The Members of
The Sri Ganapathy Mills Company Limited Tirunelveli
Report on the Financial Statements
We have audited the accompanying financial statements of The Sri Ganapathy Mills
Company Limited, which comprise the Balance Sheet as at March 31, 2016 and the
Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a
summary of 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 Section
134(5) of the Companies Act, 2013 with respect to the preparation of these financial
statements that give a true and fair view of the financial position, financial performance
and cash flows of the Company in accordance with the accounting principles generally
accepted in India, including the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
This responsibility also includes maintenance of adequate accounting records in
accordance with the provisions of the Act for safeguarding of the assets of the Company
and for preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and presentation of
the financial statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our
audit. We have taken into account the provisions of the Act, the accounting and auditing
standards and matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under
Section 143(10) of the Act. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
the disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal financial control relevant to the Company’s
preparation of the financial statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances.
An audit also includes evaluating the appropriateness of the accounting policies used
and the reasonableness of the accounting estimates made by the Company’s Directors,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations
given to us, the financial statements give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India:
1. In the case of the Balance Sheet, of the state of affairs of the Company as at March
31, 2016
2. In the case of the Statement of Profit and Loss, of the profit for the year ended on
that date; and
3. In the case of the Cash Flow Statement, of the cash flows for the year ended on that
date
Emphasis of Matter:
a. We draw attention to Note No.8, to the financial statements, which describers the
uncertainty related to the outcome of the suits filed by the company.
b. We draw attention to Note No.4.a. to the financial statements, which deals with non
provisioning of Gratuity in compliance with AS15 issued by ICAI.
c. Also, we draw attention to Note 20 to the financial statements, which indicate that
the company has accumulated losses and substantial erosion of Net Worth, in addition to
suffered with cash losses in the current and previous years. These conditions along with
other matters set forth in Note 20, indicate the existence of a material uncertainty that
may cast significant doubt about the company’s ability to continue as a going
concern. However, the financial statements of the company have been prepared on a going
concern basis for the reasons stated in the said note. Our opinion is not modified in
respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2016 issued by the
Central Government of India in terms of sub-section (11) of section 143 of The Companies
Act 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and
4 of the Order.
2. 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 best
of our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion proper books of account as required by law have been kept by the
Company so far as it appears from our examination of those books and proper returns
adequate for the purposes of our audit have been received from the branches not visited by
us.
c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with
by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid financial statements comply with Accounting Standards
specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014.
e) On the basis of written representations received from the directors as on March 31,
2016 taken on record by the Board of Directors, none of the directors is disqualified as
on March 31, 2016 from being appointed as a director in terms of Section 164(2) of the
Act.
f) With respect to the other matters to be included in the Auditor’s Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our information and according to the explanations given to us:
i) The company has disclosed the impact of pending litigations on its financial
position in its financial statements – Refer to Note 8 to the financial statements
ii) The company does not have any long-term contracts, requiring a provision for
material foreseeable losses.
iii) There has been no delay in transferring amounts required to be transferred to the
Investor Education and Protection Fund.
|
For M/s.Krishnan and Raman |
|
Chartered Accountants -FRN 01515S |
| Place : Tirunelveli |
(sd) K.V.RAMAN |
| Date : 03/08/2016 |
M.No.009790 |
ANNEXURE TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE INTERNAL
FINANCIAL CONTROLS OF THE SRI GANAPATHY MILLS COMPANY LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013
We have audited the Internal Financial Controls over financial reporting of The Sri
Ganapathy Mills Company Limited, as of March 31, 2016 in conjunction with our audit of the
financial statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The company’s management is responsible for establishing and maintaining internal
financial controls based on the internal control over financial reporting criteria
established by the company considering the essential components of internal control stated
in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting
issued by the Institute of Chartered Accountants of India.
These responsibilities include the design, implementation and maintenance of adequate
internal financial controls that were operating effectively for ensuring the orderly and
efficient conduct of its business, including adherence to company’s policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the
accuracy and completeness of the accounting records, and the timely preparation of
reliable financial information, as required under the Companies Act, 2013.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Company’s internal financial
controls over financial reporting based on our audit. We conducted our audit in accordance
with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting
and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section
143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal
financial controls, both applicable to an audit 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 and plan and perform the
audit to obtain reasonable assurance about whether adequate internal financial controls
over financial reporting was established and maintained and if such controls operated
effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of
the internal financial controls system over financial reporting and their operating
effectiveness. Our audit of internal financial controls over financial reporting included
obtaining an understanding of internal financial controls over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion on the Company’s internal financial controls
system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company’s internal financial control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal financial control over
financial reporting includes those policies and procedures that
1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company.
2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the Company’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 financial
reporting, including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls over financial
reporting to future periods are subject to the risk that the internal financial control
over financial reporting may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the company has, in all material respects, an adequate internal
financial controls system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at March 31, 2016, based on the
internal control over financial reporting criteria established by the Company considering
the essential components of internal control stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered
Accountants of India.
|
For M/s.Krishnan and Raman |
|
Chartered Accountants - FRN 01515S |
| Place : Tirunelveli |
(sd) K.V.RAMAN |
| Date : 03/08/2016 |
M.No.009790 |
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE TO
THE MEMBERS OF THE SRI GANAPATHY MILLS COMPANY LIMITED ON THE
ACCOUNTS OF THE COMPANY FOR THE YEAR ENDED 31STMARCH 2016
In terms of Companies (Auditor’s Report) Order 2016, issued by Central Government
of India, in terms of Section 143(11) of The Companies Act, 2013, we further report, on
the matters specified in paragraph 3 and 4 of the said Order, that: -
(i) In respect of FIXED ASSETS
a.The Company is maintaining proper records showing full particulars, including
quantitative details and situation of fixed assets.
b.As explained to us, all fixed assets have been physically verified by the management
at reasonable intervals during the year which, in our opinion, is reasonable having regard
to the size of the company and nature of its assets. No material discrepancy was noticed
on such physical verification.
c.According to the information and explanations given to us and on the basis of our
examination of the records of the company, the title deeds of immovable properties are
held in the name of the company.
(ii) In respect of INVENTORIES
a.As explained to us, the inventory has been physically verified at reasonable
intervals during the year by the management. In our opinion, the frequency of verification
is reasonable. The discrepancies noticed on verification between the physical stocks and
the book records were not material. The discrepancies have been properly dealt with in the
books of accounts.
(iii) LOANS TO PARTIES LISTED U/S 189 OF THE ACT
a.As explained to us, the company had not granted any loans, secured or unsecured, to
any companies, firms, Limited Liability Partnerships or other parties covered in the
register maintained under section 189 of the Act.
(iv) COMPLIANCE WITH SECTIONS 185 & 186 OF THE ACT
a.In connection with matters specified u/s 185 of the act, the Company has not advanced
any loans, directly or indirectly, to any of its directors or to any other person in whom
the directors are interested, or has given any guarantee or provided security in
connection with any loan taken by any other person.
b.The company has not made any investments in any other companies within the meaning of
section 186(1) of the act.
c.In connection with matters specified under section 186(2) of the act, the company has
not advanced any loans, directly or indirectly, to any person or body corporate, or has
given any guarantee or provided security in connection with any loan taken by any other
body corporate or any other person or acquired any securities of companies in excess of
limits stipulated
(v) The Company has not accepted any deposits from the public.
(vi) It has been explained to us that the maintenance of cost records has not been
prescribed under section 148(1) of the Act.
(vii) In respect of STATUTORY DUES
a.According to the records maintained by the company and the information and
explanations given to us, the company has been generally regular in depositing undisputed
statutory dues including provident fund, income tax, sales tax, value added tax, duty of
customs, service tax, cess.
b.According to the information and explanations given to us, no undisputed amounts
payable in respect of income tax, wealth tax, Service Tax, sales tax, custom duty, excise
duty and Cess were in arrears, as at 31-Mar-2016 for a period of more than six months from
the date they became payable.
c.According to the records of the company and the information and explanations given to
us, the disputed statutory dues, pertaining to earlier years aggregating to Rs. 52.36
lakhs on account of matters pending before appropriate authorities is as under and for
which no provision had been made in the accounts.
| Nature of Due |
Forum where pending |
Rs. in lakhs |
| Tamil Nadu General Sales Tax Act, 1956 |
Appellate Tribunal, Madurai |
4.68 |
| Tamil Nadu General Sales Tax Act, 1956 |
High Court, Chennai |
4.34 |
| Tamil Nadu General Sales Tax Act, 1956 |
Taxation Special Tribunal, Chennai |
2.90 |
| Employees Provident Fund Miscellaneous Act, 1958 |
High Court, Chennai |
28.54 |
| Employees State Insurance Act, 1974 |
Labour Court |
11.90 |
(viii) Based on our audit procedures and according to the information and explanations
given to us, we are of the opinion, the company has defaulted in repayment of dues to a
financial institution or bank. The detail of period and the amount of default as
ascertained by the management is as follows
| Name of Bank |
Principal Amount |
Interest Accrued and Due |
Period to which it relates |
| The Karur Vysya Bank Ltd |
5,00,000.00 |
1,54,989.01 |
March 2016 |
| The Karur Vysya Bank Ltd |
3,33,333.33 |
64,740.00 |
March 2016 |
(ix) The company has not raised moneys by way of initial public offer or further public
offer (including debt instrument) and term loans.
(x) Based upon the audit procedures performed and according to the information and
explanations given to us, no fraud by the company or any fraud on the company by its
officers or employees has been noticed or reported during the course of our audit that
causes the financial statements to be materially misstated.
(xi) The Managerial remuneration has been paid or provided in accordance with the
requisite approvals mandated by the provisions of section 197 read with Schedule V to the
Companies Act.
(xii) The Company is not a Nidhi Company and hence the provision of section 406(1) of
the act does not apply to the company.
(xiii) Based upon the audit procedures performed and according to the information and
explanations given to us, All transactions with related parties are in compliance with
sections 177 and 188 of Companies Act, 2013 where applicable and the details have been
disclosed in the Financial statements etc. as required by the applicable accounting
standards.
(xiv) The Company has not made any preferential allotment or private placement of
shares or fully or partly convertible debentures during the year under review.
(xv) The Company has not entered into any non-cash transactions with directors or
persons connected with directors, during the year.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve
Bank of India Act, 1934.
|
For M/s.Krishnan and Raman |
|
Chartered Accountants - FRN 01515S |
| Place : Tirunelveli |
(sd) K.V.RAMAN |
| Date : 03/08/2016 |
M.No.009790 |
+91-9892691696
