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Eastern Silk Industries Ltd.

BSE: 590022 Sector: Industrials
NSE: EASTSILK ISIN Code: INE962C01027
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OPEN 1.07
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VOLUME 2100
52-Week high 2.38
52-Week low 0.48
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.90
Buy Qty 500.00
Sell Price 1.07
Sell Qty 19100.00
OPEN 1.07
CLOSE 1.07
VOLUME 2100
52-Week high 2.38
52-Week low 0.48
P/E
Mkt Cap.(Rs cr) 8
Buy Price 0.90
Buy Qty 500.00
Sell Price 1.07
Sell Qty 19100.00

Eastern Silk Industries Ltd. (EASTSILK) - Auditors Report

Company auditors report

To the Members of Eastern Silk Industries Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Eastern Silk Industries Limited("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary ofsignificant 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 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 March 31 2019 and profit changes in equity and its cash flows for the year endedon that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to a) Note No. 35 (a) to the Ind AS financial statements which statesthat the company has not provided interest to lenders amounting to Rs. 2695.76 Lakhs forthe period April '2014 to March '2019 (Rs. 2156.61 Lakhs up to 31st March 2018). b) NoteNo. 35(c) to the Ind AS financial statements which states that the interest accruals on NoLien Term Deposits have not been accounted. c) Note No. 37 to the Ind AS financialstatements which states that the company has not provided interest on borrowings fromARC's amounting to Rs. 308.82 lakhs for the period up to 31st March 2019 (Rs. 143.69 Lakhsup to 31st March 2018). d) Note No. 38(a) to the Ind AS financial statements which statesthat the company has written off bad debts amounting to Rs. 6560.05 lakhs during the yearand thus reducing the balance of provisions of Bad and Doubtful Debts to Rs. 6319.17 lakhsas at 31.03.2019 against a total overdue trade receivables of Rs. 9527.32 lakhs of whichRs. 3208.15 lakhs is considered good for recovery by the management. e) Note No. 40 tothe Ind AS financial statements which states that total deferred tax assets (DTA) for theperiod up to 31st March 2019 is Rs. 9844.97 lakhs out of which Rs. 4572.98 lakhs hasbeen recognized in these accounts and balance Rs. 5271.99 Lakhs has not been recognisedin these accounts. We are unable to express any opinion regarding recognition of DTA andabout its adjustment against future profits of the Company.

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.

There are no key audit matters to communicate other than the matters those aredescribed under the heading Emphasis of Matter.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of 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 standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit 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 StandaloneFinancial 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 changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror. 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.

Those 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 the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: l Identify and assess therisks of material misstatement of the financial statements whether due to fraud or errordesign and perform audit procedures responsive to those risks and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resultingfrom error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control. l Obtain an understanding ofinternal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances. Under section 143(3)(i) of the Companies Act 2013 weare also responsible for expressing our opinion on whether the company has adequateinternal financial controls system in place and the operating effectiveness of suchcontrols. l Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

l Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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. l Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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 financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements. We communicate with those chargedwith governance regarding among other matters the planned scope and timing of the auditand significant audit findings including any significant deficiencies in internal controlthat 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

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 the "Annexure A" statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent 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 Statement of Changes in Equityand the Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount.

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 2019 taken on record by the Board of Directors none of the directors aredisqualified 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 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 Companyto its directors during the year is in accordance with theprovisions of section 197 of the Act.

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 standalone Ind AS Financial Statements - Refer Note No. 29 to 33 &38(b) 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 delay in transferring amounts which are required to be transferredto the Investor Education and Protection Fund by the Company due to closure of DividendAccount for the Year 2009 & 2010 by the HDFC Bank Ltd. during the F.Y. 2016-17resulting in non-transfer of the unclaimed amount for the year 2009 & 2010 to theInvestors Education & Protection Fund - Refer Note No.41 to the Ind AS financialstatements.

For SURESH KUMAR MITTAL & CO.
Chartered Accountants
Firm Registration No.: 500063N
Place: Kolkata (Rashi Goswami)
Date: The 30th May 2019 Membership No. : 522561

Annexure A referred to in Paragraph (I) under the heading of "Report on OtherLegal and Regulatory Requirements" of our report of even date to the members ofEastern Silk Industries Limited on the standalone Ind AS Financial Statements for the yearended 31st March 2019

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

b. The management has physically verified certain fixed assets during the year inaccordance with a programme of verification which in our opinion provides for physicalverification of the fixed assets at reasonable intervals having regard to the size of theCompany and nature of its assets. According to the information and explanations given tous no material discrepancies were noticed on such verification and the same have beenproperly dealt with in the books of account.

c. The title deeds of immovable properties are held in the name of the Company

ii) As explained to us inventories have been physically verified by the management atregular intervals during the year.

In our opinion and according to the information and explanations given to us nomaterial discrepancies were noticed on such verification and the same have been properlydealt with in the books of account.

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 Companies Act 2013 and as such clauses (iii) (a) (b) (c) of the orderare not applicable to the Company.

iv) In our opinion and according to the information and explanations given to us noloans investments guarantees and security covered under section 185 and 186 of theCompanies Act 2013 has been given or made by the Company.

v) According to the information and explanation given to us the Company has notaccepted any deposit from the public and as such clause (v) of the order is not applicableto the Company.

vi) The Central Government has not specified the maintenance of cost records undersection 148(1) of the Companies Act 2013 in respect of the products dealt with by theCompany.

vii) According to the information and explanations given to us in respect of thestatutory dues:

a. The Company is generally regular in depositing undisputed statutory dues includingProvident Fund Investor Education and Protection Fund Employees' State Insurance IncomeTax Wealth Tax Sales Tax Service Tax Customs Duty Cess and other applicable statutorydues with the appropriate authorities during the year. According to the information andexplanations given to us no undisputed amounts payable in respect of the aforesaid dueswere outstanding as at 31st March 2019 for a period of more than six months from the datethey became payable.

b. According to the information and explanations given to us details of dues ofCustoms Duty Excise Duty Income Tax Sales Tax Wealth Tax Service Tax and Cess whichhave not been deposited on account of any dispute are as follows :

Name of the Statute Name of the Dues Amount ( Rs. in Lakhs) Period to which the amount relates Forum where dispute is pending
Employees State Insurance Act Employees State Insurance 6.03 1995-96 & 2002-03 Asst. Director ESIC
Custom Duty Act Custom Duty 109.77 2001-02 Hon'ble High Court of Karnataka
Customs Duty Act Custom Duty 154.50 2005-06 Commissioner of Custom (Port) Kolkata
Customs Duty Act Custom Duty 78.92 2003-04 CESTAT Bangalore
Customs Duty Act Custom Duty 28.70 2003-04 Commissioner of Custom
Customs Duty Act Custom Duty 44.07 2002-03 Commissioner of Custom
Customs Duty Act Custom Duty 205.00 2010-11 CESTAT KOLKATA
Customs Duty Act Custom Duty 15.87 2014-15 CESTAT NEW DELHI
Customs Duty Act Custom Duty 69.19 2014-15 CESTAT NEW DELHI
Service Tax Service Tax 73.68 2015-16 CESTAT KOLKATA

viii) The Company has not taken any loans or borrowing from a financial institution andbanks during the financial year under Audit. The company has defaulted in repayment of thefollowing amount to Financial Institutions for more than 90 days. :

a) Term Loan RS. 2984.60 Lakhs
b) Other Loans RS. 2114.11 Lakhs
c) *Interest RS. 3289.48 Lakhs

* Rs. 284.90 Lakhs provided in Statement of Accounts and Rs. 3004.58 Lakhs notprovided in the Statement of Accounts.

ix) No moneys has been raised by way of initial public offer or further public offer(including debt instruments) and no any term loans has been obtained during the year andas such clause (ix) of the order is not applicable to the Company.

x) Based on the audit procedures performed and the information and explanations givento us no fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the year.

xi) In our opinion and according to the information and explanations given to usmanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

xii) The Company is not a Nidhi Company and as such clause (xii) of the order is notapplicable to the Company.

xiii) In our opinion all transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the Financial Statements etc. as required by the applicable accountingstandards in Note No. 47 to the Ind AS financial statements.

xiv) During the year under review the Company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures.

xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him.

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

For SURESH KUMAR MITTAL & CO.
Chartered Accountants
Firm Registration No.: 500063N
Place: Kolkata (Rashi Goswami)
Date: The 30th May 2019 Membership No. : 522561

Annexure B referred to in Paragraph (II)(f) under the heading of "Report on OtherLegal and Regulatory Requirements" of our report of even date to the members ofEastern Silk Industries Limited on the standalone Ind AS Financial Statements for the yearended 31st March 2019.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of EasternSilk Industries Limited ("the Company") as of March 31 2019 in conjunction withour audit of the financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI)". These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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 Act.

Auditors' Responsibility

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 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 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 my /our audit opinion on the Company's internal financial controlssystem over 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: a) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; b) 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 c) 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.

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 2019 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Noteissued by the ICAI".

For SURESH KUMAR MITTAL & CO.
Chartered Accountants
Firm Registration No.: 500063N
Place: Kolkata (Rashi Goswami)
Date: The 30th May 2019 Membership No. : 522561