TO
THE MEMBERS OF TWINSTAR INDUSTRIES LIMITED
Report on the Audit of the Ind AS Financial Statements
Qualified Opinion
We have audited the accompanying Ind AS financial statements of Twinstar Industries
Limited ("the Company"), which comprise the balance sheet as at 31st March 2021,
and 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 the
financial statements, including 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, except for the possible effects of the matters described in the Basis for
Qualified Opinion section of our report, 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 31st March, 2021 and its
loss for the year ended on that date.
Basis for Qualified Opinion
1) The company had received summons from GST department in 2018. During the year the
GST department started further investigation. The director of the company contented the
said action in High court and Supreme court that the company is not liable to pay GST, as
it is only paid when goods are actually supplied. It is further claimed that, no goods
have been supplied by the appellant or his company and thus no question arises of paying
GST. As per management, no substantial liability may arise as contended by them in Supreme
court. In our opinion, the management should provide for any liability, which may arise
out of such investigation.
2) The company has outstanding statutory dues as per books of accounts for Rs
11,27,106/-, which are not been paid during the current year also. The company should
provide for interest and penalty for the same in books of accounts.
3) The Company had a Service Tax liability of Rs. 75,05,569/- as on 1st April 2019
pertaining to previous years. Management of the company has provided justification that
since payment was not received the liability is not crystalised. Based on above
justification, the management has written off the service tax liability of Rs. 75,05,569/-
hence we hereby qualify the Report since the Loss of the Company is understated by Rs.
75,05,569/- during the year and liability is understated by the Rs. 75,05,569/-.
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 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 Companies Act, 2013 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 qualified opinion except
for the information specified Basis for qualified opinion and in material uncertainty
related to going concern paragraph.
Material uncertainty related to going concern
We draw attention to the standalone financial statements which indicates that the
Company has incurred a net loss of Rs.3,38,40,484 for the year ended March 31, 2021.
There are no operations in the company during the year mainly due to the credit facility
of the company declare NPA by the bank and COVID-19 lockdown, indicating that presently a
material uncertainty exists that may cast significant doubt on the Companys ability to
continue as a going concern due to operation being disrupted. The management of the
company has represented that it will be able to revive operation as company has assets and
active orders in hand, the company continue to be a going concern.
Our opinion is not modified in respect of this matter.
Emphasis of Matter
1) In absence of no substantial movement in Debtors and creditors of the company during
the year, there exists reasonable doubt whether the entire amount will be realised. The
management should consider suitable provision for the same considering the age of Debtors.
Simultaneously, the creditors might consider to go against the company in case the payment
is not made in time. The company should make suitable provisions to cover the same.
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. In
addition to the matters described in the Basis for Qualified Opinion section and Material
uncertainty related to going concern section we have determined the matters described
below to be the key audit matters to be communicated in our report.
| Sr No |
Key Audit Matter |
Auditors Response |
| 1 |
Verification and valuation of Inventory |
Due to Global Covid pandemic of 2019 there was no operation in the company leading to
no moment of inventory. Also the inventory was not physically verified during the year.
The management has made provision of 50% of inventory to account for pilferage loss. And
have Discussed with management to physically verify the inventory and write off the loss
in inventory due to pilferage. |
| 2 |
Old balances of Debtors and creditors. |
There are certain debtors and creditors without any moment during the year. Though
confirmation has been obtained from some the amount should be realised from debtors and
paid to creditors. Discuss with management to take adequate steps to realise the debtors
and pay the creditors. |
| 3 |
Unbilled receivable |
The company has sent notice to UP Government for work order no 3674 for issuing
"Mukhyamantri kisan and Sarvahit Bima Care Card" on 26.06.2020. The UP
government has appointed arbitrator on 15.12.2020 for the same. Discussion with management
for expediting the process of Arbitration to recover the claim. |
Other Information
The Companys management and Board of Directors is 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 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 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 Ind AS
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 Ind AS financial statements that give a true and fair view of the financial
position, financial performance including other comprehensive income, changes in equity
and cash flows of the Company in accordance with the Indian accounting standard (Ind AS)
and accounting principles generally accepted in India, specified under section 133 of the
Act read with the Companies (Indian
Accounting Standards) Rules, 2015, as amended. 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 Ind AS financial statement that give a true and fair
view and are free from material misstatement, whether due to fraud or error.
In preparing the Ind AS 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.
Those Board of Directors are also responsible for overseeing the Companys financial
reporting process.
Auditors Responsibility for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS 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 Ind AS 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 Ind AS 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.
• 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 Ind AS 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. Kindly refer "Material uncertainty related to going
concern" section of our report.
• Evaluate the overall presentation, structure and content of the Ind AS financial
statements, including the disclosures, and whether the Ind AS 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 Ind AS 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 sub-section (11) of
section 143 of the Companies Act, 2013 and on the basis of such checks of the books and
records of the Company as we considered appropriate and according to the information and
explanation given to us, we give in "Annexure 1", a statement on the matters
specified in paragraphs 3 & 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 except for the
matter mentioned in "Basis for Qualified opinion" paragraph.
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 except for the matter
mentioned in "Basis for Qualified opinion" paragraph.
c) The Balance Sheet, the Statement of Profit and Loss including other comprehensive
income, the Cash Flow Statement and the statement of changes in equity dealt with by this
Report are in agreement with the books of account except for the matter mentioned in
"Basis for Qualified opinion" paragraph.
d) In our opinion, the aforesaid Ind AS Financial Statements comply with the Indian
Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant
rules issued thereunder.
e) On the basis of the written representations received from the directors as on 31st
March, 2021 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2021 from being appointed as a director in terms of Section
164(2) of the Act.
f) With respect to the adequacy of the internal financial controls over financial
reporting of the Company and the operating effectiveness of such controls, we give our
separate Report in "Annexure 2".
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 does have any pending litigations which may impact its financial
position. Kindly refer Basis for qualified opinion and Material uncertainty related to
going concern for more detail.
ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
| PLACE: MUMBAI : |
FOR GUPTA RAJ & CO. CHARTERED ACCOUNTANTS FIRM NO. 001687N |
| DATED 30-06-2021 |
CA NIKUL JALAN PARTNER MEMBERSHIP NO. 0112353 |
| UDIN : 21112353AAAAEH5284 |
|
(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements
section of our report of even date)
(i) In respect of its fixed assets:
(a) The company has maintained proper records showing full particulars, including
quantitative details and situation of the fixed assets. However no separate fixed asset
register is maintained.
(b) As informed to us, all fixed assets have been physically verified by the management
at reasonable intervals. No material discrepancies were noticed on such verification
(c) The title deeds of immovable properties recorded in the books of account of the
Company are held in the name of the Company.
(ii) The inventory has not been physically verified by management during the year due
to Covid 19. The management has made a provision of 50 percent on account of pilferage
loss due to non movement of stock because of Covid 19. The management has informed us that
they shall be verifying the stock physically as soon as the restrictions are resumed and
shall make necessary adjustments in the financials.
(iii) As informed, 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. Therefore provisions of sub clause (a), (b) and
(c) of clause (iii) of paragraph 3 of the Order are not applicable to the Company.
(iv) As per the information and explanation given to us in respect of loans,
investments, guarantees and securities, the Company has complied with the provisions of
Section 185 and 186 of the Act.
(v) In our opinion and according to the information and explanations given to us, the
Company has not accepted any deposits from the public within the provisions of Sections 73
to 76 of the Act and the rules framed there under. Therefore, the provisions of clause (v)
of paragraph 3 of the Order are not applicable to the Company.
(vi) As per the information and explanations given to us, in respect of the class of
industry in which the Company falls, the maintenance of cost records has not been
prescribed by the Central Government under sub-section (1) of section 148 of the Companies
Act, 2013. Therefore, the provisions of clause (vi) of paragraph 3 of the Order are not
applicable to the Company.
(vii) In respect of statutory dues:
(a) The company is not regular in depositing with appropriate authority undisputed
statutory dues viz. Profession Tax, TDS, Service Tax, GST, FBT and Income Tax. According
to the information and explanations given to us, below undisputed amounts payable were in
arrears as at 31st March, 2021 for a period of more than six months from the date they
became payable.
| Nature of dues |
Amount () (excluding interest, if any) |
| Profession Tax |
1,28,650 |
| TDS on Professional fees |
6,95,632 |
| TDS on contractor |
31,610 |
| TDS on Brokerage |
6,816 |
| TDS on Rent |
85,719 |
| TDS on Salary |
1,60,680 |
| TDS on Interest |
18,000 |
(b) According to the information and explanations given to us, there are no dues of
income tax or sales tax or service tax or duty of customs or duty of excise or value added
tax or cess which have not been deposited on account of any dispute.
(viii) According to the information and explanation given to us, the company has
defaulted in repayment of Interest and Principal amount taken from SBI bank. Kindly refer
point no. 4 of Basis for Qualified opinion of the report. The Company has not taken loan
from government or has no dues to debenture holders.
(ix) The Company has neither raised money by way of public issue offer nor has obtained
any term loans. Therefore, the provisions of clause (ix) of paragraph 3 of the Order are
not applicable to the Company.
(x) 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
instance of fraud by the Company or any fraud on the Company by its officers or employees,
noticed or reported during the year, nor have we been informed of any such instance by the
management.
(xi) As per the information and explanations given to us, no managerial remuneration
has been paid / provided and thus the provisions of Section 197 read with Schedule V to
the companies Act, 2013 and provisions of clause xi of the Order are not applicable to
Company.
(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of
clause (xii) of paragraph 3 of the Order are not applicable to the Company.
(xiii) As per the information and explanation given to us, all transactions entered
into by the Company with the related parties are in compliance with Sections 177 and 188
of Act, where applicable and the details have been disclosed in the Financial Statements
etc., as required by the applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement of
shares or fully or partly convertible debentures during the year under review. Therefore,
the provisions of clause (xiv) of paragraph 3 of the Order are not applicable to the
Company
(xv) The Company has not entered into any non-cash transactions with directors or
persons connected with him. Therefore, the provisions of clause (xv) of paragraph 3 of the
Order are not applicable to the Company.
(xvi) As per the information and explanation given to us, the Company is not required
to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.
| PLACE: MUMBAI |
FOR GUPTA RAJ & CO. CHARTERED ACCOUNTANTS FIRM NO. 001687N |
| DATED:30-06-2021 |
CA NIKUL JALAN PARTNER MEMBERSHIP NO. 0112353 |
| UDIN : 21112353AAAAEH5284 |
|
Annexure 2 to the Independent Auditors Report
(Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements
section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section
143 of the Companies Act,2013 ("the Act")
We have audited the internal financial controls over financial reporting of TWINSTAR
INDUSTRIES LTD ("the Company") as of 31st March, 2021 in conjunction
with our audit of the Ind AS financial statements of the Company for the year ended on
that date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internal
financial controls based on the internal control over financial reporting criteria
established by the Company considering the essential components of internal control stated
in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting
issued by the Institute of Chartered Accountants of India ("ICAI"). These
responsibilities include the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to companys policies, the safeguarding of
its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial
information, as required under the Companies Act, 2013.
Auditors Responsibility
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 specified under section
143(10) of the Act to the extent applicable to an audit of internal financial controls,
both issued by the ICAI. 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 judgement, 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 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 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.
Qualified Opinion
According to the information and explanations given to us and based on our audit
material weakness has been identified in the Companys internal financial controls over
financial reporting as at March 31 2021 as regards evaluation of uncertainty for the
matters mentioned in the Basis of Qualified opinion of our report.
A material weakness is a deficiency or a combination of deficiencies in internal
financial control over financial reporting such that there is a reasonable possibility
that a material misstatement of the companys annual or interim financial statements will
not be prevented or detected on a timely basis.
In our opinion except for the possible effects of the material weakness described above
on the achievement of the objectives of the control criteria the Company has maintained in
all material respects adequate internal financial controls over financial reporting with
reference to these standalone financial statements and such internal financial controls
over financial reporting with reference to these standalone financial statements were
operating effectively as of March 31 2021 based on the internal control over financial
reporting criteria established by the Company considering the essential components of
internal control stated in the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting issued by the Institute of Chartered Accountants of India.
| PLACE: MUMBAI |
FOR GUPTA RAJ & CO. CHARTERED ACCOUNTANTS FIRM NO. 001687N |
| DATED : 30-06-2021 |
CA NIKUL JALAN PARTNER MEMBERSHIP NO. 0112353 |
| UDIN : 21112353AAAAEH5284 |
|
+91-9892691696
