To the Members of Sri Ramakrishna Mills (Coimbatore) Limited
Report on the Ind-AS Standalone Financial Statements
We have audited the accompanying standalone Ind-AS financial statements of SriRamakrishna Mills (Coimbatore) Limited (the Company') which comprise the BalanceSheet as at 31 March 2020 the statement of Profit and Loss including other comprehensiveincome the Cash flow statement the statement of changes in equity and notes to thefinancial statements for the year then ended including a summary of 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 in conformitywith the accounting principles generally accepted in India of the state of affairs of theCompany as at March 312020 and profit changes in equity and its cash flows for theyear ended on that date.
Basis for 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 thestandalone financial statements under the provisions of the Companies Act 2013 and theRules there under and we have fulfilled our other ethical responsibilities in accordancewith these 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
We invite attention to Note No:44C to the Financial Statements regarding the impact ofCOVID19 on the Company's business operations and carrying values of assets and liabilitiesas on balance sheet date and up to the date of adoption of this financial statement. Thisassessment and the outcome of the pandemic is as made by the management and is highlydependent on the circumstances as they evolve in the subsequent periods. The impacttherefore in future periods may be different from the estimates made as on the approvalof this financial statement. Our opinion is not modified in respect of this matter.
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.
The Textile segment has been incurring losses for the last several years and appear tobe functioning below rated capacities with varying revenue year to year. A materialuncertainty exists related to the conditions which cast significant doubt on the segmentto continue as a segment to contribute to the profits of the company. Our Judgement ofContinuance of Textile segment is based on audit evidence and explanations andmanagement's revival plan and due to the availability of resources from other segmentsfor modernisation and consequent profitability. Our opinion is not modified in respect ofthis matter.
DISPUTED TAX & OTHER LIABILITIES
Evaluation of tax and Regulatory dues under Dispute involves significant judgement todetermine the possible outcome. In our audit the disputes and demands were obtained fromthe management as at 31.03.2020. The grounds of dispute taken by Management wereconsidered along with Legal and Factual matters to enable us to take a judgement. Thesematters continue to remain in the same status as in the previous year.
The Borrowings and receipts of funds to fund the textile segment also has asignificant impact on the assets and Liabilities. Our judgement was based on the Auditevidence with explanations therein.
Revenue from Real Estate Development is recognised during the year on the basisof Technical Estimates as to percentage of completion furnished and accepted withoutmodification on the basis of our judgement and on the basis of transfer of control overassets judged to the extent of performance obligation executed under the Joint DevelopmentContract and acceptable in our judgement.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information (included in the ManagementDiscussion and Analysis) in the Board's Report including Annexures to Board's Report(Business Responsibility Report Corporate Governance) and Shareholder's Information butdoes not include the standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind-AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially 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.
Responsibility of Management for 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 ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards (Ind AS) specified underSection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended. This responsibility also includes maintenance of adequate accounting recordsin accordance 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 the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statements 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.
The Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone 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 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 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.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 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 sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the order to the extent possible.
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 Standalone balance sheet the Standalone statement of profit and loss includingother comprehensive income the Standalone cash flow statement and Standalone Statement ofChanges in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 ofCompanies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors aredisqualified as on 31 March 2020 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;
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:
In our Opinion and to the best of our information and according to the explanationgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of Section 197 of the act; and
(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 has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements wherever applicable - Refer Note No:41 to theFinancial Statement.
ii. The company did not have any material foreseeable losses on long-term contractsincluding derivative contracts.
iii. On the basis of the declarations made to us by the management which is reliedupon by us we report that there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
| ||For CSK PRABHU & CO |
| ||Chartered Accountants |
| ||Firm Regd No: 002485 S |
| ||CSK PRABHU |
|Place: Coimbatore ||Partner |
|Date : 30-06-2020 ||M. No. 019811 |
Annexure - A to the Auditors' Report
With reference to the Annexure - A referred to in Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 31 March2020 we report that:
1 a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets
b) According to information and explanations given to us the Company has a regularprogramme of physical verification of its fixed assets by which they are verifiedannually. In accordance with this programme all the fixed assets were verified during theyear and we are informed that no material discrepancies were noticed on such verification.In our opinion this periodicity of physical verification is reasonable having regard tothe size of the Company and the nature of its assets.
c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
2 According to information and explanations given to us by the management physicalverification of Inventory has been conducted at reasonable intervals by the managementduring the Year. We are informed that no material discrepancies were noticed on suchphysical verification.
3 a) In respect of Parties covered in the register maintained under section 189 of theCompanies Act 2013 (the Act') as at March 31 2020 a total net amount of Rs.Nilremained as Advances from two parties (Previous Year Rs.216.28 Lakhs from two parties)
b) The management has represented that out of the opening balance at the beginning ofthe year amounting to Rs.216.28 Lakhs an amount of Rs.97.47 Lakhs (Previous Year Rs.97.47Lakhs) was due from subsidiary company (erstwhile a Partnership Firm in which the Companywas a Partner and which was converted as a Private Limited Company during the financialyear 2017-18) and that the above Advance arose on account of revaluation of land in thebooks of Partnership Firm prior to the commencement of the Companies Act 2013 andrepresents the Company's share of surplus on account of such revaluation and credited tothe Partner's Current Account by the Partnership Firm and does not partake the characterof Loan. Further the said subsidiary during the year has realized its asset and settled asum of Rs.53.66 Lakhs and the balance of Rs.43.81 Lakhs has been written off as impairmentloss during the year.
c) The management has represented that the remaining net opening balance amount ofRs.118.81 Lakhs (Previous Year Rs. 118.81 Lakhs) represents Trade Advances paid to aCompany in which directors are interested before the commencement of the Companies Act2013 in the normal course of business on account of operative transactions and not in thenature of Loan. During the year the said amount is received and as at March 31 2020there were no dues from such Related Party Company.
d) We have taken into account the representations made by the management as stated videpara (b) and (c) above and based on our examination we report that in our opinion theCompany has not granted loans secured or unsecured to Companies Firms Limited LiabilityPartnerships or Other parties covered in the register maintained under section 189 of theCompanies Act 2013 (the Act') and therefore further reporting under sub-clause a)b) and c) of clause (iii) of para 3 of the order does not arise.
4 In respect of matters stated in sub-para (a)(b) and (c) of para (iii) of thisreport regarding Advances which has been realized/adjusted during the year and withbalance as at March 31 2020 amounting to Rs.Nil (Previous Year Rs. 216.28 Lakhsreceivable from two parties) we have taken into account the representations made by themanagement and based on our examination in our opinion such opening balance donot partakethe character of Loans covered under Sec.185 and 186. Further such Opening Balances havebeen realized/adjusted during the course of the year. Further we report that the Companyhas complied with the provisions of section 185 and 186 of the Companies Act 2013wherever applicable.
5 According to information and explanations given and representations made to us theCompany has received Unsecured Loans/Advances from Directors for the purpose of thebusiness of the company and has further complied with the requirement of obtaining awritten declaration made to the Company by such Director/s at the time of giving themoney to the effect that the amount is not being given to the Company out of fundsacquired by such Director/s by borrowing or accepting loans or deposits from others.Therefore such Unsecured Loans received from Directors fall out of the purview of theDefinition of Deposit under the Companies (Acceptance of Deposits) Rules2014 as amended. Further according to information and explanations given to us theCompany has also received inter corporate loans secured loans from director & bankand other unsecured Advances which are explained to fall out of the purview of theDefinition of Deposit under the Companies (Acceptance of Deposits) Rules2014 as amended. On such basis and judgment we report that the Company has not acceptedany deposits from the public and therefore further reporting under sub-clause (v) of para3 of the order does not arise.
6 According to information and explanations given to us and based on the declarationsmade to us we report that the Central Government has not prescribed the maintenance ofcost records under section 148(1) of the Act.
7 a) According to the information and explanations given to us and based on ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employee StateInsurance income-tax sales tax value added tax duty of customs excise service taxgoods and service tax cess and other material statutory dues have not generally beenregularly deposited with the appropriate authorities during the year in time and therehave been serious delays in a large number of cases.
According to the information and explanations given to us no undisputed materialamounts payable in respect of provident fund esi income tax sales tax value added taxduty of customs excise service tax goods and service tax cess and other materialstatutory dues were in arrears as at 31 March 2020 for a period of more than six monthsfrom the date they became payable excepting for Tax deducted at source under the IncomeTax Act 1961 for an amount of Rs.17.40 Lakhs relating to financial year 2019-20. The duedate of such TDS remittance is 7th of the succeeding month. The management explained thatsuch arrear Tax deducted at source has been remitted upto the date of this report.
b) According to the information and explanations given to us there are no materialdues of income tax/sales tax/service tax/GST/duty of customs/duty of excise/value addedtax/cess and other statutory dues which have not been deposited with the appropriateauthorities on account of any dispute. However according to information and explanationsgiven to us the following dues of income tax sales tax duty of excise service tax GSTand value added tax have not been deposited by the Company on account of disputes:
|Name of the Statute ||Nature of the Dues (along with Interest etc. where applicable) ||Amount [Rs.] (in lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|TNGST ||Sales Tax ||54.59 ||A.Y1995-96 ||Hon'ble High Court of Judicature Chennai |
|TNGST ||Sales Tax ||89.37 ||A.Y1999-00 ||Representation Pending before Assessing authority on the direction by the High court of Judicature at Chennai |
|TNGST ||Sales Tax ||61.66* ||A.Y1998-99 |
|TNGST ||Sales Tax AST ||121.97 ||A.Y2000-01 |
|* [Rs.30.83 lakhs since paid] || || || |
8 According to information and explanations given to us the Company has not defaultedin repayment of loans or borrowings to a financial institution bank government or duesto debenture holders.
9 The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments). According to information and explanations given to usTerm loans wherever raised during the year were applied for the purposes for which thoseare raised.
10 According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported.
11 On the basis of information and explanations given to us by the managementManagerial Remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the CompaniesAct.
12 (xii) In our opinion and according to the information and explanations given to usthe Company is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13 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.
14 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/partly convertible debentures during theyear.
15 According to the information and explanations given to us and based on ourexamination of the records of the Company in our opinion the Company has not enteredinto non-cash transactions with directors or persons connected with him. Accordinglyparagraph 3(xv) of the Order is not applicable.
16 In our opinion and according to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934.
| ||For CSK PRABHU & CO |
| ||Chartered Accountants |
| ||Firm Regd No: 002485 S |
| ||CSK PRABHU |
|Place: Coimbatore ||Partner |
|Date : 30.06.2020 ||M. No. 019811 |
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 SriRamakrishna Mills (Coimbatore) Limited (the Company) as of 31 March 2020 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor 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 (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.
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 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) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
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 2020 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 CSK PRABHU & CO |
| ||Chartered Accountants |
| ||Firm Regd No: 002485 S |
| ||CSK PRABHU |
|Place: Coimbatore ||Partner |
|Date : 30.06.2020 ||M. No. 019811 |