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Kandagiri Spinning Mills Ltd.

BSE: 521242 | NSE: KANDAGIRI | Series: NA | ISIN: INE292D01019 | SECTOR: Textiles - Spinning - Cotton Blended

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Kandagiri Spinning Mills is not traded on NSE in the last 30 days

Annual Report

For Year :
2017 2015 2014 2013 2012 2011 2010 2009 2008

Auditor's Report

To the Members of Kandagiri Spinning Mills Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Kandagiri Spinning Mills Limited (“the Company”) which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

2. The Company''s 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 financial statements that give a true and fair view of the state of affairs of the Company, profit or loss 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these standalone 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 and the Order under section 143 (11) of the Act.

4. We conducted our audit of the standalone financial statements 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 standalone financial statements are free from material misstatement.

5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone 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 standalone 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 standalone financial statements.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, 2017, its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

8. 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act.

e. On the basis of written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect of 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 A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.

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, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has, in accordance with the generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its standalone financial statements.

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

(iv) The Company has provided requisite disclosures in the standalone financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on our audit procedures and relying on the Management representation we report that the disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management- Refer note 3.18 to the standalone financial statements.

9. 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 B” a statement on the matters specified in paragraphs 3 and 4 of the Order.

ANNEXURE “A” TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in paragraph 8(f) under ''Report on Other Legal and Regulatory Requirements'' of our report of even date)

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

1. We have audited the internal financial controls over financial reporting of Kandagiri Spinning Mills Limited (“the Company”) as of March 31, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

2. 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.

Auditor''s Responsibility

3. 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 (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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.

4. 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 standalone financial statements, whether due to fraud or error.

5. 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

6. 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 standalone 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 standalone 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 standalone financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

7. 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

8. In our opinion, to the best of our information and according to the explanations given to us, 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, 2017, 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.

“ANNEXURE B” TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 9 under ''Report on Other Legal & Regulatory Requirement'' section of our report of even date to the standalone financial statements of of Kandagiri Spinning Mills Limited (“the Company”) for the year ended March 31, 2017)

In respect of fixed assets:

1. (a) The company is maintaining proper records showing full particulars, including quantitative details and situation of the fixed assets.

(b) The fixed assets have been physically verified by the Management in a phased manner, designed to cover all the items over a period of three years, which, in our opinion, is reasonable having regard to the size of the company and nature of its business. Pursuant to the program, 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.

(c) The title deeds of immovable properties of the Company are held in the name of the Company.

2. Inventories have been physically verified during the year by the management at reasonable intervals, and no material discrepancies were noticed on such physical verification.

3. The Company has not granted any 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 and accordingly, the provisions of clause (iii) of paragraph 3 of the Order are not applicable to the Company.

4. According to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security.

5. According to the information and explanations given to us, the Company has not accepted any deposits from public and in respect of the deposits accepted from shareholders, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposit) Rules, 2014.

6. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148 of the Companies Act, 2013, and are of the opinion that prima facie, the prescribed account and records have been made and maintained.

7. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, records, the Company has been generally regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it with the appropriate authorities during the year. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31, 2017 for a period of more than six months from the date on when they became payable.

(b) According to the information and explanations given to us, there are no dues of Income tax, Wealth tax, Excise duty, Service tax and Customs duty which have not been deposited on account of any dispute with the relevant authorities. Details of dues towards sales tax and value added tax that have not been deposited as at March 31, 2017 on account of disputes are stated below: (Nature of dues, dues, period to which the amount relates, forum where dispute is pending) - Sales tax, Rs.35,909, Financial year 2000-01, Sales tax Appellate T ribunal.

8. In our opinion and according to the information and explanations given to us, the Company has defaulted in the repayment of dues to banks. The period and amount of default is as follows:

Principal

Bank

Principal

Due Amount

Due Date

Paid Amount

Paid on

State Bank of India WC Term Loan-7.80 Cr.

June’ 16

29,00,000

30-June-16

29,00,000

20-Jul-16

July’ 16

29,00,000

31-Jul-16

29,00,000

11-Aug-16

Aug’ 16

29,00,000

31-Aug-16

10,00,000

31-Oct-16

19,00,000

5-Nov-16

Sep’ 16

29,00,000

30-Sep-16

29,00,000

5-Nov-16

Oct’ 16

29,00,000

31-Oct-16

26,30,000

14-Nov-16

2,70,000

18-Nov-16

Nov’ 16

29,00,000

30-Nov-16

29,00,000

14-Dec-16

Dec’ 16

29,00,000

31-Dec-16

29,00,000

6-Jan-17

Corporate Loan - 10 Cr.

Oct’ 16

10,00,000

31-Oct-16

10,00,000

14-Nov-16

Nov’ 16

10,00,000

30-Nov-16

10,00,000

14-Dec-16

Dec’ 16

10,00,000

31-Dec-16

10,00,000

6-Jan-17

Principal

Bank

Principal

Due Amount

Due Date

Paid Amount

Paid on

Karnataka Bank Ltd., Wc Term Loan - 7.80 Cr. April’ 16

29,00,000

18-Apr-16

29,00,000

16-Jun-16

May’ 16

29,00,000

18-May-16

29,00,000

15-Jul-16

June’ 16

29,00,000

18-Jun-16

29,00,000

16-Aug-16

July’ 16

29,00,000

18-Jul-16

15,00,000

15-Sep-16

Aug’ 16

29,00,000

18-Aug-16

14.00.000

29.00.000

16-Sep-16

12-Nov-16

Sep’ 16

29,00,000

18-Sep-16

29,00,000

15-Dec-16

Oct’ 16

29,00,000

18-Oct-16

29,00,000

20-Dec-16

Nov’ 16

29,00,000

18-Nov-16

29,00,000

30-Jan-17

Dec’ 16

29,00,000

18-Dec-16

29,00,000

30-Jan-17

Jan’ 17

29,00,000

18-Jan-17

29,00,000

30-Jan-17

DPN Loan - 20.00 Cr. April’ 16

60,00,000

28-Apr-16

60,00,000

24-Jun-16

May’ 16

60,00,000

28-May-16

60,00,000

25-Jul-16

June’ 16

60,00,000

28-Jun-16

60,00,000

26-Aug-16

July’ 16

70,00,000

28-Jul-16

15,00,000

27-Sep-16

Aug’ 16

70,00,000

28-Aug-16

12,00,000 43.00.000 70.00.000

15-Oct-16 21-Oct-16 24-Nov-16

Sep’ 16

70,00,000

28-Sep-16

70,00,000

20-Dec-16

Oct’ 16

70,00,000

28-Oct-16

20,56,907

20-Dec-16

Nov’ 16

70,00,000

28-Nov-16

17.00.000 32,43,093 70.00.000

26-Dec-16 23-Jan-17 30-Jan-17

Dec’ 16

70,00,000

28-Dec-16

70,00,000

30-Jan-17

Jan’ 17

70,00,000

28-Jan-17

70,00,000

30-Jan-17

Axis Bank April’ 16

5,00,000

30-Apr-16

9,936

30-Apr-16

June’ 16

5,00,000

30-Jun-16

4,90,064 5,00,000

2-May-16 1-Jul-16

July’ 16

5,00,000

31-Jul-16

5,00,000

2-Aug-16

Sep’ 16

5,00,000

30-Sep-16

1,04,526

30-Sep-16

Oct’ 16

5,00,000

31-Oct-16

1,00,000 2,00,000 95,474 1,00,000

4-Oct-16 4-Oct-16 6-Oct-16 31-Oct-16

Nov’ 16

5,00,000

30-Nov-16

4.00.000 5.00.000

1-Nov-16 2-Dec-16

Dec’ 16

5,00,000

31-Dec-16

5,00,000

2-Jan-17

Interest

Bank

Interest

Due Amount

Due Date

Paid Amount

Paid on

State Bank of India WC Term Loan-7.80 Cr.

April’ 16

6,51,439

30-Apr-16

6,51,439

5-May-16

May’ 16

6,48,815

31-May-16

6,48,815

24-Jun-16

June’ 16

6,01,760

30-Jun-16

6,01,760

20-Jul-16

July’ 16

6,06,294

31-Jul-16

6,06,294

11-Aug-16

Aug’ 16

5,63,021

31-Aug-16

5,63,021

28-Oct-16

Sep’ 16

5,38,603

30-Sep-16

5,38,603

5-Nov-16

Oct’ 16

5,61,491

31-Oct-16

5,61,491

5-Nov-16

Nov’ 16

4,59,177

30-Nov-16

4,59,177

22-Dec-16

Dec’ 16

4,35,270

31-Dec-16

4,35,270

9-Jan-17

Jan’ 17

4,32,345

31-Jan-17

4,32,345

4-Feb-17

Feb’ 17

2,43,386

28-Feb-17

2,43,386

28-Mar-17

Mar’ 17

1,76,150

31-Mar-17

1,76,150

17-Apr-17

Corporate Loan - 10 Cr.

April’ 16

10,98,931

30-Apr-16

10,98,931

5-May-16

May’ 16

11,35,041

31-May-16

11,35,041

30-Jun-16

June’ 16

11,09,300

30-Jun-16

11,09,300

20-Jul-16

July’ 16

11,41,139

31-Jul-16

11,41,139

11-Aug-16

Aug’ 16

11,38,009

31-Aug-16

11,38,009

28-Oct-16

Sep’ 16

11,09,747

30-Sep-16

11,09,747

5-Nov-16

Oct’ 16

11,57,657

31-Oct-16

11,57,657

23-Nov-16

Nov’ 16

11,01,555

30-Nov-16

11,01,555

22-Dec-16

Dec’ 16

11,23,874

31-Dec-16

11,23,874

9-Jan-17

Jan’ 17

11,28,119

31-Jan-17

11,28,119

4-Feb-17

Feb’ 17

10,66,429

28-Feb-17

10,66,429

28-Mar-17

Mar’ 17

11,40,178

31-Mar-17

11,40,178

17-Apr-17

Karnataka Bank Ltd., Wc Term Loan - 7.80 Cr.

April’ 16

6,88,801

30-Apr-16

6,88,801

24-Jun-16

May’ 16

7,07,442

31-May-16

7,07,442

28-Jul-16

June’ 16

6,67,069

30-Jun-16

6,67,069

30-Aug-16

July’ 16

6,55,534

31-Jul-16

6,55,534

25-Oct-16

Aug’ 16

6,24,140

31-Aug-16

6,24,140

11-Nov-16

Sep’ 16

5,72,289

30-Sep-16

5,72,289

20-Dec-16

Oct’ 16

5,85,383

31-Oct-16

5,85,383

23-Jan-17

Nov’ 16

5,44,421

30-Nov-16

5,44,421

31-Jan-17

Dec’ 16

5,19,574

31-Dec-16

5,19,574

31-Jan-17

DPN Loan - 20.00 Cr.

April’ 16

12,48,602

30-Apr-16

12,48,602

29-Jun-16

May’ 16

12,16,589

31-May-16

12,16,589

1-Aug-16

June’ 16

11,10,390

30-Jun-16

11,10,390

30-Aug-16

July’ 16

10,81,028

31-Jul-16

10,81,028

25-Aug-16

Aug’ 16

10,15,866

31-Aug-16

10,15,866

24-Nov-16

Sep’ 16

9,32,234

30-Sep-16

9,32,234

20-Dec-16

Oct’ 16

9,43,093

31-Oct-16

9,43,093

20-Dec-16

Nov’ 16

8,61,118

30-Nov-16

3,19,907

23-Jan-17

5,41,211

31-Jan-17

Dec’ 16

7,72,780

31-Dec-16

7,72,780

31-Jan-17

Jan’ 17

6,50,658

31-Jan-17

6,50,658

12-Apr-17

Feb’ 17

2,71,525

28-Feb-17

2,71,525

12-Apr-17

Mar’ 17

2,01,292

31-Mar-17

2,01,292

12-Apr-17

Corporate Loan - 10 Cr.

April’ 16

5,70,721

30-Apr-16

5,70,721

29-Jun-16

May’ 16

5,90,090

31-May-16

5,90,090

28-July-16

June’ 16

5,71,289

30-Jun-16

5,71,289

30-Aug-16

July’ 16

5,90,340

31-Jul-16

5,90,340

25-Oct-16

Aug’ 16

5,90,961

31-Aug-16

5,90,961

28-Nov-16

Sep’ 16

5,72,758

30-Sep-16

5,72,758

28-Nov-16

Oct’ 16

5,98,759

31-Oct-16

4,84,133

28-Nov-16

1,14,626

20-Dec-16

Nov’ 16

5,79,086

30-Nov-16

5,79,086

20-Dec-16

Dec’ 16

5,79,969

31-Dec-16

5,79,969

31-Jan-17

Jan’ 17

5,81,319

31-Jan-17

5,81,319

13-Mar-17

Feb’ 17

5,08,383

28-Feb-17

8,383

13-Mar-17

5,00,000

12-Apr-17

Mar’ 17

5,66,622

31-Mar-17

5,66,622

12-Apr-17

Axis Bank Ltd

April’ 16

99,956

30-Apr-16

99,956

2-May-16

May’ 16

97,163

31-May-16

97,163

2-Jun-16

June’ 16

88,426

30-Jun-16

34,180

30-Jun-16

54,246

4-Jul-16

July’ 16

85,572

31-Jul-16

85,572

2-Jul-16

Aug’ 16

79,424

31-Aug-16

79,424

7-Sep-16

Sep’ 16

71,298

30-Sep-16

71,298

6-Oct-16

Oct’ 16

68,764

31-Oct-16

68,764

1-Nov-16

Nov’ 16

60,345

30-Nov-16

13,072

30-Nov-16

47,273

2-Dec-16

Jan’ 17

37,735

31-Jan-17

37,735

28-Feb-17

Feb’ 17

12,614

28-Feb-17

12,614

28-Apr-17

Mar’ 17

13,924

31-Mar-17

13,924

28-Apr-17

According to the information and explanations given to us, the company has not borrowed any moneys from a financial institution, government or in the form of debentures.

9. Based upon the audit procedures performed and the information and explanations given by the management, the term loans were applied for the purposes for which the loans were taken. The Company has not raised any money by way of initial public offer or further public offers including debt instruments. Hence reporting on utilization of such money does not arise.

10. Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company and no fraud of material significance on the Company by its officer''s or employee''s has been noticed or reported during the year.

11. Based upon the audit procedures performed and the information and explanations given by the management, 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, 2013.

12. In our opinion, the Company is not a Nidhi Company and accordingly the provisions of Clause 3 (xii) of the Order are not applicable to the Company.

13. In our opinion and according to the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013. The details of the transactions during the year have been disclosed in the standalone financial statements as required by the Accounting Standards. (Refer note - 3.8 to the standalone financial statements).

14. Based upon the audit procedures performed and the information and explanations given by the management, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.

15. Based upon the audit procedures performed and the information and explanations given by the management, the Company has not entered into any non - cash transactions with directors or persons connected with them. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

16. In our opinion, the Company is not required to be registered under section 45- IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

For M.S. Krishnaswami & Rajan

Chartered Accountants

Firm registration No.01554S

Salem R. Krishnen – Partner

May 6, 2017 Membership No.201133