To the members of SUPER SPINNING MILLS LIMITED
Report on IND AS FInancial Statements
We have audited the accompanying Ind AS financial statements of M/s.Super SpinningMills Limited ('the Company') which comprise the Balance Sheet as at 31st March2019 the Statement of Profit and Loss including the Statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the financial statements including a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as 'Ind ASfinancial statements').
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 as amended ('the Act') in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at 31st March 2019 its losses including othercomprehensive income its cash flows and the changes in equity for the year ended on thatdate.
Basis for opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the 'Auditors'responsibilities for the audit of the Ind AS financial statements' section of our report.We are independent of the Company in accordance with the 'Code of Ethics' issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of the Act andthe Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Ind AS financial statements.
Key audit matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the Ind AS financial statements for the financial year ended31st March 2019. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in the'Auditor's responsibilities for the audit of the Ind AS financial statements' section ofour report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements:
|Sr No. ||Key audit matters ||How our audit addressed the key audit matter |
|1. ||Goods and service tax (GST) - Declaration of excess turnover in GSTR 3B return as compared to books of accounts to the tune of Rs. 11118.09 lakhs in the month of April 2018 ||We have verified the GST returns in conjunction with books of accounts and during the examination it has come to our attention that the Company has filed the GSTR 3B return erroneously by declaring Rs. 11118.09 lakhs in excess of actual turnover recorded in the books of accounts. |
| || ||This would lead to issuance of Notice by the concerned department asking to pay GST on such excess declaration made by the Company. |
| || ||However the management has responded as below: |
| || ||This was a typographical error happened while filing GSTR 3 B for the month of AprRs. 18. |
| || ||Inadvertently one zero had been suffixed to the actual Turnover of Rs.1235.34 lakhs and wrongly shown the taxable turnover as Rs.12353.43 lakhs. |
| || ||We have correctly reported tax payable and paid the taxes accordingly only the taxable turnover has been wrongly mentioned. |
| || ||We have communicated the errors immediately to the GST authorities on 14-12-2018 once it was noticed by us. |
|2. ||Payroll data authentication - Internal control weakness identified in authentication of payroll data processed on monthly basis in the factory Units i.e. "Super A & B" ||We have verified the month wise payroll data in conjunction with the ID and address proofs of few employees on sample basis during which it was to our observation that most of the name in the payroll register do not match with the ID proofs. |
| || ||In addition to above the process of checks and balances from the Accounts department was not adequate on receipt of payroll data for payment processing by Human Resource department on monthly basis. |
| || ||Also we have noticed that the Company has paid wages in cash on monthly basis to few of its workers which adds to the concern mentioned in the above paragraph giving more space for leakage of funds . |
| || ||To conclude this has led to Internal control weakness in authentication of payroll data and payments made in cash on monthly basis leading to scope for misappropriation and leakage of funds. |
| || ||However the management has responded as below: |
| || ||We will take necessary steps in order to sort out the concerns address by the Auditor within a reasonable timeline. |
| || ||We have already initiated to examine and fix internal control weakness identified by the |
| || ||Auditor with regard to payroll data authentication and avoidance of cash payment of wages henceforth. |
Information other than the financial statements and auditors' report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Chairman's Letter ManagementDiscussion and Analysis Corporate Governance and Directors' Report but does not includethe Ind AS financial statements and our auditors' report thereon. Our opinion on the IndAS financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the Ind AS financial statements or our knowledge obtained inthe audit 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 for the Ind AS 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 Ind AS financial statements that give a true and fair view of the financialposition financial performance including Other Comprehensive Income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) prescribed underSection 133 of the Act read with the Rules specified in the Companies (Indian AccountingStandards) Rules 2015 as amended from time to time. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; 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 Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error. In preparingthe Ind AS financial statements Management is responsible for assessing the Company'sability to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless Management eitherintends to liquidate the Company or to cease operations or has no realistic alternativebut to do so. Those Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibility for the audit of the Ind AS financial statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditors' 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 Ind AS 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 Ind AS 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 Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 auditors' 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 auditors'report. 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 Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 them allrelationships and other matters that may reasonably be thought to bear on our independenceand where applicable related safeguards. From the matters communicated with those chargedwith governance we determine those matters that were of most significance in the audit ofthe Ind AS financial statements for the financial year ended 31st March 2019 and aretherefore the key audit matters. We describe these matters in our auditors' report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. 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 including Other ComprehensiveIncome the Cash Flow Statement and Statement of changes in Equity dealt with by thisReport are in agreement with the books of account;
d) In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under Section 133 of the Act read with the Rules specified in theCompanies (Indian Accounting Standards) Rules 2017 as amended from time to time; e) Onthe basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof 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 A" forming part of the Independent Auditors Report.Our report expresses an disclaimer of opinion on the adequacy and operating effectivenessof the CompanyRs. s internal financial controls over financial reporting;
g) In our opinion the managerial remuneration for the year ended 31st March 2019 hasbeen paid/ provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to 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 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 litigation on its financial positionin its Ind AS financial statements included in Note No. 42 forming part of the Ind ASfinancial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
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" statement on the matters specified inparagraphs 3 and 4 of the order to the extent applicable.
Annexure - A to the Independent Auditors' Report (Referred to in paragraph 1(f) underReport on Other Legal and Regulatory Requirements' section of our report of evendate) Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SUPERSPINNING MILLS LIMITED ("the Company") as of 31st March 2019 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended 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'). 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 Ind AS 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 Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial 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.
Disclaimer of Opinion
The Company was not able to provide us with sufficient appropriate audit evidence onthe system of internal financial control over financial reporting based on criteriaconsidering the essential components of internal control as stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India. Due to the aforesaid reason we are unable to and do notprovide any opinion as to whether the Company had adequate internal financial control overfinancial reporting as at March 31 2019 and whether such internal financial controls wereoperating effectively.
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of SUPER SPINNING MILLSLIMITED for the year ended 31st March 2019) We report that:
i) (a) The company has maintained proper records showing full particulars includingquantitative 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) 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 the immovable properties areheld in the name of the company.
ii) (a) In our opinion and according to the information and explanations given to usthe management has conducted the physical verification of inventories at reasonableintervals during the year under review.
(b) In our opinion and according to the information and explanations given to us theprocedures of physical verification of inventories followed by the management arereasonable and adequate in relation to the size of the Company and nature of its business.
(c) According to the information and explanations given to us we are of the opinionthat the Company is maintaining proper records of inventories and no materialdiscrepancies were noticed on their physical verification.
iii) (a) The Company had not granted any loans secured or unsecured to any companiesfirms or other parties covered in the register maintained under section 189 of theCompanies Act 2013 during the year. Hence comments on the provisions of clause (iii) (a)to (c) of the said Order do not arise.
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 guarantees and investments made.
v) In our opinion and according to the information and explanations given to us duringthe year the Company has not accepted any deposit within the meaning of Section 73 to 76of the Companies Act 2013 and rules framed there under.
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 read with Companies (Cost Records and Audit)Rules 2014 as amended and are of the opinion that prima-facie the specified accounts andrecords have been made and maintained. We have not however made a detailed examinationof the records with a view to determining whether they are accurate or complete.
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 ofaccounts in respect of undisputed statutory dues including provident fund employees'state insurance income-tax goods and service tax sales-tax excise duty wealth-taxservice tax customs duty excise duty value added tax cess and other material statutorydues have been regularly deposited during the year by the company with appropriateauthorities. There are no undisputed statutory dues as referred to above as at 31stMarch 2019 outstanding for a period of more than six months from the date they becomepayable.
(b) According to the information and explanations given to us the disputed statutorydues that have not been deposited on account of matters pending before the appropriateauthority are as under:
|Name of Statute ||Nature of Dues ||Issues in the Appeal ||Unpaid Amount ||Period to which the amount relates ||Forum Where Dispute is Pending |
| || || ||(Rs. in lakhs) || || |
|Income Tax Act 1961 ||Income Tax ||Disallowance on account of replacement of machinery ||523.74 ||1993-1999 ||CIT(Appeals) Coimbatore |
| || || || ||2000-2004 ||CIT(Appeals) Coimbatore |
| || || || ||2004-2005 ||ITAT Chennai |
| || || || ||2005-2009 ||CIT(Appeals) Coimbatore |
| || || || ||2011-12 ||CIT(Appeals) Coimbatore |
|APGST Act 1957 ||Sales Tax ||Disallowance of Stock Transfer to branch & Tax due on other pending declaration forms ||162.96 ||2010-11 ||STAT Visakhapatnam |
|APGST Act 1957 ||Sales Tax ||Disallowance of Stock Transfer to branch & Tax due on other pending declaration forms ||432.00 ||2011-12 ||STAT Visakhapatnam |
|Central Excise Act1944 ||Export Rebate claim ||Appealed against the rejection of refund of export rebate claim which was received earlier. ||25.41 ||2006-2007 ||Commissioner of Central Excise and Customs (Appeals) Guntur |
|Central Excise Act 1944 ||Export Rebate claim ||Appealed against the rejection of refund of export rebate claim which was received earlier. ||39.77 ||2006-07 ||Commissioner of Central Excise and Customs (Appeals) Guntur |
viii) The company has not defaulted in repayment of loans and borrowing to financialinstitution bank government or dues to debenture holders.
ix) The company has not raised any money by way of initial public offer or furtherpublic offer (including debt instrument) and term loans during the year. Accordinglyparagraph 3(ix) of the order is not applicable.
x) 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 duringthe 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 Ind AS financial statements as required by theapplicable Indian accounting standards (Ind AS).
xiv) According to the information and explanations give 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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable. xvi) The Company is not required to be registered undersection 45-IA of the Reserve Bank of India Act 1934.
| ||For M/s Sethia Prabhad Hegde & Co |
| ||Chartered Accountants |
| ||Registration No. 013367S |
| ||Timmayya Hegde |
|Coimbatore ||Partner |
|May 30 2019 ||Membership No. 226267 |