Independent Auditor's Report
To the Members of Loyal Textile Mills Limited
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the Standalone Ind AS Financial Statements of M/s. LOYAL TEXTILEMILLS LIMITED ( the Company') which comprise the Balance Sheet as at 31 March 2020the statement of Profit and Loss the statement of cash flows and the statement of changesin equity for the year then ended and notes to the financial statements including asummary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS 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 of the state of affairs of theCompany as at 31stMarch 2020 and its profit/loss including other 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 theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under provision of the Companies Act 2013 and the Rules thereunderand have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgement 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.
We have no material matters or issues to be reported upon.
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 Ind AS Financial Statements that give a true and fairview of the financial position financial performance including other comprehensiveincome cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under Section 133 of the Act read with relevant Rules issued thereunder.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgements and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
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 judgement andmaintain professional scepticism 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 sufficient and 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)
(i) of the Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness 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 (We draw attention to note no.32(ii)(a) in the financial statements alongwith the matters set forth to state that there is no material uncertainly that existswhich may cast significant doubt on the company's ability to continue as a going concern.Our opinion is not modified in respect of this matter) and based on the audit evidenceobtained whether a material uncertainly exists related to events or conditions that maycast significant doubt on the Company's ability to continue as a going concern. If weconclude that a material uncertainly exists we are required to draw Appendices 87attention 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 Company to cease to continue as a 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.
We communicate with Those Charged With Governance regarding among other matters theplanned scope and
timing of the audit and significant audit findings including any significantdeficiencies 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 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 we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) the Balance Sheet the Statement of Profit and Loss the Statement of Cash flowsand the Statement of Changes in Equity dealt with by this Report are in agreement with thebooks of account;
(d) in our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Accounting Standards specified under Section 133 of the Act read with relevant ruleissued thereunder;
(e) on the basis of the written representations received from the Directors as on 31stMarch 2020 and taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2020 from being appointed as a Director in termsof Section 164(2) of the Act; and
(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".
(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 No. 32 to the financial statements;
(ii) the Company did not have any long-term contracts including derivative contracts;and
(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 of India in terms of section 143(11) of the Act we givein the Annexure B a statement on the matters specified in the paragraph 3 and 4 of theorder to the extent applicable.
ANNEXURE "A" to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements of Loyal Textile Mills Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section (3) ofSection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of LoyalTextile Mills Limited ("the Company") as of March 312020 in conjunction withour audit of the Standalone Ind AS Financial Statements of the Company for the year endedon 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 (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 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 reporting assessing the risk that amaterial weakness exists and testing and evaluating the design and operating effectivenessof internal control based on the assessed risk. The procedures selected depend on theAuditor's judgement including the assessment of the risks of material misstatement of thestandalone Ind AS 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:
(i) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(ii) 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
(iii) 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 standalone Ind AS 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 March 31 2020 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.
Annexure "B" to the Independent Auditor's Report of even date on theStandalone Ind AS Financial Statements of Loyal Textile Mills Limited
The Annexure referred to in Paragraph 2 under the heading "Report on Other Legaland Regulatory Requirements" of our Report on the Standalone Ind AS financialstatements of even date 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 programme of periodic physical verification of fixed assets at alllocations by which during the year the Company has verified fixed assets at selectedlocations in a phased manner and we were informed that no material discrepancies werenoticed on such verification.
c) According to the information and explanations given to us and based on the thetitle deeds of immovable properties as disclosed in Note No. 9 to the Standalone Ind ASFinancial Statements are held in the name of the Company except for the following:
|Particulars ||Free hold (Rs. in Lakhs) ||Lease hold (Rs. in Lakhs) ||Remarks |
|Gross Block as at 31st March 2020 ||Nil ||161.90 ||SIPCOT Lease hold Land |
(ii) As explained to us the inventories at all locations have been physically verifiedby the Management at regular intervals during the year. We are informed that thediscrepancies noted on such verification of stocks as compared to book records were notmaterial and the same have been properly dealt with in the books of accounts. However nodetailed examination has been carried out by us.
(iii) In our opinion and according to the information and explanations given to us theCompany has not granted any loan secured or unsecured to the companies firms limitedliability partnership or other parties listed in the register maintained under section 189of the Companies Act 2013.
(iv) The Company has not granted any loan or provided any guarantee or security to theparties covered under Sections 185 and 186 of the Act. In respect of investment insecurities the company has complied with the provisions of section 186 of the Act.
(v) The Company has not accepted any deposits from the public during the year as perthe provisions of section 73 and 76 of the Companies Act 2013. The company hasaccepted/taken interest free inter corporate deposit from a company.
(vi) We have broadly reviewed the cost records maintained by the company as prescribedby the Central Government under Sub-section (1) of Section 148 of the Companies Act 2013and are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. We have however not made a detailed examination of the records witha view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given o us the Company hasbeen regular in depositing undisputed statutory dues including Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Duty of Customs Duty of ExciseValue Added Tax Cess and any other Statutory Dues to the appropriate authorities. Inrespect of undisputed Statutory dues payable in respect of above which are outstanding asat 31st March 2020 for a period of more than six months from the date they became payableis given below:
|Nature of dues ||Amount (Rs. in Lakhs) |
|Advance Licensing ||Nil |
(b) According to the information and explanations given to us there are no dues ofincome tax service tax duty of customs duty of excise value added tax which have notbeen deposited on account of any dispute. In respect of sales tax which are pendingpayment on account of dispute the information of which is given below:
|Name of the Statute || |
Amount (Rs. in lakhs)
Period to which the dues belong
Forum where the dispute is pending
|Demand ||Paid/ adjusted against refunds |
|CST (other than SVTM) ||212.21 ||84.90 ||2005-06 2007-08 2008-09 2009-10 2013-14 ||ADC - TNVLY Dy Commr. (Appeal) |
|CST (SVTM) ||795.54 ||- ||2018 ||Commercial Tax Officer |
|VAT ||690.02 ||319.92 ||2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 ||Addl. Commissioner ADC-TNVLY |
|TNGST ||41.78 ||28.31 ||2018 ||Appellate Commissioner |
|Labour cases Pending ||18.14 || ||Different dates ||Cases pertain to accident compensation / Bonus / ESI Benefit/ Disciplinary cases |
(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of dues to financial institutions or banks or Government. Thecompany has not issued any debenture.
(ix) The Company did not raise any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the year. The term loans taken during theyear are applied for the purposes for which the term loans were obtained.
(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its Officers or employees are reported during the year.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the company the company has paid or provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Companies Act.
(xii) The Company not being a Nidhi Company the requirements of paragraph 3(xii) of theorder is not applicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the transactions with the related parties arein compliance with Sections 177 and 188 of Companies Act
2013 where applicable and the details of such transactions have been disclosed in theFinancial Statements as required by the applicable Accounting Standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year.
(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 any noncashtransactions with Directors or persons connected with him.
(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
|Place ||Madurai ||For Ganesh Prasad Chartered Accountants Firm Registration No.000872S S. Natanagopal Partner Membership No.022841 UDIN: 20022841AAAABH4093 |
|Date ||24th June 2020 || |