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Ruby Mills Ltd.

BSE: 503169 Sector: Industrials
NSE: RUBYMILLS ISIN Code: INE301D01026
BSE 00:00 | 24 Sep 281.90 -7.10
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NSE 00:00 | 24 Sep 282.05 -8.20
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OPEN 291.95
PREVIOUS CLOSE 289.00
VOLUME 22597
52-Week high 349.30
52-Week low 147.00
P/E 17.53
Mkt Cap.(Rs cr) 471
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 291.95
CLOSE 289.00
VOLUME 22597
52-Week high 349.30
52-Week low 147.00
P/E 17.53
Mkt Cap.(Rs cr) 471
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ruby Mills Ltd. (RUBYMILLS) - Auditors Report

Company auditors report

To the members of THE RUBY MILLS LIMITED

Report on the audit of the Financial Statements Opinion

We have audited the accompanying financial statements of The Ruby MillsLimited ("the Company") which comprise the balance sheet as at 31stMarch 2020 the statement of Profit and Loss (including Other comprehensive Income)statement of changes in equity and statement of cash flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "FinancialStatements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under Section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and the accounting principles generally accepted in Indiaof the state of affairs of the Company (financial position) as at 31st March2020 the profit and total Comprehensive Income (financial performance) changes in equityand 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) specified under section 143(10) of the Act except as mentioned in Emphasis ofMatters para below. Our responsibilities under those Standards are further described inthe 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 together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Emphasis of Matter

On account of our inability to conduct a physical verification as on 31stMarch 2020 owing to the lockdown restrictions imposed by the Government as well asabsence of the same procedures undertaken by the company we have relied on details asprovided by the management and related adjustments to confirm the existence and conditionof inventory at the year-end;

Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.

Sr. Key Audit Matters No. How the matter was addressed in our audit
1. Information Technology (IT) Systems and controls Audit procedures followed by us include:
- Assessment of the design and implementation of the Company's control over the IT system especially those related to financial reporting;
The Company uses different IT systems for different functions. These systems are not very user-friendly are not fully integrated and require manual intervention to determine the final figures for financial reporting.
- Testing / walk through of manual control implemented by the management to overcome the weakness in the IT system;
We identified IT system and controls as a KAM since:
- In audit plan we place significant reliance on the IT system and controls which impacts account balances reflected in the Financial statements (FS) of the Company - Assessment of management's remedial plan in form of manual control to address our concern;
- Extending scope of our substantive audit procedures wherever manual controls are being used to integrate the various IT systems which affect financial reporting.
- Management's remedial plan in form of manual intervention is prone to risk of misstatement on account of complexity of the business functions.
2. Development agreement Audit procedures followed by us include:
In an earlier year the Company entered into Development Agreement ("the DA") with a Developer whereby the Company granted the development rights to develop approximate 36000 square meters of constructed area ("the Development Rights") on 12204 square meters out of its Freehold Land At Dadar. - Understanding of the arrangement entered for the Development of the property;
- Understanding of various terms of the DA and amendments thereto;
- Co-relation of terms of the agreement with the entries made in the books of accounts by the Company for accounting of Income and amounts receivable from the Developer;
We identified DA as a KAM since: - Review of procedures followed / steps taken by the Company / Developer for obtaining approval from the authorities;
- As per the DA cost of construction incurred by the Company for the development of property covered under the DA agreement is reimbursed by the Developer. The Company has incurred huge amount of expenses / taken loan for the Construction of the property which has resulted in the significant amount receivable from the Developer;
- Review of legal opinion taken by the Company and decision taken on that basis for any dispute arises on account of DA;
- Obtaining of balance confirmation from the Developer at each period end / year end;
- Assessment of recoverability of outstanding amount from developer on the basis of:
- The amount receivable from the developer represents a major portion of the total assets of the Company;
o valuation report obtained by the Company for the vacant property covered by the DA;
- Recoverability of the said amount depends on obtaining of the various approval from competent authorities timeline of which are not within the control of the Company / Developer.
o Sharing arrangement entered between the Company and the Developer in the DA for sharing of gross revenue arises from the property covered under DA.
Refer Note No. 12 and 21 to the accompanying financial statements.
3. Evaluation of uncertain tax and other litigations Audit procedures followed by us include: - Obtained details of various pending litigations and outstanding demands for the year ended March 31 2020 from management;
The Company has various pending litigations which include litigation on account of Income Tax Indirect Taxes development activities FEMA etc. the outcome of which is uncertain and requires significant judgement.
- Read and analysed orders key correspondence external legal opinions/ consultation by management for key legal disputes;
Refer Note No. 34 and 53(a) to the accompanying financial statements
- Discussed with appropriate senior management and evaluate management's underlying key assumptions in estimating the likely demand/ possible outcome of the various litigations.

Information Other than the Financial Statements and Auditor'sReport Thereon

The Company's management and Board of Directors are responsible for theother information. The other information comprises the information included in theManagement Discussion and Analysis Director's Report including Annexures to Director'sReport Corporate Governance Report but does not include the financial statements and ourauditor's report thereon. The Management Discussion and Analysis Director's Reportincluding Annexures to Director's Report and Corporate Governance Report is expected tobe made available to us after the date of this auditor's report.

Our opinion on the financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.

Responsibilities of Management and Those Charged with Governance forthe Financial Statements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these financial statements that give a true and fair view of the financialposition financial performancechanges in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless Board of Directors either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing thecompany's financial reporting process. Auditor's Responsibilities for the Audit ofthe Financial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial control relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Companies Act 2013 we are also responsiblefor expressing our opinion on whether the company has adequate internal financial controlswith reference to financial statements in place and the operating effectiveness of suchcontrols.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 of the Companies Act 2013 we give in the 'Annexure A' a statementon the matters specified 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of our auditexcept for the matters mentioned in the Emphasis of Matter paragraph.

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (includingother comprehensive income) the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from thedirectors as on 31st March 2020 taken on record by the Board of Directorsnone of the directors is disqualified as on 31st March 2020 from beingappointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controlswith reference to financial statements of the Company and the operating effectiveness ofsuch controls refer to our separate Report in "Annexure B". Our reportexpresses an unmodified opinion on the adequacy and operating effectiveness of theCompany's internal financial controls with reference to financial statements.

(g) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its financial statements - Refer Note 53(a) to the financialstatements.

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses as requiredunder the applicable law or accounting standards.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.

3. With respect to the matter to be included in the Auditors' Reportunder Section 197(16) of the Act:

In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.

For C N K & Associates LLP
Chartered Accountants
Firm Registration No. 101961W/W-100036
Himanshu Kishnadwala
Partner
Membership No.: 37391
UDIN: 20037391AAAAED4468
Mumbai: 31st July 2020

ANNEXURE A TO INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 under 'Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report of even date to the members of The RubyMills Limited ("the Company") on the financial statements for the year ended 31stMarch 2020]

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and

situation of property plant and equipment;

(b) All the fixed assets have been physically verified by themanagement once in three years which in our opinion provides for physical verificationof all the fixed assets at reasonable intervals. Pursuant to the programme fixed assetshave been physically verified by the management during the year and no materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company and the confirmations from thebanks provided to us we report that the title deeds of immovable properties which arefreehold are held in the name of the Company as at the balance sheet date except thefollowing where the documents are lodged with the relevant bank who have communicated thatthe same are not traceable at their end.

Particulars Number of Cases Gross Block (A In Lakhs) Net Block (A In Lakhs)
Freehold Land 1 31.80 31.80

(ii) As per the information and explanations given to us and readalong-with our comments in Emphasis of Matter paragraph in the main report physicalverification of inventories other than stock lying with third parties has been conductedby the management on half yearly basis. In respect of inventory lying with third partiestheses have been substantially been confirmed by them. In our opinion the frequency ofsuch verification is reasonable and no material discrepancies were noticed on suchphysical verification;.

(iii) According to the information and explanation given to us theCompany has not granted any loans secured or unsecured to companies firms and limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act. Accordingly paragraphs 3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Orderare not applicable;

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of Section 185 and Section 186of the Act with respect to grant of loans making investments providing guarantees andsecurities as applicable;

(v) In our opinion and according to the information and explanationsgiven to us the Company has not accepted any deposits from public within the provisionsof Sections 73 to 76 of the Act read with The Companies (Acceptance of Deposits) Rules2014 and other relevant provisions of the Act and therefore the provision of the clause3(v) of the Order are not applicable to the Company;

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as specified by theCentral Government under section 148(1) of the Act in respect of the Company's product andare of the opinion that prima-facie the prescribed account and records have been made andmaintained. We have not however made a detailed examination of the same with a view todetermining whether they are accurate or complete;

(vii) (a) According to the information and explanations given to us andon the basis of the books and records

examined by us the Company has been regular in depositing undisputedstatutory dues including Provident fund Employees' State Insurance Income-tax Goods andService tax duty of Customs and any other material statutory dues applicable to it withappropriate authorities except for the dues of Provident fund Employee's Insurance forthe month of March 2020;

There were no undisputed amounts payable in respect of Provident fundEmployees' State Insurance Income-tax Goods and Service tax duty of Customs and anyother material statutory dues applicable to it were outstanding as on the last day ofthe financial year for a period of more than six months from the date they becamepayable;

(b) According to the information and explanation given to us the duesoutstanding with respect to Income- tax Sales-tax Service tax Goods and Service taxduty of Customs duty of Excise Value Added tax have not been deposited on account of anydispute are as under;

Name of the Statute Nature of dues Forum where dispute is pending Period to which the amount is relates Amount (In A Lakhs)
The Income Tax Act 1961 Income Tax and Interest Commissioner of Income Tax (Appeal) Assessment Year 2007-08 2008-09 2014-15 2015-16 2016-17 and 2017-18 889.63
Finance Act1994 (Service Tax) Service Tax Principal Commissioner CGST & Excise Financial Year 2011-12 260.08
The Central Excise Act 1944 Excise Duty Assistant Commissioner of Central Excise Financial Year 1st April 1993 to 31st October 1993 2001-01 and 2001-02 9.76
Customs Act 1962 Custom Duty Commissioner of Appeals (Customs) Financial Year 2012-13 16.21

(viii) According to the information and explanations given to us asalso on the basis of the books of accounts and records examined by us the Company has notdefaulted in the repayment of loans or borrowing to financial institutions and banks.However the company has opted for a moratorium period for repayment of certain term loansin accordance with circular dated 27th March 2020 issued by RBI on COVID-19Regulatory Package. The Company does not have any loans and borrowings from government andhas not issued any debentures;

(ix) The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) during the year. Accordinglyparagraph 3(ix) of the Order in respect thereof is not applicable. Money raised by way ofterm loans during the year have been applied for the purpose for which those were raised;

(x) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us no instances of fraudby the Company or on the Company by its officers or employees have been noticed orreported during the year;

(xi) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has paid / providedfor managerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V to the Act;

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly paragraph 3(xii) of theOrder is not applicable;

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with the provisions of Sections 177 and 188 of the Act whereapplicable and the details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standard;

(xiv) According to the information and explanations given to us andbased on our examination of the records the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable;

(xv) According to the information and explanations given to us andbased on our examination of the records the Company has not entered during the year intonon-cash transactions with directors or persons connected with them. Accordinglyparagraph 3(xv) of the Order is not applicable;

(xvi) The Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934. Accordingly paragraph 3(xvi) of the Order is notapplicable.

For C N K & Associates LLP
Chartered Accountants
Firm Registration No.101961W/W-100036
Himanshu Kishnadwala
Partner
Membership No.: 37391
UDIN: 20037391AAAAED4468
Mumbai: 31st July 2020

ANNEXURE B TO INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2(f) under 'Report on Other Legal andRegulatory Requirements' in the Independent Auditor's Report of even date to the membersof The Ruby Mills Limited on the financial statements for the year ended 31stMarch 2020]

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference tofinancial statements of The Ruby Mills Limited ("the Company") as of 31stMarch 2020 in conjunction with our audit of the Ind AS 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 andmaintaining internal financial controls based on the internal controls with referencefinancial statements 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 ('ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to Company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note on Audit of Internal Financial Controlsover Financial Reporting (the "Guidance Note") and the Standards on Auditingspecified under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both issued by the ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls withreference to financial statements were established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to financial statements andtheir operating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weakness existsand testing and evaluating the design and operating effectiveness of internal controlbased on the assessed risk. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to financial statements.

Meaning of Internal Financial Controls with reference to financialstatements

A company's internal financial control with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to financial statements includes those policies andprocedures that:

1. pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

2. provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

3. provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference tofinancial statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as at31st March 2020 based on the internal control with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the ICAI.

For C N K & Associates LLP
Chartered Accountants
Firm Registration No. 101961W/W-100036
HimanshuKishnadwala
Partner
Membership No.: 37391
UDIN: 20037391AAAAED4468
Mumbai: 31st July 2020

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