To the Members of
Hytone Texstyles Limited
Report on the Audit of Financial Statements
Opinion
We have audited the accompanying financial statements of Hytone Texstyles Limited
(‘the Company), which comprises the Balance Sheet as at 31st March 2020,
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.
In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid financial statements give the information required by the
Companies Act, 2013 ("the Act") in the manner so required and give a true and
fair view in conformity with the Indian Accounting Standards prescribed under section 133
on 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 31st March, 2020, and its profit, other
comprehensive income, the changes in equity and its cash flows for the year ended on that
date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards on
Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under
those SAs are further described in the Auditors Responsibility 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 made thereunder, and we
have fulfilled our other ethical responsibilities in accordance with these requirements
and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion on the financial statements.
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. We
have determined the matters described below to be the key audit matters to be communicated
in our report.
| Key Audit Matter Contingent Liabilities |
How the matter was addressed in our audit Our audit procedures included : |
| The company is subject to legal, regulatory and tax cases |
We evaluated the design and tested the operating effectiveness of the relevant
controls and assessed how the company monitors legal, tax and regulatory developments and
their assessment of the potential impact on the company |
| The level of judgment required to establish the level of provisioning, increases the
risk that provisions and contingent liabilities may not be appropriately provided against
or adequately disclosed. |
We read the summary of the litigation matters provided by the companys legal / tax
counsel team and discussed each of the material cases noted in the report to determine the
companys assessment of the likelihood and magnitude of any liability that may arise. |
| Accordingly this matter is considered to be a key audit matter |
We read, where applicable, external legal or regulatory advise sought by the company
and reviewed related correspondence and minutes of executive meetings |
| Managements disclosure with regards to contingent liabilities are presented in note
29 to the financial statements. |
In light of above, we reviewed the level of provisions record and assessed the
adequacy contingent liability disclosures in the financial statements |
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 and Board of Directors 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.
The 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 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, 2016 ("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) 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) In our opinion, the aforesaid financial statements comply with the Indian
Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received from the directors as on 31st
March 2020 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March 2020 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 our
separate report in "Annexure B"; and
(g) 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:
i. The Company has disclosed the impact of pending litigations (if any) as at 31st
March, 2020 on its financial position in its financial statements.
ii. 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.
iii. There has been no delay in transferring amounts required to be transferred to the
Investor Education and Protection Fund.
Annexure - A to the Independent Auditors Report
The Annexure referred to in Independent Auditors Report to the members of the Company
on the financial statements for the year ended 31st March 2020, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets
(b) The Company has a regular programme of physical verification of its fixed assets by
which fixed assets are verified in a phased manner over a period of three years. 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) According to the information and explanations given to us and on the basis of our
examination of the records of the Company, the title deeds of immovable properties are
held in the name of the Company.
(ii) The inventory has been physically verified by management during the current year.
In our opinion, the frequency of such verification is reasonable. The discrepancies
noticed on physical verification of inventory as compared to book records were not
material
(iii) According to information and explanations given to us, 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, paragraph 3 (iii) of the Order is not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, the
Company has complied with the provisions of section 185 and section 186 of the Act, with
respect to loans granted, guarantee or security given, investments made, wherever
applicable.
(v) The Company has not accepted any deposits from the public. Hence clause
(v) of paragraph 3 of the said order is not applicable.
(vi) As informed to us, the Central Government has not prescribed maintenance of cost
records under sub section (1) of Section 148 of the Act, for any of the activities carried
on by the Company
(vii) (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 provident fund, employees state
insurance, income-tax, sales tax, value added tax, duty of customs, duty of excise,
service tax, cess and other material statutory dues as and wherever applicable to the
Company, with appropriate authorities and no dues remain outstanding for a period of more
than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no material
dues of income tax, sales tax, value added tax, service tax, goods and service tax, duty
of customs, duty of excise which have not been deposited with the appropriate authorities
on account of any dispute except the following:-
| Name of the Statute |
Nature of Dues |
Amount (in Rs) |
Period to which the amount relates |
Forum where dispute is pending |
| Maharashtra Municipal Corporation Act, 1949 |
Property Tax |
1,55,11,966/- |
From 2005 to 2012 |
Assessor and Collector, Navi Mumbai Municipal Corporation |
(viii) The Company has not defaulted in repayment of loans or borrowings from any
financial institution, banks, government or debenture holders during the year.
(ix) 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 (ix) of the Order is not applicable to the Company.
(x) According to the information and explanations given to us, 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.
(xi) According to the information and explanations give to us and based on our
examination of the records of the Company, the Company has paid/provided for managerial
remuneration in accordance with the requisite approvals mandated by the provisions of
section 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us, the
Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not
applicable.
(xiii) According to the information and explanations given to us and based on our
examination of the records of the Company, 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) According to the information and explanations give to us and based on our
examination of the records of the Company, the Company has not made any preferential
allotment or private placement of shares or fully or partly convertible debentures during
the year. Accordingly, paragraph 3 (xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us and based on our
examination of the records of the Company, 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) 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.
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 Hytone
Texstyles Limited ("the Company") as of 31st March 2020 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 2020,
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.
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