Apt Packaging Ltd Auditors Report.
To the Members of APT Packaging Limited
Report on the standalone Financial Statements
We have audited accompanying standalone financial statements of APT Packaging Limited("the Company"), which comprise the Balance Sheet as at 31st March 2019, the Statement of Profit and Loss and the statement of Cash Flow for the year ended and notes to standalone financial statements including a summary of the significant accounting policies and other explanatory information(herein after referred to as standalone financial statements).
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 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, excluding the Indian accounting Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, of the state of affairs of the Company as at 31 March 2019, and its Loss and its cash flow for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors 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 there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon, and we invite attention to following observations on the matters.
A) The financial statements which indicate that the company has financial losses and its net worth has been substantially eroded i.e. 68.79% (Accumulated reserve and surplus (Loss) Rs 979.66 Lakhs and share capital Rs 580.40 Lakhs). The company has incurred net loss of Rs 25.60 Lakhs but having net cash profit of Rs 215.71 Lakhs during the year and earned Rs 45.17 Lakhs in the financial year immediately preceding current year. The companys current liabilities of Rs 1827.86 Lakhs exceeded the current asset of Rs 1342.69 Lakhs as at balance sheet date. These conditions indicate the existence of material uncertainty that may cast significant doubt about the companys ability to continue as a Going Concern.
Still the financial statements of the company have been prepared on going concern basis. The company has once again (Previously declared on 16.06.2011) declared as a "Sick Industrial Company" by the Board for Industrial and Financial Reconstruction (BIFR) as per hearing held on 10.10.2013 vide their order dated 20.11.2013. However due to repellent of the said Act, the company has to register itself to National Company Law Tribunal (NCLT) within six month. Meanwhile the desired relief from the bank which was asked to BIFR, have been already granted by the Punjab National Bank to the company, therefore the management of the company decided not to registered with the NCLT. The company has profit in financial year 2016-2017 at Rs 154.80 Lakhs, 2017-2018 at Rs 45.17 Lakhs and loss for the year at Rs 25.60 Lakhs. Further for better liquidation position and to reduce the payoff dues, the management of the company decided to sale out some of its assets for which the necessary permission is seeking from the bank and interested statutory authorities. Hence themanagement of the Companyis of the opinion of that though some extraordinary circumstances have adversely affect the profit of the year,the accounts for the year under consideration is prepared and presented on going concern basis.(Refer Note No. 36)
B) According to the provision of the act and the notification of the companies (Indian Accounting Standards) Rule, 2015 and (amendment) Rules, 2016, the company has to mandatorily adopt Indian accounting standards (Ind AS) with effect from 01.04.2017 instead of accounting standards adopted till the end of financial year 2016-17 being a listed company (although the listing is suspended since 2008 and the company is process to restore the listing). However the company has not implemented the Ind AS for the financial year ended on 31st march 2019 as well as on 31.03.2018 and to that extent the preparation and presentation of these financial statements are not in compliance with the Ind AS. The exact impact of the same could not be measured and commented upon in view of insufficient record and information.
The management is of the opinion that the impact of adopting Ind AS would not be materially affect the financial result of the company as such and presently the shares of the company are suspended from trading due to procedural reasons. The company is pursuing with the Stock exchange for restoration of trading of shares of the company. In the meantime, the management of the company decided to positively adopt the Ind AS with effect from financial year started from 01.04.2019. (Refer Note No. 34)
C) We are unable to comment on reinstatement of Tata Sponge Iron Limiteds Equity Shares valued at Rs 0.78 Lakhs by crediting to profit and loss account under the sub head other income.
The management of the opinion that the said shares belong to the company which were written of or adjusted due to bad delivery in earlier (Years) i.e. 1992 all so. The matter is now cleared and same is assets of the company. Further the original shares where either lost or misplaced hence an affidavit and indemnity have been given for any loss or claim by any other person in favour of Tata Sponge Iron Ltd. for issuing duplicate share certificate. Therefore the said shares are properly and lawfully reinstated. (Refer Note No. 37)
D) We are unable to comment on the terms and condition as well as tenure (term) and rate of interest of inter corporate deposits at Rs.382.84 Lakhs. The management has considered the same as long term with zero rate of interest.
According to the information and explanation given by the management, the confirmation is awaited whereas the same is long term with no interest and accordingly reflected in the financial statement of the company. (Refer Note No. 31A(2))
E) There is certain unimplemented portion of sanction scheme (SS07) to be implemented specifically recovery of special capital incentives and interest thereon by Government of Maharashtra, accordingly, while preparing and presenting the financial statement for the year under consideration the company has followed the said order of BIFR. (Refer Note No. 37)
F) The outstanding balances of debtors, creditors, loans and advances including inter corporate deposit (taken and given), balance with statutory/fiscal liabilities (Assets & Liabilities) i.e. Sale Tax (VAT & CST), Excise & Service Tax deposits/balance, income tax, GST subject to confirmations, reconciliation and consequent adjustment, if any. (Refer Note No. 41)
G) We draw attention towards non-conducting of internal audit of one of the unit of the company situated at Pharola (Maharashtra) having turnover of Rs. 1003.34 Lakhs and its corporate office with NIL turnover. The figures and facts stated by the management of the company is included in the financial statement of the company. Our opinion is that this practice may lead to non-compliance of various statutory requirements and will be results into financial loss too.
In the opinion of management, the management is totally look into the matter and will have solution to the problem considering the financial aspect and position of the company and due care has been taken to comply with all statutory requirement.
Claims against the company not acknowledged as debts is disclosed in note 47A of the standalone financial statements. The existence and probability of payments against these claims requires management judgment to ensure disclosure of most appropriate values of contingent liabilities. Due to level of judgment required relating to estimation and presentation of contingent liabilities this is considered to be a key audit matter.
Our audit procedures included, among others, assessing the appropriateness of the managements judgment in estimating the value of claims against the Company not acknowledged as debts as given in note 47A. We have obtained details of completed tax assessments and demands/claims as at 31 March 2019 from management. We assessed the completeness of the details of these claims through discussion with senior management personnel. We have also reviewed the outcome of the disputed cases at various forums. We have also assessed the appropriateness of presentation of the contingent liabilities in the standalone financial statement.
Information other than the Standalone Financial Statements and Auditors Report thereon
The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Board Report and Chairmans Statement but does not include the standalone financial statements and our auditors report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the 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 Standalone 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 standalone financial statements that give a true and fair view of the financial position, financial performance 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 read with Rule 7 of the Companies(Accounts)Rules,2014, as amended except not adopting mandatory Indian Accounting Standards (Ind AS) for preparation and presentation of accounting and financial statements. However the management of the company has decided to adopt the mandatory (Ind AS from financial year started from 01.04.2019 instead of 01.04.2017 as specified).
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 is responsible for assessing the Companys ability to continue as a going concern, using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operation, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the companys financial reporting process.
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 standalone 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 standalone 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 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 standalone 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 standalone financial statements, including the disclosures, and whether the standalone 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 standalone 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 the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of Section 143 (11) of the Act ("the order"), and on the basis of such checks of the books and record of the company as we considered appropriate and according to the information and explanations given to us, we give in the Annexures A, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2) As required by Section 143(3) of the Act, we report, that:
(A)We have sought and obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid financial statements except as reported under the Key Matter paragraph;
(B)In our opinion, proper books of accounts as required by law relating to preparation of the aforesaid financial statements have been kept 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), 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 Rules framed there under except adoption and implementation of Ind AS( refer note no. 35 and remark under "Key Matter" supra);
(E)On the basis of the written representations received from the directors of the Company as on 31 March, 2019 taken on record by the Board of Directors of the Company none of the directors of the company is disqualified as on 31 March, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;
(F)With respect to adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer report under Emphasis of Matter and to our separate report in Annexure B;
(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 our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of Section 197 of the Act.
(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 as amended, in our opinion and to the best of our information and according to the explanation given to us:
i. The Company has disclosed the impact of pending litigation on its financial position in its standalone financial statements;
ii.The company did not have any long-term contracts including derivative contracts having any material foreseeable losses; and
iii.There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection fund by the Company.
|For Nikhil N. Loya & co.|
|[Firm Reg. No. 132280W]|
|CA Nikhil N. Loya|
|Place: Aurangabad||M. No. 133562|
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT (APT Packaging Ltd. 31.03.2019)
The Annexure referred to in Independent Auditors Report to the members of the Company on the standalone financial statements for the year ended 31 March 2019, we report that:
a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
b) A major portion of the fixed assets has been physically verified by the management in accordance with a phased programme of verification adopted by the company. In our opinion, the frequency of verification is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, no material discrepancies have been noticed on such verification.
c) As per the information and records made available, the title deeds of immovable properties are held in the name of the company.
d) As per the information and records made available to us all movable properties are held in the name of the company on 31.03.2019 except some of the vehicle which are held in the name of the director/Ex-director of the company.
|Owner as per Road Transport Authority||Cost (rupees in lakhs)||Acc. Dep.||WDV|
e) There was no disposal of Fixed Assets during the year which forms substantial part of the undertaking.
2) Inventory: a. As informed to us, the stock of finished goods, work-in-process and raw materials at all the units of the Company have been physically verified by the Management at regular intervals except for the goods lying with the third parties.
b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of stock followed by the management are reasonable and adequate in relation the size of Company and the nature of its business.
c. On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to book records were not material and have been properly dealt with in the books of account.
3) Loans and Advances Given:
According to the information and explanations given by the management, 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 Act. Accordingly, the provisions of clause iii (a) to (c) of the Order are not applicable to the Company.
4) Loans, Investments, and Guarantees:
In our opinion and according to the information and explanations given to us, the company has not made any loans, investments, guarantee and security according to the provisions of Sec 185 & 186 of the Companies Act, 2013. However, In view of the sanctioned scheme of Demerger and the order of Honorable BIFR for resulting company, the company has given Guarantees to banks and other creditors for their respective outstanding balances as on cutoff date i.e. 01.04.2007 if the resulting company fails to pay or shortfall to pay the same. As this is stipulated condition of the Sanctioned Scheme ordered by the BIFR, the same is not treated as prejudicial to the interest of the company. According to information and explanations given to us by the management there is outstanding balance payable of resulting company Machhar Industries Limited at Rs. 11.86 Lakhs (Rs 134.33 Lakhs) as on 31.03.2019 on account of Sales tax deferral.
According to the information and explanations given by the management, the Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Rules framed thereunder with regard to the deposits accepted from the public are not applicable to the company for the year. The details of other deposits accepted by the company are as follows.
As per information and explanations given by the management to us, the company has accepted Inter Corporate Deposit (ICD) from Non-Group Companies and from Group Companies as well as directors / promoters to maintain the balance according to the terms and conditions stipulated by the banker. The information related to these deposits is as mentioned below;
a. The company has accepted an amount of Rs.70.50 Lakhs during the year as Inter Corporate Deposit (ICD) from Non Group Companies. The company has repaid Rs. 37.60Lakhs. Total interest provided for the year is Rs.2.95 Lakhs. The Outstanding balance as on 31.03.2019 is Rs.382.84 Lakhs.
b. The company has accepted 11.50 Lakhsduring the year as Inter Corporate Deposit (ICD) from Group Companies. The company has repaid Rs. 7.67 Lakhs. Total interest provided for the year is Rs. 12.53 Lakhs .The outstanding balance as on 31.03.2019 is Rs.154.82 Lakhs
c. The company has accepted Rs. 87.60 Lakhs from the Directors / Promoters and also repaid Rs. 28.88 Lakhs. Total Interest provided and paid for the year is Rs. 92.74 Lakhs. The outstanding balance as on 31.03.2019 is Rs 880.47 Lakhs.
d. According to the information and explanations given to us all deposits except Rs. 355.62Lakhs ICD from non group Companies (which is zero bearing interest) are interest bearing at differential rates. Total interest on deposits is provided during the year at Rs.108.21Lakhs (Rs. 15.48 Lakhs to ICD and Rs.92.73 Lakhs to Director / Promoters).
There is no stipulation period for repayment of these deposits and according to the information and explanations given to us by the management all deposits are Long Term. The terms and conditions of these deposits are not prejudicial to the interest of the company. We are unable to comment about the same as the necessary record is not available regarding ROI, Term and Tenure of renewal of such loan.
6) Cost Records
We have broadly reviewed the cost records maintained by the company prescribed by the Central government under section 148(1) of the Act and are the opinion that prima facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of such records with a view to determine whether they are accurate or complete.
7) Statutory dues a. According to the records of the company, the company is not regular in depositing with the appropriate authorities undisputed statutory dues including Provident fund, Employees State Insurance, customs, excise duty, income tax, sales tax, investors education and protection fund, Goods & Service Tax (GST), Custom Duty Cess, value added tax, cess and other statutory dues applicable except Rs. 159.58 Lakhs and deposited beyond six months are at Rs 104.31 Lakhs. The statements of Arrears of Statutory dues outstanding for more than six months and deposited beyond due dates exceeding six months are as under;
|Amount in Lakhs(Deposited|
|Type of Taxes||Amount in Lakhs(Not deposited within 6 months i.e. outstanding as on 31.03.2019)||After 6 monthsbut before 31.03.2019)|
|Sale Tax Deferment Dues||67.96||33.79|
b. As at 31st March 2019 according to the records of the company, the following are the particulars of disputed dues have not been deposited:-
|Name of Statute||Period||Disputed Liability Rs.||Forum where dispute is in pending|
|Sales Tax Govt. of Maharashtra Setoff Disallowance for 2006-2007 and interest thereon (2.25 Lakhs + 2.22Lakhs).||2006- 2007||04.47 Lakhs||Sales Tax Authority, Aurangabad (Appeal Dt. 01.10.2014)|
|Tax Deducted at Source||2007-08 to 2018- 19||16.36 Lakhs||Before Assessing officer TDS, Income Tax Department.|
|By commissioner of State|
|Central Sales Tax Haridwar||2014-15||25.00 Lakhs||(Sales) Tax Uttarakhand Haridwar|
|Sales Tax Govt. of Uttarakhand, Haridwar||2014-15||48.54 Lakhs||By commissioner of State (Sales) Tax Uttarakhand Haridwar|
8) Based on our Audit procedures and on the information and explanations given by the management in our opinion, the company has defaulted in depositing the installments and interest of the Panjab National Bank(the bank) totaling to Rs. 411.17 lakhs ranging from 17 days to 87 days(upto 30 days 61.45 Lakhs, from 31 to 60 day Rs317.65 lakhs and from 61 to 90 Days Rs 32.07 Lakhs) of loans or borrowing to a financial institution, bank, government or dues to debenture holders during the year in the balance sheet date.
9) According to the records of the Company, information and explanation given to us, there was no public offer or further public offer for the year under consideration. The company has obtained term loans during the year under audit and the same were applied for the purpose for which they are raised.
As far as inter-corporate as well as other loans / deposits are concerned as mentioned under "Deposits" above, the terms did not specify the tenure of the loans / deposits hence unable to comments about long term / short term. The company has shown the same as long term loans / deposits.
10) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud on or by the Company, noticed or reported during the year, nor have been informed of such case by the management.
11) According to the records of the company examined by us and information and explanations given to us, the company has paid or provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Sec197 read with Schedule V to the Act.
12) In our opinion and according to the information and explanation given to us by the management, the Company is not a Nidhi company and hence the requirements under the Nidhi Rules, 2014 are not applicable.
13) In our opinion and according to the information and explanation given to us and based on our examination of the record of the company, the transactions with the related parties are in compliance with sections 177 and 188 of the Act, 2013 where applicable and the details of such transactions have been disclosed in the standalone Financial Statements etc., as required by the applicable accounting standards.
14) In our opinion and according to the information and explanation given to us by the management, Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
15) In our opinion and according to the information and explanation given to us by the management, the company has not entered into any non-cash transactions with directors or persons connected with him during the year.
16) In our opinion and according to the information and explanation given to us by the management, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
|For Nikhil N. Loya& co.|
|[Firm Reg. No. 132280W]|
|CA Nikhil N. Loya|
|Place: Aurangabad||M. No. 133562|
ANNEXURE B TO THE INDEPENDENT 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) as referred to in paragraph under "Report on other Legal and Regulatory requirements" of our report of even date to the members of APT PAKAGING LIMITED on the standalone financial statements for the year ended on 31 March 2019.
We have audited the internal financial controls over financial reporting of APT Packaging Limited (the Company) as of 31 March 2019 in conjunctions with our audit of the standalone 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 the 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 Act.
Our responsibility is to express an opinion on the Companys 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) 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. 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 standalone 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 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 the 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.
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 31 March 2019, 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,except non-conducting of internal audit of pharola unit (Turnover Rs. 1003.04 Lakhs) and financial indiscipline i.e. irregularity in deposit of statutory dues as well as deposit of banks installments.
The management is of the opinion that due to stringent financial crises and delay in recovery from sundry debtors result in delay in remitting the statutory fund to the respective authority and interest and installment to the bank. The management has taken due care of its internal working and also taking the corrective state to smoothing the function of the company with respect to various compliances to the statutory requirements.
|For Nikhil N. Loya & co.|
|[Firm Reg. No. 132280W]|
|CA Nikhil N. Loya|
|M. No. 133562||Place: Aurangabad|