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Suryalakshmi Cotton Mills Ltd.

BSE: 521200 Sector: Industrials
NSE: SURYALAXMI ISIN Code: INE713B01026
BSE 00:00 | 12 Aug 17.00 0.65
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NSE 00:00 | 12 Aug 16.95 -0.15
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OPEN 16.40
PREVIOUS CLOSE 16.35
VOLUME 901
52-Week high 27.10
52-Week low 12.75
P/E
Mkt Cap.(Rs cr) 28
Buy Price 16.80
Buy Qty 300.00
Sell Price 17.00
Sell Qty 72.00
OPEN 16.40
CLOSE 16.35
VOLUME 901
52-Week high 27.10
52-Week low 12.75
P/E
Mkt Cap.(Rs cr) 28
Buy Price 16.80
Buy Qty 300.00
Sell Price 17.00
Sell Qty 72.00

Suryalakshmi Cotton Mills Ltd. (SURYALAXMI) - Auditors Report

Company auditors report

To the members of The Suryalakshmi Cotton Mills Limited

Hyderabad

Report on the Financial Statements:

Opinion

We have audited the accompanying financial statements of THE SURYA LAKSHMI COTTON MILLSLIMITED ("the company") which comprise the Balance Sheet as at March 31 2019the Statement of Profit and Loss (including other comprehensive income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information (hereinafter referred to as "the financial statements")

In our opinion and to the best of our information and according to the explanationsgiven to us the accompanying financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standard) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under Section 143(10) of the Act. Our responsibilities underthose standards are further described in the Auditors' responsibility for the Audit ofFinancial 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 (ICAI) together with the ethical requirements that are relevant to our audit offinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the financial statements.

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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

S. No. Key Audit Matters Auditor's Response
1 Valuation of inventories Principal audit procedures
The value of inventory as at the balance sheet date amounted to Rs.130.35 crores accounting for 34% of total current assets. Inventories are considered as key audit matter on account of its significant proportion in the total current assets and it involves judgement in its valuation taking into account the obsolescence and measuring inventories at the lower of cost or Net realisable value. To address the risk for material error on inventories our audit procedures inter alia includes:
refer to Note 1.4.4 for the accounting policy on valuation of inventories • assessing the compliance of company's accounting policies over inventory with applicable accounting standards;
• assessing inventory valuation processes and practices in some locations we tested effectiveness of the key controls;
• evaluating the assessments made in relation to slow moving and obsolete stock.
We assessed the adequacy of company's disclosures related to inventories
2 Evaluation of uncertain tax positions Principal audit procedures
The company is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including direct and indirect tax matters. There are material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. We performed the following procedures in this regard:
Refer Note No. 35.1.a to the Financial Statements. • evaluated the Design and tested the operating effectiveness of controls around the assessment of the matter.
• discussed the status and likelihood of the outcome of the litigation with the external legal counsel engaged by the management.
• we also evaluated the independence and competency of the management's legal expert.
• obtained and tested evidence to support the management assessment with regard to non- provisioning against the demand.
Assessed the appropriateness of disclosures made under the head ‘Contingent Liabilities' in the financial Statements.

Report on Other information other than Financial statements

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 Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the financial statementsand our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially 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

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 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 Indian Accounting Standards (IndAS) prescribed under Section 133 of the Companies Act 2013 read with relevant rulesissued there under and other accounting principles generally accepted in 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 the 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 ofInd 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 the Board of Directors is responsible forassessing the company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the company or to cease operations orhas no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibility for the Audit of the 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 scepticism 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany 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.

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) Order2016("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 inthe paragraph 3 and 4 of the Order to the extent applicable.

2) As required by Section 143(3) of the Companies Act 2013 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 Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account;

d) in our opinion the aforesaid financial statements comply with the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Companies Act 2013 read with Rule7 of Companies (Accounts) Rules 2014;

e) on the basis of 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 internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in "Annexure B" Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the company's internal financialcontrols with reference to financial statements;

g) with respect to the Statement on Managerial Remuneration to be included in theAuditor's report under Section 197(16):

in our opinion and according to the information and explanations given to us theremuneration paid by the Company to its Directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any Director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

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 no pending litigations that would impact its financial position.However the company has disclosed all pending litigations as contingent liabilities. -Refer Note 35.1.(a) to the Ind AS financial statements ;

ii. the Company has no long term contracts and did not have derivative contracts; and

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

for K. S. RAO &Co
Chartered Accountants
Firm Registration No:003109S
(P.GOVARDHANA REDDY)
Place: Hyderabad Partner
Date:30th May 2019 (Membership no:029193)

ANNEXURE ‘A' TO THE INDEPENDENT AUDITORS' REPORT

(As required by the Companies (Auditor's Report) Order2016("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act)

The Annexure referred to in Paragraph 1 under the heading "Report on other Legaland Regulatory Requirements" of our report of even date to the members of SuryaLakshmi Cotton Mills Limited 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 its fixed assets;

b. the Fixed Assets are physically verified by the management according to a phasedprogram designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the company and the nature of itsassets. Pursuant to the program a portion of the fixed assets has been physicallyverified by the management during the year and no material discrepancies have been noticedon such verification;

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 property areheld in the name of the company.

(ii) the inventory has been physically verified by the management at reasonableintervals during the year under report and the discrepancies noticed during such physicalverification of inventories as compared to book records have been properly dealt with inthe books of account;

(iii) the company has not granted any loans to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theCompanies Act 2013. Therefore the provisions of clause 3(iii)(a) 3(iii)(b) &3(iii)(c) of the said Order are not applicable to the company;

(iv) in our opinion and according to the information and explanations given to us thecompany has not granted any loans guarantees and security in accordance with theprovisions of section 185 of the Companies Act 2013. The company has complied with theprovisions of Section 186 of the Companies Act 2013 in respect of investments made by thecompany;

(v) the Company has not accepted any deposits from the public. Hence the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under do not apply to this Company

(vi) we have broadly reviewed the books of account and records maintained by thecompany pursuant to the Rules made by the Central Government for the maintenance of CostRecords under section 148(1) of the Companies Act 2013 and we are of the opinion thatprima facie the prescribed accounts and records have been made and maintained.

(vii) (a) according to the information and explanations given to us and on the basis ofour examination of the records of the company in our opinion the company is regular indepositing with the appropriate authorities the undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Sales Tax Goods and Service TaxService Tax duty of Customs duty of Excise Value added tax Cess and other materialstatutory dues applicable to it; and according to the information and explanations givento us no undisputed amounts payable in respect of Provident Fund Income Tax Sales TaxGoods and Service Tax Service Tax duty of customs duty of Excise value added tax cessand other material statutory dues were in arrears as at 31st March 2019 for a period ofmore than six months from the date they became payable;

(b) According to the records of the Company and the information and explanations givento us the dues of Sales tax Income tax Custom Duty Wealth Tax Service Tax ExciseDuty Cess which have not been deposited on account of dispute are as follows:

Nature of the Statute Nature of Dues Amount Period to which the amount relates (Financial year) Forum where dispute is pending
(Rs. in Lakhs
Foreign Trade (Development & Regulations) Act 1992 TPS # 3307.33 2004-05 Hon'ble High Court of Judicature at Hyderabad
Maharashtra Value Added Tax Act 2005 VAT 23.69 2013-14 Commissioner of sales Tax (Appeals) Nagpur
Maharashtra Gram Panchayat Act Gram Panchayat Tax 23.87 2017-18 Divisional Commissioner Maharashtra State Nagpur
Customs Act1962 Customs Duty # 559.37 2004-05 CESTAT Mumbai
Custom Duty 61.49 2009 Hon'ble High Court of Judicature at Hyderabad

#net of pre-deposit paid in getting the stay/appeal admitted.

viii) according to the records of the company examined by us and the information andexplanations given to us there were no defaults in repayment of loans or borrowings tobanks during the year under report;

ix) in our opinion and according to the information and explanations given to us theterm loans taken by the Company have been applied for the purpose for which they wereraised. The Company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the year;

x) during the course of our examination of the books and records of the companycarried out in accordance with the Generally Accepted Auditing Practices in India andaccording to the information and explanations given to us we have neither come across anyinstances of material fraud by the company or any fraud on the company by its officers oremployees noticed or reported during the year nor we have been informed any such casesby the management;

xi) according to the information and explanations given to us and based on ourexamination of the records of the company the company has paid/provided for themanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V of the Companies Act 2013;

xii) the company is not a chit fund or a nidhi/mutual benefit fund/society and hencethe requirement of clause 3(xii) of the Order is not applicable to the company during theyear under report; xiii) according to the information and explanations given to us andbased on our examination of the records of the company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards;

xiv) 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 or partly convertible debentures duringthe year;

xv) according to the information and explanations given to us and based on ourexaminations of the records of the company the company has not entered into non-cashtransactions with directors or persons connected with them. Therefore the provision ofclause 3(xv) of the Order is not applicable;

xvi) the Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934

for K. S. RAO &Co
Chartered Accountants
Firm Registration No:003109S
(P.GOVARDHANA REDDY)
Place: Hyderabad Partner
Date:30th May 2019 (Membership no:029193)

ANNEXURE - ‘B' TO THE INDEPENDENT AUDITORS' REPORT

Report on the Internal Financial Controls under Clause

(i) Of Sub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

The Annexure referred to in Paragraph 2(f) under the heading "Report on otherLegal and Regulatory Requirements" of our report of even date to the members ofSurya Lakshmi Cotton Mills Limited for the year ended 31st March 2019

We have audited the internal financial controls with reference to financial statementsof Surya Lakshmi Cotton 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 with reference to financialstatements

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal financial control with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the "Guidance Note on Audit of Internal Financial Controlsover financial reporting" issued by the Institute of Chartered Accountants of India(‘ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal

Financial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to financial statements was established and maintainedand 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 with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements 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 systemwith reference to financial statements

Meaning of Internal Financial Controls with reference to financial statements

A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that (1) pertainto the maintenance of records that in reasonable detail accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and such internal financialcontrols with reference to financial statements were operating effectively as at 31stMarch 2019 based on the internal control with reference to financial statements 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.

for K. S. RAO &Co
Chartered Accountants
Firm Registration No:003109S
(P.GOVARDHANA REDDY)
Place: Hyderabad Partner
Date:30th May 2019 (Membership no:029193)