To the Members of HINDOOSTAN MILLS LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of HINDOOSTAN MILLS LIMITED("the Company") which comprise the Balance Sheet as at 31st March 2018 the Statementof Profit and Loss (including Other Comprehensive Income) the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and a summary of thesignificant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated inSection 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation and presentation of these financial statements that give a true and fair viewof the financial position financial performance (including other comprehensive income)cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standardsspecified in the Companies (Indian Accounting Standards) Rules 2015 (as amended) underSection 133 of the Act. This responsibility also includes maintenance of adequateaccounting 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; makingjudgements and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the financial statements that give a true and fairview and 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 and Rules made thereunderincluding the accounting and auditing standards and matters which are required tobe included in the audit report under the provisions of the Act and the Rules madethereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act and other applicable authoritative pronouncement issued by theInstitute of Chartered Accountants of India. Those Standards and pronouncementrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about theamounts and the disclosures in the financial statements. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompany's preparation of the financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluatingthe 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 financial statements.
In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India: (a) in the case of the BalanceSheet of the state of affairs of the Company as at March 31 2018; (b) in the case of theStatement of Profit (including Other Comprehensive Income) of the loss for the year endedon that date; (c) in the case of the Cash Flow Statement of the cash flows for the yearended on that date. and
(d) In the case of the Statement of Changes in Equity for the year ended on that date
The financial information of the Company for the year ended 31st March 2017 and thetransition date opening balance sheet as at 1st April 2016 included in these financialstatements are based on the previously issued statutory financial statements for theyears ended 31st March 2017 and 31st March 2016 prepared in accordance with theCompanies (Accounting Standards) Rules 2006 (as amended) which were audited by us onwhich we expressed an unmodified opinion dated 9th May 2017 and 4th May 2016respectively. The adjustments to those financial statements for the differences inaccounting principles adopted by the Company on transition to the have been audited by us.
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 specifiedin 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 andobtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purposes of our audit; (b) In our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books; (c) The Balance Sheet the Statement of Profit and Loss(Including Other Comprehensive Income) the Cash Flow Statement and the Statement ofChanges in equity dealt with by this Report are in agreement with the books ofaccount; (d) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act; (e) On the basis ofthe written representations received from the directors as on 31st March 2018 and takenon record by the Board of Directors none of the directors is disqualified as on 31stMarch 2018 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 financial reportingof the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure "B"; and
(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) Amendment Rules2017 in our opinion and to the best of our knowledge and belief and according to the informationand explanations given to us: (i) The company has disclosed the impact of pendinglitigations on its financial position in its financial statements Refer to NoteNo. 33Point No. II(A) II(B) and II(C) of other notes to the financial statements.
(ii) The Company does not have any long-term contracts including derivative contractsfor which there could be any material foreseeable losses and hence the question ofmaking provision for such losses does not arise.
(iii) There has been no delay in transferring amount required to be transferred tothe Investor Education and Protection Fund by the
Annexure A to the Auditors' Report
Annexure referred to in paragraph 1 of our report on Other Legal and RegulatoryRequirements of even date
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
(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 Leasehold Land are held inthe name of the company.
(ii) As explained to us inventories were physically verified during the year by themanagement at reasonable intervals and no material discrepancies were noticed on physicalverification. Further Inventory lying with third party processors as on 31st March 2018aggregating to Rs 17.63 lakhs (previous year Rs 70.04 lakhs) were not verified for whichconfirmations have been obtained.
(iii) The Company has not granted loans to parties covered in the register maintainedunder section 189 of the Act. Thus paragraph 3(iii) of the Order is not applicable.
(iv) In our opinion and according to the information and explanations given to us theCompany:
(a) Has complied with the provisions of section 186 of the Act with respect to theinvestments made.
(b) The provisions of section 185 of the Act are not applicable to it.
(v) The Company has not accepted any deposits from the public. Thus paragraph 3 (v) ofthe Order is not applicable (vi) We have broadly reviewed the books of accounts andrecords maintained by the Company pursuant to the rule made by the Central Government forthe maintenance of Cost Records under Sub Section 1 of Section 148 of the Companies Act2013 and are of the opinion that prima facie the prescribed accounts and records have beenso made and maintained. We have however not made a detailed examination of the accountsand records with a view to determining whether they are accurate or complete.
(vii) In respect of statutory dues:
(a) According to the information and explanations given to us the Company has beengenerally regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income-tax Sales-Tax Wealth Tax Service Tax Duty ofCustoms Duty of Excise Value Added Tax Cess and any other statutory dues as applicablewith the appropriate authorities during the year.
(b) According to the information and explanations given to us statutory duesaggregating to Rs 91.57 lakhs which have not been deposited as on 31st March 2018 onaccount of disputes are given below:
|Name Of Statute ||Nature of dues ||Amount ||Period to which the dues relate ||Forum Where dispute is pending |
| || ||(Rs in lakhs) || || |
|Income Tax Act1961 ||Income Tax dues ||3.12 ||A.Y. 2007-08 ||Commissioner of Income Tax. |
| || ||1.94 ||A.Y. 2010-11 ||Commissioner of Income Tax. |
| || ||3.94 ||A.Y. 2014-15 ||Commissioner of Income Tax. |
|Central Excise Act ||Excise Duty ||4.06 ||1977-2002 ||Dy. Commissioner of Central Excise. |
| || ||2.49 || ||Joint Commissioner of Central Excise |
| || ||27.78 || ||Asst. Commissioner of Central Excise |
| || ||16.63 ||1994-1998 ||Commissioner of Central Excise. |
| || ||5.36 ||1996-2003 ||CESTAT |
|Maharashtra Sales Tax and Central Sales Tax ||Sales Tax and Central Sales Tax ||5.10 ||2002-03 ||Dy. Commissioner of sales-tax (Appeal)-I |
|Maharashtra Sales Tax on the transfer of property in goods involved in the execution of the work contract (Reenacted) Act 1989 ||Work contract Tax ||21.15 ||1993-94 to 1997-98 ||Dy. Commissioner of sales-tax (Appeal)-I |
(viii) Based on our audit procedures and according to the information and explanationsgiven to us we are of the opinion that the Company has not defaulted in repayment of duesto its banks.
(ix) 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. Thus paragraph3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers employees has been noticed or reported during the courseof our audit.
(xi) The Company has paid/provided managerial remuneration which is in accordance withthe provisions of section 197 read with Schedule V of the Companies Act 2013.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company.
Thus paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with 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 byIndianAccounting Standard 24.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company during the year the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures.
(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) According to the information and explanations given to us and based on ourexamination of the records of the Company it is not required to be registered undersection 45-IA of the Reserve Bank of India Act 1934.
Annexure - B to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act") over We have audited the internalfinancial financialreporting of HINDOOSTAN MILLS LIMITED ("the Company")as of 31st March 2018 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancialcontrols based on the internal control over financialreporting 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 Act.
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 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 wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial control 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 theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material 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
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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisations ofmanagement and directors of the Company; and (3) 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.
In our opinion the Company has in all material respects an adequate internalfinancial operating effectively as at andsuchinternalfinancial 31 st March 2018 based onthe internal considering the essential components of internal control statedcontroloverfinancial in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the ICAI.
For M. A. Parikh & Co.
(Firm's Registration No. 107556W)
MukuL M. PATEL
Membership No. 032489
Date: May 16 2018