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Century Textiles & Industries Ltd.

BSE: 500040 Sector: Industrials
NSE: CENTURYTEX ISIN Code: INE055A01016
BSE 00:00 | 24 Apr 2020 Century Textiles & Industries Ltd
NSE 05:30 | 01 Jan 1970 Century Textiles & Industries Ltd

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OPEN 292.80
PREVIOUS CLOSE 296.25
VOLUME 223628
52-Week high 657.00
52-Week low 220.10
P/E 4.67
Mkt Cap.(Rs cr) 3,176
Buy Price 284.35
Buy Qty 200.00
Sell Price 291.95
Sell Qty 100.00
OPEN 292.80
CLOSE 296.25
VOLUME 223628
52-Week high 657.00
52-Week low 220.10
P/E 4.67
Mkt Cap.(Rs cr) 3,176
Buy Price 284.35
Buy Qty 200.00
Sell Price 291.95
Sell Qty 100.00

Century Textiles & Industries Ltd. (CENTURYTEX) - Auditors Report


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Company auditors report

To the Members of Century Textiles and Industries Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of CenturyTextiles and Industries Limited ("the Company") which comprise the Balancesheet as at March 31 2019 the Statement of Profit and Loss including the statement ofOther Comprehensive Income the Cash Flow Statement and the Statement of Changes in Equityfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019its profit including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sResponsibilities for the Audit of the Standalone Ind AS Financial Statements' sectionof our report. We are independent of the Company in accordance with the ‘Code ofEthics' issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2019. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
Recognition of MAT credit (as described in note 2.6 and 16 of the financial statements)
The Company has recognized Minimum Alternate Tax (MAT) credit receivable of Rs. 373.54 crores (as deferred tax asset) as at 31st March 2019. The recognition of MAT credit is a key audit matter as its recoverability within the allowed time frame in- volves significant estimate of the financial projec- tions availability of sufficient taxable income in the future and significant judgements in the interpreta- tion of tax regulations and tax positions adopted by the Company. • Our audit procedures included considering the Company's accounting policies with respect to recognition of MAT credit and assessing compliance with the policies in terms of Ind AS 12 "Income Taxes"
• We performed test of controls over recognition of MAT credit through inspection of evidence of performance of these controls.
• We performed the following tests of details:
• We involved tax specialists who evaluated the Company's tax positions by comparing it with past precedents
• We discussed the future business plans and financial projections as approved by the Board of Directors.
• We assessed the management's long term financial projections and the key assumptions used in the projections by comparing it to the approved business plan. We compared the projections with past trends and enquired for the significant variations.
• We assessed the disclosures in the Standalone Ind AS financial statements in accordance with the requirements of Ind AS 12 "Income Taxes".
Litigations and claims (as described in note 2.23 37 and 38 of the financial statements)
The Company operates in various states within India exposing it to a variety of different Central and State/Local laws regulations and interpretations thereof. • Our audit procedures included considering the company's policies and procedures with respect to identifying evaluating and accounting for litigation claims and assessments and assessing compliance with the policies in terms of Ind AS 37
In the normal course of business provisions and contingent liability disclosures for litigations and claims may arise from direct and indirect tax proceedings legal proceedings including regulatory and other government/department proceedings as well as investigations by authorities and commercial claims. • We tested the design and operating effectiveness of the Company's key controls over the identification estimation monitoring accounting / disclosure of Provision for disputed matters and Contingent liabilities. We read the minutes of meeting of Board of Directors to conclude on the effectiveness of management's review controls
• We performed the following tests of details:
At 31 March 2019 the Company contingent liabilities were Rs 1170.30 crores and provisions for legal matters aggregated Rs 355.46 crores. • For selected samples we obtained direct confirmation from the Company's external counsel on his assessment of the expected likely outcome of the matter. We evaluated the responses received from the external counsel compared it with the management's final assessment on the matter and the consequent treatment i.e. recognition / disclosure in the financial statements
Given the inherent complexity and magnitude of potential exposures across the Company and the judgement necessary to estimate the amount of provisions required or to determine required disclosures this is a key audit matter. • We examined legal and professional fee expense accounts for assessment of completeness of the identified matters
• For significant cases where the Company has recognized provision we assessed the determination of amounts recognized. For samples selected we tested the underiying data and assumptions used in the determination of provision
• For cases where provision was not recognized by the Company we assessed the disciosure made in the financial statements

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe standalone Ind AS financial statements and our auditor's report thereon.

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

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

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

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 standalone Ind AS financialstatements for the financial year ended March 31 2019 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 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 bestof our knowledge and belief were necessary for the purposes of our audit;

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

(c) The Balance Sheet the Statement of Profit and Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct; (f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate Report in"Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year ended March 31 2019 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to 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 standalone Ind AS financial statements – Refer Note 38 to thestandalone Ind AS financial statements;

(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts – Refer Note 15 to the standalone Ind AS financial statements;

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company

ANNEXURE ‘1' TO INDEPENDENTAUDITOR'S REPORT

Annexure 1 referred to in paragraph 1 under the heading ‘Report on Other Legal andRegulatory Requirements' of our report of even date

i) (a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in property plant and equipments are held in thename of the Company except the following

1. Land measuring 29 acres at a carrying value of 4.03 crores at Textiles Division.

2. Land measuring 6.31 acres at a carrying value of 0.01 crores at Real EstateDivision.

As explain to us The Company is in process of getting the above lands transferred inCompany's name.

ii) The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification. Inventories lying with third parties have beenconfirmed by them as at March 31 2019 and no material discrepancies were noticed inrespect of such confirmations.

iii) (a) The Company has granted loans to a company covered in the register maintainedunder section 189 of the Companies Act 2013. In our opinion and according to theinformation and explanations given to us the terms and conditions of the grant of suchloans are not prejudicial to the company's interest.

(b) The Company has granted loans that are re-payable on demand to a company coveredin the register maintained under section 189 of the Companies Act 2013. We are informedthat the Company has not demanded repayment of any such loan during the year and thusthere has been no default on the part of the parties to whom the money has been lent. Thepayment of interest has been regular.

(c) There are no amounts of loans granted to companies firms or other parties listedin the register maintained under section 189 of the Companies Act 2013 which are overduefor more than ninety days. iv) In our opinion and according to the information andexplanations given to us provisions of section 185 and 186 of the Companies Act 2013 inrespect of loans to directors including entities in which they are interested and inrespect of loans and advances given investments made and guarantees and securitiesgiven have been complied with by the company.

v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable.

vi) We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of cost records under section148(1) of the Companies Act 2013 related to the manufacture and are of the opinion thatprima facie the specified accounts and records have been made and maintained. We havenot however made a detailed examination of the same.

vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax goods and service tax cess and other statutory dues have generally been regularlydeposited with the appropriate authorities though there has been a slight delay in a fewcases.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax duty of custom duty of excise value added tax goods and service tax cessand other statutory dues were outstanding at the year end for a period of more than sixmonths from the date they became payable.

(c) According to the records of the Company the dues of income-tax sales-tax servicetax duty of custom duty of excise value added tax and cess on account of any disputeare as follows:

Name of Statute Nature of dues (Rs. in Crores) Period to which the amount relates Forum where the dispute is pending
Customs Act 1962 Custom Duty 18.45 2004-2017 Tribunal [CESTAT]
12.76 1987-2018 Departmental Authorities
21.99 1997-2018 Supreme Court
39.56 1994-2018 High Court
The Central Excise Act 1944 Excise Duty 2.21 1994-2018 Tribunal [CESTAT]
14.84 2006-2017 Commissioner Appeals
3.62 1994-2018 Departmental Authorities
58.95 2002-2018 Supreme Court
Sales Tax Sales Tax 9.28 1999-2018 High Court
0.29 1994-2008 Tribunal [CESTAT]
11.38 1987-2017 Departmental Authorities
0.14 2005-2008 Supreme Court
The Finance Act 1994 Service tax 0.95 2005-2010 High Court
4.89 1994-2018 Tribunal [CESTAT]
2.09 1994-2018 Departmental Authorities
Income tax Act1961 Income Tax 4.57 2012-2016 High Court

*Net of deposits

viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowing to afinancial institution bank or government or dues to debenture holders. ix) In our opinionand according to the information and explanations given by the management the Company hasutilized the monies raised by way of term loans for the purposes for which they wereraised. x) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given by the management we report that no fraud by the company or no fraudon the company by the officers and employees of the Company has been noticed or reportedduring the year.

xi) According to the information and explanations given by the management themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.

xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.

xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of Companies Act 2013. xvi) According to theinformation and explanations given to us the provisions of section 45-IA of the ReserveBank of India Act 1934 are not applicable to the Company.

ANNEXURE ‘2' TO INDEPENDENTAUDITOR'S REPORT

Annexure 2 to the Independent Auditor's Report of even date on the Standalone FinancialStatements of Century Textiles and Industries Limited Report on the Internal FinancialControls 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 CenturyTextiles and Industries Limited ("the Company") as of March 31 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these standalone financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls and both issuedby the Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these standalone financial statements was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to thesestandalone financial statements and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting with reference to these standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlsover financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to theseFinancial Statements

A company's internal financial control over financial reporting with reference to thesestandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial control over financial reporting with referenceto these standalone financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting WithReference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these standalone financial statementsand such internal financial controls over financial reporting with reference to thesestandalone financial statements were operating effectively as at March 31 2019 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Sudhir Soni

Partner

Membership Number: 41870

UDIN: 19041870AAAAAN9964

Place of Signature: Mumbai

Date: May 3 2019


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