To
The Members of Aadi Industries Ltd
Report on the Audit of Financial Statements
Disclaimer of Opinion
We have audited the accompanying financial statements of Aadi Industries Limited
(‘the Company), which comprises the Balance Sheet as at 31st March 2023,
the statement of Profit and Loss (including Other Comprehensive Income), Statement of
Changes in Equity and statement of cash flows for the year then ended, and notes to
financial statements, including a summary of the significant accounting policies and other
explanatory information.
Because of the significance of the matters described in the Basis for Disclaimer of
Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence
to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the
financial statements.
Basis for Disclaimer of Opinion
Management has not been able to provide any cash credit loan statement or loan
confirmation for Rs 35,00,000/- as on 31st March, 2023 reflected as borrowings under
current financial liabilities. Accordingly, in the absence of sufficient and appropriate
evidence to our satisfaction, we are unable to satisfy ourselves on the cash credit limit
and bank balance.
As a result of these matters, we were unable to determine whether any adjustments might
have been found necessary in respect of recorded or unrecorded transactions in the Balance
Sheet, and the corresponding elements making up the Statement of Profit and Loss and Cash
Flow Statement.
Material uncertainty related to Going Concern
We draw attention to note 26 of the financial statements, which indicates that the
Company has incurred a loss after tax of Rs 17.69 Lakhs for the year ended 31st
March 2023. There has been significant decline in the key financial ratios on account of
the persistent loss in preceding previous years.
In the opinion of the Company, based on the reasons mention in note no 26 company
expects to realise its assets and discharge its liabilities in the normal course of
business and hence the financial statements have been prepared on a going concern basis.
The said assumption of going concern is inter-alia dependent on the Companys ability
to achieve improvements in liquidity and turnaround in its business operations. Though a
material uncertainty exists on the Companys going concern assumption, Companys
management is of the view that there are mitigating factors to such uncertainties
including discussions with infusion of funds by promoters, orders on hand etc.
Our conclusion on the financial statement 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.
Refer basis of opinion and emphasis of matter paragraph for key audit matter during the
year under consideration. Other than that there has been no Key Audit Matter identified
given the fact of no or minimum business operations of the Company.
Information Other than the Financial Statements and Auditors Report Thereon
The Companys management and Board of Directors are responsible for the other
information. The other information comprises the information included in the Companys
annual report, but does not include the financial statements and our auditors report
thereon.
Our opinion on the financial statements does not cover the other information and we do
not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the 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.
Managements Responsibility for the Financial Statements
The Companys management and Board of Directors are responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the
preparation and presentation 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 Indian Accounting
Standards (Ind AS) prescribed under Section 133 of the Act, read with Companies (Indian
Accounting Standards) Rules, 2015, as amended and other accounting principles generally
accepted in India. 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 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 and Board of Directors are
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.
Board of Directors is also responsible for overseeing the Companys financial reporting
process.
Auditors Responsibility for the 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
Act, we are also responsible for expressing our opinion on whether the Company has
adequate internal financial controls 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.
? 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.
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 Section 197(16) of the Act, we report that the Company has paid
remuneration if any to its directors during the year in accordance with the provisions of
and limits laid down under Section 197 read with Schedule V to the Act.
2. As required by the Companies (Auditors 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.
3. 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. Except for the matters described in the basis of disclaimer of opinion paragraph, 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 (including other comprehensive
income), statement of changes in equity and statement of cash flow dealt with by this
Report are in agreement with the books of account;
d. Except for the effects of the matter described in the basis of disclaimer of opinion
paragraph, in our opinion, the aforesaid financial statements comply with the Indian
Accounting Standards prescribed under Section 133 of the Act
e. On the basis of the written representations received from the directors as on 31st
March 2023 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March 2023 from being appointed as a director in terms
of Section 164 (2) of the Act;
f. The disclaimer of opinion relating to the maintenance of accounts and other matters
connected therewith are as stated in the basis of disclaimer of opinion paragraph.
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"; 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:
1. The Company does not have any pending litigations as on 31st March, 2023
which would impact its financial position other than that mentioned in the basis of
opinion paragraph and in the financials;
2. The Company has made provision, as required under the applicable law or accounting
standards, for material foreseeable losses, if any, on long-term contracts including
derivative contracts.
3. There has been no delay in transferring amounts required to be transferred to the
Investor Education and Protection Fund.
4. The management has represented that, to the best of its knowledge and belief, 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 persons
or entities, 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 to or on behalf of the Ultimate
Beneficiaries.
5. The management has represented, that, to the best of its knowledge and belief, no
funds have been received by the Company from any persons or entities, 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 persons or entities identified in any
manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding
Party or
- Provide any guarantee, security or the like from or on behalf of the Ultimate
Beneficiaries; and
6. Based on such audit procedures as considered reasonable and appropriate in the
circumstances, nothing has come to our notice that has caused us to believe that the
representations under subclause (h) (4) and (h) (5) contain any material mis-statement.
For RAK CHAMPS & CO LLP. CHARTERED ACCOUNTANT
Firm Registration No. 131094W
RAMANATHA SHETTY M. No. 218600 UDIN: 23218600BGQJTE4981
Place: Mumbai
Date: 26/05/2023
Annexure - A to the Independent Auditors Report
The Annexure referred to in Independent Auditors Report to the members of the Company
on the Ind AS financial statements for the year ended 31st March 2023,
according to the information and explanations given to us and on the basis of our
examination of the records of the Company, we report that:
i. Property, Plant and Equipment:
a. (A) The Company has maintained proper records showing full particulars, including
quantitative details and situation of Property, Plant and Equipment.
(B) The Company does not have any intangible asset. Accordingly, clause 3(i)(a)(B) of
the order is not applicable.
b. The Company has a regular programme of physical verification of its Property, Plant
and
Equipment by which Property, Plant and Equipment are verified in a phased manner over a
period of three years. In accordance with this programme, certain Property, Plant and
Equipment were verified during the year and no material discrepancies were noticed on such
physical verification. In our opinion, this periodicity of physical verification is
reasonable having regard to the size of the Company and the nature of its assets.
c. The company does not have any immovable property. Accordingly, clause 3(i)(c) of the
order is not applicable.
d. The Company has not revalued any of its property, plant and equipment (including
Right-of-use assets) or Intangible assets or both during the year.
e. There are no proceedings initiated or pending against the Company for holding any
benami property under the Prohibition of Benami Property Transactions Act, 1988 and rules
made thereunder.
ii. Inventory:
a. There are no inventories in the year under consideration. Hence, there is nothing to
report under this clause.
b. We are unable to provide an opinion on clause 3(ii)(b) of the Order for the reasons
stated in the basis for disclaimer of opinion paragraph. However during the year under
consideration there has been no utilization of working capital borrowed funds and no
quarterly statements has been filed with the banks.
iii. Loans, Guarantees, Security and Investment:
The company has not made investments in or granted any loans and advances in the nature
of loans, secured or unsecured, to companies, firms, limited liability partnerships or any
other parties during the year. Accordingly, the provision of the clause 3(iii) and its
sub-clauses of the Order is not applicable to the company.
iv. Loans, Guarantee and Advances to Director of Company:
The Company has not made investments in or granted any loans, guarantees or security to
any entity or person. Accordingly, the provision of the clause 3(iv) of the Order is not
applicable to the company.
v. Public Deposits:
The Company has not accepted any deposits from the public within the meaning of the
directives issued by the Reserve Bank of India, provisions of section 73 to 76 of the Act,
any other relevant provisions of the Act and the relevant rules framed thereunder.
vi. Maintenance of costing records:
As specified in Rule 3 of the Companies (Cost Records and Audit) Rules, 2014, the
Company is not engaged in the business of production of goods or providing of services.
Accordingly, the requirement of maintaining cost records in accordance with Section 148(1)
of the Act read with the aforementioned Rules is not applicable to the Company for the
period under review.
vii. Deposit of statutory liabilities:
a. According to the information and explanations given to us and on the basis of our
examination of the records of the Company, amounts deducted/ accrued in the books of
account in respect of undisputed statutory dues including Goods and Services Tax
(‘GST), Provident fund, Employees State Insurance, Income-tax, Duty of Customs,
Cess and other material statutory dues have generally been regularly deposited with the
appropriate authorities.
According to the information and explanations given to us, no undisputed amounts
payable in respect of GST, Provident fund, Employees State Insurance, Income-tax, Duty of
Customs, Cess and other material statutory dues were in arrears as at 31 March 2023 for a
period of more than six months from the date they became payable. However, company has
defaulted in deducting with TDS as required by the provisions of Income Tax Act, 1961.
b. According to the information and explanations given to us, there are no dues of GST,
Provident fund, Employees State Insurance, Income-tax, Sales tax, Service tax, Duty of
Customs, Value added tax, Cess or other statutory dues which have not been deposited by
the Company on account of disputes, except for the following:
Nature of Dues |
Amount (In Lakhs) |
Period to which amount relates |
Forum where dispute is pending |
| Income Tax |
237.09/- |
A.Y. 2010-2011 |
CIT(A) 22 |
| Income Tax |
621.76/- |
A.Y. 2011-2012 |
CIT(A) 22 |
| Income Tax |
225.39/- |
A.Y. 2012-2013 |
CIT(A) 22 |
| Income Tax |
351.38/- |
A.Y. 2014-2015 |
CIT(A) 22 |
viii. Previously unrecorded income:
The Company has not surrendered or disclosed any transactions, previously unrecorded as
income in the books of account, in the tax assessments under the Income-tax Act, 1961 as
income during the year.
ix. Default in repayment of borrowings:
a. Company has been declared as NPA by the Banks on account of default in repayment of
loan.
The said default continues as on date. However. we are unable to provide the details of
the default for the reasons stated in the basis for disclaimer of opinion paragraph.
b. The Company has not been declared a wilful defaulter but declared as NPA by any bank
or financial institution or government or government authority.
c. The Company has not taken any term loan except loan mentioned in basis of disclaimer
of opinion.
d. We report that no funds have been raised on short-term basis by the Company during
the year.
Accordingly, clause 3(ix)(d) of the Order is not applicable.
e. We report that the Company has not taken any funds from any entity or person on
account of or to meet the obligations of its subsidiaries as defined under the Companies
Act, 2013. Accordingly, clause 3(ix)(e) of the Order is not applicable.
f. We report that the Company has not raised loans during the year on the pledge of
securities held in its subsidiaries as defined under the Companies Act, 2013. Accordingly,
clause 3(ix)(f) of the Order is not applicable.
x. Funds raised and utilization:
a. The Company has not raised any moneys by way of initial public offer, further public
offer (including debt instruments) or term loans during the year. Accordingly, paragraph
3(x)(a) of the Order is not applicable to the Company.
b. The Company has not made any preferential allotment or private placement of shares
or fully or partly convertible debentures during the year. Accordingly, clause 3(x)(b) of
the Order is not applicable.
xi. Fraud and whistle-blower complaints:
a. No material fraud by the Company or on the Company by its officers or employees has
been noticed or reported during the course of our audit.
b. No report under sub-section (12) of Section 143 of the Companies Act, 2013 has been
filed by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and
Auditors) Rules, 2014 with the Central Government.
c. We have taken into consideration the whistle blower complaints received by the
Company during the year while determining the nature, timing and extent of our audit
procedures.
xii. Nidhi Company:
The Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not
applicable.
xiii. Related Party Transactions:
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 Indian Accounting Standards.
xiv. Internal Audit:
a. The Company has an internal audit system commensurate with the size and nature of
its business.
b. We have considered the internal audit reports of the Company issued till date for
the period under audit.
xv. Non-Cash Transactions:
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.
xvi. Registration under RBI act:
The Company is not required to be registered under section 45-IA of the Reserve Bank of
India Act 1934. Accordingly, paragraph 3(xvi) of the Order is not applicable to the
Company.
xvii. Cash Losses:
The Company has incurred cash losses of Rs 16.67 Lakhs and Rs 34.07 Lakhs for the year
ended 31st March, 2023 and 31st March, 2022 respectively.
xviii. Resignation of Statutory Auditors:
There has been no resignation of the statutory auditors during the year. Accordingly,
clause 3(xviii) of the Order is not applicable.
xix. Material uncertainty on meeting liabilities:
According to the information and explanations given to us and on the basis of the
financial ratios, ageing and expected dates of realisation of financial assets and payment
of financial liabilities, other information accompanying the financial statements, our
knowledge of the Board of Directors and management plans and based on our examination of
the evidence supporting the assumptions and for the reasons stated in note no 26 of the
financial statements, we believe that that material uncertainty exists as on the date of
the audit report that the Company may not be capable of meeting its liabilities existing
at the date of balance sheet as and when they fall due within a period of one year from
the balance sheet date.
xx. Unspent CSR:
The company is not liable for spending amount under CSR under sub-section (5) of
Section 135 of the Companies Act, 2013 pursuant to any project. Accordingly, clauses
3(xx)(a) and 3(xx)(b) of the Order are not applicable.
xxi. Qualified CARO in Subsidiary:
The company has no subsidiary companies. Accordingly, clause 3(xxi) of the Order is not
applicable.
For RAK CHAMPS & CO LLP. CHARTERED ACCOUNTANT
Firm Registration No. 131094W
RAMANATHA SHETTY M. No. 218600 UDIN: 23218600BGQJTE4981
Place: Mumbai Date: 26/05/2023
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")
Opinion
We have audited the internal financial controls over financial reporting of AADI
Industries Limited ("the Company") as of 31st March 2023 in
conjunction with our audit of the Ind AS financial statements of the Company for the year
ended on that date.
In our opinion, the Company has, in all material respects, an adequate internal
financial controls system over financial reporting and such internal financial controls
over financial reporting were operating effectively as at 31st March 2023,
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.
Managements Responsibility for Internal Financial Controls
The Companys management and the Board of Director are responsible for establishing and
maintaining internal financial controls based on the internal financial controls with
reference to financial statements 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 have 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 with reference to Financial Statements
A companys internal financial controls with reference to financial statements 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 controls
with reference to financial statements include 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.
For RAK CHAMPS & CO LLP. CHARTERED ACCOUNTANT
Firm Registration No. 131094W
RAMANATHA SHETTY M. No. 218600 UDIN: 23218600BGQJTE4981
Place: Mumbai Date: 26/05/2023
+91-9892691696
