THE MEMBERS OF
M/s. GANGOTRI TEXTILES LIMITED
REPORT ON THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of M/s. GANGOTRI TEXTILESLIMITED which comprise the balance sheet as at 31st March 2016 the Statement ofProfit and Loss and the Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flow of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; 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.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
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 there under.
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 theauditor's 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 control 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 the appropriateness of the accounting policies usedand the reasonableness of the accounting estimates made by the Company's Directors aswell as evaluating the overall presentation of 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.
BASIS FOR QUALIFIED OPINION
1. In our opinion there prevails material uncertainty related to events/ conditionswhich individually/ collectively cast significant doubts on going concern assumption.
2. The Trade Receivables Rs.108.15 Lakhs are subject to confirmation.
3. The interest provisions for all Loans from Banks has not been worked out since thedate of taking over of assets by the bank. We could not able to quantify the interestamount.
4. On Examination of the books of accounts and the information and explanations give tous the internal control systems continue to be not commensurate considering the nature ofcompany's business.
5. The State Bank of India took possession and sold all the assets of the Companyexcept the Unit No. VIII at Perundurai SIPCOT. The realised value of the assets soldamount Rs.152.05 Crores is adjusted under the head Term Loan and the Term Loan amount ason 31.03.2016 is Rs.136.88 Crores.
6. The balances shown under Secured loans and Balances with bank. Confirmation ofbalance is yet to be given by the Bankers. Hence the balances reflected under these twoheads are as per the books of account of the company. These matters were also qualified inthe report of the predecessor auditors on the financial statements for the year ended31.03.2015.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid 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 31 st March 2016 and its loss and its cash flows for the year ended on that date.
(i) In the case of the Balance Sheet of the State of affairs of the Company as at 31stMarch 2016;
(ii) In the case of the Statement of Profit and Loss of the loss for the year ended onthat date; and
(iii) In the case of the Cash Flow Statement of the cash flows for the year ended onthat date.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. 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 Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the order.
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) Except for the effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company 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) Except for the effects of the matters described in the basis for qualified opinionparagraph above the aforesaid standalone financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;
(e) The matters described on the Basis for Qualified Opinion paragraph above in ouropinion may have adverse effect on the functioning of the Company.
(e) On the basis of the written representations received from the directors as on 31March 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2016 from being appointed as a director in terms of Section164 (2) of the Act;
(f) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated on the Basis for Qualified Opinion paragraph above
(g) 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 financial statements-Refer Note 28 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.
| ||For M. GANGADARAN & CO. |
| ||Firm Regn.No.0881S |
| ||Chartered Accountants |
|Place: Coimbatore ||M. GANGADARAN |
|Date : 02.08.2016 ||Membership No:024949 |
ANNEXURE-A TO THE AUDITORS' REPORT
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2016 we report 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 fixed assets are verified in a phased manner over a period of three years. Asexplained to us the Fixed Assets were taken over by the bank and took possession of allassets and hence Physical verification was not done.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company
II) As explained to us inventories of the company at all its location have not beenphysically verified by the management during the year since all the units were taken overby the bank.
III) The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013 during the year.
IV) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
V) The Company has not accepted any deposit from public during the year.
VI) We have broadly reviewed the records maintained by the company till the date ofpossession taken over by the bank pursuant the Rules made by the Central Government forthe maintenance of the cost records under 148(1) of the Companies Act. We are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed Examination of the records with a viewof determining whether they are accurate or complete
VII) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amount deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund InvestorEducation and Protection fund income-tax Sales-tax Wealth tax service Tax and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities As explained to us the Company did not have any dues onaccount of employees' State Insurance Customs duty and Excise duty except the following.
|Particulars || || || |
31.03.2016 (in Rs.Lakhs)
31.03.2015 (in Rs.Lakhs)
|Name of the Statute ||Year ||Nature of Dues ||Amount in Lakhs ||Forum where dispute is pending ||Provided in the books of accounts ||Amount in Lakhs |
|TamilNadu Additional Sales Tax Act 1970 ||1996-97 ||Additional Sales Tax ||20.07 ||Supreme Court of India ||Yes ||20.07 |
|CST Acts ||2002-03 ||TNGST Surcharge AST Penalty ||1.82 ||STAT Coimbatore ||No ||1.82 |
|TNGST CST Acts ||2003-04 ||TNGST Surcharge AST Penalty ||13.54 ||STAT Coimbatore ||No ||13.54 |
|Income Tax Act 1961 ||2004-05 ||Interest U/S 234B/234C ||5.85 ||ITAT Chennai ||No ||5.85 |
(b) According to the records of the company there are no statutory dues which havenot been deposited on account of any disputes
VIII The Company has defaulted in repayment of interest and principal to bank andfinancial institutions.
IX. During the year the company has not given any guarantee for loan taken fromothers from banks or financial institution.
X. The company has not obtained any term loan during the year.
XI. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
XII. According to the information and explanations given to us no material fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.
XIII. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act
XIV. 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 and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
XV. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
XVI. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Annexure-B to the Independent Auditors' Report of even date on the financial statementsof GANGOTHRI TEXTILES LIMITED Report on the Internal Financial Controls under Clause (i)of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of GANGOTHRITEXTILES LIMITED ("the Company") as of 31 March 2016 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility lor 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 (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 the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's 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 Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls ever 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 financial reporting includes those policiesand 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 the 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 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 31 March 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| || ||For M. GANGADARAN & CO. |
| || ||Firm Regn.No.0881S |
| || ||Chartered Accountants |
|Place: Coimbatore ||CA. M. GANGADARAN || |
|Date : 02.08.2016 ||Membership No:024949 || |