TO THE MEMBERS OF
SHRI BHOLANATH CARPETS LIMITED
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying (Standalone) financial statements of SHRI BHOLANATH
CARPETS LIMITED, which comprise the Balance Sheet as at March 31, 2023 and the Statement
of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of
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 (‘Act) in the manner so required and give a true and fair view
in conformity with the accounting principles generally accepted in India, of the state of
affairs of the Company as at March 31, 2023 and its profits or Loss for the year ended on
that date.
Basis for opinion
We have conducted our audit in accordance with the standards on auditing specified
under section 143 (10) of the Companies Act, 2013. 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 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.
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 do not provide a
separate opinion on these matters. For each matter below our description of how our audit
addressed the matter is provided in that context.
A. Revenue Recognition
The accounting policies of the company for revenue recognition are set out in the
Financial Statement. The auditors of company have reported revenue recognition as a key
audit matter due to the high volume of the transactions, high degree of manufacturing
process, labour involvement and considering that accounting involve exercise of judgments
and estimates, thereby affecting occurrence and accuracy assertions in respect of revenue
recognition. The company is engaged in manufacturing , export and trading carpets on a
principal basis and recognizes full value of consideration on transfer of control of
traded goods to the customers which most of the time coincides with collection of cash or
cash equivalent.
Auditors Response
Our audit procedures included and were not limited to the following:
Obtained and read the financial statements of the company to identify whether the
revenue recognition policies are followed in the financial statement of the company.
We performed audit the following procedures as under:-
i. involvement of IT environment and testing of the IT environment inter-alia for
access controls and change management controls over companys billing and other relevant
support systems.
ii. evaluation and testing of the design and operating effectiveness of the relevant
business process controls, inter-alia controls over the capture, measurement and
authorization of revenue transactions and involvement of IT specialists for testing the
automated controls therein.
iii. Evaluation of substantive testing involved, testing collections, testing the
reconciliation between revenue per the billing system and the financial records and
testing supporting documentation for manual journal entries posted in revenue to ensure
veracity thereof.
iv. Validation of the judgements and estimates exercised by the management regarding
the application of revenue recognition accounting standard.
2. Inventory
The auditors Company have reported existence of inventory as a key audit matter due to
involvement of high risk and high volumes .
Auditors Response
Our audit procedures included and were not limited to the following:
We performed inquiry of the audit procedures performed by them to address the key audit
matter. As reported to us by the subsidiary auditor, the following procedures have been
performed by them:-i. Evaluation of the design and testing of the implementation of
internal controls relating to physical inventory ii. Performance of test of controls over
verification of documentary evidences of controls including the calculation of consumption
of raw material in relation to manufacturing prosess and its loss occurred during
manufacturing . iii. Performance of test of details through sample selection of stores as
part of the inventory verification program, including verification of inventory with
documentary evidence and verification of shrinkage and moisture gain or loss.
3. Litigation matters
The company has certain significant open legal proceedings with the Income tax ,
continuing from earlier years, which are as under: Due to complexity involved in these
litigation matters, managements judgement regarding recognition and measurement of
provisions for these legal proceedings is inherently uncertain and might change over time
as the outcomes of the legal cases are determined. Accordingly, it has been considered as
a key audit matter Auditors Response Our audit procedures included and were not limited to
the following:
i. Assessing managements position and judgement through discussions (where considered
necessary) on legal precedence and other ruling in evaluating managements position on
these uncertain tax positions and the probability of success in the aforesaid cases, and
the magnitude of any potential loss.
ii. Discussion with the management on the development in these litigations during the
year ended March 31, 2023. Review of the disclosures made in the financial statements in
this regard.
iii. Obtained representation letter from the management on the assessment of these
matters.
Information other than the financial statements and auditors report thereon
The Companys board of directors is responsible for the preparation of the other
information. The other information comprises the information included in the Boards
Report including Annexures to Boards Report,
Business Responsibility 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 express any form 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 standalone financial statements or
our knowledge obtained during the course of our audit or otherwise appears to be
materially misstated.
Based on the work we have performed, we conclude that there is no material misstatement
in this other information and conclued that we have nothing to report in this regard.
Information other than the financial statements and auditors report thereon
The Companys board of directors is responsible for the preparation of the other
information. The other information comprises the information included in the Boards
Report including Annexures to Boards Report,
Business Responsibility 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 express any form 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 standalone financial statements or
our knowledge obtained during the course of our audit or otherwise appears to be Based on
the work we have performed, we conclude that there is no material misstatement in this
other information and conclued that we have nothing to report in this regard.
MANAGEMENTS RESPONSIBILITY FOR THE 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. 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, 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 are also responsible for overseeing the Companys financial
reporting process.
Auditors 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 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
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
Companies Act, 2013, 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 and Board of Directors.
Conclude on the appropriateness of management and Board of Directorss 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 the Companies (Auditors Report) Order, 2020 (the "Order")
issued by the CentralGovernment in terms of Section 143(11) of the Act, we give in
"Annexure A" a statement on thematters 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 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 appears from our examination of those books.
(c) The Balance Sheet and the Statement of Profit and Loss dealt with by this Report
are in agreement with the books of account.
(d) In our opinion, the aforesaid (Standalone) financial statements comply with the
Accounting Standards specified under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014.
(e) On the basis of written representations received from the directors as on 31 March,
2023, taken on record by the Board of Directors, none of the directors is disqualified as
on 31 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
standalonefinancial statements of the Company and the operating effectiveness of such
controls, refer toour separate Report in "Annexure B". Our report expresses an
unmodified opinion on theadequacy and operating effectiveness of the Companys internal
financial controls withreference to standalone financial statements.
(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:
1) The Company has not deposited self assessment tax of the past precedings two
assessment year inculding the current assessment year and also have some of the pending
litigations which would not impact its financial position as such which is mentioned
below:-
| S.NoName of the Statute |
Nature of Dues |
Gross Amount |
Paid Under Protest * |
Period |
Sectio n |
Forum Where the Dispute is Pending |
| 1 Income Tax |
Income Tax |
27,98,068.00 |
- |
2009-10 |
154 |
CIT(Appeals) |
| 2 Income Tax |
Income Tax |
2,30,316.00 |
- |
2021-22 |
143(1a |
ITO |
| 3 Income Tax |
Income Tax |
3,301.00 |
- |
2015-16 |
250 |
CIT(Appeals) |
| 4 Income Tax |
Income Tax |
64,270.00 |
- |
2017-18 |
143(3) |
CIT(Appeals) |
| 5 Income Tax |
Income Tax |
14,57,638.00 |
|
2013-14 |
143(3) |
CIT(Appeals) |
| 6 Income Tax |
Income Tax |
4,76,050.00 |
|
2019-20 |
143(1a |
ITO |
| 7 Income Tax |
Income Tax |
1,57,852.00 |
|
2018-19 |
143(3) |
CIT(Appeals) |
| 8 Income Tax |
Income Tax |
8,24,960.00 |
|
2012-13 |
154 |
CIT(Appeals) |
| 9 Income Tax |
Income Tax |
9,18,323.00 |
|
2020-21 |
154 |
CIT(Appeals) |
| 10 Income Tax |
Income Tax |
2,34,734.00 |
|
2021-22 |
143(1) |
|
| 11 Income Tax |
Income Tax |
6,257.00 |
|
2022-23 |
143(1) |
|
* Inculding Interest and Refund Adjusted by
2) The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.
3) There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
4) (a) The Management has represented that, to the best of its knowledge and belief,
details of funds in Note No. 13 (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,
5) The Company has neither declared dividend nor distributed dividend during the year.
6) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books
of account using accounting software which has a feature of recording audit trail (edit
log) facility is applicable to the Company with effect from April 1, 2023, and
accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is
not applicable for the financial year ended March 31, 2023.
|
For O.P. TULSYAN & CO. |
|
CHARTERED ACCOUNTANTS |
|
FRN 500028N |
| PLACE: VARANASI |
|
| DATED: 30.06.2023 |
sd/- |
| UDIN:- |
(S.N.GARG) |
|
(PARTNER) |
|
M.No. 052740 |
+91-9892691696
