TO THE MEMBERS OF: SANTOSH INDUSTRIES LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of SANTOSHINDUSTRIES LIMITED (the company") which comprises the Balance Sheet as at31st March 2017 the Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance 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 read with Rule 7 of theCompanies (Accounts) Rules 2014 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 these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing 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 standalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of theCompany as at 31 March 2017 and its profit and its cash flows for the year ended on thatdate.
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 in of India in terms of sub-section (I I) of section 143of the Act we give in the Annexure A a statement on the matters specified inthe paragraph 3 and 4 of the order.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
(c) The balance sheet the statement of profit and loss 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 31March 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31 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 B; and
(g) With respect to (he other matters to be included in the Auditor's Report inaccordance with Rule
II of the Companies (Audit and Auditors) Rules 2014 in our opinion and to the best ofour information and according to the explanations given to us;
i The Company does not have any pending litigations which would impact its financialposition.
ii The Company did not have any long-term contracts including derivativescontracts for which there were any material foreseeable losses.
iii There are no amount required to be transferred to the Investor Education andProtection Fund by the Company.
iv The Company had provided requisite disclosures in its financial statements as toholdings as well as dealings in Specified Bank Notes during the period from 8thNovember 2016 to 30th December. 2016 and these are in accordance with thebooks of accounts maintained by the company.
To the Members of SANTOSH INDUSTRIES LIMITED Annexure - A to the Auditors'Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2017 we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details
and situation of its fixed assets.
(b) The fixed assets have been physically verified by the management at reasonableintervals and no material discrepancies were noticed on such verification.
(c) According to t he information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesincluded in Non-Current Investments are held in the name of the Company
(ii) As explained to us physical verification of tire inventories (held Physically andDemat Form) have been conducted at reasonable intervals by the management which in ouropinion is reasonable having regard to the size of the Company and nature of itsinventories. No material discrepancies were noticed on such physical verification.
(iii) The Company has granted loans to bodies corporate covered in the registermaintained under section 189 of the Companies Act. 2013 (the Act').
a) In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the bodies corporate listed in the register maintained undersection 189 of the Act were not prima facie prejudicial to the interest of the Company.
b) In the case of the loans granted to the bodies corporate listed in the registermaintained under section 189 of the Act the borrowers have been regular in the payment ofthe principal and interest as stipulated.
c) There are no overdue amounts in respect of the loan granted to a body corporatelisted in the register maintained under section 189 of the Act.
(tv) The Company being NBFC and charging Imerest at a rate not less than the bank ratedeclared by the Reserve Bank of India hence provisions of Section 185 & 186 of theCompanies Act 2013 is not applicable Accordingly the provisions of clause (iv) ofparagraph 3 of the Order are not applicable to the Company.
(v) In our opinion and according to the information given to us the Company has notaccepted any deposits from public within the meaning of the directives issued by theReserve Bank of India and the provisions of sections 73 to 76 of the Act and the rulesframed there under.
(vi) In our opinion maintenance of cost records has not been prescribed by the CentralGovernment under subsection (j) of Section 148 of the Act.
(vii) (a) The Company is generally regular in depositing undisputed statutory duesincluding Provident Fund
Employees' State Insurance Income-tax Sales-tax Service tax duty of Custom duty ofExcise? value added tax cess and other material statutory dues with theappropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of the aforesaid dues were outstanding as at March31 st 2017 for a period of more than six months from the date they became payable
(b) According to the information and explanations given to us there are no dues ofIncome Tax/ Sales Tax/ Service Tax / duty of Custom/ duty of Excise value added tax orcess which have not been deposited on account of any dispute.
(viii) The Company has not defaulted in the repayment of dues to any financialinstitutions or banks as at the balance sheet date.
(ix) The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instrument) or term loans. Accordingly the provisions ofclause (ix) of paragraph 3 of the Order are not applicable to the Company.
(x) According to the information and explanations given to us no fraud by the Companyor on the Company by
its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us and based on ourexamination of the records of
the Company the Company has provided for managerial remuneration in accordance withthe requisite
approvals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company. Accordingly the provisions of clause (xii)of paragraph 3 of the Order are not applicable to the Company.
(xiii) The Company has complied with Section 177 and 188 of Companies Act 2013 for alltransactions with the related parties and the details have been disclosed in the FinancialStatements as required under Accounting Standards - 18 related party disclosuresspecified under section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.Accordingly the provisions of clause (xiv) of paragraph 3 of the Order are not applicableto the Company.
(xv) The Company has not entered into any non-cash transactions with the directors orpersons connected with him during the year under review. Accordingly the provisions ofclause (xv) of paragraph 3 of the Order are not applicable to the Company.
(xvi) According to the information and explanations given to us the company is alreadyregistered under section 45-1A of the Reserve Bank of India Act 1934
TO THE MEMBERS OF: SANTOSH INDUSTRIES LIMITED 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 SantoshIndustries Limited (the Company) as of 31 March 2017 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 ([CAP). 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the Guidance Note) and the Standards on Auditing issued by ICAi and deemedto be prescribed under section 143( 10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and rheir 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^ 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 the Company lias 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 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated In the Outdance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants ofindia.