TO THE MEMBERS OF SANTOSH FINE FAB LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Santosh Fine Fab Limited ('theCompany') which comprise the Balance Sheet as at 31 st March 2017. the statement ofProfit and Loss and the Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.
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 the financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on the financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which arc required to be included in the audit report under theprovisions of the Act and the Rules made thereunder and the Order under section 143 (11)of the Act.
We conducted our audit in accordance with the Standards on Audi ting specified underSection 143( 10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples general ly accepted in India of the state of affairs of the Company as at 31March 2017 and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Actwe 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) ihe balance sheet the statement of profit and loss and the cash flow statementdealt with by this report are in agreement with the books of account;
(d) in our opinion the aforesaid standalone 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 the directors as on 31 stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (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 A". Our report expresses an unmodified opinion onthe adequacy and 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. in our opinionand to the best of our information and according to the explanations given to us;
(i) the Company does not have any pending litigations and therefore no impact ordisclosure in relation to the same has been made in the financial statement;
(ii) the Company does not see any foreseeable losses on long-term contracts as on thebalance sheet date and the Company has not entered into any derivative contractstherefore no provision has been made in relation to the same;
(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
(iv) The Company has provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8 November2016 to 30 December 2016 and these are in accordance with the books of accountsmaintained by the Company .Refer Note 34 to the financial statements
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure "B" a statement on the matters specified in theparagraph 3 and 4 of the Order.
ANNEXURE "A"TOTHE INDEPENDENTAUDITOR'S REPORT
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SantoshFine Fab Limited ("the Company") as of March 312017 in conjunction with ouraudit of the financial statements of the Company for the year ended on 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." 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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 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 judgement 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2017 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audii of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountantsoflndia".
ANNEXURE "B"TOTHE INDEPENDENTAUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'of our report of evendate)
Report on the statement on the matters specified in the paragraph 3 and 4 of theCompanies (Auditor's Report) Order 2016:
(I) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) As per the information and explanations given to us. physical verification of fixedassets has been carried out by the Company and no material discrepancies were noticed onsuch verification. In our opinion the frequency of verification is reasonable havingregard to the size of the Company and nature of its business.
(c) The title deeds of immovable properties were found to be held in the name of thecompany.
(ii) As per the information furnished the inventories have been physically verifiedduring the year by the management. In our opinion having regard to the nature andlocation of stocks the frequency of the physical verification is reasonable and no suchmajor discrepancies found during verification of inventories.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties covered inthe register 1 maintained under section 189 of the Companies Act and thusparagraph 3(iii) of the Order is not applicable.
(iv) According to the information and explanations given to us. the Company had notgranted any loans or provided any guarantees under Sec 185 and neither had any investmentsduring the year and therefore compliance in respect to provisions of Section 185 and 186of the Companies Act 2013 may not be applicable to the Company.
(v) The Company did not accept any deposits during the year and therefore compliancewith the directives issued by the Reserve Bank of India and the provisions of sections 73to 76 or any other relevant provisions of the Companies Act 2013 and the rules framedthereunder may not be applicable to the Company.
(vi) The Central Government has prescribed maintenance of the cost records undersection 148 of the Companies Act 2013 in respect of textile manufacturing activity of thecompany. We have broadly reviewed the books of accounts and records maintained by the'Company in this connection and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have however not made a detailedexamination of the records with a view' to determining 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 the Company has been found to be regular indepositing undisputed statutory dues such as provident fund income tax sales lax dutyof customs and other statutory dues as applicable.
b) According to the records of the Company and information and explanations given tous there are no dues of income tax sales tax service tax customs duly excise dutyvalue added tax which has not been deposited on account of disputes and are pending.
(viii) As per the information and explanations given to us and based on our audit theCompany has not defaulted in repayment of loans or borrowings to financial institutionsbanks and government and dues to debenture holders.
(ix) The Company has not raised any money by way of initial public offer or by furtherpubl ic offer (including debt instruments) during the year. Further in our opinion andaccording to the information and the explanations given to us no any term loan obtainedby company except vehicle loan Rs 18.54 lakhs.
(x) According to the information and explanations given to us no material fraud by oron the Company by its officers or employees has been noticed or reported during the courseof our audit.
(xi) The managerial remuneration has been found to be paid or provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with Clause(d) of section 111 of part II of Schedule V of the Companies Act. 2013.
(xii) The Company is not the Nidhi Company and therefore paragraph 3(xii) of the Orderis not applicable to the Company.
(xiii) In our opinion and according to the information and the explanations given tous the transactions with the related parties were in compliance with Sec 177 and 188 ofthe Companies Act and the details of the same have been disclosed in Note 28 of theFinancial Statements in conformity with Accounting Standard 18.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review undersection 42 of the Companies Act. 2013 and therefore paragraph 3(xiv) of the Order is notapplicable to the Company.
(xv) The Company has not entered into any non cash transactions with the directors orpersons connected with him and therefore paragraph 3(xv) of the Order is not applicable tothe Company.
(xvi) The Company is not required to be registered under section 45-IAof the ReserveBank oflndia Act. 1934 and therefore paragraph 3(xvi) of the Order is not applicable tothe Company.
For Bhuwania & Agrawal Associates
Firm's registration number: 101483 W
N K Agrawal
Membership number: 034659