<dhhead>INDEPENDENT AUDITOR’S
REPORT</dhhead>
TO THE MEMBERS OF
LAKSHMI FINANCE & INDUSTRIAL CORPORATION LIMITED, HYDERABAD.
Report on the Audit of the Financial Statements Opinion
We have audited the financial statements of LAKSHMI FINANCE
& INDUSTRIAL CORPORATION LIMITED (“the Company”), which comprise the
balance sheet as at 31st March 2023, the statement of Profit and Loss (including Other
Comprehensive Income), statement of changes in equity, 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 herein after referred to as the
“financial Statements”).
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 fairview in conformity with the accounting principles generally accepted
in India including the Indian Accounting Standards prescribed under section 133 of the Act
read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (IndAS), of
the state of affairs of the Company as at March 31,2023, its profit, the total
comprehensive income, changes in equity and its cash flows 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 Companies Act, 2013. Our
responsibilities under those Standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with the Code of Ethics issued by the Institute
of Chartered Accountants of India together with the ethical requirements that are relevant
to our audit of the financial statements under the provisions of the Act and the Rules
thereunder, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion on the financial
statements.
Key Audit Matters
Key Audit Matters (‘KAM’) are those matters that, in
our professional judgement, were of most significance in our audit of the financial
statements of 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
KAM Title
Deferred Tax Assets
KAM Description
As per Ind AS 12 on ‘Income Taxes’, the company has
recognised deferred tax asset in respect of deductible temporary differences. However, the
deferred tax asset has not been recognised for unused tax losses as the utilisation of
deferred tax assets is dependent on the company’s ability to generate future taxable
profits sufficient to utilise tax losses before they expire. We determined this to be a
key audit matter due to the inherent limitations in estimation and uncertainty in
forecasting the amount and timing of future taxable profits and the utilisation of tax
losses.
Management is of the opinion that utilisation of the deferred
tax assets arising from unused tax losses mainly depends on future taxable income
generated by the company. The future taxable income projections contain estimates and tax
strategies which may be significantly impacted by changes in the Regulations, industrial
scenario, the business, and market conditions. Hence, not recognised the deferred tax
asset on unused tax losses.
Our Response
Our audit procedures included, among others, evaluating the
future estimated business projections and projected tax computations prepared by the
company to assess the recognition and measurement of the current tax and deferred tax
assets and liabilities and evaluate the compliance with the tax legislation. We paid
attention to the long-term forecasts and critically assessed the assumptions and judgments
underlying these forecasts by considering the historical accuracy of forecasts and the
sensitivities of the profit forecasts. We assessed the adequacy and the level of
estimation involved.
KAM Title
Unused MAT Credit
KAM Description
The company is not recognizing such MAT Credit Entitlement in
respect of Tax paid on book profits in earlier years as the utilisation of MAT Credit
Entitlement is dependent on the company’s ability to generate future normal taxable
profits sufficient to utilise the available MAT Credit before they expire which depends on
the country’s fiscal policies to be announced in future years. We determined this to
be a key audit matter due to the inherent limitations in estimation and uncertainty in
forecasting the amount and timing of future taxable profits, changes in fiscal policies
and utilisation of MAT credit.
Management is of the opinion that utilisation of the MAT credit
mainly depends on future taxable income generated by the company. The future taxable
income projections contain estimates and tax strategies which may be significantly
impacted by changes in the regulations, industrial scenario, the business, and its markets
and therefore has not recognised the MAT credit entitlement.
Our Response
Our audit procedures included, among others, evaluating the
projected tax computations prepared by the company to assess the recognition and
measurement of the current tax and evaluate the compliance with the tax legislation. We
paid attention to the long-term forecasts and critically assessed the assumptions and
judgments underlying these forecasts by considering the historical accuracy of forecasts
and the sensitivities of the profit forecasts. We assessed the adequacy and the level of
estimation involved.
Other Information
The Company’s Board of Directors is responsible for the
other information. The other information comprises the information included in the company’s
annual report but does not include the financial statements and our auditor’s report
thereon.
Our opinion on the 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 financial statements, our
responsibility is to read the other information and, in doing so, consider whether such
other information is materially inconsistent with the 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.
Responsibilities of Management and Those Charged with Governance
for the Financial Statements
The Company’s 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 accounting principles
generally accepted in India, including the Indian 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 Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the
Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of 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 auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if,
individually or in 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 Standards on Auditing, 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 controls 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 management’s 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 Company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the 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 auditor’s report. However, future events or
conditions may cause the Company to cease to continue as a going concern.
> Evaluate the overall presentation, structure, and content
of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair
presentation.
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 auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Other Matters:
The comparative financial information of the Company for the
year ended 31 March 2022 included in these financial statements, is based on the statutory
financial statements audited by the predecessor auditors, whose audit report for the year
ended 31 March 2022 dated 26th May 2022 expressed an unmodified opinion on those financial
statements
Our opinion is not modified in respect of above matter.
Report on Other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor’s Report) Order,
2020 (“the Order”), issued by the Central Government of India in terms of
sub-section (11) of section 143 of the Companies Act, 2013, we give in the ‘Annexure
A’ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the
extent applicable.
2. 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, the
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 ouropinion, the aforesaid financial statements comply
with the Accounting Standards specified under Section 133 of the Act, read with Rule 7
ofthe Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from
the directors as on 31st March 2023 taken on record by the Board of Directors, none ofthe
directors is disqualified as on 31st March 2023 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 with reference to financial statements of the Company and the operating
effectiveness of such controls, refer to our separate Report in “Annexure B.”
(g) With respect to the other matters to be included in the
auditor’s report in accordance with the requirements ofsection 197(16) ofthe Act, as
amended, in ouropinion and to the best of our information and according to the
explanations given to us, the remuneration paid by the company to its Managing Director
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
Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules, 2014, in our opinion and to the best of our information and according to the
explanations given to us:
i. The Company does not have any pending litigations which would
impact its financial position.
ii. The Company did not have any longterm contracts including
derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required
to be transferred, to the Investor Education and Protection Fund by the Company.
iv. a. The Management has represented that, to the best of its
knowledge and belief, no funds (which are material either individually or in the
aggregate) have been advanced or loaned or invested (either from borrowed funds or share
premium or any other sources or kind of funds) by the Company to or in any other person or
entity, including foreign entity (“Intermediaries”), with the understanding,
whether recorded in writing or otherwise, that the Intermediary shall, whether, directly
or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
b. The Management has represented, that, to the best of its
knowledge and belief, no funds (which are material either individually or in the
aggregate) have been received by the Company from any person or entity, including foreign
entity (“Funding Parties”), with the understanding, whether recorded in writing
or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in
other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or
the like on behalf of the Ultimate Beneficiaries;
c. Based on the audit procedures that have been considered
reasonable and appropriate in the circumstances, nothing has come to our notice that has
caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e),
as provided under (a) and (b) above, contain any material misstatement.
v. The dividend declared or paid during the year by the Company
is in compliance with Section 123 of the Act.
Annexure -A to the Auditor’s Report:
The Annexure referred to in Para 1 under the heading of
"Report on Other Legal and Regulatory Requirements” of our report of even date,
to the members of LAKSHMI FINANCE & INDUSTRIAL CORPORATION LIMITED, HYDERABAD, for the
year ended March 31, 2023.
1. a. A. The Company is maintaining proper records showing full
particulars, including quantitative details and situation of Property, Plant and
Equipment.
B. The Company does not have any Intangible assets. Therefore,
the provisions of paragraph 3 (i)(a)(B) of the Order are not applicable.
b. As explained to us, the management has physically verified
the Property, Plant and Equipment during the year and there is a regular programme of
verification which, in our opinion, is reasonable having regard to the size of the Company
and the nature of the assets. According to the information and explanations given to us no
discrepancies were noticed on such verification.
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 except that Pattadar Pass books
in respect of Land admeasuring 23.93 Acres situated at Adoni, Kurnool Dist., (A.P) are yet
to obtained in the name of the company.
d. The company did not revalue its Property, Plant and Equipment
(including right of use assets) or intangible assets during the year. Therefore, the
provisions of paragraph 3 (i)(d)of the Order are not applicable.
e. According to the information and explanations given to us and
on our verification of records of the Company, no proceedings have been initiated or are
pending against the company for holding any benami property under the Benami Transactions
(Prohibition) Act, 1988. (45 of 1988) and rules made thereunder.
2. a. The Company does not have any inventory during the year.
Therefore, the provisions of paragraph 3(ii)of the of the Companies (Auditor’s
Report) Order 2020 are not applicable to the Company.
b. The company did not obtain any working capital limits during
the year. Therefore, the provisions of paragraph 3 (ii)(b) of the Order are not
applicable.
3. During the year, the Company has not made investments in,
provided any guarantee or security, or granted any loans or advances in the nature of
loans, secured or unsecured to companies, firms, Limited Liability Partnerships or any
other parties. Therefore, the provisions of paragraph 3 (iii) of the Order are not
applicable.
4. The Company has not given any loans or made any investments
or given any guarantees or security to the parties covered under Sections 185 and 186 of
the Act. Therefore, the provisions of paragraph 3 (iv) of the Order are not applicable.
5. The Company has not accepted any deposits and also there were
no amounts which are deemed to be the deposits. 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 Companies Act, 2013, and the rules framed there under, do not apply to this Company.
6. The Central Government has not prescribed the maintenance of
cost records under sub-section (1) of 148 section of the Companies Act, 2013 for the
activities of the Company.
7. a. According to the records, the company is generally regular
in depositing undisputed statutory dues including Goods and service tax, provident fund,
employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty
of excise, value added tax, cess and all other material statutory dues with the
appropriate authorities and there were no arrears of statutory dues as at March 31,2023
for a period of more than six months from the date they became payable.
b. According to the records of the Company and the information
and explanations given to us, there were no statutory dues referred to in subclause (a)
and have not been deposited on account of any dispute.
8. According to the information and explanations given to us and
based on our verification, there were no transactions which are not recorded in the books
of account have been surrendered or disclosed as income during the year in the tax
assessments under the Income Tax Act, 1961 (43 of 1961). Therefore, the provisions of
paragraph 3 (ii)(b) of the Order are not applicable.
9. As the Company has no borrowings, the provisions of paragraph
3(ix) of the Companies (Auditors Report) Order, 2016 are not applicable to the Company.
10. a. The Company did not raise any money by way of an initial
public offer or further public offer (including debt instruments) during the year.
Therefore, the provisions of paragraph 3 (x) (a) of the Order are not applicable.
b. The Company has not made any Preferential allotment or
Private placement of shares or convertible debentures during the year. Therefore, the
provisions of paragraph 3 (x) (b) of the Order are not applicable.
11. a. According to the information and explanations given to
us, we report that during the year, the management of the Company has not come across any
fraud and consequently 3(xi)(a) are not applicable.
b. No report under sub-section (12) of section 143 of the
Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit
and Auditors) Rules, 2014 with the Central Government during the year and up to the date
of this report;
c. According to the information and explanations given to us and
based on our verification, during the year, the Company has not received any
Whistle-blower complaints. Therefore, the provisions of paragraph 3 (xi)(c) of the Order
are not applicable.
12. In our opinion and according to the information and
explanations given to us, the Company is not a Nidhi Company. Therefore, the provisions of
paragraph 3(xii) of the Order are not applicable
13. 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 accounting standards.
14. a. In our opinion, the company has an adequate internal
audit system commensurate with the size and nature of its business; b. We have considered
the reports of the Internal Auditors forthe period under audit.;
15. According to the information and explanations given to us
and based on our examination of the records ofthe Company, the Company has not entered
into non-cash transactions with directors or persons connected with them. Therefore, the
provisions of paragraph 3(xv) of the Order are not applicable.
16. a.According to the information and explanations given to us
and based on our examination of the records of the Company, the Company is required to be
registered under section 45-IA of the Reserve Bank of India Act 1934 and such registration
has been obtained.
b. The company has not conducted any NonBanking Financial or
Housing Finance activities during the year without a valid Certificate of Registration
(CoR) from Reserve Bank of India as per Reserve Bank of India Act,1934. Therefore, the
provisions of paragraph 3(xvi) (b) of the Order are not applicable.
c. The company is a not Core Investment Company (CIC) as defined
in the regulations made by the Reserve Bank of India. Therefore, the provisions of
paragraph 3(xvi)(c) of the Order are not applicable.
d. The Group has no Core Investment Company (CIC). Therefore,
the provisions of paragraph 3(xvi)(d) of the Order are not applicable.
17. The company has not incurred any cash losses in the
financial year and also in the immediately preceding financial year.
18. There is no resignation of statutory auditors during the
year. Therefore, the provisions paragraph 3(xviii) of the Order are not applicable.
19. On the basis of the financial ratios, ageing and expected
dates of realisation of financial assets and payment of financial liabilities, other
information accompanying the financial statements and our knowledge of the Board of
Directors and Management plans and based on our examination of the evidence supporting the
assumptions, nothing has come to our attention, which causes us to believe that any
material uncertainty exists as on the date of the audit report indicating that Company is
not capable of meeting its liabilities existing at the date of balance sheet as and when
they fall due within a period of one year from the balance sheet date. We further state
that our reporting is based on the facts up to the date of the audit report and we neither
give any guarantee nor any assurance that all liabilities falling due within a period of
one year from the balance sheet date, will get discharged by the Company as and when they
fall due.
20. The Provisions of Section 135 of the Companies Act ,2013
relating to Corporate Social Responsibility are not applicable to the Company. Therefore,
the provisions paragraph 3(xx) of the Order are not applicable.
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”)
We have audited the internal financial controls with reference
to financial statements of LAKSHMI FINANCE & INDUSTRIAL CORPORATION LIMITED, HYDERABAD
(“the Company”) as of 31 March 2023 in conjunction with our audit of the
financial statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial
Controls
The Company’s management is responsible for establishing
and maintaining internal financial controls based on the internal control 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 company’s
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 with reference to financial statements 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, 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 with reference to financial
statements 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 with reference to
financial statements and their operating effectiveness. Our audit of internal financial
controls with reference to financial statements included obtaining an understanding of
internal financial controls with reference to financial statements, 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 auditor’s 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.
Meaning of Internal Financial Controls with reference to
financial statements:
A companys internal financial control 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 control with reference to financial statements 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 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 with
reference to financial statements
Because of the inherent limitations of internal financial
controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk
that the internal financial control with reference to financial statements may become
inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an
adequate internal financial controls system with reference to financial statements and
such internal financial controls over financial reporting were operating effectively as at
31 March 2023, based on the internal control 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 with reference
to financial statements issued by the Institute of Chartered Accountants of India.
for BRAHMAYYA & CO; |
Chartered Accountants |
Firm’s Registration Number: 000513S |
Sd/- |
P. CHANDRAMOULI |
Partner |
Membership Number: 025211 |
UDIN:23025211BGXIPU3004 |
Place : Hyderabad |
Date : May 30, 2023 |
+91-9892691696
