The Members of SALONA COTSPIN LIMITED Coimbatore ("the company")
Report on the Audit of the Financial Statements Opinion
We have audited the accompanying financial statements of Salona Cotspin Limited("the Company") which comprise the Balance Sheet as at 31st March2019 and the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of changes in Equity for the year then ended andnotes to the financial statements and a summary of significant accounting policies andother explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the company as at 31st March 2019 and its profit totalcomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis of Opinion
We conducted our audit of the Financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility 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 (ICAI) together with the ethical requirements that are relevant to our audit of theFinancial Statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the FinancialStatements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
Information other that Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual Report Board's ReportReport on Corporate Governance but does not include the Financial Statements and ourauditor's report thereon.
Our Opinion on the Financial Statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the Financial Statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the Financial Statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the accounting Standards specified undersection 133 of the Act as amended and other accounting principles generally accepted inIndia.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
That Board of Directors is also responsible for overseeing the Company's financialreporting process. Auditor's Responsibilities 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 and auditor's report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exits. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also;
Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is 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 on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulations 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 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 Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
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 accounts and 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 Other comprehensive IncomeStatement of changes in equity and the Statement of Cash Flow dealt with by this Reportare in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(g) With respect to other matter to be included in the Auditor report in accordancewith the requirements of sec 197(16) of the act as amended.
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company did not have any pending litigations which would impact its financialposition
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the investorEducation and Protection Fund by the Company.
| ||For GOPAL AIYER AND SUBRAMANIAN |
| ||Chartered Accountants |
| ||(FRN: 000960S) |
|Place : Coimbatore ||CA.R.MAHADEVAN |
|Dated : 27th May 2019 ||Partner (M No.027497) |
ANNEXURE A' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legaland RegulatoryRequirements' section of our report to the Members of SALONA COTSPIN LIMITED of even date)
i. In respect of the Company's fixed assets :
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings which arefree hold are held in the name of the Company as at the balance sheet date.
ii. In respect of Inventory:
As explained to us inventories have been physically verified by the management atregular intervals during the year. In our opinion the frequency of such verification isreasonable and no discrepancies were noticed at the time of verification.
iii. In respect of Loans and Advances granted:
According to the information and explanations given to us the Company has not grantedunsecured loans to any corporate covered in the register maintained under section 189 ofthe Companies Act 2013.
iv. In respect of Loans and investments:
In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
v. In respect of Deposits accepted:
The company has not accepted deposits from parties listed in the register maintainedpursuant to Section 189 of the Companies Act 2013 but has accepted inter corporatedeposits from certain parties. These deposits are not covered by the provisions of Section73 to 76 or any other relevant provisions of the Companies Act 2013 or the rules madethere under. Hence the comments to be made on compliance of provisions or rules or otherdirectives does not arise.
vi. In respective of Cost records:
The Central Government has prescribed maintenance of Cost Records under Section148(1)of the Companies Act 2013. We have broadly reviewed the accounts and cost records of theCompany maintained in pursuant to Companies (Cost Records and Audit) Rules 2014 as amendedby the Central Government under subsection (1) of Section 148 of Companies Act 2013 andare of the opinion that prima facie the prescribed accounts and cost records have beenmade and maintained. We have not however made a detailed examination of the cost recordswith a view to determine whether they are accurate or complete.
vii. In respect of statutory dues:
(a) According to the information and explanations given to us the company hasgenerally been regular in depositing un disputed statutory dues including Provident FundEmployees' State Insurance Income Tax Sales Tax Service tax Goods and Service TaxValue Added Tax Customs Duty Excise Duty Cess and other material statutory duesapplicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund Employee'sState Insurance Income tax Sales Tax Service Tax Value Added Tax Goods and ServiceTax Customs Duty Excise Duty Cess and other material statutory dues in arrears as atMarch 312019 for a period of more than six months from the date they became payable.
viii. In respect of default in repayment of loans:
Based on our audit procedures and according to the information and explanations givento us we are of the opinion that the company has not defaulted in repayment of dues tofinancial institutions banks or debenture holders.
ix. In respect of Application of Funds:
The company has not raised any money by way of Initial Public Offer / Further PublicOffer during the Year. In our opinion the moneys raised by way of Term Loans during theyear were applied for the purpose for which those are raised.
x. In respect of Frauds:
In our opinion and according to the information and explanations given to us no fraudby the Company and no fraud on the Company by its officers / employees has been noticed orreported during the year.
xi. In respect of Managerial Remuneration:
The Managerial Remuneration has been paid / provided in accordance with the requisiteapprovals mandated by Section 197 read with Schedule V to the Companies Act 2013.
xii. In respect of Nidhi Companies:
The Company is not a Nidhi Company and therefore reporting as per Para 3 Clause 12 ofthe Order is not applicable to the Company.
xiii. In respective of related party transactions:
In our opinion all the related party transactions entered into by the Company duringthe year are in compliance with the provisions of Section 177 and 188 of the Act and thedetails there of have been disclosed in the financial Statements as required by theaccounting Standards.
xiv. In respect of preferential allotment / private placement:
The Company has not made any preferential allotment / private placement of sharesduring the year and therefore Para 3 Clause 14 of the Order is not applicable to theCompany.
xv. In respect of non-cash transactions with directors:
During the year the Company has not entered into any non-cash transactions withdirectors/persons connected with him as stipulated u/s.192 of the act. Hence reporting asper Para 3 of Clause 15 of the Order is not applicable to the Company.
xvi. In respect of registration with RBI:
In our opinion and based on our verification we report that the Company is notrequired to be registered u/s.45-IA of the Reserve Bank of India Act 1934.
| ||For GOPAL AIYER AND SUBRAMANIAN |
| ||Chartered Accountants |
| ||(Firm registration number: 000960S) |
| ||CA.R.MAHADEVAN |
|Place: Coimbatore ||Partner |
|Dated : 27th May 2019 ||(Membership No.027497) |
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act2013("the Act" )
We have audited the internal financial controls over financial reporting of overfinancial reporting of SALONA COTSPIN LIMITED ("the Company") as of March 312019 in conjunction with our audit of the financial statements of the Company for the yearended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India .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 Act2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over the financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to 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 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 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 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 authorities of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 the 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 the changes in conditions orthat the 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 2019 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 GOPAL AIYER AND SUBRAMANIAN |
| ||Chartered Accountants |
| ||(Firm registration number: 000960S) |
| ||CA.R.MAHADEVAN |
| ||Partner |
| ||(Membership No.027497) |
|Place: Coimbatore || |
|Dated : 27th May 2019 || |
CORPORATE GOVERNANCE- NON MANDATORY REQUIREMENTS - EXTENT ADOPTED
|1. The Board - A Non-executive Chairman may be entitled to maintain a Chairman's Office at the Company's expense and also allowed reimbursement of expenses Incurred In performance of his duties ||Does not arise as the Chairman of the Board is an Executive Chairman |
|Independent Directors may have tenure not exceeding in aggregate a period of nine years on the Board of a Company ||Tenure of Five years has been fixed for independent Directors. |
|The Company may ensure that the person who is being appointed as an independent director has the requisite qualification and experience which would be of use to the Company and which in the opinion of the Company would enable him to contribute effectively to the Company In his capacity as an independent director. ||This is ensured. |
|2 Remuneration Committee ||Please refer to Serial No.4 of Report on Corporate Governance |
|3. Shareholders Rights - The half-yearly declaration of financial performance including summary of the significant events in last six months may be sent to each household of shareholders ||As the Company's half yearly results are published in leading English newspapers having circulation all over India and in Tamil newspapers and also in the SEBI website the same ate not sent to the shareholders of the Company. There is no publication of second half-yearly result as the annual results are approved by the Board and then published in the newspapers and also communicated to the shareholders through the Annual Report. |
|4. Audit qualifications - Company may move towards a regime of unqualified financial statements ||Nil |
|5. Training of Board Members - The Company may train its Board Members in the business model of the Company as well as the risk profile of the business parameters of the Company their responsibilities as directors and the best ways to discharge them ||At present the Company does not have any such training program for Directors. |
|6. Mechanism for evaluating non-executiveBoard - Members -The performance evaluation of non-executive Directors could be done by a Peer Group comprising the entire Board of Directors excluding the Director being evaluated; and Peer Group evaluation could be the mechanism to determine whether to extend / continue the terms of appointment of non -executive directors ||At present the Company does not have any such mechanism for evaluating the performance of Non- Executive Board Members. |
|7. Whistle Blower Policy ||The Company has a whistle Blower Policy. |
| ||BY ORDER OF THE BOARD |
| ||SHYAMLAL AGARWALA |
|Place : COIMBATORE ||Chairman. |
|Date :27th May 2019 ||DIN: 00003055 |