The Members of 20 Microns Limited
We have audited the accompanying standalone Ind AS Financial Statements of 20 MicronsLimited ("the Company") which comprise the Balance Sheet as at 31st March 2019and the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and statement of changes in equity for the year thenended and a summary of significant accounting policies and other explanatory information(herein referred to as 'Ind AS Financial Statements').
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Ind AS Financial Statements give the informationrequired by the Companies Act 2013 ("The Act") in the manner so required andgive a true and fair view in conformity with Indian Accounting Standards prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended ("Ind AS") and other accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2019 its profit totalother comprehensive income its cash flows and the changes in equity for the year ended onthat date.
Basis for Opinion
We conducted our audit of the Standalone Ind AS Financial Statement in accordance withthe Standards on Auditing specified under section 143(10) of the Act. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Ind AS Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the ethical requirements that arerelevant to our audit of the Standalone Ind AS Financial Statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Standalone Ind AS Financial Statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS Financial Statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS Financial Statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.
|Sr. No. ||Key Audit Matter ||How out Audit Addressed the Key Audit Matter |
|1. ||Aspects of Revenue Recognition || |
| ||The Company has large product and customer portfolio and multiple business locations. The nature of the risk associated with the accurate recording of revenue varies. ||Our audit approach was a combination of test of internal controls and substantive procedures which included the following: |
| We evaluated the design of internal controls relating to revenue recognition. |
| ||We recognise that revenue is a key metric upon which the Company is judged that the Company has annual internal targets and that the Company has incentive schemes that are partially impacted by revenue growth. We have determined that there is a risk of material misstatement in recognition of revenue considering the above. || We performed full and specific scope audit procedures over this risk area in major locations which covered majority of the risk amount. |
| || We assessed the processes and tested controls over each significant revenue stream. We carried out a combination of procedures involving enquiry and observation |
| ||We have determined this to be a key audit matter in view of exercise of management judgement and estimates and the significance of the amounts involved. ||reperformance and inspection of evidence in respect of operation of the controls. |
| || We evaluated the appropriateness of journal entries impacting revenue as well as other adjustments made in the preparation of the financial statements. We considered unusual journals such as those posted outside of expected days or by unexpected individuals. |
| || || We also evaluated management's controls over such adjustments. |
| || || We inspected a sample of contracts to check that revenue recognition was in accordance with the contract terms and the group's revenue recognition policies. |
| || || We tested a sample of transactions around period end to test that revenue was recorded in the correct period. |
| || || For revenue streams which have judgemental elements we evaluated management's assumptions. |
| || ||Basis the procedures performed we have not noted any significant exceptions in the management assessment of Revenue Recognition. |
|2. ||Assessment of contingencies in respect of statutory claims and claims against company not acknowledged as debt ||Our procedures included the following: |
| || || Understanding and evaluating the design of operating effectiveness of controls in respect of the legal matters. |
| ||The company has various ongoing material uncertain statutory claims and claims against company not acknowledged as debt under dispute. Refer Note 40 to the Standalone Financial Statements. || Reading the orders received by the company from authorities. |
| || || Discussing ongoing matters under dispute and developments with the management and the audit committee. |
| ||The assessment of the likely outcome of the matters and related outflow of resources involves significant judgement on the positions taken by the management which are based on the application and interpretation of law. || Where relevant reading opinions of Managements' external consultants on the tax matters. |
| ||We have considered these matters to be a key audit matter given the materiality of the potential outflow of economic resources and uncertainty of the possible outcome. || Independently assessing the Management's judgement on contingencies and provisions of statutory claims and other claims. |
| || || Involving litigation experts to assist us in the assessment of the possible outcome of certain cases. |
| || || Assessing adequacy of disclosure in the financial statements. |
| || ||Based on the above procedures the management's assessment of contingencies in respect of statutory claims and claims against company not acknowledged as debt was considered to be appropriate. |
Information Other than the Financial Statements and Auditor's Report Thereon
The company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's Report and CorporateGovernance Report but does not include the Standalone Ind AS Financial Statements and ourAuditor's Report thereon. The Board's Report and Corporate Governance Report is expectedto be made available to us after the date of this auditor's report.
Our opinion on the Standalone Ind AS financial statements does not cover the otherinformation and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated.
When we read the Board's Report and Corporate Governance Report if we conclude thatthere is a material misstatement therein we are required to communicate the matter tothose charged with governance as required under SA 720 'The Auditor's responsibilitiesRelating to Other Information'
Management's Responsibility for the Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Standalone Ind AS FinancialStatements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriate ofaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone Ind AS FinancialStatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the Standalone Ind AS Financial Statements management is responsible forassessing the Company's
ability to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Company or to cease operations or has no realistic alternativebut to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind ASFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Ind AS Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign 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 companyhas adequate internal financial controls systemin place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS financial statements or
if such disclosures are inadequate to modify our opinion. Our conclusions are based onthe audit evidence obtained up to the date of our auditor's report. However future eventsor conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Standalone IndAS Financial Statements including the disclosures and whether the Standalone Ind ASFinancial Statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit we report that:
a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes In Equity dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid Standalone Ind AS Financial Statements comply with theInd AS specified under Section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified
as on 31st March 2019 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 financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A".Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS Financial Statements - Refer Note 40 to the Standalone Ind ASFinancial Statements;
ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. Asrequired by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
| ||For J. H. Mehta & Co. |
| ||Chartered Accountants |
| ||ICAI Firm Regn. No. 106227W |
| ||(Naitik J Mehta) |
|Place: Ahmedabad ||Partner |
|Date: 28/05/2019 ||Membership No. 130010 |
(Referred to in paragraph 2 (f) under "Report on Other Legal and RegulatoryRequirements" section of our Independent Auditor's Report of even date to themembers of 20 Microns Limited on Standalone Ind AS Financial Statements for the year ended31st March 2019)
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 20MICRONS LIMITED ("the Company") as of
31 stMarch2019 in conjunction with our audit of the standalone Ind As financialstatements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the are responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia.
Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls overfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For J. H. Mehta & Co. |
| ||Chartered Accountants |
| ||ICAI Firm Regn. No. 106227W |
| ||(Naitik J Mehta) |
|Place : Ahmedabad ||Partner |
|Date : 28/05/2019 ||Membership No. 130010 |
(Referred to in paragraph 1 under "Report on Other Legal and RegulatoryRequirements" section of our Independent Auditor's Report of even date to themembers of 20 Microns Limited on Standalone Ind AS Financial Statements for the year ended31 stMarch 2019)
(i) (b) The Company is maintaining proper records showing
full particulars including quantitative details and situation of fixed assets.
(c) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of 3 years which in our opinionis reasonable having regard to the size of the Company and the nature of its assets. Nomaterial discrepancies have been noticed on such verification.
(d) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company as at 31st March 2019.
(ii) The inventory has been physically verified by the Management during the year. Thediscrepancies noticed on physical verification of inventory as compared to book recordswere not material.
(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liabilities Partnerships or other parties covered in the register maintained underSection 189 of the Act. Therefore the provisions of Clause 3 (iii) [(a) to (c)] of thesaid Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the loans and investments made.
(v) In respect of deposits accepted by the Company the Company has complied with thedirectives of Reserve
Bank of India and provisions of sections 73 to 76 or any other relevant provisions ofthe Companies Act 2013 and the rules framed thereunder.
(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where pursuant to the rules made by the Central Government of India themaintenance of cost records has been prescribed under sub-section (1) of Section 148 ofthe Act and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have not however made a detailed examination of therecords with a view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given
to us and the records of the Company examined by us in our opinion the Company isregular in depositing the undisputed statutory dues including provident fund employees'state insurance income tax goods and service tax cess duty of customs and othermaterial statutory dues as applicable with the appropriate authorities.
According to the information and explanations given to us and the records of theCompany examined by us in our opinion no undisputed amounts payable were in arrears asat 31 stMarch 2019 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of sales tax GST service tax and customs dutywhich have not been deposited on account of any dispute.
The particulars of dues of income tax and duty of excise as at 31 st March 2019 whichhave not been deposited on account of a dispute are as follows:
|Name of statute ||Nature of dues ||Amount (in Lakhs) ||Period to which the amount relates ||Forum where the dispute is pending |
|Income Tax Act. 1961 ||Income Tax ||5.96 ||Assessment Year 2009-10 ||Commissioner of Income Tax Appeals |
|Central Excise Act 1944 ||Excise Duty ||10.70 ||April 2012 to March 2015 ||Central Excise and Service Tax Appellate Tribunal |
|Central Excise Act 1944 ||Excise Duty ||14.21 ||April 2015 to December 2016 ||Central Excise and Service Tax Appellate Tribunal |
|Central Excise Act 1944 ||Excise Duty ||06.59 ||January 2017 to June 2017 ||Central Excise and Service Tax Appellate Tribunal |
| || ||37.46 || || |
(viii) The Company has not defaulted in repayment of loans or borrowing to financialinstitution bank government or dues to debenture holders.
(ix) The Company did not raise any money by way of initial public offer further publicoffer (including debt instruments) or term loans during the year.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us no fraud by the Company or onthe Company by its officers or employees has been noticed or reported during the yearnor we have been informed of any such case by the Management.
(xi) In our opinion and according to the information and explanations given to us theCompany has paid or provided managerial remuneration during the year in accordance withthe requisite approvals mandated by the provisions of Section 197 read with Schedule V tothe Companies Act 2013.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Companies
Act 2013. Details of such transactions have been disclosed in the financial statementsas required by the applicable Indian Accounting Standards.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3(xv)of the Order is not applicable.
(xvi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder section 45-IA of the Reserve Bank of India Act 1934.
| ||For J. H. Mehta & Co. |
| ||Chartered Accountants |
| ||ICAI Firm Regn. No. 106227W |
| ||(Naitik J Mehta) |
|Place : Ahmedabad ||Partner |
|Date : 24/05/2018 ||Membership No. 130010 |