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Sutlej Textiles and Industries Ltd.

BSE: 532782 Sector: Industrials
NSE: SUTLEJTEX ISIN Code: INE645H01027
BSE 00:00 | 07 Aug 18.90 0.05
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NSE 00:00 | 07 Aug 18.90 0.05
(0.27%)
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OPEN 19.00
PREVIOUS CLOSE 18.85
VOLUME 2036
52-Week high 38.90
52-Week low 15.40
P/E 7.94
Mkt Cap.(Rs cr) 310
Buy Price 18.00
Buy Qty 1.00
Sell Price 18.95
Sell Qty 59.00
OPEN 19.00
CLOSE 18.85
VOLUME 2036
52-Week high 38.90
52-Week low 15.40
P/E 7.94
Mkt Cap.(Rs cr) 310
Buy Price 18.00
Buy Qty 1.00
Sell Price 18.95
Sell Qty 59.00

Sutlej Textiles and Industries Ltd. (SUTLEJTEX) - Auditors Report

Company auditors report

To the Members of Sutlej Textiles and Industries Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of Sutlej Textiles and IndustriesLimited ("the Company") which comprise the standalone balance sheet as at 31March 2019 the standalone statement of profit and loss (including other comprehensiveincome) standalone statement of change in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of the significant accounting policies and other explanatory information. In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("Act") in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2019 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

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 aseparate opinion on these matters.

Description of the Key Audit Matters
The Key Audit Matter How the matter was addressed in our audit
Impairment of Property plant & equipment Considering internal and external indicators we considered impairment evaluation of one of the Cash Generating Units (CGUs) engaged in Home Textiles business to be a key audit matter having carrying value of the property plant and equipment as on 31 March 2019 is INR 110 crore. (Refer Note 51) Besides obtaining an understanding of the information included in the impairment model through our knowledge of the business gained through reviewing the plans strategic initiative and meeting with key stakeholders our procedures included the following: -
There is a risk that the carrying value of CGU is higher than the recoverable value thereby triggering impairment. a. We understood the methodology applied by management in performing its impairment test for the CGU underlying assumptions for sales growth margins and discounting rate and walked through the procedure followed by the management.
When a review of impairment is conducted the recoverable amount is determined based on value in use calculations which rely on the assumptions and estimates of future performance. b. We obtained cash flow forecasts and fair valuation of property plant and equipment considered during impairment assessment and assessed cash flow forecasts to ensure consistency with current operations of the Company and obtained reasons for deviations if any.
We focused on this area because of the inherent judgement involved in determining key assumptions such as future sales growth margins and discount rates and the magnitude of the assets under consideration. c. We discussed the assumptions made by management for the input data used during impairment model. We also performed sensitivity analysis on the key assumptions and found that these assumptions were reasonable. However recoverable amount arrived solely depends upon the achievement of the CGU's projections.

Information other than the Standalone Financial Statements and Auditor's Report thereon

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sAnnual Report but does not include the standalone financial statements and our auditor'sreport 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 and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility 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 state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities 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 skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• 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 with reference to financial statements in place andthe operating effectiveness 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 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.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent 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 themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's 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 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 the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. (A) As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.

e) On the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2019 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

(B) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 onits financial position in its standalone financial statements - Refer Note 40 to thestandalone 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 disclosures regarding holdings as well as dealings in specified bank notesduring the period from 8 November 2016 to 30 December 2016 have not been made inthese standalone financial statements since they do not pertain to the financial yearended 31 March 2019.

(C) With respect to the matter to be included in the Auditor's Report under section197(16): In our opinion and according to the information and explanation given to usduring the current year the remuneration paid by the company to its directors is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anydirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
ICAI Firm registration number: 101248W/W-100022 Rajiv Goyal
Place: Gurugram Partner
Date: 9th May 2019 Membership No. 094549

Annexure A referred to in our Independent Auditor's Report to the Member of SutlejTextiles and Industries Limited on the Standalone Financial Statement for the year ended31 March 2019

(i) (a) According to the information and explanations given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets (property plant & equipment and intangible assets).

(b) According to the information and explanations given to us the Company has aregular programme of physical verification of its fixed assets by which all fixed assetsare verified in a phased manner over a period of three years. In accordance with thisprogram certain fixed assets were verified during the year. In our opinion theperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. As informed to us no material discrepancies wereobserved on 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 properties areheld in the name of the Company except for the below assets for which registration ispending and are currently held in the name of respective units :-

( Rs. in crore)
Particulars Gross block as at 31 March 2019 Net block as at 31 March 2019
Leasehold land at Jammu (Jammu & Kashmir) 2.92 2.55
Freehold land at Baddi (Himachal Pradesh) 0.08 0.08

(ii) According to the information and explanations given to us the inventories exceptgoods-in-transit has been physically verified by the management. For goods-in transitall materials were substantially received/ delivered till the date of issuance of thereport. In our opinion the frequency of verification is reasonable. Further as informedthe discrepancies noticed on verification between the physical inventory and the booksrecords were not material.

(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013 ("the Act"). Accordingly paragraph 3(iii) of the Order isnot applicable to the Company.

(iv) The Company has not granted any loans or made any investments or provided anyguarantees or security to the parties covered under Section 185 and 186. Accordinglyparagraph 3(iv) of the said Order is not applicable to the Company.

(v) According to the information and explanations given to us the Company has notaccepted any deposits as mentioned in the directives issued by the Reserve Bank of Indiaand the provisions of Section 73 to 76 or any other relevant provisions of the Act and therules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company asspecified under section 148(1) of the Act for maintenance of cost records in respect ofproducts manufactured by the Company and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of cost records with a view to determine whether they are accurate orcomplete.

(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 ofaccount in respect of undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax Goods and Services Tax Duty of Customs Cess and any othermaterial statutory dues to the extent applicable have generally been regularly depositedwith the appropriate authorities. According to the information and explanations given tous no undisputed amounts payable in respect of Provident Fund Employees' StateInsurance Income-tax Sales Tax Goods and Services Tax Services Tax Duty of CustomsDuty of Excise Value Added Tax Cess and other material statutory dues to the extentapplicable were in arrears as at 31 March 2019 for a period of more than six months fromthe date they became payable.

(b) According to the information and explanations given to us and on the basis of therecords of the Company examined by us there are no dues outstanding of Income Tax SalesTax Service Tax Duty of Customs Duty of Excise Value Added Tax and Goods and ServiceTax which has not been deposited as on 31 March 2019 on account of disputes except asmentioned below:-

Name of the Statute Nature of dues# Amount (net of paid) Rs. in crore Forum where dispute is pending Period to which amount relates
Himachal Pradesh Tax on entry of goods in Local Area Act 2010 Entry Tax 5.43 High Court Himachal Pradesh 2011-2017
Gujrat Tax on Entry of Specified Goods into Local Area Act 2001 4.41 Supreme Court of India 2006-2017
The Central Excise Act 1944 Excise Duty 0.53 Central Excise & Service Tax 2010-2011
0.03 Appellate Tribunal New Delhi Commissioner Appeal 2013-2016
1.50 Central Excise & Service Tax Appellate Tribunal Ahmedabad 2011-2016
0.07 Central Excise & Service Tax Appellate Tribunal Ahmedabad 2009-2011
0.07 High Court Jammu 2004-2005
0.24 Supreme Court of India 1995-1996
0.08 Commissioner Appeal 2012-2013
0.04 Regional Authority Jammu 2010
Income Tax Act 1961 Income Tax 0.19 CIT (Appeal) 2016-2017

(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to any banks and financial institutions. TheCompany did not have any outstanding debentures or dues on account of loans or borrowingsto any government during the year.

(ix) According to the information and explanations given to us the Company did notraise any money by way of initial public offer or further public offer (including debtinstrument) during the year. Further the term loans taken by the Company have beenapplied for the purpose for which term loans were raised.

(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during theyear.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the managerial remuneration has been paid orprovided by the Company in accordance with provisions of Section 197 read with Schedule Vof the Companies Act 2013.

(xii) According to the information and explanations given to us the Company is not aNidhi Company. Accordingly paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and on the basis ofour examination of the records of the Company all transactions with the related partiesare in compliance with section 177 and 188 of the Act where applicable and the detailshave been disclosed in the standalone financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of its shares or fully or partly convertible debenturesduring the year. Accordingly paragraph 3(xiv) of the Order is not applicable.

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For B S R & Co. LLP
Chartered Accountants
ICAI Firm registration number: 101248W/W-100022 Rajiv Goyal
Place: Gurugram Partner
Date: 9th May 2019 Membership No. 094549

Annexure B to the Independent Auditor's Report on the Standalone Financial Statementsof Sutlej Textiles and Industries Limited for the year ended 31 March 2019

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013(Referred to in paragraph 2(A)(f) under ‘Report on other Legal andRegulatory Requirements' section of our report of even date)

Opinion

We have audited the internal financial controls with reference to financial statementsof Sutlej Textiles and Industries Limited ("the Company") as of 31 March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013 (hereinafter referred to as"the Act").

Auditor's 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 and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

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 withreference to financial statements.

Meaning of Internal Financial controls with reference to Financial Statements

A company's internal financial controls 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 controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial controls 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 controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants

ICAI Firm registration number: 101248W/W-100022

Rajiv Goyal
Place: Gurugram Partner
Date: 9th May 2019 Membership No. 094549