS which havebeen audited by us.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. 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 including Other ComprehensiveIncome the Statement of Cash Flow and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account.

(d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 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) 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 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsInd AS financial statements – Refer Note 29 to the Ind AS financial statements. ii.The Company did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses. iii. There were no amounts which were requiredto be transferred to the Investor Education and Protection Fund by the Company. iv. TheCompany has provided requisite disclosures in its Ind AS financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8th November2016 to 30th December 2016. Based on audit procedures and relying on the managementrepresentation we report that the disclosures are in accordance with books of accountmaintained by the Company and as produced to us by the Management – Refer Note 39 tothe Ind AS financial statements.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143(11) of the Act we give in the‘Annexure B' a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For MZSK & Associates Chartered Accountants

Firm Registration No. 105047W

Sd/-

Abuali Darukhanwala

Partner

Membership No. 108053

Place : Mumbai

Date : May 23 2017

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report of even date]

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 SanathnagarEnterprises Limited ("the Company") as of March 31 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 Reporting (the‘Guidance Note') issued by the Institute of Chartered Accountants of India(‘ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required 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 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. 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 controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 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 ofmanagement 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 March 31 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.

For MZSK & Associates Chartered Accountants

Firm Registration No. 105047W

Sd/-

Abuali Darukhanwala

Partner

Membership No. 108053

Place : Mumbai

Date : May 23 2017

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT

[Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report of even date] i. (a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) All the fixed assets have been physically verified by the management during theyear and no material discrepancies were identified on such verification.

(c) The Company does not hold any immovable properties (in the nature of fixed assets).Accordingly the provisions stated in paragraph 3 (i)(c) of the Order are not applicableto the Company. ii. The inventory has been physically verified during the year by themanagement. In our opinion the frequency of verification is reasonable. No materialdiscrepancies were noticed on verification between the physical stock and the bookrecords. iii. The Company has not granted any loans secured or unsecured to CompaniesFirms Limited Liability Partnerships (LLP) or other parties covered in the registermaintained under section 189 of the Companies Act 2013 (‘the Act'). Accordingly theprovisions stated in paragraph 3 (iii) (a) to (c) of the Order are not applicable to theCompany. iv. In our opinion and according to the information and explanations given to usthe Company has not either directly or indirectly granted any loan to any of itsdirectors or to any other person in whom the director is interested in accordance withthe provisions of section 185 of the Act and the Company has not made investments throughmore than two layers of investment companies in accordance with the provisions of section186 of the Act. Accordingly provisions stated in paragraph 3(iv) of the Order are notapplicable to the Company. v. In our opinion and according to the information andexplanations given to us the Company has not accepted any deposits from the public withinthe meaning of Sections 73 to 76 of the Act and the rules framed there under. Accordinglyprovisions stated in paragraph 3(v) of the Order are not applicable to the Company. vi. Wehave broadly reviewed the cost records maintained by the Company pursuant to the Companies(Cost Records and Audit) Rules 2014 as amended prescribed by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013 and are of the opinionthat prima facie the prescribed cost records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete. vii. (a) According to the information and explanations given tous and the records of the Company examined by us in our opinion the Company is regularin depositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income-tax sales-tax service tax duty of customsduty of excise value added tax cess and any other statutory dues applicable to it.

(b) According to the information and explanation given to us and examination of recordsof the Company the outstanding dues of income-tax sales-tax service tax customs dutyexcise duty value added tax cess and any other statutory dues on account of any disputeare as follows:

Name of the statute Nature of dues Amount Rs. Period to which the amount relates Forum where dispute is pending Remarks if
any
Finance Act 1994 Service tax 887532 2013-14 & 2014-15 Assistant Commissioner Service Tax

viii. The Company does not have any loans or borrowings from any financial institutionbanks government or debenture holders during the year. Accordingly the provision statedin paragraph 3(viii) of the Order is not applicable to the Company.

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. Accordingly theprovisions stated in paragraph 3 (ix) of the Order are not applicable to the Company. xAccording to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

xi. The Company has not paid / provided for managerial remuneration during the year.Accordingly the provisions of section 197 of the Act will not be applicable. Accordinglythe provisions stated in paragraph 3(xi) of the Order are not applicable to the Company.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly the provisions stated in paragraph 3(xii) ofthe Order are not applicable to the Company.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the 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 the applicableInd AS.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly the provisions stated in paragraph 3 (xiv) of the Order are notapplicable to the Company.

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-cashtransactions with directors or persons connected with him. Accordingly provisions statedin paragraph 3(xv) of the Order are not applicable to the Company. xvi. In our opinionthe Company is not required to be registered under section 45 IA of the Reserve Bank ofIndia Act 1934 and accordingly the provisions stated in paragraph clause 3 (xvi) of theOrder are not applicable to the Company.

For MZSK & Associates Chartered Accountants

Firm Registration No. 105047W

Sd/-

Abuali Darukhanwala

Partner

Membership No.108053

Place : Mumbai

Date : May 23 2017