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Western India Cottons Ltd.

BSE: 532026 Sector: Industrials
NSE: N.A. ISIN Code: INE078F01017
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Western India Cottons Ltd. (WICOTTONS) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR’S REPORT

To the Members of The Western India Cottons Limited Pappinisseri.

Report on the Financial Statements

We have audited the accompanying financial statements of THE WESTERN INDIA COTTONSLIMITED PAPPINISSERI ("the Company") which comprise the Balance Sheet as at 31stMarch 2016 and the Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.

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 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 undersection 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.

Auditor’s Responsibility

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 anddisclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal 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 accounting policies used and the reasonableness of the accountingestimates made by the Company’s Directors as well as evaluating the overallpresentation of the financial statements.

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

Basis for Qualified Opinion

1. Confirmation in respect of balances outstanding under trade receivables advancesand liabilities has not been obtained.

2. The segment information required to be disclosed as per the Accounting Standard‘AS 17- Segment Reporting’ has not been disclosed in the financial statements.

3. The impairment loss if any in respect of assets has not been assessed and adjustedin the accounts as required in the Accounting Standard ‘AS 28-Impairment ofAssets’.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matters described in the Basis forQualified Opinion paragraph the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at 31st March 2016 and its profit and its cash flows for the yearended on that date.

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 Companies Act 2013 we give in the Annexure-A a statement on thematters specified in 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. We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit;

b. Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the company so far as appears from our examination of those books;

c. The Balance Sheet Statement of Profit and Loss and Cash Flow Statementdealt with by this Report are in agreement with the books of account;

d. Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the Balance Sheet Statement of Profit and Lossand Cash Flow Statement comply with the Accounting Standards specified under section 133of the Act read with Rule 7 of the Companies (Accounts) Rules 2014;

e. Except for the matters described in the Basis for Qualified Opinion paragraph above

in our opinion the other matters and the financial transactions may not have an

adverse effect on the functioning of the Company;

f. On the basis of 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 termsof section 164(2) of the Act;

g. The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above; h.Our report with respect to the adequacy of internal financial controls over financialreporting of the company and the operating effectiveness of such controls is given inAnnexure-B. i. With respect to the other matters to be included in the Auditor’sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:

1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements – Refer Note 26 to the financial statements.

2. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

3. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For T.K. Menon & Co.

Chartered Accountants.

Firm Regn. no:002067S

P.Balagopal

Partner

Membership No.022290

ANNEXURE ‘A’ TO AUDITORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2016

Referred to in our report of 18th August 2016

In terms of the information and explanations sought by us and given by the company andthe books and records examined by us in the normal course of audit and to the best of ourknowledge and belief we state that:

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

(b) The fixed assets have been physically verified by the management during the year.No material discrepancies were noticed on such verification. In our opinion the frequencyof verification is reasonable.

(c) The title deeds of immovable properties are held in the name of the company.

(ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. No material discrepancy wasnoticed on such physical verification.

(iii) The company has not granted any loan secured or unsecured to companies firmsand limited liability partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013.

(iv) The company has not given any loan or guarantee to directors or any person or bodycorporate during the year. The company has complied with the provisions of section 186 ofthe Companies Act 2013 in respect of the investment made in the shares of IDBI Bank Ltd.

(v) The company has not accepted deposits from the public.

(vi) The provisions of section 148(1) of the Companies Act 2013 regarding maintenanceof cost records are not applicable to the company.

(vii) (a)The company was regular in depositing with the appropriate authoritiesundisputed statutory dues including provident fund employees’ state insuranceincome tax service tax value added tax and other statutory dues during the year. Thecompany was not required to deposit duty of customs and duty of excise during the year. Noundisputed amounts payable in respect of statutory dues were in arrears as at 31 March2016 for a period of more than six months from the date they became payable.

(b) There were no dues of value added tax service tax customs duty and excise dutywhich have not been deposited on account of dispute. In respect of incometax thefollowing disputed amount was not deposited with the appropriate authority as at 31 March2016:

Nature of statute Incometax
Nature of dues Incometax and interest
Amount Rs.7396550/-
Period for which the amount relates 2010-’11 (Assessment year 2011-’12)
Forum where dispute is pending Commissioner of Incometax (Appeals)
Kozhikode

(viii) In our opinion the company has not defaulted in repayment of loans orborrowings to any financial institution bank or government. The company has not issueddebentures.

(ix) The company has not raised moneys by way of initial public offer or further publicoffer including debt instruments during the year. The short term loan taken by thecompany has generally been applied for the purpose for which it was raised.

(x) No fraud by the company or no fraud on the company by its officers or employees hasbeen noticed or reported during the year.

(xi) The company has not paid/provided any managerial remuneration other than fee forattending meetings of the Board/Committee. The company was not therefore required to getthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act 2013.

(xii) The company is not a Nidhi company and hence clause (XII) of the Companies(Auditor’s Report) Order 2016 is not applicable to the company.

(xiii) In our opinion the transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 and the details of such transactions have beendisclosed in the financial statements as required by the applicable accounting standards.

(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year and hence reportingunder clause (XIV) of the Companies (Auditor’s Report) Order 2016 is not applicableto the company.

(xv) In our opinion the company has not entered into any non-cash transactions withdirectors or persons connected with them during the year.

(xvi) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934

For T.K. Menon & Co.

Chartered Accountants.

Firm Regn. no:002067S

P.Balagopal

Partner

Membership No.022290

ANNEXURE ‘B’ TO AUDITORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2016

Referred to in our report of 18th August 2016.

Report on Internal Financial Controls over Financial Reporting

We have audited the internal financial controls over financial reporting of The WesternIndia Cottons Ltd. ("the Company") as of 31 March 2016 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company’s policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

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 both issued by TheInstitute of Chartered Accountants of India and deemed to be prescribed and section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls 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 include 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s 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 company’s internal financial control overfinancial reporting includes those policies and procedures that (i) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) 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 authorisations ofmanagement and directors of the company; and (iii) 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.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31 March 2016 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For T.K. Menon & Co.

Chartered Accountants.

Firm Regn. no:002067S

P.Balagopal

Partner

Membership No.022290