Suryajyoti Spinning Mills Ltd.
|BSE: 521022||Sector: Industrials|
|NSE: SURYAJYOTI||ISIN Code: INE411C01017|
|BSE 00:00 | 04 Mar||Suryajyoti Spinning Mills Ltd|
|NSE 05:30 | 01 Jan||Suryajyoti Spinning Mills Ltd|
|BSE: 521022||Sector: Industrials|
|NSE: SURYAJYOTI||ISIN Code: INE411C01017|
|BSE 00:00 | 04 Mar||Suryajyoti Spinning Mills Ltd|
|NSE 05:30 | 01 Jan||Suryajyoti Spinning Mills Ltd|
To the Members of
Suryajyoti Spinning Mills Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Suryajyoti Spinning MillsLimited ("the Company")which comprise the Balance Sheet as at March 31 2017the Statement of Profit & Loss and the Cash Flow Statement for the year then endedand a summary of the significant accounting policies and other explanatory information.
Management's Responsibility for the 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 financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards prescribedunder section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these financial statements based on ouraudit. In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of theAct and the Rules made thereunder.
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud orerror. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our qualified audit opinion on thefinancial statements.
Basis for Qualified Opinion
The Company has not provided the interest on Working capital loans and Term loans withSBI SBH IDBI and IOB for Rs.43.16 Crores for the period post the loan accounts becameNPA during the year.
Consequent to the above the loss for the year is under stated to the extent ofRs.43.16 cr and the liabilities as at 31.03.2017 is understated to the extent of Rs.53.92crores and Shareholders funds are overstated to that extent.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis ofQualified Opinion paragraph above the aforesaid 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 31 2017 and its loss and its cash flows for the year ended on thatdate.
Emphasis of Matters
We draw attention to the following notes in to the financial statements:
(i) Note No.28.16 of the financial statements which indicates that as at March 312017 the accumulated losses amounting to Rs.11486.10 lakhs have completely eroded thenet-worth of the Company and the current liabilities exceeded the current assets as onthat date. These conditions along with other matters as set forth in Note 28.16 of thefinancial statements including dependence on continuous support from its promotersindicate the existence of a material uncertainty that may cast significant doubt about theCompany's ability to continue as a going concern and therefore it may be unable to realiseits assets and discharge its liabilities in the normal course of business. However thesefinancial statements have been prepared on a going concern basis for the reasons stated inthe said Note.
(ii) Note No.28.9 to the financial statements relating to confirmation of balances inrespect of Trade receivables and Trade Payables and the Inventories as certified by theManagement.
(iii) Note No. 28.8 to the financial statements relating to non-provision of interestfor delay in payments to MSME suppliers.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143 (3) of the Act based on our audit we report that:
a) We have sought and except for the matter described in the Basis for QualifiedOpinion paragraph above obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books
c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
d) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion the aforesaid financial statements comply withthe Accounting Standards prescribed under section 133 of the Act.
e) The going concern matter described in sub-paragraph (i) under the Emphasis ofMatters paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.
f) On the basis of the written representations received from the directors as on March312017taken on record by the Board of Directors none of the directors is disqualified ason March 31 2017 from being appointed as a director in terms of Section 164 (2) of theAct.
g) The qualification relating to the maintenance of accounts and other mattersconnected there with are as stated in the Basis for Qualified Opinion paragraph above.
h) 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".
i) 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 litigations on its financialposition in its financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
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 the financial statements asregardsits holding and dealings in Specified Bank Notes as defined in the NotificationS.O. 3407(E) dated the November 8 2016 of the Ministry of Finance during the period fromNovember 8 2016 to December 30 2016. Based on audit procedures performed and therepresentations provided to us by the Management we report that the disclosures are inaccordance with the books of account maintained by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section ofour report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SuryajyotiSpinning Mills Limited ("the Company") as of March 31 2017 in conjunction withour audit of the financial statements of the Company for the year ended on that date.
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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated 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. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Company's internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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 includingthe possibility of collusion or improper management override ofcontrols material misstatementsdue to error or fraud may occur and not be detected. Alsoprojections of any evaluation of theinternal financial controls over financial reportingto future periods are subject to the risk that theinternal financial control overfinancial reporting may become inadequate because of changes inconditions or that thedegree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has maintained inall material respects adequate internalfinancialcontrols over financial reporting and such internalfinancial controls over financialreporting wereoperating effectively as of March 31 2017 based onthe internal controlover financial reporting criteriaestablished by the Company considering theessentialcomponents of internal control stated in the Guidance Note on Audit of InternalFinancialControls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanations given to us no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us and the records examinedby us we report that the title deeds comprising all the immovable properties of landand buildings are held in the name of the Company as at the balance sheet date.
(ii) As explained to us the inventories were physically verified during the year bythe Management at reasonable intervals and no material discrepancies were noticed onphysica lverification.
(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 189of the Companies Act 2013.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities as applicable.
(v) According to the information and explanations given to us the Company has notaccepted any deposit during the year.
(vi) The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the Company pursuant to the Companies (Cost Records and Audit) Rules2014as amended prescribed by the Central Government under sub-section (1) of Section148 ofthe Companies Act 2013 and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us in respect ofstatutory dues:
(a) The Company is not regular in depositing undisputed statutory dues includingProvident Fund Employees' State Insurance Income-tax Sales Tax Service Tax CustomsDuty Excise Duty Value Added Tax cess and all other material statutory dues applicableto it to the appropriate authorities. The extent of the arrears of outstanding statutorydues as at March 312017 fora period of more than six months from the date they becamepayable are as follows:
(b) There are no dues of Income-tax Sales Tax Service Tax Customs Duty Excise Dutyand Value Added Tax as on March 31 2017 on account of disputes except as given below.
(viii) In our opinion and according to the information and explanations given to usthe Company has defaulted in the repayment of loans or borrowings to financialinstitutions and banksand as a consequence the loan accounts have been classified as NonPerforming by the said Banks as on the Balance Sheet date.
(ix) In our opinion and according to the information and explanations given to us theterm loans have been applied by the Company during the year for the purposes for whichthey were raised other than temporary deployment pending application of proceeds. Nomoneys were raised by way of initial public offer or further public offer.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.
(xii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section177 and 188 of the Companies Act 2013 whereapplicable for all transactions with there lated parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
(xiii) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order is not applicable to the Company.
(xiv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with them and hence provisions of section 192 of theCompanies Act2013 are not applicable.
(xv) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.