Aditya Forge Auditors Report


TO THE MEMBERS OF - ADITYA FORGE LIMITED

Report on the Audit of the Financial Statements

Opinion

I have audited the accompanying financial statements of M/s. Aditya Forge Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, (hereinafter referred to as "the financial statements").

In my opinion and to the best of my information and according to the explanations given to me, 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 Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, the Losses and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

I conducted my audit of the financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. My responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of my report. I am of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the independence requirements that are relevant to my audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion on the financial statements.

Emphasis of Matter

I draw your attention to Note 30 to the financial statements, which describe the managements assessment of the impact of the outbreak of Corona Virus (COVID-19) on the business operations of the Company. The management believes that no adjustments are required in the financial statements as it does not impact the current financial year, however, in view of the various preventive measures taken (such as social distancing and similar restrictions by the Government of India, travel restrictions etc.) and highly uncertain economic environment, a definitive assessment of the impact on the subsequent periods is highly dependent upon circumstances as they evolve.

Due to the COVID-19 situations, I was not able to observe the year-end physical verification of Inventory that has been carried out by the management. Consequently, I have performed alternate procedures to audit the existence of Inventory as per the guidance provided in SA 501 "Audit Evidence - Specific Considerations for selected items" and have obtained sufficient appropriate audit evidence to issue my unmodified opinion on these Financial Statements.

My opinion is not modified in respect of above matters.

Key Audit Matters

Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

I have determined that there are no key audit matters to communicate in my report.

Information other than the Financial Statement and Auditors Report thereon

The Companys Board of Directors is responsible for preparation of the other information. The other information comprises the information including Boards Report including Annexure to Boards Report, Corporate Governance and Shareholders Information, but does not include the financial statements and my auditors report thereon;

My opinion on the financial statements does not cover the other information and I will not express any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my 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 my knowledge obtained in the audit, or otherwise appears to be materially misstated.

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

Responsibility of Management for Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other 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 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 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 is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so;

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

Auditors Responsibilities for the Audit of the Financial Statements

My 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 my 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, I exercise professional judgment and maintain professional scepticism 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 my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, I am also responsible for expressing my opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. I consider quantitative materiality and qualitative factors in (i) planning the scope of my audit work and in evaluating the results of my work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

I 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 I identify during my audit.

I also provide those charged with governance with a statement that I 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 my independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, I 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. I describe these matters in my auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my 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

As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, I give in the "Annexure-A", a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

As required by Section 143(3) of the Act, we report that:

a) I have sought and obtained most of the information and explanations which to the best of my knowledge and belief were necessary for the purposes of my audit;

b) In my opinion, proper books of account as required by law have been kept by the Company so far as it appears from my examination of those books;

c) The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, statement of changes in equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In my opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent applicable;

e) On the basis of the written representations received from the directors as on 31 March, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2021 from being appointed as a director in terms of Section 164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to mu separate report in "Annexure-B". My report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting;

g) With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended:

In my opinion and to the best of my information and according to the explanations given to me, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act; and

h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in my opinion and to the best of my information and according to the explanations given to us:

i. Subject to what is said in contingent liabilities, the Company does not have any pending litigations which would impact its financial position.

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

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For, Harsha Nikhilchandra Bhatt,
Chartered Accountant
Place: Vadodara
Date: 30th August 2021
(Harsha N Bhatt)
Membership No. 155589
UDIN: 21155589AAAABG6891

"ANNEXURE - A" TO THE INDEPENDENT AUDITORS REPORT

CARO 2016 Report on the financial statement of ADITYA FORGE LIMITED for the year ended March 31, 2021

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements ‘section of my report of even date)

To the Member of ADITYA FORGE LIMITED

On the basis of records produced to me for my verification/ examination as I considered appropriate and in terms of information and explanations given to me for my enquiries, I state that;

i. In respect of its fixed assets:

a) The Company had maintained records showing full particulars including quantitative details and situation of the fixed assets. According to the information and explanation given to me, maintained records got affected due to weather and frequent shifting. The same requires to be regenerated/updated on the basis of available information.

b) All the fixed assets have not been physically verified by the management during the year but there is regular program of verification, which in my opinion is reasonable, having regard to the size of the company and nature of its assets. As informed to me, no material discrepancies were noticed on such physical verification.

c) According to the information and explanations given by the management the title deeds of immovable properties included in fixed assets are held in the name of the Company.

ii. In respect of its inventories:

a) According to the information and explanation given to me, physical verification of heavy articles/ products is costly and laborious and not possible manually. In such cases no procedure of physical verification is followed. In other cases periodical test check was applied. In my opinion and according to the information and explanation given to me, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

b) According to the information and explanations given by the management, no material discrepancies were noticed on such physical verification.

iii. In respect of the loans, secured or unsecured, granted by the company to companies, firms or other parties.

a) The Company has not granted loan to firms and other parties covered in the register maintained under section 189 of the Companies Act, 2013. Hence no reporting is given on this clause.

b) The Company has taken loan under the section 189 of companies act, 2013 & its repayable on demand.

c) According to the information and explanations given to me all other terms and conditions (except NIL rate of Interest) for such loans are not prima facie prejudicial to the interest of the company.

iv. In respect Loans, Investments, Guarantees and Securities.

In my opinion and according to the information and explanations given to me, provisions of section 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and guarantee and securities given have been complied with by the Company.

v. In respect of deposits from public

According to the information and explanation given to me, the Company has not accepted any deposit from the public during the year under audit. Therefore the provisions of Clause (v) of paragraph 3 of the CARO 2016 are not applicable to the Company.

According to the information and explanation given to me, the Board has made reporting of disclosure of details of outstanding money or loan received or transactions by a company but not considered as deposits in terms of rule 2(l)(c) of the Companies (Acceptance of Deposits) Rules, 2014 by filing e-form DPT-3 as notified by Ministry of Corporate Affairs vide Notification No. GSR 42(E) dated 27th August 2021.

vi. In respect of maintenance of cost records

I have broadly reviewed the books of account maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the central Government under Section 148 (1) of the Companies Act, 2013 in respect of Companys product to which the said rules are made applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. I have, however not made a detailed examination of the records with a view to determine whether they are accurate.

vii. In respect of statutory dues:

a) According to the records of the Company, undisputed statutory dues including Employees State Insurance, Sales Tax, Wealth Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues have been deposited with appropriate authorities.

viii. According to the information and explanation given to me, following amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2021 for a period more than six months from the date of becoming payable.

There were disputed statutory dues of the company that have not been deposited on account of matters pending before appropriate authorities. The same are as below;

Sr. No. Name of the Statue Nature of the Due Amount Period to which the amount relates Forum where dispute is pending
1 Central Excise Excise Demand 36,10,204/- F.Y. 2013-14 Appeal pending before appellate Authority
2 Income Tax Tax & Interest 74,04,830/- F.Y 2012- 13, 2013- 14, 2014- 15 Commissioner of Income Tax Appeal Baroda

ix. In respect of dues to financial institution /banks/debentures.

Madhavpura Mercantile Co-op Bank Limited(MMCB) is under Liquidation, as the result of which the company is not able to do banking transaction with it. The bank has filed a case against the company in the Court of Board of Nominees. The company has provided for Interest of Rs. 1,92,11,140 to arrive at the figure for which case is filed by the Bank with the Court of Board of Nominees as per the Notice No. MMCB/HO/44/229/2011-12 dated 4th January, 2012 issued to the company by MMCB. Interest from the date of decree on the outstanding amount of the suit is yet to be charged to the Profit and loss account. The Company had shown their willingness to settle the account as per OTS offered to them by the Bank (MMCB) vide their letter No. MMCB/SHB/43/10/11 Dated 10/06/2010. The request of Company is pending. In the meanwhile the MMCB has offered new OTS Scheme. The Company has shown their willingness subject to arriving at OTS amount which was offered to the Company vide their Letter dated 10th June 2010 for an amount of Rs. 4.76crores. The necessary discussion between the Company and MMCB is under way.

According to information and explanation given to us the company has filed a counter claim of Rs. 12,16,19,311/- on account of sudden closure of Banks Branch at Vadodara, excessive charging/ recovering of interest from working capital facilities forcing the company to face financial crunch resulting into loss of Export orders etc.

Further according to the information and explanations given to me, the Company has been identified as Viable Sick Industrial Enterprise by Government of Gujarat, Industries Commissionerate, accepting the TEV Report of GITCO, vide their Communication Reference - IC/IM/VSIE/SUReg/2019/154485 dated 12-06-2019 with Registration Number SU/MSME/007 dated 04/06/2019as per scheme declared under Notification - Industries and Mines Department GR No MIS/10/2015/702426/P dated 11/09/2017. Company has approached to Madhavapura Cooperative Bank Ltd (Under Liquidation) to consider OTS Proposal as per the Amount arrived at within TEV Report at Rs 411.00 Lakhs. According to the information and explanations given to me the Company is hopeful of favorable outcome thereof.

x. In respect of application of Term Loans

a) The company has not raised any money by way of initial public offer or further public offer (including debt Instruments) during the year. Hence, reporting on utilization of such money does not arise.

b) The fresh term loan was not raised during the year. Hence, reporting on utilization of such money does not arise.

xi. In respect of Fraud.

Based upon the audit procedure performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanation given by the management to me, I report that no fraud by the Company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

xii. In respect of Managerial Remuneration.

In my opinion and according to the information and explanations given to me, managerial remuneration has been provided 8s paid. The requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act,2013 (including approval by the Central Government)is not obtained.

xiii. In respect of Nidhi Companies

In my opinion the Company is not a Nidhi Company. Therefore the provision of clause 3 (xii) of the Order are not applicable to the Company and hence not commented upon.

xiv. In respect of Related Parties Transactions

According to the information and explanation given to me by the management transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable. The relevant details, if any, have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

xv. In respect of Preferential allotment/ Private placement

During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Therefore paragraph 3(xiv) of the Order is not applicable to the Company.

xvi. In respect of Non-Cash Transactions with Directors

According to the information and explanation given to me by the management the Company has not entered into any non-cash transactions with the directors or persons connected with them as referred to in section 192 of the Act.

xvii. In respect of Registration with RBI

According to the information and explanation given to me by the management the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company and hence not commented upon.

For, Harsha NikhilchandraBhatt,
Chartered Accountant
Place: Vadodara
Date: 30th August 2021
(Harsha N Bhatt)
Membership No. 155589

"ANNEXURE - B" TO THE INDEPENDENT AUDITORS REPORT ADITYA FORGE LIMITED for the year ended March 31, 2021

(Referred to in paragraph 2(f) under ‘Report on Other Legal and Regulatory Requirements ‘section of my report of even date)

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

I have audited the internal financial controls over financial reporting of ADITYA FORGE LIMITED ("the Company") as of 31 March 2021 in conjunction with my audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI), These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

My responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on my audit. I have conducted my 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 I 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.

My audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. My 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with 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 Companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In my opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2021, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For, Harsha Nikhil chandra Bhatt,
Chartered Accountant
Place: Vadodara
Date: 30th August 2021
(Harsha N Bhatt)
Membership No. 155589