To the Members of Ambika Cotton Mills Limited Report on theFinancial Statements Opinion
We have audited the Financial Statements of Ambika Cotton Mills Limited("theCompany") which comprise the Balance Sheet as at 31st March 2019 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes in Equityand Statement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Financial Statements give the information required bytheCompanies Act2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standardsprescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the Profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
|Key Audit Matter Evaluation of open tax litigations (Direct and Indirect tax) ||How our audit addressed the key audit matter |
|The Company has uncertain tax positions on matters under dispute which involve significant judgment to determine the possible outcome of these disputes. Refer Note 30.1 to the Financial statements. || Obtained details of completed tax assessments and demands as on March 312019 from the management. Obtained an understanding of key uncertain tax positions Discussed with appropriate senior management and assessed management's estimate of the possible outcome of the disputed cases. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparationof the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the 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 in theaudit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Financial Statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities 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 aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregatemakes it probable that the economic decisions of a reasonablyknowledgeable user of the financial statements may be influenced. We consider quantitativemateriality and qualitative factors in
(i) planning the scope of our audit work andin evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
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 also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships 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) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in theAnnexure"A"a statement on the mattersspecified 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 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 Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid Financial Statements comply with the Ind AS specifiedunder Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 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" B".Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirementsof section 197(16) of the Act as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act and is within the limit specifiedunder the said section.
(h) 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. 30.1 to the financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For SRIKISHEN & Co.
Chartered Accountants Regn. No. 004009S
K. Murali Mohan
Place : Coimbatore Proprietor Date : 28/05/2019 Membership No. 14328
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements)
According to the information and explanations sought by us and given by the Company andthe books and records examined by us during the course of our Audit and to the best of ourknowledge and belief we report the following:
(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 in a phased periodical manner bythe management which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies have been noticed on suchphysical verification.
(c) The title deeds of all the immovable properties of land and building which arefreehold are held in the name of the company as at the Balance Sheet date.
(ii) The physical verification of inventory has been conducted by the management atreasonable intervals. The Company has maintained proper record of inventory and nomaterial discrepancies were noticed on the physical verification of inventories ascompared to the book records.
(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Act.
(iv) The Company has not advanced any loans to its directors or any other person inwhom the directors are interested or given any guarantee or provided any security inconnection with any loan taken by the directors or such other person as contemplated undersection 185 of the Act.
(v) The Company has not accepted any deposits from the public. Therefore the provisionsof clause (v) of para 3 of the order are not applicable to the company.
(vi) The Central Government has prescribed the maintenance of cost records undersection 148(1) of the Act. We have broadly reviewed the accounts and records of thecompany in this connection and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have not however carried out adetailed examination of the cost records with a view to determine whether they areaccurate or complete
(vii) (a) The Company is regular in depositing undisputed statutory dues includingprovident fund income-tax goods and service tax duty of customscess and othermaterial statutory dues with the appropriate authorities. There are no undisputed arrearsof statutory dues which were outstanding as at 31 March 2019 for a period of more than sixmonths from the date they became payable.
(b) The details of disputed statutory dues which have not been deposited by the Companyare as given below:
|Name of the Statute ||Nature of Dues ||Amount (Rs. in Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act1944 ||Excise duty ||11.32 ||From 20.05.1999 to 06.08.1999 ||Madras High Court |
|Service Tax ||Service tax ||23.99 ||From 01.10.2005 to 30.06.2006 ||The matter was remitted back to adjudicating Authority by Madras High Court |
|Central Excise Act1944 ||Central Excise ||410.01 ||Assessment year 2005-06 ||Madurai Bench of Madras High Court |
|Income tax Act1961 ||Income tax ||11.65 ||Assessment year 1998-99 ||CIT (Appeals-I) Coimbatore |
| || ||456.97 || || |
(viii) The Company has not defaulted in the repayment of dues to banks. The Company hasnot borrowed from financial institutions or Government and has not issued any debenturestill date.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year.The Company has not availed anynew term loans during the year.Accordingly clause 3(ix) of the order is not applicable.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.
(xi) In our opinion the managerial remuneration has been paid in accordance with therequisite approval mandated by the provisions of section 197 read with schedule V of theAct.
(xii) The Company is not a Nidhi company. Accordingly paragraph 3(xii) of the Order isnot applicable.
(xiii) In our opinion the transactions with the related parties are in compliance withsections 177 and 188 of the Act and details of such transactions have been disclosed inthe Ind AS financial statements as required by the applicable accounting standards.
(xiv) The Company has not made preferential allotment or private placement of shares orfully or partly paid convertible debentures during the year and hence reporting underparagraph 3 clause (xiv) of the Order is not applicable to the Company.
(xv) The Company has not entered into non-cash transactions with directors or personsconnected with the directors and hence provisions of section 192 of the Act are notapplicable to the Company.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Chartered Accountants Regn. No. 004009S
K. Murali Mohan
Place : Coimbatore Proprietor Date : 28/05/2019 Membership No. 14328
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in Paragraph 2(f) of Report on Other Legal and Regulatory Requirements)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of AmbikaCotton Mills Limited("the Company") as of March 31 2019 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 Board of Directors of the Company is responsible for establishing and maintainingInternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. 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 respective company's policies thesafeguarding 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 Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. 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 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 procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting of the Company.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedtoprovide 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 financial reporting includes those policiesand 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 thattransactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company;and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial 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.
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 March 31 2019 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 SRIKISHEN & Co. |
| ||Chartered Accountants |
| ||Regn. No. 004009S |
| ||K. Murali Mohan |
|Place : Coimbatore ||Proprietor |
|Date : 28/05/2019 ||Membership No. 14328 |