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Aarvi Encon Ltd.

BSE: 535014 Sector: Others
NSE: AARVI ISIN Code: INE754X01016
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Aarvi Encon Ltd. (AARVI) - Auditors Report

Company auditors report

To The Members of Aarvi Encon Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited accompanying standalone financial statements of AarviEncon Limited (the "company") which comprise the Balance Sheet as at March31 2021 the Statement of Profit and Loss including the statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the Standalone Financial Statements including a summary ofsignificant accounting policies and other explanatory information. In our opinion and tothe best of our information and according to the explanations given to us the aforesaidfinancial statements give the information required by the Companies Act 2013 as amended("the Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2021 its profit including other comprehensiveincome its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) as specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the standalone Financial Statements sections of our report. We are independent ofthe Company in accordance with the "Code of Ethics" issued by the Institute ofChartered Accountants of India together with the ethical requirements that are relevant toour audit of the standalone financial statements under the provisions of the Act and Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on theStandalone Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statement of the current period.These matters were addressed in the context of our audit of the 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.

Key Audit Matter

1. Revenue Recognition

The Company's contracts with customers include contracts withmultiple services. The Company derives revenues from manpower supply and related services.The Company assesses the services promised in a contract and identifies distinctperformance obligations in the contract. Identification of distinct performanceobligations to determine the deliverables and the ability of the customer to benefitindependently from such deliverables involves significant judgement.

As certain contracts with customers involve management's judgmentin

(1) identifying distinct performance obligations

(2) determining whether the Company is acting as a principal or anagent revenue recognition from these judgments were identified as a key audit matter andrequired a higher extent of audit effort.

Auditor's Responses Principal Audit Procedures

Our audit procedures related to the

(1) identification of distinct performance obligations

(2) determination of whether the Company is acting as a principal oragent included the following among others:

We tested the effectiveness of controls relating to the-

(a) identification of distinct performance obligations

(b) determination of whether the Company is acting as a principal or anagent and

We selected a sample of contracts with customers and performed thefollowing procedures:

– Obtained and read contract documents for each selectionincluding master service agreements and other documents that were part of the agreement.

– Identified significant terms and deliverables in the contract toassess management's conclusions regarding the-

(i) identification of distinct performance obligations

(ii) whether the Company is acting as a principal or an agent

Key Audit Matter

1. Evaluation of Uncertain Tax Positions

The Company has material uncertain tax positions including mattersunder dispute which involves significant judgment to determine the possible outcome ofthese disputes.

Auditor's Responses Principal Audit Procedures

Obtained details of completed tax assessments and demands for the yearended March 31 2021 from management. We involved our internal experts to challenge themanagement's underlying assumptions in estimating the tax provision and the possibleoutcome of the disputes. Our internal experts also considered legal precedence and otherrulings in evaluating management's position on these uncertain tax positions.

Information Other than the Standalone Financial Statements andAuditor's Report Thereon

The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information but does not include the standalone financial statementsand our auditor's report thereon. The Annual report is expected to be made availableto us after the date of this Auditor's Report. Our opinion on the standalonefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. If based on the workwe have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Management's Responsibility for the Financial Statements

The management and Board of Directors of the Company are responsiblefor the matters stated in section 134(5) of the Companies Act 2013 ("the Act")with respect to the preparation and presentation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility includes themaintenance of adequate accounting records in accordance with the provision of the Act forsafeguarding of the assets of the Company and for preventing and detecting the frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of internal financial control that were operating effectively for ensuringthe accuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the financial statements management is responsible forassessing the company's ability to continue as a going concern disclosing asapplicable matters related to 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 theCompany's financial reporting process.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalonefinancial statements based on our audit. Our objectives are to obtain reasonable assuranceabout whether the Financial Statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in aggregate they could reasonably be expected to influence the economicdecisions of users taken on the basis of these Financial Statements. As a part of an auditin accordance with SAs we exercise professional judgement and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theStandalone Financial Statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or override of internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are Company has adequate internal financial controls withreference to financial statements in place and the operating effectiveness of suchcontrols.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of theFinancial Statements including the disclosures and whether the Financial Statementsincluding the disclosure and whether the Financial Statements represent the underlyingtransactions and events in a manner that achieves fair presentation. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings. Including any significant deficiencies ininternal control that we identify during our audit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards. From the matterscommunicated with those charged with governance we determine those matters that were ofmost significance in the audit of the Financial Statements for the financial year endedMarch 31 2021 and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about thematter or when 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.

We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompany's preparation of the financial statements that give true and fair view inorder to design audit procedures that are appropriate in the circumstances An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by Company's management and Board of Directors aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of Section 143 of the Act we give in the Annexure 1 a statement on the mattersspecified in paragraph 3 and 4 of the Order.

2. As required by section 143(3) of the Act we further report that:

a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

b) In our opinion proper books of account as required by law have beenkept by the Company so far as appears from our examination of those books;

c) The Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements complywith the applicable Accounting Standards specified under Section 133 of the Act read withCompanies (Indian Accounts Standard) Rules 2015 as amended.

e) On the basis of written representations received from the directorsas on 31 March 2021 and taken on record by the Board of Directors none of the directorsis disqualified as on 31 March 2021 from being appointed as a director in terms ofSection 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls overfinancial reporting of the company and the operating effectiveness of such controls referto our separate report in ‘Annexure 2'. Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the company's internalfinancial control over financial reporting.

g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended: In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in theAuditor'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 theexplanations given to us:

i. The company does not have any pending litigations which wouldimpacts its financial position.

ii. The Company did not have any long-term contracts includingderivative contracts; as such the question of commenting on any material foreseeablelosses thereon.

iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

For Arvind H. Shah & Co.
Chartered Accountants
Firm Reg. No. 100577W
Arvind Shah
(Proprietor)
Membership No. 100/31224
UDINo. : 21031224AAAAFB1527
Place : Mumbai.
Date : 3rd June 2021

Annexure – 1 to the Independent Auditor's Report

The Annexure referred to in Independent Auditors' Report to themembers of the Company on the standalone financial statements for the year ended 31 March2021 we report that

(I) (a) The company is in process of maintaining proper records showingfull particulars including quantitative details and situation of fixed assets;

(b) The Company has a regular program of physical verification of itsfixed assets by which fixed assets are verified in a phased manner over a period of threeyears. In accordance with this program certain fixed assets were verified during the yearand no material discrepancies were noticed on such verification. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.

(c) According to the information & explanations given to us and onthe basis of examination of the records of the Company the title deeds of immovableproperties are held in the name of company.

(II) The Company being in service sector does not hold any physicalinventories. Accordingly reporting under clause 3(ii) of the Order is not applicable tothe Company.

(III) The Company has not granted any loans secured or unsecured tocompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act 2013. Accordingly clause (iii)(a) to (c) of paragraphs 3 of the orderare not applicable to the company.

(IV) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 185 and 186 of theAct with respect to the loans and investments made.

(V) The Company has not accepted deposits from the public during theyear and does not have any unclaimed deposits as at March 31 2021 and therefore theprovisions of the clause 3(v) of the Order are not applicable to the Company.

(VI) The maintenance of cost records has not been specified by theCentral Government under section 148(1) of the Companies Act 2013 for the businessactivities carried out by the Company. Thus reporting under clause 3(vi) of the order isnot applicable to the Company.

(VII) (a) According to the information and explanation given to us andon the basis of our examination of books of accounts and records the Company has beenregular in depositing the statutory dues applicable to the company with the appropriateauthorities.

(b) According to the information and explanations given to us anundisputed amount of Rs. 1536690/- towards Tax Deducted at Source in respect of theabove were in arrears as at March 31 2021 for a period of more than 6 months from thedate on when they became payable.

(c) According to the information and explanation given to us there areno dues of sales tax service tax duty of custom duty of excise value added taxoutstanding on account of any dispute subject to dues as per Income Tax Act 1961 as givenbelow.

Name of the Statute Nature of Dues Amounts (In Rs.) Period to which the amount relates Forum Where the dispute is pending
Income Tax Act 1961 Income tax 25850875 A.Y-2017-18 CIT (Appeal)
Income Tax Act 1961 Income tax 3084672 A.Y-2018-19 CIT (Appeal)
Income Tax Act 1961 Income tax 11607077 A.Y. 2020- 21 CIT (Appeal)

(VIII) The Company has not taken any loans or borrowings from financialinstitutions banks and government or has not issued any debentures. Hence reporting underclause 3 (viii) of the Order is not applicable to the Company.

(IX) During the year under review the Company has not raised any amountby way of initial public offer issuing and allotting the equity shares and hencereporting under clause 3(ix) of the Order is not applicable to the company.

(X) To the best of our knowledge and according to the information andexplanations given to us no material fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.

(XI) According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid / providedmanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V of the Act.

(XII) The Company is not a Nidhi Company and hence reporting underclause 3 (xii) of the Order is not applicable to the Company.

(XIII) In our opinion and according to the information and explanationsgiven to us and based on our examination of the records of the Company transactions withthe related parties are in compliance with sections 177 and 188 of the Act whereapplicable and details of such transactions have been disclosed in the financialstatements as required by the applicable accounting standards.

(XIV) According to the information and explanations give to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

(XV) In our opinion and according to the information and explanationsgiven to us and based on our examination of the records of the Company the Company hasnot entered into non-cash transactions with the Directors or persons connected to itsdirectors and hence provisions of Section 192 of the Companies Act 2013 are notapplicable to the Company.

(XVI) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

For Arvind H. Shah & Co.
Chartered Accountants
Firm Reg. No. 100577W
Arvind Shah
(Proprietor)
Membership No. 100/31224
UDINo. : 21031224AAAAFB1527
Place : Mumbai.
Date : 3rd June2021.

Annexure – 2 to the Independent Auditor's Report

Report on the Internal Financial Controls Over Financial Reportingunder Clause (i) of sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

We have audited the internal financial controls over financialreporting of Aarvi Encon Limited ("the Company") as of 31 March 2021 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India(‘ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks 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 toprovide a basis for our audit opinion on the Company's internal financial controlssystem over financial reporting

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlover financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assetsthat could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting commensurate to its size andnature of business and such internal financial controls over financial reporting wereoperating effectively as at 31 March 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.

For Arvind H. Shah & Co.
Chartered Accountants
Firm Reg. No. 100577W
Arvind Shah
(Proprietor)
Membership No. 100/31224
UDINo. : 21031224AAAAFB1527
Place: Mumbai.
Date : 3rd June 2021

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