To the Members of M/s.SRI NACHAMMAI COTTON MILLS LIMITEDSalem.
Report on the Financial Statements
We have audited the accompanying financial statements of Sri Nachammai Cotton MillsLimited ('the Company')which comprise the Balance Sheet as at 31st March2016theStatement of Profit and Loss and the Cash Flow Statement for the period then endedand asummary of significant accounting policies and other explanatory information.
Management's Responsibility forthe Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act2013 ftheAcf) with respect to the preparation and presentationof these financial statements that give a true and fair view of the financialpositionfinancial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in Indiaincluding the Accounting Standardsspecified under Section 133 of the Actread with Rule 7 of the Companies (Accounts)Rules2014.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 designimplementation and maintenance of adequate internal financialcontrolsthat were operating effectively for ensuring the accuracy and completeness of theaccounting recordsrelevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatementwhetherdue 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 Actthe accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
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 judgmentincluding the assessment of the risks of material misstatement of thefinancial statementswhether due to fraud or errorin making those risk assessmentstheauditor 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 Directorsas 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 usthe aforesaid financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in Indiaof the state of affairs of the Company as at31stMarch2016 and its Loss and its cash flows for the period ended on that date.Report onOther Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order2016 (the Order") issuedby the Central Government of India in terns of subsection (11) of Section 143 of theActwe give in the Annexure Aa statement on the matters specified in the paragraph 3 and4 of the Orderto 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 Sheetthe 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 opinionthe aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Actread with Rule 7 of the Companies(Accounts) Rules2014;
(e) On the basis of the written representations received from the directors as on31" March2016 taken on record by the Board of Directorsnone of the directors isdisqualified as on 31st 'March 2016 from being appointed as adirector 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 controlsrefer to ourseparate report in "Annexure B"; and .
(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) Rules2014in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed its pending litigations in Note No 27(1).
ii. The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
iii. As the Company has not declared any dividends in the earlier yearstransferring ofdividends to Investor Education and Protection Fund does not arise.
Annexure A to the Independent Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the financial statements for the period ended 31 st March 2016we report that:
1. a.The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The Company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years.Inaccordance with this programmecertain fixed assets were verified during the period and nomaterial discrepancies were noticed on such verification.In our opinionthis periodicityof physical verification is reasonable having regard to the size of to the Company and thenature of its assets.
c. According to the information and explanations given to us and the records examinedby us and based on the confirmations directly received by us from BanksImmovableproperties whose title deeds have been pledged as security for Term Loans and cash creditfacilities availed from Banks are held in the name ofthe Company.
2. a.As explained to usinventories have been physically verified by the management atregular intervals during the year.
b. In our opinion and according to the information and explanations given to ustheprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size ofthe company and the nature of itsbusiness.
c. In our opinion and according to the information and explanations given to usthecompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification as compared to the book records.
3. During the yearthe company has not granted any loansecured or unsecured tocompaniesfirms or other parties covered in the register maintained under Section 189 ofthe Companies Act2013 and henceClause (b) and (c) is not applicable.
4. During the yearCompany has not made any loans or investments or given anyguarantees and hence disclosure under this clause related to compliance with theprovisions of Section 185 and 186 of theAct does not arise.
6. We have broadly reviewed the cost records maintained by the company specified by theCentral Government under sub-section (1) of Section 148 of the Companies Act2013asapplicable to the companyand are ofthe opinion that prima facie the specified costrecords have been maintained.We havehowevernot made a detailed examination of the costrecords with a view to determine whether they are accurate or complete.
7. a.According to the information and explanations given to us the company is regularin depositing undisputed statutory dues including ' Provident FundEmployees' StateinsuranceIncome taxService Taxvalue added taxand any other statutory dues with theappropriate authorities during the year.
According to the information and explanations given to usno undisputed amounts payablein respect ofthe aforesaid dues were outstanding as at 31" March2016 for a period ofmore than six months from the date they became payable.
b. According to the information and explanations given to usthere are no dues ofIncome taxService tax or Value added tax which have not been deposited with theappropriate authorities on account of any dispute.
8. In our opinion and according to the information and explanation given to usthecompany has not defaulted in repayment of dues to any ofthe banks.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year.Accordinglyclause 3(ix) ofthe Order is not applicable.
10. To the best of our knowledge and belief and according to the information andexplanations given to usno fraud on or by the company was noticed or reported during theyear that causes the financial statements to be materially misstated.
11. According to the information and explanations give to us and based on ourexamination ofthe records ofthe Companythe Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.
12. In our opinion and according to the information and explanations given to ustheCompany is not a nidhi company.Accordinglyclause 3(xii) ofthe Order is not applicable.
13. According to the information and explanations given to us and based on ourexamination ofthe records ofthe Companytransactions 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 applicableaccounting standards.
14. According to the information and explanations given to us and based on ourexamination ofthe records ofthe Companythe Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
15. According to the information and explanations given to us and based on ourexamination of the records of the Companythe Company has not entered into non-cashtransactions with Directors or persons connected with him.Accordingly paragraph 3(xv) ofthe Order is not applicable.
16. The Company is not required to be registered under Section 45-1A of the ReserveBank of India Act 1934.
Annexure - B to the Auditors' Report
Report on the I ntemai Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act2013 ("the Act")
We have audited the internal financial controls over financial reporting cf SriNachammai Cotton Mills Ltd as of 31" March2016 in conjunction with our audit of thestandalone financial statements of the Company for the period 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 repoiting 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 (ICAC).Theseresponsibilities include the designimplementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its businessincluding adherence to company's policiesthe safeguarding of itsassetsthe prevention and detection of frauds and errorsthe accuracy and completeness ofthe accounting recordsand the timely preparation of reliable financial informationasrequired underthe Companies Act2013.
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 Auditingissued by ICAI and deemed tobe prescribed under Section 143(10) of the Companies Act2013to the extent applicable toan audit of internal financial controlsboth applicable to an audit of Internal FinancialControls andboth issued by the Institute of Chartered Accountants of India.ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 financialreportingassessing the risk that a material weakness existsand testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk.Theprocedures selected depend on the auditor's judgmentincluding the assessment of the risksof material misstatement of the financial statementswhether 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 thatin reasonable detailaccurately and fairly reflect the transactions anddispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciplesand that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorisedacquisitionuseor disposition of the company's assets that could have a material effecton the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreportingincluding the possibility of collusion or improper management override ofcontrolsmaterial misstatements due to error or fraud may occur and not bedetected.Alsoprojections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsorthat the degree of compliance with the policies or procedures may deteriorate. .
In our opinionthe Company hasin all material respectsan adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31" March2016based 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 the Institute of CharteredAccountants of India.
| ||For M.S.JAGANNATHAN & VISVANATHAN |
| ||Chartered Accountants |
| ||Firm Regd No: 001209S. |
| ||M.V.JEGANATHAN |
|Salem ||Partner |
|23rd May2016 ||Membership No.214178. |