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Aananda Lakshmi Spinning Mills Ltd.

BSE: 539096 Sector: Industrials
NSE: N.A. ISIN Code: INE197R01010
BSE 00:00 | 25 May 10.00 0.33
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NSE 05:30 | 01 Jan Aananda Lakshmi Spinning Mills Ltd
OPEN 10.01
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VOLUME 988
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P/E 2.78
Mkt Cap.(Rs cr) 4
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Sell Price 0.00
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OPEN 10.01
CLOSE 9.67
VOLUME 988
52-Week high 15.39
52-Week low 2.83
P/E 2.78
Mkt Cap.(Rs cr) 4
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Aananda Lakshmi Spinning Mills Ltd. (AANANDALAKSHMI) - Auditors Report

Company auditors report

To the Members of

AANANDA LAKSHMI SPINNING MILLS LIMITED.

Report on the Audit of the Financial Statements Qualified Opinion

We have audited the accompanying financial statements of AANANDA LAKSHMI SPINNINGMILLS LIMITED. ("the company") which comprise the Balance Sheet as at March31 2021 the Statement of Profit and Loss (including other comprehensive income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation (herein after referred to as "the financial statements")

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects/ possible effects of our observations stated in"Qualified Opinion" section below the accompanying financial statements givethe information required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandard) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 312021the loss and total comprehensive income changes in equity and its cash flows for the yearended on that date.

Basis for Qualified Opinion

i) During the year the company has recorded purchase of cotton worth of Rs.436.79 Lakhsfrom a supplier and recorded a sale of Rs.555.32 Lakhs by selling to the same supplier onthe day of purchase (Cotton trading activity) Which resulted in a profit of Rs.118.53Lakhs. We are unable to comment upon this transaction and resulted profit.

ii) During the year the company has provided Rs.100.76 Lakhs as interest on workingcapital loans and term loans with Andhra Bank as per Terms of OTS proposal submitted withthe Banks which the company has failed to repay whereas interest as per Bank sanctionletter amounts to Rs. 536.80 Lakhs. In the absence of statement of account/ confirmationfrom the Bank the above amount has been arrived at as per calculation made by the company.

iii) During the year the company has not provided provision for Property Tax on factoryBuildings.

iv) Manufacturing operations of the company were stopped since 22nd September 2020 wedid not receive physical verification reports for the property plant and Equipment as onthe reporting date.

we are unable to comment on the condition existence and consequent impairment impactif any on carrying value of Property Plant and Equipment as at March 312021.

v) Confirmation of balances was not obtained from Debtors Creditors loans andadvances and other current assets. The management has not made any provision in the booksof accounts.

vi) The Company has not provided the liability towards Gratuity on actuarial valuationas required under The Ind As 19 Employee Benefits We are unable to comment upon theimpact of non-provision of additional loss of the company for the year and on the currentliabilities as at March 312021.

vii) The Company has not provided the liability towards interest and penalties payableon account of statutory dues.

Consequent to the above loss for the year and Liabilities as at March 312021 wasunderstated and Shareholders funds are overstated to this extent.

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under Section 143(10) of the Act. Our responsibilities underthose standards are further described in the Auditors responsibility for the Audit ofFinancial Statements section of our report. We are independent of the company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit offinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our qualified opinion.

Material Uncertainty Related to Going Concern

we draw attention to note no. 40(d) of Financial Results which states that during theyear the company has incurred a loss of Rs. 448.86 Lakhs and as at March 312021accumulated losses of Rs. 4799.08 lakhs as at March 312021 resulting in completeerosion of net worth and current liabilities exceed current assets by Rs. 1936.02 Lakhs.Further there were lower cash inflows from existing business activities and the Companyhas defaulted in payment of dues to banks/ Financial Institutions and could not complywith the terms of sanction and /or repayment schedule of the banks. There were no writtencommunications from banks for further extension of OTS Scheme. These conditions indicatethe existence of material uncertainty that may cast significant doubt about the Company'sability to continue as a Going Concern. However the accompanying financial have beenprepared on "Going Concern" basis for the reasons stated in the said note.

Our opinion is not modified in respect of this matter.

Emphasis of Matter:

Attention is invited to the following material matters:

a) Note no 43 of the statement Exceptional items includes Profit on sale of assets ofRs.238.75 lakhs and

b) As stated in Note No. 44 of the Financial Results which describes the uncertaintiesand the possible effects of Covid-19 on the operations of the Company.

Our conclusion is not modified in respect of above matter

Key Audit Matters

Key Audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.

Key Audit Matters Auditor's Response
Evaluation of Contingent liabilities Principal audit procedures
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes Our audit procedures include the following substantive procedures:
Refer to Notes: no 40 to the Financial Statements • Obtained understanding of key uncertain tax positions; and
• We along with our internal tax experts -
• evaluated the Design and tested the operating effectiveness of controls around the assessment of the matter;
• Read and analyzed select key correspondences external legal opinions / consultations by management for key uncertain tax positions;
• Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the tax provisions; and
• Assessed management's estimate of the possible outcome of the disputed cases;
Assessed the appropriateness of disclosures made under the head ‘Contingent Liabilities' in the financial Statements.

Other information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report but does not includethe financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained duringthe course of our audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

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 including other comprehensive income cash flows and changes inequity of the Company in accordance with the Indian Accounting Standards (Ind AS)prescribed under Section 133 of the Act read with relevant rules issued there under andother accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the companyand for preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation offinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements the Board of Directors is responsible forassessing the company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the company or to cease operations orhas no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor's Report) Order2016 ("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 specified in the paragraph3 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 purposes of our audit

b) Except for the effects of the matters described in the Basis for qualified opinionparagraph above In our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books

c) the balance sheet the statement of profit and loss including other comprehensiveincome statement of changes in equity and the cash flow statement dealt with by thisReport are in agreement with the books of account

d) Except for the effects of the matters described in the basis for qualified opinionparagraph in our opinion the aforesaid financial statements comply with the IndianAccounting Standards (Ind AS) prescribed under Section 133 of the Act.

e) The matters described in Basis for Qualified Opinion and Material UncertaintyRelation to Going Concern above in our opinion may have an adverse effect on thefunctioning of the company.

f) On the basis of written representations received from the directors as on March312021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312021 from being appointed as a director in terms of Section 164(2) of theAct

g) With respect to the adequacy of internal financial controls over financial reportingof the Company with reference to these financial statements and the operatingeffectiveness of such controls refer to our separate report in ‘Annexure B".

h) No managerial remuneration was paid during the year under review. Accordinglyreporting under requirements of section 197 does not apply.

i) 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. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements. Refer Note no 45 of financial statements.

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

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

Annexure - A to the Auditor's Report:

The Annexure referred to in Para 1 under the heading of "Report on Other Legal andRegulatory Requirements" of our report of even date to the members AANANDA LAKSHMISPINNING MILLS LIMITED SECUNDERABAD for the year ended March 312021.

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

b. As explained to us the management could not verify physically the fixed assetssituated at Bhongir (Factory) due to closure of plant during the year.

c. According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the immovable properties have been transferredto AANANDA LAKSHMI SPINNING MILLS LIMITED (Resulting company) as per the scheme ofdemerger approved by Hon'ble High Court at Hyderabad.

2. No physical verification of inventory has been conducted during the year.

3. a. During the year the Company has not granted any loans secured or unsecured toCompanies firms limited liability partnerships or other parties covered in the registermaintained under Section 189 of the Companies Act 2013.

b. In view of our comments in para (a) above Clause (III) (a) (b) and (c) ofparagraph 3 of the aforesaid order are not applicable to the Company.

4. In our opinion and according to the information and explanation given to us theCompany has not advanced any loan to any Director and no investments were made during theyear as referred to in sections 185 and 186 of the Act. Therefore the provisions ofParagraph 3(iv) of the Companies (Auditor's Report) Order 2016 are not applicable to theCompany.

5. The Company has not accepted any deposits from the public. Hence the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under do not apply to this Company.

6. During the year there was no production and related activity in the factory and assuch cost records pursuant to sub section(l) of section 148 of the Companies Act 2013have been not been maintained.

7. a. According to the records the company is not regular in depositing undisputedstatutory dues including provident fund employees ‘state insurance Income-taxSales-tax Service tax Goods and Services Tax Duty of customs Duty of excise Valueadded tax Cess and all other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us there are no arrears of outstandingstatutory dues as at March 312021 for a period more than six months from the date theybecame payable are as follows.

Name of Statute Nature of the dues Amount (In Lakhs) Period to which the amount relates ( Financial Year) Due Since Date of Payment
AP GST Act Sales Tax Deferment 146.53 2019-20 & 2020-21 Mar 2020 Not Yet Paid
Central Sales Tax Act CST 15.77 2015-16 2016-17 &2017-18. June 2015 Not Yet Paid
Employees provident Fund Act Provident Fund Contribution 20.53 2017-2018 & 2018-2019 2019-20 April 2017 Not Yet Paid
Employees State Insurance Act Employees State Insurance 1.43 2019- 20& 2020-21 Dec 2019 Not Yet Paid
Professional Tax Professional Tax 0.65 2017-18 & 2018-192019- 20&2020-21 April 2017 Not yet Paid
Income tax Act 1961 TDS 15.45 2016-172017-18 & 2018-19 2019-20 Oct 2016 Not Yet Paid

b. According to the records of the Company and the information and explanations givento us the dues of Sales tax Income tax Custom Duty Wealth Tax Service Tax ExciseDuty Cess which have not been deposited on account of dispute are as follows:

Name of Statute Nature of the dues Amount (In Lakhs) Period to which the amount relates (Financial Year) Forum where dispute is pending
Andhra Pradesh General sales Tax(AP GST) Act1957 Sales Tax Dues 3.25 2001-02 Hon'ble High Court Hyderabad
Andhra Pradesh General sales Tax(AP GST) Act1957 ( Case filed by Bharat Petroleum Corporation Ltd) Sales Tax dues 40.28 1997-98 Additional Chief Judge City Civil Court Secunderabad
Telangana state General sales Tax Sales Tax dues 10.05 2014-2015 Hon'ble High Court Hyderabad

8. In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of loans to financial institutions and Banks.

Name of the Bank Amount of default as at the Balance Sheet date (Rs in Lakhs)* Due from
Term Loans
i) Andhra Bank -Corp 280.02 From Sep'2016
Working capital Loan
Andhra Bank 1000.00 From Sep'2016

*Total Principal dues excluding interest

9. During the year under review the company has not raised any moneys by way ofinitial public offer or further public offer (including debt instruments) and Term loansduring the year. Accordingly the provisions of paragraph 3(ix) of the Companies(Auditor's Report) Order 2016 is not applicable.

10. According 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.

11. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not paid any remunerations todirectors. Accordingly paragraph 3(xi) of the Companies (Auditor's Report) Order 2016 isnot applicable.

12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Companies (Auditor'sReport) Order 2016 is not applicable.

13. 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 the applicableaccounting standards.

14. According to the information and explanation 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.

15. 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 paragraph 3(xv) ofthe Companies (Auditor's Report) Order 2016 is not applicable.

16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

Annexure - B to the Auditor's 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 with reference to financial statementsof AANANDA LAKSHMI SPINNING MILLS LIMITED SECUNDERABAD ("the Company")as of March 312021 in conjunction with our audit of the financial statements of theCompany 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 Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls with reference to financial statements wasestablished and maintained and if such controls operated effectively in all materialaspects.

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 and error.

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

Meaning of Internal Financial Controls with reference to financial statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that:

1. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions 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 accountingprinciples and that receipts and expenditure of the Company are being made only inaccordance with authorisations of management and directors of the Company; and

3. provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrols with reference to financial statements may become inadequate because of changesin conditions or that the degree of compliance with policies or procedures maydeteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing weaknesses has been identified as at March 312021.

a) The Company did not obtain comparative quotes for the prices paid/ received relatingto the transactions with related parties to ensures that those transactions were enteredinto at arm length prices.

b) As stated in Note no 43 Pending confirmations/ reconciliation of balances of securedborrowings balances with banks including trade receivables trade payables (includingmicro and small) and receivables/payables from/to related parties. In this regard asstated in the note internal control is being strengthen.

The management is confident that on confirmation/reconciliation there will not be anymaterial impact on the financial statements for the year ended March 312021.

In our opinion except for the possible effects of the material weakness describedabove on the achievement of the objectives of the control criteria the Company hasmaintained in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls with reference to financialstatements were operating effectively as at March 312021 based on "the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India".

We have considered the weaknesses identified and reported above in determining thenature timing and extent of audit tests applied in our audit of the financial statementsof the company and these weaknesses do not affect our opinion on the financial statementsof the company.

for K.S.RAO & CO.
Chartered Accountants
Firm's Regn No. 003109S
(M.NAGA PRASADU)
Partner
Place : Hyderabad Membership No. 231388
Date : 31.07.2021 UDIN: 21231388AAAABN6566

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