The Members of Bannari Amman Spinning Mills Limited
1. Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of BANNARI AMMANSPINNING MILLS LIMITED ("the Company") which comprise the Balance Sheet as at31st March 2017 the Statement of Profit and Loss the Cash Flow Statement forthe year then ended and a summary of the significant accounting policies and otherexplanatory information.
2. 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 Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting 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 ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
3. Auditors' Responsibility.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143 (10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March2017 and its profit and its cash flows for the year ended onthat date.
5. Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in exercise of the powers conferred by subsection (11) of Section 143 of the Companies Act 2013 we give in the "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order to theextent applicable.
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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e) On the basis of the written representations received from the Directors as on 31stMarch 2017 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2017 from being appointed as a Director interms of Section 164(2) of the Act.
f) With respect to the adequacy of internal financial controls over financial reportingof the company and the operating effectiveness of such controls referred to our separatereport in"Annexure B"; and
g) With respect to other matters to be included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest 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 as referred to in Note No.28 to the financialstatements.
ii) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii) There are no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv) The Company has provided requisite disclosure in the Standalone financialsstatements as to holding as well as dealings in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016. On the basis ofinformation available with the Company based on audit procedures and relying onmanagement's representation we report that disclosures are in accordance with the booksof accounts maintained by the company and as produced to us by the Management. Refer Noteno.46.
For P N RAGHAVENDRA RAO & CO
P R VITTEL
M No 200/018111
Firm Reg. No: 003328S
30th May 2017
Annexure 'A' to the Independent Auditors' Report
The Annexure 'A' referred to in our Independent Auditors' Report to the members of theCompany on the financial statements for the year ended 31st March 2017 wereport 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. In accordance with this programmecertain fixed assets were verified by the management during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.
c) In our opinion and according to the information and explanations given to us and onthe basis of examination of the records of the company the title deeds of immovableproperties are held in the name of the company.
ii. a) The inventory has been physically verified by the management at reasonableintervals during the year. No material discrepancy was noticed on physical verification ofstocks by the management as compared to book records.
iii. In our opinion and according to the information and explanations given to us andon the basis of our examination of the books of account the Company has not granted anyloans secured or unsecured to companies firms Limited Liability partnerships or otherparties listed in the register maintained under section 189 of the Companies Act 2013('the Act'). Consequently the provisions of Clauses iii (a) iii (b) and iii(c) of theOrder are not applicable to the Company.
iv. In our opinion and according to the information and the explanations given to usthe Company has not granted any loans or provided any guarantees or securities to theparties covered under the section 185 of the Act. The Company has complied with theprovisions of section 186 of the Act in respect of investments made or loans or guaranteeor security provided.
v. The Company has not accepted any deposits from the public.
vi. As per the information and explanation given by the management maintenance of costrecords has been prescribed by the Central Government and we are of the opinion that primafacie the prescribed accounts and records have been made and maintained under section148(1) of the Act by the company.
vii. a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the undisputed statutory dues includingprovident fund Employee's State Insurance Income Tax Sales Tax Service Tax Duty ofCustoms Duty of Excise Value Added Tax Cess and any other material statutory dues asapplicable have been regularly deposited during the year by the Company with theappropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employee's State Insurance Income Tax Sales TaxService Tax Duty of Customs Duty of Excise Value Added Tax Cess and other materialstatutory dues were in arrears as at 31st March 2017 for a period of more thansix months from the date they became payable.
b) According to the information and explanations given to us the disputed statutorydues (in case of Income Tax Sales Tax Wealth Tax Service Tax Duty of Customs Duty ofExcise Value Added Taxes and Cess) aggregating to ' 320.50 Lakhs that have not beendeposited on account of matters pending before appropriate authority are as under:
|Name of the Statue ||Nature of the Dues ||Amount (Rs. in Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Central Sales Tax Act 1956 ||Sales Tax and Penalty ||87.55 ||Assessment year 2009 10 ||High Court of Madras Chennai |
|Central Sales Tax Act 1956 ||Sales Tax ||46.60 ||Assessment year 2008 09 ||High Court of Madras Chennai |
|Income Tax Act 1961 ||Income Tax ||1.84 ||Assessment year 2010 11 ||CIT (Appeals) Coimbatore |
|Income Tax Act 1961 ||Income Tax ||4.81 ||Assessment year 2013 14 ||CIT (Appeals) Coimbatore |
|Income Tax Act 1961 ||Income Tax ||37.47 ||Assessment year 2011 12 ||CIT (Appeals) Coimbatore |
|Central Excise ||Excise Duty ||69.61 ||December 2008 to July 2009 ||CESTAT Chennai |
|Central Excise ||Excise Duty ||72.62 ||May 2016 to December 2016 ||C.EX Commissioner (Appeals) Madurai |
viii. According to the information and explanations given to us the Company has notdefaulted in repayment of dues to financial institutions banks and Government during theyear. The Company has not issued any debentures and hence there are no dues to debentureholders.
ix. The Company has not raised any money by way of Initial Public Offer or FurtherPublic Offer (including Debt instruments) during the year. According to the informationand explanations given to us the term loans are applied for the purposes for which theloans were obtained.
x. 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 year.
xi. According to the information and explanations given to us and based on theexamination of the records the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly para 3(xii) of the Order is not applicable.
xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder the Accounting Standard (AS 18 Related Party Transactions).
xiv. According to the information and explanations given to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview.
xv. According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into non cash transactions withthe Directors or persons connected with them. Accordingly para 3(xv) of the Order is notapplicable.
xvi. The Company is not required to be registered under section 45 IA of the ReserveBank of India Act 1934. Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company.
For P N RAGHAVENDRA RAO & CO
P R VITTEL
M No 200/018111
Firm Reg. No: 003328S
30th May 2017
Independent Auditors' Report of even date on the Standalone Financial Statements ofBannari Amman Spinning Mills Limited
Report on the Internal Financial Controls under Clause (i) of sub section 3 of section143 of the Act
We have audited the internal financial controls over financial reporting of BannariAmman Spinning Mills Limited ("the Company") as of 31st March 2017 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 controls over financial reporting criteriaestablished by the Company considering the essential components of the internal controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofInternal Financial Controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofinternal 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 controls based on the assessed risks. Theprocedures selected depend on the auditor's judgment including the assessment of the riskof material misstatements 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 control systemover financial reporting.
Meaning of Internal Financial Control 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 controls 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 andexpenditure of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 limitation 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 internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlsover financial reporting may become inadequate because of changes in condition or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate InternalFinancial Control system over financial reporting and such Internal Financial Controlsover financial reporting were operating effectively as at 31st March 2017based on the Internal Controls over Financial Reporting criteria established by theCompany considering the essential components of Internal Controls stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by ICAI.
For P N RAGHAVENDRA RAO & CO
P R VITTEL
M No 200/018111
Firm Reg. No: 003328S
30th May 2017