To the Members of Arrow Textiles Limited
Report on the Financial Statements
Opinion
1. We have audited the accompanying financial statements of Arrow Textiles Limited
(‘the Company’), which comprise the Balance Sheet as at 31st March,
2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash
Flow Statement and the Statement of Changes in Equity for the year then ended, and a
summary of the significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations
given to us, the accompanying financial statements give the information required by the
Companies Act, 2013 (‘Act’) in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in India including
Indian Accounting Standards (‘Ind AS’) specified under Section 133 of the Act,
of the state of affairs of the Company as at 31st March, 2019, and its profit
(including other comprehensive income), its cash flows and the changes in equity for the
year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards on Auditing specified under
Section 143(10) of the Act. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India (‘ICAI Code’)
together with the ethical requirements that are relevant to our audit of the financial
statements under the provisions of the Act and the rules thereunder, and we have fulfilled
our other ethical responsibilities in accordance with these requirements and the ICAI
Code. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Key Audit Matters
4. Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
5. We have determined the matters described below to be the key audit matters to be
communicated in our report.
| The Key Audit Matter |
How the matter was addressed in our audit |
| Revenue recognition (Refer note 2(c), 24 and 37 of the Financial Statements) |
|
| Revenue is one of the key profit drivers and is therefore susceptible to misstatement.
Cut-off is the key assertion in so far as revenue recognition is concerned, since an
inappropriate cut-off can result in material misstatement of results for the year. |
Our audit procedures with regard to revenue recognition included testing controls,
automated and manual, around dispatches/deliveries, inventory reconciliations and
circularization of receivable balances, substantive testing for cut-offs and analytical
review procedures. |
Information other than the Financial Statements and Auditor’s Report thereon
6. The Company’s Board of Directors is responsible for the other information. The
other information comprises the information included in the Annual Report, but does not
include the financial statements and our auditor’s report thereon. The Annual Report
is expected to be made available to us after the date of this auditor’s report.
Our opinion on the financial statements does not cover the other information and we
will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information identified above when it becomes available and, in doing so,
consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
When we read the Annual Report, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
7. The Company’s Board of Directors is responsible for the matters stated in
Section 134(5) of the Act with respect to the preparation of these financial statements
that give a true and fair view of the financial position, financial performance, changes
in equity and cash flows of the Company in accordance with the accounting principles
generally accepted in India, including the Ind AS specified under Section 133 of the Act.
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
statement that give a true and fair view and are free from material misstatement, whether
due to fraud or error.
8. In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
9. Those Board of Directors are also responsible for overseeing the Company’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
10. Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with
Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
11. As part of an audit in accordance with Standards on Auditing, we exercise
professional judgment and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)
of the Act, we are also responsible for explaining our opinion on whether the company has
adequate internal financial controls system in place and the operating effectiveness of
such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the 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’s report. However, future events or conditions may cause the
Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
12. We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
13. We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements of
the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
15. As required by section 197(16) of the Act, we report that the Company has paid
remuneration to its directors during the year in accordance with the provisions of and
limits laid down under section 197 read with Schedule V to the Act.
16. As required by the Companies (Auditor’s Report) Order, 2016 (‘the
Order’) issued by the Central Government of India 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 the Order.
17. Further to our comments in Annexure 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 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;
c. the financial statements dealt with by this report are in agreement with the books
of account;
d. in our opinion, the aforesaid financial statements comply with Ind AS specified
under Section 133 of the Act;
e. on the basis of the written representations received from the directors and taken on
record by the Board of Directors, none of the directors is disqualified as on 31st
March, 2019 from being appointed as a director in terms of Section 164(2) of the Act;
f. we have also audited the internal financial controls over financial reporting
(IFCoFR) of the Company as on 31st March, 2019 in conjunction with our audit of
the financial statements of the Company for the year ended on that date and our report
dated 22nd May, 2019 as per Annexure B expressed unmodified opinion;
g. 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 (as amended), in
our opinion and to the best of our information and according to the explanations given to
us:
i. the Company, as detailed in Note No. 32 has disclosed the impact of pending
litigations on its financial position;
ii. the Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses;
iii. there were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company;
iv. the disclosure requirements relating to holdings as well as dealings in specified
bank notes were applicable for the period from 8th November, 2016 to 30th
December, 2016, which are not relevant to these financial statements. Hence, reporting
under this clause is not applicable.
|
For M H S & Associates |
|
Chartered Accountants |
|
ICAI Firm Reg. No.: 141079W |
|
(Mayur H. Shah) |
|
Proprietor |
| Mumbai: 22nd May, 2019 |
Membership No. 147928 |
|
|
ANNEXURE A
To The Independent Auditor’s Report of even date to the members of Arrow Textiles
Limited on the financial statements for the year ended 31st March, 2019
Based on the audit procedures performed for the purpose of reporting a true and fair
view on the financial statements of the Company and taking into consideration the
information and explanations given to us and the books of account and other records
examined by us in the normal course of audit, and to the best of our knowledge and belief,
we report that:
(i) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
b) The Company has a regular programme of physical verification of its fixed assets by
which all fixed assets are verified in a phased manner over a period of three years. In
accordance with this programme, a portion of the fixed assets has been physically verified
by the management during the year and no material discrepancies have been noticed on such
verification. In our opinion, this periodicity of physical verification is reasonable
having regard to the size of the Company and the nature of its assets.
c) The title deeds of immovable properties (which are included under the head
‘Property, Plant and Equipment’) are held in the name of the Company.
(ii) The inventory, except goods-in-transit, has been physically verified by the
management at reasonable intervals during the year. In our opinion, the frequency of such
verification is reasonable. In respect of inventory lying with third parties, these have
substantially been confirmed by them. The discrepancies noticed on verification between
the physical stocks and the book records were not material.
(iii) The Company has not granted any loan, secured or unsecured to companies, firms,
Limited Liability Partnerships (LLPs) or other parties covered in the register maintained
under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b)
and 3(iii)(c) of the Order are not applicable.
(iv) The Company has not advanced any loan or given any guarantee or provided any
security or made any investment covered under section 185 and 186 of the Act. Hence, the
provisions of Paragraph 3(iv) of the order are not applicable.
(v) In our opinion, the Company has not accepted any deposits within the meaning of
Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as
amended). Accordingly, the provisions of Paragraph 3(v) of the order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant
to rules prescribed by the Central Government for the maintenance of the cost records
under Sub-Section (1) of Section 148 of the Act and are of the opinion that prima facie,
the prescribed accounts and records have been made and maintained.
(vii) (a) The Company is regular in depositing with appropriate authorities, undisputed
statutory dues including provident fund, employees’ state insurance, income tax,
sales tax, gst, service tax, duty of customs, duty of excise, value added tax, cess and
any other material statutory dues, as applicable to it. Further, no undisputed amounts
payable in respect thereof were outstanding, at the year-end for a period of more than six
months from the date they became payable.
b) In our opinion, there are no dues with respect to income tax, sales tax, service
tax, value added tax, customs duty, excise duty, which have not been deposited on account
of any dispute, except for the dues in relation to income tax as disclosed hereunder:
Statement of Disputed Dues:
| Name of the Statute |
Nature of Dues |
Amount ( in ‘000) |
Period to which the Amount Relates |
Forum where dispute is pending |
| Income Tax Act, 1961 |
Income Tax |
2,373.94 |
F.Y 2010-11 |
Commissioner of Income Tax (Appeals) |
| Income Tax Act, 1961 |
Income Tax |
3,091.64 |
FY 2011-12 |
Commissioner of Income Tax (Appeals) |
| Income Tax Act, 1961 |
Income Tax |
3,175.84 |
FY 2012-13 |
Commissioner of Income Tax (Appeals) |
| Income Tax Act, 1961 |
Income Tax |
2,244.43 |
F.Y 2013-14 |
Commissioner of Income Tax (Appeals) |
| Income Tax Act, 1961 |
Income Tax |
1,040.40 |
F.Y 2014-15 |
Commissioner of Income Tax (Appeals) |
(viii) According to the information and explanations given to us, the Company has not
defaulted in repayment of loans or borrowings to banks. The Company did not have any
outstanding dues to any financial institutions or debenture holders during the year.
(ix) The Company did not raise moneys by way of initial public offer or further public
offer (including debt instruments). In our opinion, no term loans were raised during the
year under audit.
(x) During the course of our examination of the books and records of the Company,
carried out in accordance with the generally accepted auditing practices in India, and
according to the information and explanations given to us, we have neither come across any
instance of fraud by the Company or any fraud on the Company by its officers or employees,
noticed or reported during the year, nor have we been informed of any such instance by the
management.
(xi) As per the information and explanations given to us, managerial remuneration has
been paid / provided in accordance with the requisite approvals mandated by the provisions
of Section 197 read with Schedule V to the Act.
(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of
Paragraph 3(xii) of the Order are not applicable to the Company.
(xiii) As per the information and explanation given to us, all transactions entered
into by the Company with the related parties are in compliance with Sections 177 and 188
of Act, where applicable, and the requisite details have been disclosed in the financial
statements etc., as required by the applicable Ind AS.
(xiv) As informed, the Company has not made any preferential allotment or private
placement of shares or fully or partly convertible debentures.
(xv) According to the information and explanations given to us, the Company has not
entered into any non-cash transactions with directors or persons connected with them
covered under Section 192 of the Act.
(xvi) The Company is not required to be registered under Section 45-IA of the Reserve
Bank of India Act, 1934.
|
For M H S & Associates |
|
Chartered Accountants |
|
ICAI Firm Reg. No.: 141079W |
|
(Mayur H. Shah) |
|
Proprietor |
| Mumbai: 22nd May, 2019 |
Membership No. 147928 |
ANNEXURE B
To The Independent Auditor’s Report on the Internal Financial Controls under
Clause (i) of Sub-Section 3 of Section 143 of the Companies Act, 2013 ("the
Act")
In conjunction with our audit of the financial statements of Arrow Textiles Limited
("the Company") as of and for the year ended 31st March, 2019, we
have audited the internal financial controls over financial reporting (IFCoFR) of the
company of as of that date.
Management’s Responsibility for Internal Financial Controls
The Company’s Board of Directors is responsible for establishing and maintaining
internal financial controls based on the 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 (the "Guidance Note")
issued by the Institute of Chartered Accountants of India (ICAI). 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 Act.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Company’s IFCoFR based on our
audit. We conducted our audit in accordance with the Guidance Note and the Standards on
Auditing issued by ICAI and deemed to be prescribed under Section 143(10) of the Act, to
the extent applicable to an audit of IFCoFR, both issued by the ICAI. 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 IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an
understanding of IFCoFR, 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 judgement, 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 IFCoFR.
Meaning of Internal Financial Controls over Financial Reporting
A Company’s IFCoFR 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 the Indian Accounting Standards (Ind AS) prescribed
under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules,
2015, as amended, and other accounting principles generally accepted in India. A
Company’s IFCoFR 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 authorisations of
management and directors of the Company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorised 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 IFCoFR, 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 IFCoFR to future
periods are subject to the risk that the IFCoFR 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 31st March, 2019,
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 ICAI.
|
For M H S & Associates |
|
Chartered Accountants |
|
ICAI Firm Reg. No.: 141079W |
|
(Mayur H. Shah) |
|
Proprietor |
| Mumbai: 22nd May, 2019 |
Membership No. 147928 |
+91-9892691696
