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Surat Textile Mills Ltd.

BSE: 530185 Sector: Industrials
NSE: N.A. ISIN Code: INE936A01025
BSE 00:00 | 07 Aug 2.62 0.01
(0.38%)
OPEN

2.69

HIGH

2.69

LOW

2.48

NSE 05:30 | 01 Jan Surat Textile Mills Ltd
OPEN 2.69
PREVIOUS CLOSE 2.61
VOLUME 153537
52-Week high 4.20
52-Week low 0.81
P/E 7.49
Mkt Cap.(Rs cr) 58
Buy Price 2.62
Buy Qty 250.00
Sell Price 2.63
Sell Qty 657.00
OPEN 2.69
CLOSE 2.61
VOLUME 153537
52-Week high 4.20
52-Week low 0.81
P/E 7.49
Mkt Cap.(Rs cr) 58
Buy Price 2.62
Buy Qty 250.00
Sell Price 2.63
Sell Qty 657.00

Surat Textile Mills Ltd. (SURATTEXTILE) - Auditors Report

Company auditors report

TO THE MEMBERS OF SURAT TEXTILE MILLS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of SURAT TEXTILEMILLS LIMITED (hereinafter referred as "the Company") which comprise theBalance Sheet as at 31st March 2019 and the Statement of Profit and Loss (including OtherComprehensive Income) the Cash Flows statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone financial statements including a summaryof significant accounting 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 financial statements give the information requiredby the Companies Act 2013 (hereinafter referred as "the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended(hereinafter referred as "Ind AS") and otheraccounting principles generally accepted in India of the state of affairs (financialposition) of the Company as at 31st March 2019 and its profit (financial performanceincluding other comprehensive income) its cash flows and the changes in equity for theyear ended on that date.

Basis for Opinion

We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (hereinafter referred as "SAs") specified under section143(10) of the Act. Our responsibilities under those Standards are further described inthe Auditor's responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI's Codeof Ethics.

We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide a separateopinion on these matters. We have determined the matters described below to be the keyaudit matters to be communicated in our report.

1. Accounting treatment for customer contracts

Description of Key Audit Matter

Revenue amounting to '21532.45 Lakhs reported in the company's financial statementspertains to customer specific contracts and the same are required to satisfy therecognition and measurement criteria as prescribed in IND AS 115 'Revenue from Contractswith Customers'. Revenue recognition is considered as an inherent risk and also as a fraudrisk. In case of revenue recognition risk of material mis-statement significantlyincreases for its cut-offs accuracy completeness and presentation and disclosure. Thiscan lead to revenue either being recognised in incorrect accounting periods or atincorrect value thereby impacting the results. Considering these factors in the contextof our audit this matter was of significance and hence a key audit matter.

Description of Auditor's Response

With a view to verify the reasonableness of the revenue accounting we carried outfollowing procedures:

a) Understanding the internal control environment for revenue recognition and to testcheck with a view to verify its operating effectiveness;

b) Read terms of the contracts and verified accuracy of sales recognition;

c) Discussed with the management process of identification of variable consideration;

d) Verified cut-off documents to ensure that revenue is recognized in correctaccounting period and carried out other substantive procedures;

e) Performed analytical procedures and obtained reasons for major variances;

f) Ensured that revenue is recognized in accordance with accounting policy of theCompany and Ind AS 115 and necessary disclosures are made in the financial statements;

Information Other than the Standalone Financial Statements and Auditor's Report Thereon(hereinafter referred as "Other Information")

The Company's Management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included inDirectors Report including Annexure to Directors Report and Management Discussion andAnalysis Corporate Governance and Information for Shareholder but does not include thestandalone 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 financial statements our responsibilityis to read the other information identified above 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 amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Management's Responsibilities for the Standalone Financial Statements

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India.

This responsibility also includes maintenance of adequate accounting records inaccordance 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 design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements Company's Management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

A. Identify and assess the risks of material misstatement of the standalone 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.

B. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct 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.

C. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

D. Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

E. Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality

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 standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

Communication with those charged with governance

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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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 mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143 (3) of the Act and based on our audit 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 Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with rule 7 of the Companies (Accounts)Rules 2014;

e) On the 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 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". Our Report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting;

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 we report thatin our opinion and to the best of our information and according to the explanations givento 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. There is no pending litigation of Company as at 31st March 2019.

ii. The Company has made provision as required under the applicable law or Ind AS formaterial foreseeable loses if any on long term contracts including derivative contracts- refer note 38 to the standalone financial statements.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Sharp & Tannan Associates
Chartered Accountants
Firm's Registration No.: 109983W
Tirtharaj Khot
Partner
Mumbai 14th May 2019 Membership No.: (F) 037457

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" section of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets (i.e. property plant and equipmentinvestment property and other intangible assets of the Company).

(b) The fixed assets are being physically verified by the management at regularintervals based on the programme of verification which in our opinion is reasonable. Nomaterial discrepancies were identified during such physical verification conducted by theCompany during the year.

(c) According to the information and explanation provided to us all title deeds ofimmovable properties are held in the name of the Company.

(ii) Physical verification of inventory has been conducted at reasonable intervals bythe management. Discrepancies noticed on physical verification were not material and thesame have been properly dealt with in the books of account.

(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. Accordingly reporting on paragraph 3(iii) of the Order is notapplicable.

(iv) According to information and explanation provided to us the Company has compliedwith provisions of section 185 and section 186 of the Act in respect of grant of loansmaking investments and providing guarantees and securities as applicable.

(v) According to information and explanation provided to us the Company has notaccepted deposits during the years and does not have any unclaimed deposits as at March31 2019 and hence the directives issued by the Reserve Bank of India and the provisionsof Sections 73 to 76 of the Act and the rules framed there under are not applicable toit. According to information and explanation provided to us no order has been passed byCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any courtor any other tribunal in the current year. Accordingly reporting on para 3(v) is notapplicable.

(vi) The Central Government has specified maintenance of cost records under section148(1) of the Act. We have broadly reviewed these records relating to materials labourand other items of cost maintained by the Company and are of the opinion that primafacie; the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of records with a view to determine whether they areaccurate and complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company is generally regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax goods and service tax sales-taxservice tax duty of customs duty of excise value added tax cess and any otherstatutory dues as applicable with the appropriate authorities. According to theinformation and explanation provided to us no undisputed amounts payable in respect ofstatutory dues were in arrears as at 31st March 2019 for a period of more than six monthsfrom the date they became payable.

(b) According to the information and explanation provided to us no dues of income taxsales tax service tax duty of customs duty of excise value added tax or cess whichhave not been deposited on account of dispute as at 31st March 2019.

(viii) Based on our audit procedures and according to the information and explanationprovided to us the Company has not defaulted in repayment of dues to a financialinstitution bank or government. The Company does not have any debenture holders.

(ix) According to information and explanation provided to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments). According to the information and explanations provided to us term loansavailed by the Company were prima facie; applied for the purposes for which the loanswere obtained.

(x) Based upon the audit procedures performed by us and according to the informationand explanations provided to us no material fraud by the Company or any material fraud onthe Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanation provided to us the managerialremuneration has been paid and provided in accordance with the requisite approvalsmandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi Company. Accordingly reporting on para 3(xii) is notapplicable.

(xiii) According to the information and explanation provided to us all transactionswith the related parties are in compliance with Sections 177 and 188 of the Act whereverapplicable and the details have been disclosed in the standalone financial statements asrequired by the applicable Ind AS.

(xiv) According to the information and explanation provided to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review. Accordingly reporting on para 3(xiv)is not applicable.

(xv) According to the information and explanation provided to us the Company has notentered into any non-cash transactions with directors or persons connected with them.Accordingly reporting on para 3(xv) is not applicable.

(xvi) According to the information and explanation provided to us the Company is notrequired to be registered under Section 45- IA of the Reserve Bank of India Act 1934.Accordingly reporting on para 3(xv) is not applicable.

For Sharp & Tannan Associates
Chartered Accountants
Firm's Registration No.: 109983W
Tirtharaj Khot
Partner
Mumbai 14th May 2019 Membership No.: (F) 037457

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 (f) under the heading "Report on Other Legal andRegulatory Requirements" section of our report of even date)

Report on the Internal Financial Controls

[under Clause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")]

Opinion

We have audited the internal financial controls over financial reporting of SuratTextile Mills Limited (hereinafter referred as "the Company") as of 31stMarch 2019 in conjunction with our audit of the standalone Ind AS financial statements ofthe Company for the year ended on that date.

In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2019 based on theinternal financial control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting (hereinafter referred as"the Guidance Note") issued by the Institute of Chartered Accountants of India(hereinafter referred as "ICAI").

Management's Responsibility for Internal Financial Controls

The Company's Management and Board of Directors are responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the guidance note. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditor's responsibility

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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

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 included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone 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 standalone 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 standalonefinancial 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 standalonefinancial 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.

For Sharp & Tannan Associates
Chartered Accountants
Firm's Registration No.: 109983W
Tirtharaj Khot
Partner
Mumbai 14th May 2019 Membership No.: (F) 037457