The Members of BANNARI AMMAN SPINNING MILLS LIMITED Report on the Audit of theStandalone Financial Statements
We have audited the accompanying standalone financial statements of BANNARI AMMANSPINNING MILLS LIMITED ("the Company") which comprise the Balance Sheet as at31 March 2019 and the st Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and 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 standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended and other accounting principles (Ind AS) generally accepted in India of the stateof affairs of the Company as at 31 Marchst 2019 and its profit total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibility for the Audit of the Standalone Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (ICAI) together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis for our audit opinion on the standalone financial statements.
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 standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matter described below to be thekey audit matter to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|1 Determination of Net Realisable Value of certain finished goods ||Principal audit procedures performed |
|The Company has inventory of certain finished goods aggregating Rs. 3045.55 lakhs [Refer Note 6 to the standalone financial statements] which as per the accounting policy for valuation of inventory in Note 2.4 are valued at lower of cost and net realizable value. ||We have performed the following procedures : a. Evaluated the design and implementation of the relevant internal controls and the operating effectiveness of such internal controls existing over the process of assumptions considered by the management in determining the net realisable value and assessing if the same is higher than cost or requiring adjustment to cost of such finished goods. |
|Determination of the net realisable value by Management involves certain element of judgment involving consideration of volatility in selling price of garments stock (finished goods) past trends of discounts applied for disposal of old inventory estimated fashion trends and market conditions etc. ||b. Obtained an understanding of the significant judgements applied by the management in determination of the net realizable values of the finished goods and the relevant workings and for sample selected we performed the following procedures: test |
|Any change in the assumptions considered by the Management would result in an impact in the margins in the year of disposal of the inventory or change in assumption. ||l Conducted a retrospective of comparing the net realisable value determined by the management in the previous year with the sale values of such finished goods in the current year to evaluate if the assumptions considered were reasonable. l Compared the net realisable value determined at the year-end with any instance of sale occurring for such inventory after the year end / latest realization to assess the reasonableness of the assumptions considered by the management. l Compared the actual costs incurred to sell after the year end / based on the latest sale transaction to assess the reasonableness of the cost to sell that was estimated and considered by the management. l Compared the cost of the finished goods with the estimated net realisable value and checked if the finished goods were recorded at the lower of cost and net realisable value. |
Information Other than the Financial Statements and Auditor's Report thereon l TheCompany's Board of Directors is responsible for the preparation of the other information.The other information comprises the information included in the Management Discussion andAnalysis Director's Report including annexures to Director's Report and CorporateGovernance but does not include the consolidated financial statements standalonefinancial statements and our auditor's report thereon. l Our opinion on the standalonefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon. l In connection with our audit of the standalonefinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated. l If based on the work we have performed we concludethat there is a material misstatement of this other information we are required to reportthat fact. We have nothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
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 standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the Ind AS and other accounting principles generally accepted in India. 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 accounting recordsrelevant to the preparation and presentation of the standalone financial statement thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. In preparing the standalone financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. Those Board of Directors are also responsible foroverseeing the Company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements. As part of an audit inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also: l Identify and assess the risks of materialmisstatement of the standalone financial statements whether due to fraud or error designand perform audit procedures responsive to those risks and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error asfraud may involve collusion forgery intentional omissions misrepresentations or theoverride of internal control. l Obtain an understanding of internal financial controlrelevant to the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls. l Evaluate the appropriateness ofaccounting policies used and the reasonableness of accounting estimates and relateddisclosures made by the management. l Conclude on the appropriateness of management's useof the going concern basis of accounting and based on the audit evidence obtainedwhether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company's ability to continue as a going concern. If we concludethat a material uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern. l Evaluate theoverall presentation structure and content of the standalone financial statementsincluding the disclosures and whether the standalone financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our 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
1. As required by Section 143(3) of the Act based on our audit we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) The Balance Sheet the Statement of Profitand Loss including Other Comprehensive Income the Cash Flow Statement and Statement ofChanges in Equity dealt with by this Report are in agreement with the relevant books ofaccount. d) In our opinion the aforesaid standalone financial statements comply with theInd AS specified under Section 133 of the Act. e) On the basis of the writtenrepresentations received from the directors as on 31 March 2019 st taken on record by theBoard of Directors none of the directors is disqualified as on 31st March 2019 frombeing appointed as a director in terms of Section 164(2) of the Act. f) With respect tothe adequacy of the internal financial controls over financial reporting of the Companyand the operating effectiveness of such controls refer to our separate Report in"Annexure A". Our report expresses an unmodified opinion on the adequacy andoperating effectiveness of the Company's internal financial controls over financialreporting. g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act. h) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 as amended in our opinion and to the best of our information andaccording to the explanations given to us: i) The Company has disclosed the impact ofpending litigations on its financial position in its standalone financial statements. ii)The Company did not have any long-term contracts including derivative contracts for whichthere were any material foreseeable losses. iii) There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants (Firm's Registration No. 117366W/W-100018)
Coimbatore Partner th (Membership No. 23418)
19 June 2019
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)
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 haveaudited the internal financial controls over financial reporting of BANNARI AMMAN SPINNINGMILLS LIMITED ("the Company") as of 31 March 2019 in conjunction with our auditof the standalone Ind st AS financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India". These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the 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 proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement 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 controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures 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 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 31 March 2019st based the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants (Firm's Registration No. 117366W/W-100018)
Coimbatore Partner 19th June 2019 (Membership No. 23418)
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of plant property and equipment. b) Some of the plantproperty and equipment were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the plant property and equipment at reasonable intervals.According to the information and explanation given to us no material discrepancies werenoticed on such verification. c) According to the information and explanations given to usand the records examined by us and based on the examination of the registered sale deedprovided to us we report that the title deeds comprising all the immovable propertiesof land and buildings which are freehold are held in the name of the Company as at thebalance sheet date. In respect of immovable properties of land that have been taken onlease and disclosed as plant property and equipment in the financial statements and thebuildings constructed on such leasehold land whose lease deeds have been pledged assecurity for credit facilities taken from banks the lease agreements are in the name ofthe Company where the Company is the lessee in the agreement based on the confirmationsdirectly received by us from banks. ii) As explained to us the inventories werephysically verified during the year by the Management at reasonable intervals and nomaterial discrepancies were noticed on physical verification. iii) The Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the Register maintained under Section 189 of theCompanies Act 2013. iv) The Company has not granted any loans hence provisions of Section185 is not applicable. The Company has complied with the provisions of section 186 of theCompanies Act 2013 in respect of making investments and providing guarantees. v)According to the information and explanations given to usthe Company has not accepted anydeposit during the year hence the provisions of Sections 73 to 76 or any other provisionsof the Companies Act 2013 is not applicable. vi) We have broadly reviewed the costrecords maintained by the Company pursuant to the Companies (Cost Records and Audit)Rules 2014 as amended and prescribed by the Central Government under sub-section (1) ofSection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and cost records have been maintained. We have however not made adetailed examination of the cost records with a view to determine whether they areaccurate or complete.
vii) According to the information and explanations given to us in respect of statutorydues: a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Duty of Customs Cessand other material statutory dues applicable to it to the appropriate authorities. b)There were no undisputed amounts payable in respect of Provident Fund Employees' StateInsurance Income-tax Duty of Customs Cess and other material statutory dues in arrearsas at 31 March 2019 for a period of more than six months from the date they becamepayable. st c) Details of dues of Duty of Excise which have not been deposited as on 31March 2019 on st account of disputes are given below :
|Name of Statute Central Excise Act 1944 ||Nature of Dues Claim for refund of duty ||Forum where dispute is pending CESTAT Chennai ||Period to which the amount relates Assessment Year 2008-09 2009-10 2017-18 ||Amount involved |
| || || || ||(Rs. in Lakhs) 112.58 |
viii) In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to banks. The Company has not has taken anyloans from financial institutions Government or has not issued any debentures. ix) TheCompany has not raised any moneys by way of initial public offer or further public offer(including debt instruments). The Company has obtained term loans during the year and thesame have been applied for the purposes for which they were obtained. x) To the best ofour knowledge and according to the information and explanations given to us no fraud bythe Company and no material fraud on the Company by its officers or employees has beennoticed or reported during the year. xi) In our opinion and according to the informationand explanations given to us the Company has paid/provided managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act 2013. xii) The Company is not a Nidhi Company andhence reporting under clause (xii) of the CARO 2016 Order is not applicable. xiii) In ouropinion and according to the information and explanations given to us the Company is incompliance with Sections 177 and 188 of the Companies Act 2013 where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the Standalone Financial Statements as required by the applicableaccounting standards.
xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the CARO 2016 Order is not applicable to the Company. xv) In our opinionand according to information and explanations given to us during the year the Company hasnot entered into any non-cash transactions with its directors or persons connected withthem and hence provisions of Section 192 of Companies Act 2013 are not applicable. xvi)The Company is not required to be registered under section 45-IA of the Reserve Bank ofIndia Act 1934.
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants \
(Firm's Registration No. 117366W/W-100018)
C R Rajagopal
Coimbatore Partner th (Membership No. 23418)
19 June 2019