To The Members Of Filatex India Limited
Report On The Audit Of Financial Statements
We have audited the accompanying financial Statements of Filatex India Limited(the Company') which comprise the Balance Sheet as at March 31
2020 the Statement of Profit and Loss
(including other comprehensive income) the Cash Flow Statementand the Statement ofChanges in Equity for the year ended on that date and a summary of the significantaccounting policies and other explanatory 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 Act2013
("the Act") in the manner so required and give a true and fair view inconformity with the Companies( Indian Accounting Standards) Rules2015asamended("IND
AS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2020 the profit and total comprehensive incomechanges in equity and its cash flows for the year ended on 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 the Financial Statementssection of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India(ICAI) together with the ethical requirements that arerelevant to our audit of the financial statements under the provisions of the CompaniesAct 2013 and the Rules 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 we have obtained is sufficient and appropriate to providea basis for our opinion on the financial statements
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 matte Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
|Sr. No Key Audit Matters ||Auditors Response |
|1 Evaluation of Minimum Alternate Tax(MAT) credits ||Principal Audit Procedures |
|The Company has material uncertain tax position regarding set off of MAT credit which involves significant judgment to determine the possible utilization of tax assets amounting to 7947.07 lakhs refer note No. 24 of financial Statements. ||In assessing the realisability of MAT credit entitlement management considered whether some portion or all of the MAT credits will not be realized. The ultimate realization of MAT Credits is dependent upon the generation of future taxable income during the periods taxable incomes exceeds the book profit as per the provisions of the income tax act. This requires the significant judgement. The management considered the scheduled adjustment of MAT credit projected future taxable income and tax planning strategies in making this assessment. We have considered the projections of the future profitability of the company as appraised by the Company's bankers for assessing credit limits and the relevant provisions of the income tax act as amended from time to time to test the probability of expected future economic benefit in respect of MAT credit. |
|2 Allowance for Inventories ||Principal Audit Procedures |
|The Company holds significant inventories and records allowance for identified obsolete inventories. As at 31 March 2020 the Company's inventories amounted to 17173.61 lakhs representing 10.59 % of the Company's total assets. Refer Note No. 11 of financial statements. ||Our audit procedures to assess allowance for inventories included the following: |
|At the end of each reporting period management assesses whether there is any objective evidence that certain inventories which are stated at cost are above their net realizable value. If so these inventories are written down to their net realizable value. Assessing the net realizable value is an area of significant judgment with specific consideration to slow moving and obsolete inventory and hence considered to be a Key Audit Matter.Management undertakes the following procedures for determining the level of write down required. || We checked the management process for identification of slow moving non-moving or obsolete inventories and ensured that the same is reasonable and consistently applied. |
| Specific identification procedures are performed periodically by the management to ascertain the slow moving non-moving or obsolete inventories. || We checked that the allowance for slow-moving non-moving and obsolete inventories is appropriately computed basis the underlying working/ supporting. |
| Adequate allowance is created for non- moving and slow- moving inventories basis market realizable value and need of incremental re-processing cost. || We tested the net realizable value of inventory properties selected on a sample basis to recent selling price. |
| Perform a line-by-line analysis of remaining item of finished inventory (Inventory properties) to ensure it is stated at the lower of cost and net realizable value and a specific write down is recognized if required. || We compared the actual utilization/liquidation of inventories to the status of inventories previously assessed as per specific identification method. |
| || We also checked inventory aging and inquiries for non-moving inventories which are not considered for inventory provisioning. |
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and our auditor's report thereon. The above mentioned report is expected to bemade available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above when it becomes available and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.
When we read the Annual Report if we conclude that there is a material misstatementtherein we are required to communicate the matter to those charged with governance.
Management's Responsibility for the 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 of these financial statements togive a true and fair view of the financial position financial performance
(including other comprehensive income) cash flows and changes in equity of the Companyin accordance with the accounting principles generally accepted in India including theIndian
Accounting Standards specified in the Companies (Indian Accounting Standards) Rules2015 (as amended) under Section 133 of the Act. 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 thefinancial statements that give a true and fair view andare free from material misstatement whether due to fraud or error.
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.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibility 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:
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficientand appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3) (i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting 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.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements thatindividually 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 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 matte 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
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 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 including Other
Comprehensive Income Statement of Changes in Equity and the Statement of Cash Flowdealt with by this Report are in agreement with the relevant books of account.
d. In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the
e. On the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on March
31 2020 from being appointed as a director in terms of Section 164 (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 A". Our report expresses an unmodified opinion on theadequacy 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 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 be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous: i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements- Refer Note-41A& D to the financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
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" astatement on the matters specified in paragraphs 3 and 4 of the Order. for Arun K.Gupta & Associates
Firm Registration No. 000605N
Gireesh Kumar Goenka
Partner Membership No. 096655
Place : New Delhi
Date : June 04 2020
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 to the Members of Filatex India Limited of evendate)
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 have audited the internal financial controls over financial Filatex India Limited("the Company") as of March 31 2020 in conjunction with our audit of thefinancial 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 Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired 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 the 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 be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 of A company'sinternal financial control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of recordsthat 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 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 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 information and according to the explanations given tous 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 March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
for Arun K. Gupta & Associates
Firm Registration No. 000605N
Gireesh Kumar Goenka
Partner Membership No. 096655
Place : New Delhi
Date : June 04 2020
Annexure-B to Independent Auditors' Report
(Referred to in paragraph 2under "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Filatex India Limited of evendate) i. In respect of the Company's fixed assets: a. The Company is maintaining properrecords showing full particulars including quantitative details and situation of fixed
b. There is a regular programme of verification of fixed assets which in our opinionis reasonable having regard to the size of the Company and the nature of its assets. Inaccordance with the said programme part of the fixed assets have been physically verifiedby the management during the year. As informed no material discrepancies were noticed onsuch verification
c. According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. In respect of immovable properties of land and building that have been taken onlease and disclosed as Right of Use Assets in the financial statements the leaseagreements are in the name of the Company.
ii. The management has conducted physical verification of inventory at reasonableintervals and no material discrepancies in inventory were noticed on physicalverification. assets.
iii. The Company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under Section 189 of the CompaniesAct 2013. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b)&(iii)(c) ofthe said Order are not applicable to the Company.
iv. In our opinion and according to the information and explanations given to usprovisions of section 186 of the Companies Act2013 in respect of investments made havebeen complied by the Company. There are no other loans guarantees and securities grantedin respect of which provisions of section 185 and 186 of the Companies Act2013 areapplicable.
v. In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.
vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. However we have not made a detailed examination of the cost records with aview to determine whether they are accurate 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 Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities.
b. There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2020 for a period of more than six months fromthe date they became payable. c. Details of the dues outstanding of income-tax duty ofcustomsgoods & service taxand cess which have not been deposited on account of anydispute as at March 31 2020 are stated below:-
|Sr. No. Name of the Statute ||Nature of Dues ||Amt (Rs/ Lakhs) ||Period to Which it relates ||Forum where Dispute is pending |
|1 Central Excise Act 1944. ||NCCD on Deemed Exports. ||2.77 ||From July 2004 to Nov. 2004 ||Commissioner (Appeals) C.E. Vapi |
|2 Central Excise Act 1944. ||Service Tax Credit before starting of production ||51.08 ||F.Y 2011-12 ||CESTAT Ahmedabad |
|3 Central Excise Act 1944. ||Credit of Service Tax availed on courier service. ||0.21 ||F.Y's 2005-06 & 206-07 ||The Asst. Commissioner of Central Excise Silvassa. |
|4 Central Excise Act 1944. ||Demand of Service Tax credit availed on Sales Commission for the years 2009-10 & 2010-11 ||15.31 ||F.Y's 2009-10 & 2010-11 ||The Addl. Commissioner Central Excise Customs & Service Tax Vapi |
|5 Central Excise Act 1944. ||Demand of Ex. duty on Polyester FDY Yarn transferred to NWF on transaction value instead of CAS-04 for the period from April-2009 to April-2012 ||32.99 ||From Apr.-2009 to Apr -2012 ||Commissioner (Appeals) C.E. Vapi |
|6 Customs Act 1962. ||Differential duty on import of chip ||14.54 ||December 2007 ||Asst. Commissioner of Customs Group II C&D JNCH Navi Mumbai |
|7 Customs Act 1962. ||Co-Party made with a customer for discrepancies in compliance of export obligation by customer ||15.00 ||April 2007 ||CESTAT Western Zone Ahmedabad. |
|8 Customs Act 1962. ||Fraudulent Availment of DEPB credit by M/s Shivam Overseas Ludhiana by resorting to overvaluation of their exported goods ||8.64 ||March 2005 ||The Commissioner of Customs (EP) New Custom House Ballard Estate Mumbai |
|9 Central Excise Act 1944. ||Demand of service tax credit availed on sales commission for the period April 2011 to December 2014 ||20.10 ||April 2011 to December 2014 ||The Additional Commissioner Central excise Custom & Service Tax Div I Vapi. |
|10 Central Excise Act 1944. ||Demand of service tax credit availed on sales commission for the period January 2015 to November 2015 ||3.58 ||January 2015 to November 2015 ||The Assistant Commissioner Central excise Custom & Service Tax Div I Silvassa |
|11 Central Excise Act 1944. ||Demand of service tax credit availed on sales commission for the period April 2010 to February 2016 ||44.10 ||April 2010 to February 2016 ||The Superintendent Central Ex & Custom Range- IIIDivision - V Bharuch |
|12 Central Excise Act 1944. ||Excise Rebate claim sale Invoice no. 2039ARE no.8/2014-15 ||3.09 ||For the period 2014-15 ||The Joint Commissioner Central Excise Raigarh |
|13 Central Excise Act 1944. ||Demand of C. Ex. duty on clearance of Narrow Woven Fabrics ||289.76 ||For the period from August-2015 to June-2017 ||The Commissioner CGST & Central Excise Daman |
viii.According to the records of the Company examined by us and the information andexplanation given to us the Company has not defaulted in repayment of dues to anyfinancial institution or banks. The Company does not have any outstanding debenture.
ix. In our opinion and according to the information and explanations given to us themoneys raised by way of term loans have been applied on overall basis for the purposesfor which they were obtained. The Company has not raised any moneys by way of initialpublic offer and further public offer
(including debt instruments).
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 material fraud on or by the Company noticed or reported during the year norhave we been informed of any such case by the Management.
xi. According to the records of the Company examined by us and the information andexplanation given to us the Company has paid and provided managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V of the Companies Act 2013.
xii. The Company is not a Nidhi
Company this clause is not applicable to the Company.
xiii. According to the records of the Company examined by us and the information andexplanation given to us the Company has complied with section 177 and 188 of theCompanies Act 2013 in relation to transaction with related parties and the details havebeen disclosed in the Financial Statements as required by applicable Indian AccountingStandards.
xiv. According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.
xv. As per the information & explanations given to us the Company has not enteredinto any noncash transactions with directors or persons connected with them as referred toin section 192 of the Companies Act2013.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
for Arun K. Gupta & Associates
Firm Registration No. 000605N
Gireesh Kumar Goenka
Partner Membership No. 096655
Place : New Delhi
Date : June 04 2020