TO THE MEMBERS OF
VIJAY TEXTILES LIMITED
Report on the Audit of the Financial Statements
We have audited the accompanying financial statements of Vijay Textiles Limited (theCompany') which comprise the Balance Sheet as at 31 March 2020 the Statement ofProfit & Loss (including Other Comprehensive Income) the Statement of Changes inEquity and the Statement of Cash Flows for the year ended on that date and a summary ofthe significant accounting policies and other explanatory information (here in afterreferred to as "the financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid 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 Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 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 Financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Companies Act 2013. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India ("ICAI") together with the independencerequirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and the Rules made thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgement 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.
|Key audit Matter ||Auditor Response |
|1. Delay in Payment of loan installments Generally the term loan installments are duly paid with minute delay but the installment for the month of Dec'19 Jan'20 February'20 & March'20 were not paid on the due date. ||Principal Audit Procedure: Our audit procedures included the following: We obtained an understanding from the management assessed and tested the design and operating effectiveness of the Company's key controls over the payment of the loan installments. We have noted that the company has opted for the moratorium for repayment of term loans/working capital as per the circular issued by the RBI dated 27 March 2020 on COVID-19 Regulatory Package. |
Information other than the financial statements and auditor's report thereon:
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Directors' Report ManagementDiscussion & Analysis and Corporate Governance Report but does not include thefinancial statements and our auditor's report thereon. Our opinion on the financialstatements does not cover the other information and we will not express any form ofassurance 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 forthe Financial Statements The Company's Board ofDirectors is responsible for the matters stated in section 134(5) of the Act with respectto the preparation and presentation of these financial statements that give a true andfair view of the financial position financial performance total comprehensive incomechanges in equity and cash flows of the company in accordance with Ind AS and otheraccounting principles generally accepted in India.
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 judgements 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.
In preparing the financial statements Management irresponsible for assessing thecompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are responsible for overseeing the financial reporting processof the company.
Auditor's Responsibilities for the Audit of the Financial Statements Our objectives areto obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement whether due to fraud or error and to issue an auditor'sreport that includes our opinion. Reasonable assurance is a high level of assurance butis not a guarantee that an audit conducted in accordance with SAs will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesefinancial statements.
As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism 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 exists we are required to draw attention inour auditor's report to the related disclosures in the financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a 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.
Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
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 Section 143 (3) of the Act 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 asit appears from our examination of those books;
(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) Cash Flow Statement and the Statement of Changes in Equity dealt with by thisreport are in agreement with the books of account;
(d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act read with Companies (Indian Accounting Standards) Rules2015 as amended.
(e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 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 unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controls overfinancial 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:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the act.
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 24.1 (iii) to the financial statements;
(ii) The Company did not have any long-term contracts including derivative contractsfor which 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.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended 31st March 2020 we report that:
(i) . In respect of the company's fixed assets
a. The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
b. Fixed assets are physically verified by the Management during the year in phasedprogramme of verification which in our opinion is reasonable having regard to the sizeof the Company and the nature of its assets. 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 immovable properties areheld in the name of the Company.
(ii) . The inventory has been physically verified on sample basis by the managementduring the
year. The discrepancies noticed on verification between the physical stocks and thebook/records were not material nevertheless those have been dealt properly within thebooks of accounts.
(iii) . According to the information and explanations given to us the Company has notgranted
any loans secured or unsecured to companies firms Limited Liability Partnerships orother parties covered in the register maintained under Section 189 of the Companies Act2013. Accordingly para 3(iii) (a) (b) and (c) of the order are not applicable.
(iv) . In our opinion and according to the information and explanations given to usthe Company
has complied with the provisions of section 185 and 186 of the Act with respect to theloans and investments made.
(v) . The company has not accepted any deposits during the year and does not have any
unclaimed deposits as at 31st March 2020 and therefore the provisions of the clause 3(v) of the order are not applicable to the company.
(vi) . We have broadly reviewed the cost records maintained by the Company pursuant tothe
Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government under sub-section (1) of Section 148 of the Companies Act 2013 andare of the opinion that prima facie the prescribed cost records have been made andmaintained. We have however not made a detailed examination of the cost records with aview to determine whether they are accurate or complete
(vii) . a). According to the information and explanations given to us and the recordsof the
company examined by us the company is generally regular in depositing with appropriateauthorities undisputed statutory dues including Provident Fund Employees' StateInsurance Income tax Customs duty Cess Goods and Service Tax and any other statutorydues applicable to it as on 31st March 2020.
b) According to the information and explanations given to us following are theundisputed amounts payable in respect of income tax and duty of customs were in arrears asat 31st March 2020 for a period of more than six months from the date they became payable.
|Type of Dues ||Assessment year ||Amount Outstanding as on 31.03.2020 ||Amount Outstanding as on 31.03.2019 |
|Income Tax ||2020-21 ||4294313 ||4294313 |
|Customs Duty ||2020-21 ||2014127 ||8514127 |
(c) According to the information and explanations given to us there are no dues ofIncome tax Customs duty and Goods and Service Tax which have not been deposited with theappropriate authorities on account of any dispute except as under:
|Type of Dues ||Assessment year ||Amount Outstanding as on 31.03.2020 ||Amount Outstanding as on 31.03.2019 ||Appeal Pending with |
|Income Tax ||2009-10 ||8836190 ||8836190 ||CIT Appeals - IV |
(viii).According to the information and explanation given to us the company hasdefaulted in repayment of dues to bank and financial institutions as at balance sheetdate which includes the March'20 amount as well which is under moratorium.
|Particulars ||Month of default ||Amount of default as at the balance sheet date (Principal amount) ||Amount of default as at the balance sheet date (Interest amount) ||Remarks if any. |
|Axis ||Dec'19 to Mar'20 ||6720000 ||1009951 ||Will be paid in following month |
|SBH ||Dec'19 to Mar'20 ||35036000 ||4473905 ||Will be paid in following month |
|SBI ||Dec'19 to Mar'20 ||11696128 ||1050256 ||Will be paid in following month |
| ||Total ||53452128 ||6534112 || |
(ix) . The Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(x) . To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.
(xi) . In our opinion and according to the information and explanations give to us theCompany has paid/provided for managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
(xii) . In our opinion and according to the information and explanations given to usthe Company is not a Nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable to the company.
(xiii) . According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting 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 allotment duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the company.
(xv) . According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
(xvi) .The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of VijayTextiles Limited ("the Company") as of 31st March 2020 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of directors of the company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India (ICAI'). 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.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and issued by 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 judgement including the assessment of the risks ofmaterial misstatement of the 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 internal financial controls system overfinancial reporting of the Company.
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
|For Laxminiwas & Co. Chartered Accountants Firm's Registration Number: 011168S |
|Vijay Singh Partner Membership Number: 221671 |
|Hyderabad 31.07.2020. |