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. () - Auditors Report

Company auditors report

To the Members of Arrow Textiles Limited

Report on the Financial Statements

Opinion

1. We have audited the accompanying financial statements of Arrow Textiles Limited(‘the Company’) which comprise the Balance Sheet as at 31st March2019 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the accompanying financial statements give the information required by theCompanies Act 2013 (‘Act’) in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India includingIndian Accounting Standards (‘Ind AS’) specified under Section 133 of the Actof the state of affairs of the Company as at 31st March 2019 and its profit(including other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified underSection 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 (‘ICAI Code’)together with the ethical requirements that are relevant to our audit of the financialstatements under the provisions of the Act and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAICode. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Key Audit Matters

4. 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.

5. We have determined the matters described below to be the key audit matters to becommunicated in our report.

The Key Audit Matter How the matter was addressed in our audit
Revenue recognition (Refer note 2(c) 24 and 37 of the Financial Statements)
Revenue is one of the key profit drivers and is therefore susceptible to misstatement. Cut-off is the key assertion in so far as revenue recognition is concerned since an inappropriate cut-off can result in material misstatement of results for the year. Our audit procedures with regard to revenue recognition included testing controls automated and manual around dispatches/deliveries inventory reconciliations and circularization of receivable balances substantive testing for cut-offs and analytical review procedures.

Information other than the Financial Statements and Auditor’s Report thereon

6. The Company’s Board of Directors is responsible for the other information. Theother information comprises the information included in the Annual Report but does notinclude the financial statements and our auditor’s report thereon. The Annual Reportis expected to be made available to us after the date of this auditor’s report.

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

In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the FinancialStatements

7. The Company’s Board of Directors is responsible for the matters stated inSection 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Ind AS specified under Section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

8. 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.

9. Those Board of Directors are also responsible for overseeing the Company’sfinancial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

10. 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

11. As part of an audit in accordance with Standards on Auditing we exerciseprofessional judgment and maintain 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 explaining 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 concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However future events or conditions may cause theCompany to cease to continue as a 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.

12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor’s report unless law or regulation precludes public disclosure about thematter or when 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

15. As required by section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under section 197 read with Schedule V to the Act.

16. As required by the Companies (Auditor’s Report) Order 2016 (‘theOrder’) issued by the Central Government of India in terms of section 143(11) of theAct we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4of the Order.

17. Further to our comments in Annexure A as required by section 143(3) of the Act wereport that:

a. we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose 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 financial statements dealt with by this report are in agreement with the booksof account;

d. in our opinion the aforesaid financial statements comply with Ind AS specifiedunder Section 133 of the Act;

e. on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31stMarch 2019 from being appointed as a director in terms of Section 164(2) of the Act;

f. we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31st March 2019 in conjunction with our audit ofthe financial statements of the Company for the year ended on that date and our reportdated 22nd May 2019 as per Annexure B expressed unmodified opinion;

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 (as amended) inour opinion and to the best of our information and according to the explanations given tous:

i. the Company as detailed in Note No. 32 has disclosed the impact of pendinglitigations on its financial position;

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;

iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8th November 2016 to 30thDecember 2016 which are not relevant to these financial statements. Hence reportingunder this clause is not applicable.

For M H S & Associates
Chartered Accountants
ICAI Firm Reg. No.: 141079W
(Mayur H. Shah)
Proprietor
Mumbai: 22nd May 2019 Membership No. 147928

ANNEXURE A

To The Independent Auditor’s Report of even date to the members of Arrow TextilesLimited on the financial statements for the year ended 31st March 2019

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

(i) (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 all fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme a portion of the fixed assets has been physically verifiedby the management during the year and no material discrepancies have been noticed on suchverification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets.

c) The title deeds of immovable properties (which are included under the head‘Property Plant and Equipment’) are held in the name of the Company.

(ii) The inventory except goods-in-transit has been physically verified by themanagement at reasonable intervals during the year. In our opinion the frequency of suchverification is reasonable. In respect of inventory lying with third parties these havesubstantially been confirmed by them. The discrepancies noticed on verification betweenthe physical stocks and the book records were not material.

(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.

(iv) The Company has not advanced any loan or given any guarantee or provided anysecurity or made any investment covered under section 185 and 186 of the Act. Hence theprovisions of Paragraph 3(iv) of the order are not applicable.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of Paragraph 3(v) of the order are not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto rules prescribed by the Central Government for the maintenance of the cost recordsunder Sub-Section (1) of Section 148 of the Act and are of the opinion that prima faciethe prescribed accounts and records have been made and maintained.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund employees’ state insurance income taxsales tax gst service tax duty of customs duty of excise value added tax cess andany other material statutory dues as applicable to it. Further no undisputed amountspayable in respect thereof were outstanding at the year-end for a period of more than sixmonths from the date they became payable.

b) In our opinion there are no dues with respect to income tax sales tax servicetax value added tax customs duty excise duty which have not been deposited on accountof any dispute except for the dues in relation to income tax as disclosed hereunder:

Statement of Disputed Dues:

Name of the Statute Nature of Dues Amount (' in ‘000) Period to which the Amount Relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 2373.94 F.Y 2010-11 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 3091.64 FY 2011-12 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 3175.84 FY 2012-13 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 2244.43 F.Y 2013-14 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income Tax 1040.40 F.Y 2014-15 Commissioner of Income Tax (Appeals)

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to banks. The Company did not have anyoutstanding dues to any financial institutions or debenture holders during the year.

(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion no term loans were raised during theyear under audit.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.

(xi) As per the information and explanations given to us managerial remuneration hasbeen paid / provided in accordance with the requisite approvals mandated by the provisionsof Section 197 read with Schedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofParagraph 3(xii) of the Order are not applicable to the Company.

(xiii) As per the information and explanation given to us all transactions enteredinto by the Company with the related parties are in compliance with Sections 177 and 188of Act where applicable and the requisite details have been disclosed in the financialstatements etc. as required by the applicable Ind AS.

(xiv) As informed the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with themcovered under Section 192 of the Act.

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

For M H S & Associates
Chartered Accountants
ICAI Firm Reg. No.: 141079W
(Mayur H. Shah)
Proprietor
Mumbai: 22nd May 2019 Membership No. 147928

ANNEXURE B

To The Independent Auditor’s Report on the Internal Financial Controls underClause (i) of Sub-Section 3 of Section 143 of the Companies Act 2013 ("theAct")

In conjunction with our audit of the financial statements of Arrow Textiles Limited("the Company") as of and for the year ended 31st March 2019 wehave audited the internal financial controls over financial reporting (IFCoFR) of thecompany of as of that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Board of Directors is responsible for establishing and maintaininginternal financial controls based on the criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting (the "Guidance Note")issued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company’s policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s IFCoFR based on ouraudit. We conducted our audit in accordance with the Guidance Note and the Standards onAuditing issued by ICAI and deemed to be prescribed under Section 143(10) of the Act tothe extent applicable to an audit of IFCoFR both issued by the ICAI. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor’s judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue 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 IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

A Company’s IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules2015 as amended and other accounting principles generally accepted in India. ACompany’s IFCoFR includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) 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 (3) 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 IFCoFR including the possibility of collusionor improper management override of controls material misstatements due to error or fraudmay occur and not be detected. Also projections of any evaluation of the IFCoFR to futureperiods are subject to the risk that the IFCoFR may become inadequate because of changesin conditions or that the degree of compliance with the policies or procedures maydeteriorate.

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 31st March 2019based on the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by ICAI.

For M H S & Associates
Chartered Accountants
ICAI Firm Reg. No.: 141079W
(Mayur H. Shah)
Proprietor
Mumbai: 22nd May 2019 Membership No. 147928

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