THE MEMBERS OF
EUROTEX INDUSTRIES AND EXPORTS LIMITED Report on Audit of Financial Statements
We have audited the accompanying financial statements of
EUROTEX INDUSTRIES AND EXPORTS LIMITED (the Company) which comprises ofBalance Sheet as at March 31 2021 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Statement of Cash Flowfor the year then ended and a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as the financial statements).
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (the Act) in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with Companies (Indian Accounting Standards) Rules 2015 as amended(Ind AS) and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 its losses including totalcomprehensive income its changes in equity and its cash flows for the year ended on thatdate.
Basis of Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143 (10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theindependence requirements that are relevant to our audit of the financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the financial statements.
Material Uncertainty Related to Going Concern
Without qualifying we draw your attention to note no. 40 of the financial statementswith respect to the fact that the financial statements have been prepared on a goingconcern basis which contemplates the realization of assets and the satisfaction ofliabilities in the normal course of business though the Company has incurred cash lossduring the current year losses during the last couple of previous years having erodedits entire net worth and that the operations of the Mills have continued grinding haltsince 25th March 2019 on account of persistent unfair and illegal activities of labourincluding strike resorted to by workers and disconnection of power and lack of workingcapital. The management has already settled dues of lender banks (by borrowing frompromoter group companies) is exploring ways to settle workers legal dues studying waysto restart the operations of the Mills pursuing to raise further funds from sellingsurplus assets (during the year end substantial cash flow was generated by dispossing offof certain assets of the Company at Kolhapur) exploring for sources of additional fundsto restructure the operations after proper evaluation and in view of such positivitiesthe financial statements have been prepared on a going concern basis.
Emphasis of Matters
We draw your attention to Note no. 41 of the financial statements with regard tomanagement's assessment about the impact on Company's operations due to COVID 19 pandemicoutbreak and lockdown. The management apart from considering the internal and externalinformation up to the date of approval of these financial statements the Company has alsoperformed sensitivity analysis on the assumptions used interalia including in respect ofrealisability of asset based on current indicators of future economic conditions theCompany expects to recover the carrying amount of all these assets.
The impact of the global health pandemic may be different from that estimated as at thedate of approval of these financial statements. Considering the continuing uncertaintiesas explained the Management will continue to closely monitor any material changes tofuture economic conditions. Our report is not modified in respect of these matters.
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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Key Audit Matters ||Auditor's Response |
|1. Evaluation of Indirect tax and other receivables || |
|The Company has MVAT receivables of Rs.73.20 lakhs for the financial year 2007-08 Central Sales Tax of Rs.96.90 Lakhs for the financial year 2006- 07 and MSEB Load Factor Incentives receivables of Rs.178.06 Lakhs pertaining to financial years from 2005-2008 including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||Obtained understanding of key uncertain tax positions. |
| ||Obtained details of completed tax assessments and demands received during the year from the Management. |
| ||Discussed with appropriate senior management and evaluated the Management's underlying key assumptions in estimating the tax provision. |
| ||Assessed management's estimate of the possible outcome of the disputed cases. |
| ||Considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of otherinformation.The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to the Board Report CorporateGovernance report and Shareholder's information but does not include the financialstatement and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse 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.
Management's Responsibility for the 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 financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome changes in equity and cash flows of the Company in accordance with Ind AS andother accounting principles generally accepted in India.This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements the Management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements are free from material misstatement whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high levelof assurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: a) 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. b) 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 Act we are alsoresponsible for expressing our opinion on whether the Company has adequate internalfinancial control system in place and the operating effectiveness of such controls. c)Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management. d) Conclude on theappropriateness of Management's use of the going concern basis of accounting and based onthe audit evidence obtained whether a material uncertainty exists related to events orconditions that may cast significant doubt on the entity's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the entity to cease to continue as a going concern. e)Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of a reasonablyknowledgeable user of the financial statements may be influenced. We consider quantitativemateriality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work and
(ii) to evaluate the effect of an identified misstatements in the financial statements.We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulations 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 outway the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. Pursuant to the Companies (Auditor's Report) Order 2016 (theOrder) issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Act we give in the Annexure A a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books and records.
(c) The Balance Sheet the Statement of Profit & Loss (including othercomprehensive income) Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with (Indian Accounting Standards)Rules 2015 as amended.
(e) On the basis of the written representation received from the directors as on March31 2021 taken on records by the Board of Directors none of the directors aredisqualified as on March 31 2021 from being appointed as Directors 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 control 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 Company to its directors during the year is in accordance withthe provisions of Section 197 of the Act.
(h) With respect to the matters to be included in the Auditor's report in accordancewith the rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and tothe best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements- Refer Note No. 32.1.
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.
For SVP & Associates
Chartered Accountants Firm Regn. No. 003838N
| ||(YOGESH KUMAR SINGHANIA) |
| || |
|Place: Mumbai || |
(M. No. 111473)
|Date : 22nd June 2021 || |
Annexure A referred to in Report on Other Legal and RegulatoryRequirements section of our report to the members of Eurotex Industries and ExportsLimited of even date:
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we state that:
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment (fixed assets).
b) According to the information and explanations given to us the property plant andequipment (fixed assets) have been physically verified by the management at the year endwhich in our opinion is reasonable considering the size of the Company and nature of itsproperty plant and equipment (fixed assets). As explained no material discrepancies werenoticed on such verification.
c) Based on the information and explanations given to us the title deeds of immovableproperties are held in the name of the Company.
ii) The inventories of the Company have been physically verified by the management atreasonable intervals during the year. No material descrepancies were noticed on suchphysical verification.
iii) The Company has not granted any loans secured or unsecured to the Companiesfirms limited liability partnerships or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of Clause 3(iii) of the Orderare not applicable to the Companies.
iv) The Company has not granted any loan guarantees and security to the partiescovered in Section 185 of the Act.
The provisions of Section 186 of the Act have been complied in respect of theinvestments made.
v) No deposits within the meaning of directives issued by RBI (Reserve Bank of India)and Sections 73 to 76 or any other relevant provisions of the Act and rules framedthereunder have been accepted by the Company.
vi) We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government of India regarding the maintenance of costrecords under sub-section (1) of Section 148 of the Act and are of the opinion that primafacie the prescribed accounts and records have been maintained. We have however notmade a detailed examination of the records with a view to determine whether they areaccurate or complete.
vii) a) According to the information and explanations given to us and on the basis ofour examination of the records the Company is generally regular in depositing undisputedstatutory dues including Provident Fund Employees' State Insurance Income Tax Duty ofCustoms Cess Goods and Service Tax and other material statutory dues applicable to theCompany with the appropriate authorities except delay in payment of Provident Fund of Rs.0.35 Lakhs (since paid) and Employees' State Insurance of Rs. 1.23 Lakhs (yet to be paid).
b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no dues of Income Tax Sales TaxService tax Duty of Customs Duty of Excise and Value Add Tax which have not beendeposited on account of any dispute except the following:
|Nature of Statute ||Nature of Dues ||Period to which it relates ||Rs. in Lakhs ||Forum where the dispute is pending |
|The Custom Act 1962 ||Cenvat Duty & Penalty ||2006-07 ||131.08 ||Custom Excise and service tax Appellate Tribunal (CSSTAT) |
|The Bombay Sales Tax Act 1959/ ||Sales Tax ||2005-06 ||184.38 ||Maharashtra Sales Tax |
|Central Sales Tax Act 1956 || ||2006-07 ||101.59 ||Tribunal Pune. |
viii) During the year or in the recent past the Company has not taken any loan frombank Financial Institutions government or debenture holders. However there was a delayin repayment of loan to a bank of Rs.22.61 Lakhs by 27 days.
ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) or term loan during the year or in the recentpast. Therefore para 3(ix) of the order is not applicable to the Company.
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 or on the Company by its officers or employees noticed or reportedduring the year nor have we been informed of such case by the management.
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) The provisions of Nidhi Company are not applicable to the Company. Therefore Para3 (xii) of the Order is not applicable to the Company.
xiii) According to the information and explanations given to us the provisions ofSection 177 and 188 of Act in respect of transactions with the related parties have beencomplied by the Company and the details have been disclosed in the Financial Statements asrequired by the applicable accounting standards in Note No.32.5 to the FinancialStatements.
xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures. Therefore Para 3 (xiv) ofthe Order is not applicable to the Company.
xv) According to the information and explanations given to us during the year theCompany has not entered into any non-cash transactions with directors or persons connectedwith him 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 SVP & Associates |
| ||Chartered Accountants Firm Regn. No. 003838N |
| ||(YOGESH KUMAR SINGHANIA) |
| || |
|Place: Mumbai || |
(M. No. 111473)
|Date : 22nd June 2021 || |
Annexure B referred to in Report on Other Legal and RegulatoryRequirements section of our report to the members of Eurotex Industries and ExportsLimited of even date: Report on the Internal Financial Controls over Financial Reportingunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013(Act)
We have audited the internal financial controls over financial reporting of EurotexIndustries and Exports Limited (the Company) as of March 31 2021 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential component of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to 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 internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the Guidance Note) issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the Act to theextent applicable to an audit of internal financial controls. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 judgment 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 internal financial controls system overfinancial reporting of Company.
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of company and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has broadly in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential component of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India. Also refer Emphasis of matter para of main auditreport. Besides it is advisable to continue internal audit for better financial controls.
| ||For SVP & Associates |
| ||Chartered Accountants Firm Regn. No. 003838N |
| ||(YOGESH KUMAR SINGHANIA) |
| || |
|Place: Mumbai || |
(M. No. 111473)
|Date : 22nd June 2021 || |