Sri Ramakrishna Mills (Coimbatore) Ltd Directors Report.

To the Members of Sri Ramakrishna Mills (Coimbatore) Limited

Report on the Ind-AS Standalone Financial Statements

Opinion

We have audited the accompanying standalone Ind-AS financial statements of Sri Ramakrishna Mills (Coimbatore) Limited (‘the Company), which comprise the Balance Sheet as at 31 March 2020, the statement of Profit and Loss including other comprehensive income, the Cash flow statement , the statement of changes in equity and notes to the financial statements for the year then ended, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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, of the state of affairs of the Company as at March 31,2020, and profit, changes in equity, and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Companies Act, 2013 and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We invite attention to Note No:44C to the Financial Statements regarding the impact of COVID19 on the Companys business operations and carrying values of assets and liabilities as on balance sheet date and up to the date of adoption of this financial statement. This assessment and the outcome of the pandemic is as made by the management and is highly dependent on the circumstances as they evolve in the subsequent periods. The impact, therefore, in future periods may be different from the estimates made as on the approval of this financial statement. Our opinion is not modified in respect of this matter.

Key Audit Matters

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.

TEXTILE SEGMENT

The Textile segment has been incurring losses for the last several years and appear to be functioning below rated capacities with varying revenue year to year. A material uncertainty exists related to the conditions which cast significant doubt on the segment to continue as a segment to contribute to the profits of the company. Our Judgement of Continuance of Textile segment is based on audit evidence and explanations and managements revival plan, and due to the availability of resources from other segments for modernisation and consequent profitability. Our opinion is not modified in respect of this matter.

DISPUTED TAX & OTHER LIABILITIES

Evaluation of tax and Regulatory dues under Dispute involves significant judgement to determine the possible outcome. In our audit the disputes and demands were obtained from the management as at 31.03.2020. The grounds of dispute taken by Management were considered along with Legal and Factual matters to enable us to take a judgement. These matters continue to remain in the same status as in the previous year.

• The Borrowings and receipts of funds to fund the textile segment also has a significant impact on the assets and Liabilities. Our judgement was based on the Audit evidence with explanations therein.

• Revenue from Real Estate Development is recognised during the year on the basis of Technical Estimates as to percentage of completion furnished and accepted without modification on the basis of our judgement and on the basis of transfer of control over assets judged to the extent of performance obligation executed under the Joint Development Contract and acceptable in our judgement.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information (included in the Management Discussion and Analysis) in the Boards Report including Annexures to Boards Report (Business Responsibility Report, Corporate Governance) and Shareholders Information, but does not include the standalone financial statements and our auditors report thereon.

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

In connection with our audit of the standalone Ind-AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of Management for Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (Ind AS) specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended. 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 the 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Companys 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.

The Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

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 auditors 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 SAs 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.

As part of an audit in accordance with SAs, 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 Companies Act, 2013, we are also responsible for expressing 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 managements 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 auditors 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.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative 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 financial statements.

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.

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.

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 auditors 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

1. As required by the Companies (Auditors Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order, to the extent possible.

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 purposes 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 Standalone balance sheet, the Standalone statement of profit and loss including other comprehensive income, the Standalone cash flow statement and Standalone Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31 March 2020 taken on record by the Board of Directors, none of the directors are disqualified as on 31 March 2020 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”;

(g) With respect to the other matters to be included in the Auditors Report in accordance 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 explanation given to us, the remuneration paid by the company to its directors during the year is in accordance with the provisions of Section 197 of the act; and

(h) With respect to the other matters to be included in the Auditors 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 Ind AS financial statements, wherever applicable - Refer Note No:41 to the Financial Statement.

ii. The company did not have any material foreseeable losses on long-term contracts including derivative contracts.

iii. On the basis of the declarations made to us by the management, which is relied upon by us, we report that there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For CSK PRABHU & CO
Chartered Accountants
Firm Regd No: 002485 S
CSK PRABHU
Place: Coimbatore Partner
Date : 30-06-2020 M. No. 019811

Annexure - A to the Auditors Report

With reference to the Annexure - A referred to in Independent Auditors Report to the members of the Company on the standalone financial statements for the year ended 31 March 2020, we report that:

1 a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets

b) According to information and explanations given to us, the Company has a regular programme of physical verification of its fixed assets by which they are verified annually. In accordance with this programme, all the fixed assets were verified during the year and we are informed that no material discrepancies were 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) 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.

2 According to information and explanations given to us by the management, physical verification of Inventory has been conducted at reasonable intervals by the management during the Year. We are informed that no material discrepancies were noticed on such physical verification.

3 a) In respect of Parties covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act), as at March 31 2020, a total net amount of Rs.Nil remained as Advances from two parties (Previous Year Rs.216.28 Lakhs from two parties)

b) The management has represented that out of the opening balance at the beginning of the year amounting to Rs.216.28 Lakhs, an amount of Rs.97.47 Lakhs (Previous Year Rs.97.47 Lakhs) was due from subsidiary company (erstwhile a Partnership Firm in which the Company was a Partner and which was converted as a Private Limited Company during the financial year 2017-18) and that the above Advance arose on account of revaluation of land in the books of Partnership Firm prior to the commencement of the Companies Act, 2013 and represents the Companys share of surplus on account of such revaluation and credited to the Partners Current Account by the Partnership Firm and does not partake the character of Loan. Further the said subsidiary during the year has realized its asset and settled a sum of Rs.53.66 Lakhs and the balance of Rs.43.81 Lakhs has been written off as impairment loss during the year.

c) The management has represented that the remaining net opening balance amount of Rs.118.81 Lakhs (Previous Year Rs. 118.81 Lakhs) represents Trade Advances paid to a Company in which directors are interested before the commencement of the Companies Act, 2013 in the normal course of business on account of operative transactions and not in the nature of Loan. During the year, the said amount is received and as at March 31, 2020, there were no dues from such Related Party Company.

d) We have taken into account the representations made by the management as stated vide para (b) and (c) above, and based on our examination we report that, in our opinion, the Company has not granted loans, secured or unsecured to Companies, Firms, Limited Liability Partnerships or Other parties, covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act) and therefore further reporting under sub-clause a), b) and c) of clause (iii) of para 3 of the order does not arise.

4 In respect of matters stated in sub-para (a),(b), and (c) of para (iii) of this report regarding Advances which has been realized/adjusted during the year and with balance as at March, 31, 2020 amounting to Rs.Nil (Previous Year Rs. 216.28 Lakhs receivable from two parties), we have taken into account the representations made by the management and based on our examination, in our opinion such opening balance donot partake the character of Loans covered under Sec.185 and 186. Further such Opening Balances have been realized/adjusted during the course of the year. Further we report that the Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013, wherever applicable.

5 According to information and explanations given and representations made to us, the Company has received Unsecured Loans/Advances from Directors for the purpose of the business of the company and has further complied with the requirement of obtaining a written declaration made to the Company by such Director/s at the time of giving the money, to the effect that the amount is not being given to the Company out of funds acquired by such Director/s by borrowing or accepting loans or deposits from others. Therefore, such Unsecured Loans received from Directors fall out of the purview of the Definition of “Deposit” under the Companies (Acceptance of Deposits) Rules, 2014, as amended. Further according to information and explanations given to us, the Company has also received inter corporate loans, secured loans from director & bank and other unsecured Advances, which are explained to fall out of the purview of the Definition of “Deposit” under the Companies (Acceptance of Deposits) Rules, 2014, as amended. On such basis and judgment, we report that the Company has not accepted any deposits from the public and therefore further reporting under sub-clause (v) of para 3 of the order does not arise.

6 According to information and explanations given to us and based on the declarations made to us, we report that the Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act.

7 a) According to the information and explanations given to us and based on our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employee State Insurance, income-tax, sales tax, value added tax, duty of customs, excise, service tax, goods and service tax, cess and other material statutory dues have not generally been regularly deposited with the appropriate authorities during the year in time and there have been serious delays in a large number of cases.

According to the information and explanations given to us, no undisputed material amounts payable in respect of provident fund, esi, income tax, sales tax, value added tax, duty of customs, excise service tax, goods and service tax, cess and other material statutory dues were in arrears as at 31 March 2020 for a period of more than six months from the date they became payable excepting for Tax deducted at source under the Income Tax Act, 1961 for an amount of Rs.17.40 Lakhs relating to financial year 2019-20. The due date of such TDS remittance is 7th of the succeeding month. The management explained that such arrear Tax deducted at source has been remitted upto the date of this report.

b) According to the information and explanations given to us, there are no material dues of income tax/sales tax/service tax/GST/duty of customs/duty of excise/value added tax/cess and other statutory dues, which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, duty of excise, service tax, GST and value added tax have not been deposited by the Company on account of disputes:

Name of the Statute Nature of the Dues (along with Interest etc., where applicable) Amount [Rs.] (in lakhs) Period to which the amount relates Forum where dispute is pending
TNGST Sales Tax 54.59 A.Y1995-96 Honble High Court of Judicature Chennai
TNGST Sales Tax 89.37 A.Y1999-00 Representation Pending before Assessing authority on the direction by the High court of Judicature at Chennai
TNGST Sales Tax 61.66* A.Y1998-99
TNGST Sales Tax, AST 121.97 A.Y2000-01
* [Rs.30.83 lakhs, since paid]

8 According to information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution, bank, government or dues to debenture holders.

9 The Company did not raise any money by way of initial public offer or further public offer (including debt instruments). According to information and explanations given to us, Term loans wherever raised during the year were applied for the purposes for which those are raised.

10 According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported.

11 On the basis of information and explanations given to us by the management, 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.

12 (xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

13 According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14 According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully/partly convertible debentures during the year.

15 According to the information and explanations given to us and based on our examination of the records of the Company, in our opinion, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

16 In our opinion and according to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For CSK PRABHU & CO
Chartered Accountants
Firm Regd No: 002485 S
CSK PRABHU
Place: Coimbatore Partner
Date : 30.06.2020 M. No. 019811

Annexure - B to the Auditors Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act")

We have audited the internal financial controls over financial reporting of Sri Ramakrishna Mills (Coimbatore) Limited (“the Company”) as of 31 March 2020 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys 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 (‘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 companys 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 Companys 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 (the “Guidance Note”) 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 auditors 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 Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companys 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 companys 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 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 companys 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 31 March 2020, 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 CSK PRABHU & CO
Chartered Accountants
Firm Regd No: 002485 S
CSK PRABHU
Place: Coimbatore Partner
Date : 30.06.2020 M. No. 019811