1. We have audited the Financial Statements of Super Spinning Mills Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2024, the statement of Profit and Loss including other comprehensive income, the statement of changes in equity, the Cash flow statement, and notes to the financial statements for the year then ended, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the Financial Statements”).
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Financial Statements give the information required by the Companies Act, 2013 (“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 31 March 2024, its loss and other comprehensive income, changes in equity, and its cash flows for the year ended on that date.
Basis for opinion
3. We conducted our audit in accordance with the Standards on Auditing (“SAs”) specified under section 143(10) of the Act. Our responsibilities under those SAs 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”) 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 Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our opinion on the financial statements.
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 financial year ended 31 March 2024. 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. For each matter below, our description 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 be communicated in our report. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.
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Key Audit Matters
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How the key audit matter was addressed in our audit
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4.1 Impact on Going Concern Assumption as a result of discontinuation of Textile Activity and evaluation of impairment on the textile activity assets
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The Textile segment has incurred losses for various years and had been functioning below rated capacities and with varying revenue year to year. The Company has discontinued the textile segment activity during the year under report. The Company has also re-classified the Property, Plant and Equipment specifically related to textile segment activity as Investment Property during the year under report.
Considering the fact that the assets and liabilities of such discontinued activity (textile segment) have significant impact on the overall assets of the entire company and therefore affect the going concern principles. Considering the existence of doubt related to the conditions which cast significant doubt on going concern assumption and further the consequential assessment of impairment of such assets related to the discontinued activity as a cash generating unit, this has been considered as a key audit matter.
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We have evaluated the management’s assessment of the Company’s ability to continue as a Going Concern, which included Financial, Operational and other events/conditions. Our Evaluation of the assessment of Going Concern assumption included the following:
• Evaluation of the process, the management followed to make its assessment
• Assumptions on which the assessment is based and management’s plans for future action and alternate business plans available to the management
• Feasibility of management’s plans in the circumstances.
• Medium and long-term financing ability of the Company and management/group’s ability to fund and meet the company’s obligations under support arrangement.
• Past practices followed, strategies and alternate usage of assets of the company by the management, and Cash flow forecasts prepared by the management.
• Inquiries with the management of events or conditions beyond management’s assessment
• Reviewed subsequent events and facts that become known to us occurring between the date of the financial statements and the date of auditor’s report.
Based on the above assessment we have obtained sufficient appropriate audit evidence about the appropriateness of the management’s use of Going Concern assumption and concluded that there is no material uncertainty about the Company’s ability to continue as Going concern.
Further we have also evaluated the management’s estimate of the recoverable amount of the assets of the textile activity and the management’s conclusion and impairment provision arrived thereon.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. Our Opinion is not modified in respect of this matter.
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Key Audit Matters
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How the key audit matter was addressed in our audit
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4.2 Disputed tax & other liabilities (Refer Note No:3(c
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) & 36 (a)(I),(II) and (III) to the Financial Statements)
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The Company is required to discharge direct and indirect tax obligations under various legislations, as may be applicable.
The tax authorities have raised certain tax demands on the Company in respect of the past periods. The Company has disputed such demands and has appealed/ contested against them at appropriate forums. As at March 31, 2024 the Company has an amount of Rs. 666.60 Lakhs (Previous Year- Rs. 666.60 Lakhs) determined pertaining to various pending tax litigations.
Ind AS 37 requires the Company to perform an assessment of the probability of economic outflow on account of such disputed tax matters and determine whether any particular obligation needs to be recorded as a provision in the books of account or to be disclosed as a contingent liability. Considering the significant degree of judgement applied by the management in making such assessments and the resultant impact on the financial statements, we have considered it to be a key audit matter.
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In assessing the exposure of the Company for the tax litigations, we have performed the following procedures:
• Obtained an understanding of the process laid down by the management for performing their assessment taking into consideration past legal precedents, changes in laws and regulations etc.
• Assessed the processes and entity level controls established by the Company to ensure completeness of information with respect to tax litigations.
• Obtained suitable representations from the management with respect to tax litigations and the forum where they are pending including the issues under litigation.
• The grounds of dispute taken by Management were considered to enable us to take a judgement. These matters continue to remain in the same status as in the previous year. Our Opinion is not modified in respect of this matter.
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4.3 Fair value measurement of Investment in Equity Shares of Andhra Pradesh Gas Power Corporation Limited (Refer Note 6 to the Financial Statements)
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As at 31 March 2024, the cost of investment in 9,38,000 Equity Shares of Andhra Pradesh Gas Power Corporation Limited amounted to Rs. 1326.05 lakhs (Prev Year - Rs. 1326.05 Lakhs). The investment was remeasured at its fair value, which stood at Rs.Nil as at 31 March 2024 (Rs.403.59 Lakhs as at 31 March 2023)
The fair value of the investment in such investment are assessed based on assumptions that require the management to exercise their judgement. As a result the company recorded a total fair value adjustment for the year ended 31 March 2024 amounting to Rs. 403.59 Lakhs (for the year ended 31 March 2023 Rs.923.46 Lakhs). We focussed on this area due to significant carrying amount of the investment and the significant management judgement and estimates involved in measuring the fair value.
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We performed the following principal audit procedures in relation to the management’s estimation of the fair value of the investments:
a) Evaluated the design and implementation and tested the operating effectiveness of the controls (including techniques) relating to management’s assessment of fair value amount of investment.
b) Evaluated the Disclosures made in the financial statements and the related compliance with the requirements of the applicable accounting standards. Our Opinion is not modified in respect of this matter.
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Key Audit Matters
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How the key audit matter was addressed in our audit
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4.4 Provision for Electricity Claims (Refer Note 22 &
The Company is a shareholder of Andhra Pradesh Gas Power Corporation Limited (APGCL) and has been consuming power from the corporation in the past. The Company is also a power consumer with Southern Power Distribution Company Limited (SPDCL). There are several power disputes between APGCL, SPDCL and the Company (both in the capacity as shareholder of APGCL and as a power consumer of SPDCL) relating to past several years pending in different forums. The issues under dispute range from tariff rates, levy of wheeling charges, monthly rent consumption, peak hour energy allocation, surplus allocation charges, amongst others. Both APGCL and the Company have filed court cases against SPDCL and the issues are pending in various forums. The Company has obtained information that APGCL has suspended its operations as on date. Meanwhile an amount of Rs. 6957.64 Lakhs (Current Consumption Charges Rs.3,574.25 Lakhs and Surcharge Rs.3,383.39 Lakhs) appears as arrear outstanding in the electricity bills of SPDCL during the year. Despite the management’s best effort to obtain the details and basis of charge of such unilateral claim made by SPDCL, the company has not been able to obtain any information from SPDCL and APGCL. The management has made an overall assessment of all such claims. The management has also considered the fact that some of the claims by SPDCL have been settled by the Company to APGCL and may not fall back on the Company. The management has also reviewed the status of the various disputes pending in different forums. The management has also taken note of APGCL’s ability to timely defend legal cases considering that the corporation has suspended operations. Considering all the above factors, the management has estimated on the basis of available data an amount of Rs.1,055.32 Lakhs as Electricity Payables and such amount has been provided in the books of account as at 31 March, 2024. The balance of the disputed claim is disclosed as contingent liability in Note 36 (a) (iv) of the financial statements. Considering the significant degree of judgement applied by the management in making such assessments and the resultant impact on the financial statements, we have considered it to be a key audit matter.
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k Note 36(a)(IV) to the Financial Statements)
We have evaluated the following principal audit
procedures in relation to the management’s
estimation of the amount payable in this regard.
Our Evaluation of the provision for electricity claims
included the following:
• Obtained an understanding of the filed court cases and the issues pending in various forums.
• Assessed the controls established by the Company to ensure completeness of information with respect to litigations.
• Obtained suitable representations from the management with respect to litigations and the forum where they are pending including the issues under litigation.
• The grounds of dispute taken by Management were considered to enable us to take a judgement.
• The Company’s representation that APGCL was permitted to generate power and sell independently without depending on SPDCL and further that the claims from SPDCL is for the same supply of power from APGCL for which due charges have been paid.
• Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. Our Opinion is not modified in respect of this matter.
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Information Other than the Financial Statements and Auditor’s Report Thereon
5. The Company’s management and Board of Directors are responsible for the other information. The other information comprises the information in the Company’s Annual Report, but does not include the Financial Statements and our auditor’s report thereon.
6. The Other information is expected to be made available to us after the date of this auditors’ report. Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
7. 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.
8. 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 and take necessary actions, as applicable under the relevant laws and regulations.
Management’s and Board of Directors’ Responsibilities for the Financial Statements
9. The Company’s management and Board of Directors are 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 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 Indian Accounting Standards (“Ind AS”) specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.
10. 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
11. In preparing the Financial Statements, the management and Board of Directors are 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 and the board of directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
12. The Board of Directors are also responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibility for the audit of the financial statements
13. 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 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.
14. 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 Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system with reference to financial statements 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 and the board of directors.
• Conclude on the appropriateness of management and the board of director’s use of the going concern basis of accounting in preparation of financial statements 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.
15. 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.
16. 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.
17. 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
18. As required by the Companies (Auditor’s Report) Order, 2020 (“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 applicable.
19. (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 purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company, in electronic mode on servers physically located in India, so far as it appears from our examination of those books except for the matters stated in the paragraph 19 B (f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. Management has represented to us that the process of taking daily backups is in place, however, we are unable to comment on the same due to absence of backup logs. Refer Note 46 (ii) to the Financial Statements.
(c) The balance sheet, the statement of profit and loss (including other comprehensive income), the statement of changes in equity and the statement of cash flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
(e) On the basis of the written representations received from the directors as on 31 March 2024 and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March 2024 from being appointed as a director in terms of Section 164(2) of the Act;
(f) The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 19(A)(b) above on reporting under Section 143(3)(b) of the Act and paragraph 19(B)(f) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
(g) 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”
(B) 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:
a) The Company has disclosed the impact of pending litigations as at 31 March 2024 on its financial position in its financial statements, wherever applicable - Refer Note No:36 to the Financial Statements.
b) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
c) 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
d) (i) The Management has represented that, to the best of its knowledge and belief, as disclosed in Note
No: 46(xii)(A) to the Financial Statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Company or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) The Management has represented that, to the best of its knowledge and belief, as disclosed in Note No: 46(xii)(B), to the Financial Statements to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other person(s) or entity(ies) identified in any manner whatsoever (“Ultimate Beneficiaries”) by or on behalf of the Funding Parties or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(iii) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e) , as provided under (i) and (ii) above, contain any material mis-statement.
e) The company has not declared or paid any dividend during the year. Hence reporting in respect of compliance with section 123 of the Companies Act, is not applicable.
f) As stated in Note 44 of the Financial Statements and based on our examination which included test checks, except for instances mentioned below, the Company, in respect of financial year commencing on 01 April 2023, has used accounting softwares for maintaining its books of accounts, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software. Further, during the course of our audit, we have not come across any instance where the audit trail (edit log) facility has been tampered with, other than the consequential impact of the exception given below:
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Nature of exception noted:
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Details of Exception:
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1. Instances of accounting software(s) for maintaining books of account which did not have a feature of recording audit trail (edit log) facility for all relevant transactions recorded in the software.
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The software/application used for maintaining Payroll and Property, Plant and Equipment & Intangible Assets does not have a feature of recording audit trail (edit log) facility both at the application level and database level.
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2. Instances of accounting software(s) for maintaining books of account for which the feature of recording audit trail (edit log) facility was not operated throughout the year for all relevant transactions recorded in the software.
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We are not able to verify the effective date from which the audit trail (edit log) facility for the accounting software “Tally” (used for maintenance of the accounting records by the Company) was operated. Further the audit trail feature was not enabled at the database level throughout the year to log any direct data changes, for the accounting software “Tally” used for maintenance of the accounting records by the Company.
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(C) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended:
In our opinion and according to the information and explanations given to us, the remuneration paid/provided by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid/provided to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under section 197(16) of the Act, which are required to be commented upon by us.
For CSK Prabhu & Co.
Chartered Accountants Firm’s registration number: 002485S Mahesh Prabhu
Coimbatore Partner
25-05-2024 Membership number: 214194
UDIN: 24214194BKBGAA7927
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