To the members of sarla performance bers limited
REPORT ON THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Sarla PerformanceFibers Limited (the company) which comprise the balance sheet as at 31 March 2017 thestatement of profit and loss and the cash flow statement for the year then ended and asummary of significant 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 preparation andpresentation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under section 133 of the Act read with rule 7 of the Companies(Accounts) Rules2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the company and for preventing and detecting frauds and other irregularities;selection and applications of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the stand alone financial statements that give a true and fair view andare free from material misstatement whether due to fraud or error.
AUDITOR S RESPONSIBILITY
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 accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions 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 misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on the auditors 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 andpresentation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrols system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company s Directors as well asevaluating the overall presentation of 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 the Companyas at 31st March 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 the Companies (Auditor's Report) Order 2015 ( the Order ) issued bythe Central Government of India in terms of sub-section (11) of section 143 of the Act wegive in the Annexure - A statement on the matters specified in paragraphs 3 and 4of 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 explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit.
b. In our opinion proper books of account as required by law have been kept by thecompany so far as appears from our examination of those books.
c. The balance sheet statement of profit and loss and the cash flow statement dealtwith by this report are 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 written representations received from the directors as on 31 March2017 taken on record by the Board of Directors none of the directors is disqualified ason 31st March 2017 from being appointed as a director in terms of section 164(2) of theCompanies Act 2013.
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 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 explanation given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements- refer note to the financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts includingderivative contracts-refer note to the financial statements
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 standalone financialstatements as to holdings as well as dealings specified Bank notes during the period from08 November 2016 to 30 December 2016 and these are in accordance with the books ofaccounts maintained by the company Refer Note 46 to the standalone financial statements.
Annexure a to the independent auditors' report
The Annexure A referred to in our Independent Auditors Report to the members of theCompany on the Standalone Financial Statements for the year ended 31st March 2017 wereport that: i. a. The company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.
b. The company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.
c. The title deeds of immovable properties are held in the name of Company.
ii. a. The management has conducted physical verification of inventory at reasonableintervals during the year.
b. The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.
c. The company is maintaining proper records of inventory. As explained to us there isno material discrepancy noticed on physical verification of inventory as compared to bookrecords.
iii. The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013.(the Act).
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public covered under section 73 to 76 ofthe companies Act 2013.
vi. We have broadly reviewed the books of account maintained by the company pursuant tothe rules made by the Central Government for the maintenance of cost records under section148 of the Companies Act 2013 and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have not however made a detailedexamination of the same.
vii. a. According to the information and explanation 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 investoreducation and protection fund employees state insurance income tax sales tax servicetax wealth tax duty of customs value added tax cess and other material statutory duesapplicable have generally been regularly deposited during the year by the Company with theappropriate authorities. As explained to us the Company did not have any dues on accountof employees state insurance and duty of excise.
b. According to information and explanations given to us no 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 atbalance sheet date for a period of more than six months from the date they became payable.
c. According to the information and explanations given to us there are no materialdues of Income tax sales tax service tax wealth tax duty of customs and cess whichhave not been deposited with the appropriate authorities on account of any dispute.However according to explanations given to us the following dues of excise duty customduty and income tax have not been deposited by the Company on account of disputes.
|Name of the statute ||Nature of dues ||Amount in Rs. ||Period to which the amount relate ||Forum where dispute is pending |
|The Central Excise Act 1944 ||Excise duty ||110532000/- ||F.Y. 1999-2000 to 2012-2013 ||High Courts of Gujarat and Bombay and Supreme Court of India. |
|The Central Excise Act 1944 ||Custom Duty ||475000/- ||F.Y. 1999-2000 2000-2001 ||CESTAT |
|The Central Excise Act 1944 ||Custom Duty (Anti dumping) ||4105001/- ||F.Y. 2011-2012 2016-2017 ||CESTAT |
d. According to the information and explanation given to us the amounts which wererequired to be transferred to the investor education and protection fund in accordancewith the relevant provisions of the Companies Act 2013 and rules there under has beentransferred to such fund within time.
viii. The Company has not defaulted in repayment of dues to financial institutionsbanks or debenture holders during the year.
ix. In our opinion and according to the information and explanations given to us thecompany has not accepted any deposit from public.
x. According to information and explanations given to us no material fraud on or bycompany has been noticed or reported during the course of our audit.
xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
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. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards. xiv. According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
xv. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.
Annexure b to the independent auditors' report
REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (i) OF SUB-SECTION 143 OF THECOMPANIES ACT 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SARLAPERFORMANCE FIBERS LTD ('the company') as of 31 March 2017 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date.
MANAGEMENT S RESPONSIBILITY FOR INTERNAL
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'). 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") 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 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
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 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 2016 based on theinformation and explanation of the company provided to us Internal Financial Controlframework and the report of the Internal Auditors on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting issued by the Institute of Chartered Accountants of India.
| ||For SUNDARLAL DESAI & KANODIA |
| ||Chartered Accountants |
| ||Firm Registration No. 110560W |
| ||H. P. Kanodia |
|Place: Mumbai ||Partner |
|Date: 27th May 2017 ||Membership No. 40617 |