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Samtex Fashions Ltd.

BSE: 521206 Sector: Industrials
NSE: N.A. ISIN Code: INE931D01020
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NSE 05:30 | 01 Jan Samtex Fashions Ltd
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VOLUME 14940
52-Week high 1.89
52-Week low 0.49
P/E
Mkt Cap.(Rs cr) 4
Buy Price 0.49
Buy Qty 940.00
Sell Price 0.49
Sell Qty 3120.00
OPEN 0.49
CLOSE 0.50
VOLUME 14940
52-Week high 1.89
52-Week low 0.49
P/E
Mkt Cap.(Rs cr) 4
Buy Price 0.49
Buy Qty 940.00
Sell Price 0.49
Sell Qty 3120.00

Samtex Fashions Ltd. (SAMTEXFASHION) - Auditors Report

Company auditors report

TO THE MEMBERS OF SAMTEX FASHIONS LIMITED

Report on Audit of the Financial Statements Opinion

We have audited the accompanying standalone financial statements of SAMTEX FASHIONSLIMITED which comprise the Balance Sheet as at 31st March 2019 the Statement of Profitand Loss (including other comprehensive income) the Statement of Changes in Equity andthe Cash Flow Statement for the year then ended and a summary of the significantaccounting 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 (subject tothe matters of emphasis mentioned below) in conformity with the Ind AS and otheraccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2019 and its Profit/loss total comprehensive income/ lossits cash flows and the changes in equity for the year ended on that date.

Basis Of 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 the provisions of the Companies Act 2013 and the Rulesthereunder and we have ful_lled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

1. The company has ceased its business operations at NSEZ plant during the FY 2017-18and shifted its premises at NSEZ. However the company has shifted its manufacturingactivities to a new leased premises outside NSEZ to D-100 Phase-II Hosiery ComplexNoida Gautam Budhh Nagar UP- 201305 and The Company had carried on manufacturingactivities on job work basis during the year and upto since 21st March 2019 andthereafter the company had vacated the existing manufacturing premises at D-100 Phase-II Hosiery Complex Noida Gautam Budhh Nagar UP- 201305 and shifted to Plot no 163Udyog Vihar Greater Noida UP- 201308 and no manufacturing activity is being carried onpresently.

2. The company had already given a corporate guarantee for an amount of Rs 807.46crores against secured loans taken by its wholly owned subsidiary namely M/s SSAInternational Limited which has been classified as non performing assets by the banks.The company has also received the notice u/s 13(2) of the SARFAESI Act 2002 fromconsortium of banks for revocation of its corporate guarantee. The company has alsoreceived a notice from IDBI Bank Ltd as to why the company along with its subsidiary SSAInternational Ltd ( Main Borrower) and others should not be declared as willfuldefaulters.

3. Balance of unsecured loans sundry creditors debtors and advances are subject toconfirmation and consequential effect if any on the financial statements remainsuncertain. The trade receivables of the company could not be verified as the confirmationof balances have not been provided and made available to us. Trade receivables amountingto Rs 693.31 which are long overdue and not provided for. We are unable to form an opinionon the uncertainty regarding the collection of these long outstanding and otherreceivables.

4. We have not been provided with sufficient appropriate audit evidence relating tophysical verification of fixed assets and inventory related reconciliation with the booksof account. Pending completion of such verification/ reconciliation we are unable tocomment on the possible impact it any arising out of the said matters.

5. The company is not regular in payments of undisputed statutory dues towards PF TDSduring the year.

6. We have observed that Internal Audit of the company has been undertaken by a firm ofIndependent Chartered Accountants however no such report has been provided to us.

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 than the 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 Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and our auditor's report thereon. Our opinion on the financial statements doesnot cover the other information and we do not express any form of assurance conclusionthereon. In connection with our audit of the financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with governance for the financialstatements

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. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate implementation and maintenance of 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 statement that givea true and fair view and are free from material misstatement whether due to fraud orerror. 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. Those Board of Directors are also responsible for overseeing thecompany's financial reporting process.

Auditor's Responsibilities for the Audit of financial statement

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 weexercise professional judgment and maintain professional scepticism throughout the audit.We also:

Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has internal financial controls with reference to Financial Statements in placeand the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation. Materiality is themagnitude of misstatements in the financial statements that individually or in aggregatemakes it probable that the economic decisions of a reasonably knowledgeable user of thefinancial statements may be influenced. We consider quantitative materiality andqualitative factors in (i) planning the scope of our audit work and in evaluating theresults of our work; and (ii) to evaluate the effect of any identified misstatements inthe financial statements. We communicate with those charged with governance regardingamong other matters the planned scope and timing of the audit and significant auditfindings including any significant deficiencies in internal control that we identifyduring our audit. 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 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 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 A a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. As required by Section 143(3) of the Act based on our audit and on theconsideration of the reports of the branch auditors and other auditors on the separatefinancial statements/ financial information of the branches and joint operations referredto in the Other Matters paragraph above we report to the extent applicable 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 of the aforesaidstandalone Ind AS financial statements.

b) In our opinion proper books of account as required by law relating to preparationof the aforesaid standalone Ind AS financial statements have been kept so far as itappears from our examination of those books.

c) The standalone Balance Sheet the standalone Statement of Profit and Loss thestandalone Statement of Changes in Equity and the standalone Statement of Cash Flow dealtwith by this Report are in agreement with the books of account maintained for the purposeof preparation of the standalone Ind AS financial statements.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under Section 133 of the Act.

e) On the basis of the written representations received from the directors of theCompany as on 31 March 2019 and taken on record by the Board of Directors of respectivecompanies none of the directors of the Group companies incorporated in India isdisqualified 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 financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses a qualified / adverseopinion on the operating effectiveness of the Company's internal financial controls overfinancial reporting.

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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements refer note no. 24(B).

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.

3. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

FOR KAPIL KUMAR & CO
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO: 006241N
Sd/-
CHIRAG AGGARWAL
DATE : 30/05/2019 (PARTNER)
PLACE : NEW DELHI MEMBERSHIP NUMBER: 523052

ANNEXURE A TO THE INDEPENDENT AUDITORS' REPORT

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2019 we reportthat:

(i) a) The Company has not updated its records showing full particulars includingquantitative details and situation of fixed assets.

b) As explained to us the fixed assets have been physically verified by the managementduring the year. As informed to us there is regular program which has been carried outduring the year. However we are unable to comment on any difference in physicalverification and books as we have not been provided with sufficient appropriate auditevidence relating to physical verification of fixed assets and fixed assets register ispending to be updated.

c) According to the information and explanations given to us and on the basis of ourexamination of the records of the company the company does not own any immovableproperty.

(ii) According to the information and explanations given to us the inventory has beenphysically verified during the year by the management but stock records were underupdation. Accordingly they were not produced before us for verification and we have reliedupon the information provided to us by the management.

Further as explained to us discrepancies noticed on physical verification were notsignificant and have been properly dealt within the books of accounts.

(iii) As explained to us the Company has not granted loans to bodies corporate coveredin the register maintained under section 189 of the Companies Act 2013. Accordinglyparagraph 3(iii)(b) &(c) of the Order is not applicable to the Company in respect ofrepayment of the principal amount. However the company has advanced loan to wholly ownedsubsidiary M/s Arlin Foods Ltd and the outstanding balance of the said loan as on31.03.2019 is Rs 16.79 lacs. The said loan is unsecured and free of interest and scheduleof repayment of the principal has not been stipulated.

(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of section 185 & 186 of the act in respect ofinvestments guarantees & securities provided by it.

(v) In our opinion & according to the information and explanations given to us thecompany has not accepted any deposits from the public within the meaning of provisions ofSections 73 to 76 of the Act or any other relevant provisions of the Act & the rulesframed thereunder.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the manufacture of Company'sproducts and generation of electrical energy and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same with a view to determine whether they are accurate orcomplete.

(vii) a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues have not been regularly deposited during the year by the Companywith the appropriate authorities. As explained to us the Company did not have any dues onaccount of employees' state insurance and duty of excise.

According to the information and explanations given to us undisputed amounts payablein respect of provident fund income tax sales tax wealth tax service tax duty ofcustoms value added tax cess and other material statutory dues were in arrears as at 31March 2019 for a period of more than six months from the date they became payable asdetailed below

Sr. No Name of Statute Nature of the Dues Amount Period Due Date Date of payment
1 Employees' Provident Fund and Miscellaneous Provisions Act 1952 Monthly Provident fund 246126 01/04/2018 to 30/09/2018 15th of following month 30/05/2019
2 Income Tax Act 1961 TDS 164277 01/04/2018 to 30/09/2018 7th of following month Not yet paid.
3 Income Tax Act 1961 TDS 56200 01/04/2018 to 31/05/2018 7th of following month 18/02/2019
4 Income Tax Act 1961 TDS 240000 01/06/2018 to 30/09/2018 7th of following month Not yet paid.

Further TDS payable from period 01/10/2018 to 31/03/2019 was outstanding for paymenttill date.

b) According to information and explanation given to us the disputed statutory duesi.e Income Tax aggregating to Rs 166.29 lakhs that have not been provided for in the booksof accounts on account of matters pending before concerned appellate authorities and ITATDelhi Bench. As per the data available online Income Tax account of the company there arecertain liabilities to the tune of Rs 46.61 lacs in total related to earlier years havebeen uploaded by the department relating to certain discrepancies and a sum amounting toRs 15.02 lacs related to TDS defaults related to earlier years have been uploaded onTRACES website. The said demands have been claimed to be disputed by the company and thecompany is in process of _ling necessary rectifications u/s 154 of the income tax act withthe income tax department.

(viii) Based on our audit procedures and according to the information and theexplanations given to us we are of the opinion that the company has not defaulted inrepayment of dues to financial institutions banks Government or to debenture holders.

(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not raised moneys by way of initial public offeror further public offer including debt instruments and term Loans during the year.

(x) In our opinion and according to the information and explanations given to us nomaterial fraud on the company by its officers or employees has been noticed or reportedduring the year.

(xi) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act; 2013.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) In our opinion and according to the information and explanations given to us andon the basis of examination of books and records of the company carried out by us all thetransactions with the related parties are in compliance with provisions of section 177 and188 of the act where applicable. The details there on has been disclosed in the financialstatements as required under Accounting Standards (AS-18- Related Party Disclosures).

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe 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 non-cashtransactions with directors or persons connected with him. Accordingly the provisions ofclause 3 (xv) of the Order are not applicable to the Company.

(xvi) According to the information and explanations given to us the provisions ofsection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

FOR KAPIL KUMAR & CO
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO: 006241N
Sd/-
CHIRAG AGGARWAL
DATE : 30/05/2019 (PARTNER)
PLACE : NEW DELHI MEMBERSHIP NUMBER: 523052

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")

We have audited the internal financial controls over financial reporting of SamtexFashions Limited ("the Company") as of 31 March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting

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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.

Opinion

In our opinion and according to information and explanations given to us the companydoes not have an adequate internal financial control system commensurate with the size ofcompany and nature of its business.

FOR KAPIL KUMAR & CO
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO: 006241N
Sd/-
CHIRAG AGGARWAL
DATE : 30/05/2019 (PARTNER)
PLACE : NEW DELHI MEMBERSHIP NUMBER: 523052