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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 Aarvi Encon Limited(the “company”) which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss including the statement of Other Comprehensive Income theCash Flow Statement and the Statement of Changes in Equity for the year then ended andnotes to the Standalone Financial Statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 as amended (“the Act”) in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 312020 its profit includingother comprehensive income its cash flows and the changes in equity for the year ended onthat date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) as specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of thestandalone Financial Statements sections of our report. We are independent of the Companyin accordance with the “Code of Ethics” issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof 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 judgment were of mostsignificance in our audit of the financial statement of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

1. Key Audit Matter

Accuracy of recognition measurement presentation and disclosures of revenues andother related balances in view of adoption of AS 9 “Revenue Recognition”

The application of the accounting standard involves certain key judgements relating toidentification of distinct performance obligations determination of transaction price ofthe identified performance obligations the appropriateness of the basis used to measurerevenue recognized over a period.

Auditor's Responses

Principal Audit Procedures

We assessed the Company's process to identify the impact of adoption of the revenueaccounting standard.

Our audit approach consisted testing of the design and operating effectiveness od theinternal controls and substantive testing as follows:

• Selected a sample of continuing and new contracts and tested the operatingeffectiveness of the internal control relating to identification of the distinctperformance obligations and determination of transaction price. We carried out acombination of procedures involving enquiry and observation reperformance and inspectionof evidence in respect of operation of these controls.

• Tested the relevant information technology systems' access and change managementcontrols relating to contracts and related information used in recording and disclosingrevenue in accordance with the new revenue accounting standard.

• Selected a sample of continuing and new contracts and performed the followingprocedures:

- Read analysed and identified the distinct performance obligations in thesecontracts.

- Compared these performance obligations with that identified and recorded by theCompany.

- Considered the terms of the contracts to determine the transaction price includingany variable consideration to verify the transaction price used to compute revenue and totest the basis of estimation of the variable consideration.

- Samples in respect of revenue recorded for time and material contracts were testedusing a combination of approved time sheets including customer acceptances subsequentinvoicing and historical trend of collections and disputes.

- Sample of revenues disaggregated by type and service offerings was tested with theperformance obligations specified in the underlying contracts.

- In respect of samples relating to fixed-price contracts progress towardssatisfaction of performance obligation used to compute recorded revenue was verified withactual and estimated efforts from the time recording and budgeting systems.

- Sample of revenues disaggregated by type and service offerings was tested with theperformance obligations specified in the underlying contracts.

- Performed analytical procedures for reasonableness of revenues disclosed by type andservice offerings.

- We reviewed the collation of information and the logic of the report generated fromthe budgeting system used to prepare the disclosure relating to the periods over which theremaining performance obligations will be satisfied subsequent to the balance sheet date.

2. Key Audit Matter

Evaluation of Uncertain Tax Positions

The Company has material uncertain tax positions including matters under dispute whichinvolves significant judgment to determine the possible outcome of these disputes.

Auditor's Responses Principal Audit Procedures

Obtained details of completed tax assessments and demands for the year ended March 312020 from management. We involved our internal experts to challenge the management'sunderlying assumptions in estimating the tax provision and the possible outcome of thedisputes. Our internal experts also considered legal precedence and other rulings inevaluating management's position on these uncertain tax positions.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's

Information but does not include the standalone financial statements and our auditor'sreport thereon. The Annual report is expected to be made available to us after the date ofthis Auditor's Report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course of our audit or otherwiseappears to be materially misstated. If based on the work we have performed we concludethat there is a material misstatement of this other information we are required to reportthat fact. We have nothing to report in this regard.

Management's Responsibility for the Financial Statements

The management and Board of Directors of the Company are responsible for the mattersstated in section 134(5) of the Companies Act 2013 (“the Act”) with respect tothe preparation and presentation of these standalone financial statements that give a trueand fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended. This responsibility includes the maintenance ofadequate accounting records in accordance with the provision of the Act for safeguardingof the assets of the Company and for preventing and detecting the frauds and otherirregularities; 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 for assessing thecompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern basis of accounting unless management either intends to liquidatethe Company or to cease operations or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

Our objectives are to obtain reasonable assurance about whether the FinancialStatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese Financial Statements.

As a part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the StandaloneFinancial 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 error as fraud may involve collusion forgery intentional omissionsmisrepresentations or override of internal control.

• 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 Company has adequate internal financial controls with reference tofinancial statements in place and the operating effectiveness of such 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the FinancialStatements including the disclosures and whether the Financial Statements including thedisclosure and whether the Financial Statements represent the underlying transactions andevents in a manner that achieves 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 for thefinancial year ended March 31 2020 and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give true and fair view in order to design audit proceduresthat are appropriate in the circumstances An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by Company's management and Board of Directors as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us aforesaid standalone financial statement give the information required by theAct in the manner so required and give a true and fair view in conformity with accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2020 and its profit and its Cash Flows and its Statement of Changes in Equity forthe year ended on that date.

Report on other Legal and Regulatory Requirements

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 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraph 3and 4 of the Order.

As required by section 143(3) of the Act we further 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 appears from our examination of those books;

c) The Balance Sheet the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with theapplicable 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 directors as on 31 March2020 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31 March 2020 from being appointed as a director in terms of Section 164(2) of theAct.

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 2'. Our report expresses an unmodified opinion on theadequacy and operating effectiveness of the company's internal financial control overfinancial reporting.

g) 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 in our opinionand to the best of our information and according to the explanations given to us:

i. The company does not have any pending litigations which would impacts its financialposition.

ii. The Company did not have any long-term contracts including derivative contracts; assuch the question of commenting on any material foreseeable losses thereon.

iii. There were no amounts which were required to be transferred to the InvestorEducation 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. : 20031224AAAABP7182
Place : Mumbai.
Date : 30th June 2020

Annexure - 1 to the Independent Auditor's Report

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone financial statements for the year ended 31 March 2020 we report that

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

(b) The Company has a regular program of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this program certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) According to the information & explanations given to us and on the basis ofexamination of the records of the Company the title deeds of immovable properties areheld in the name of company.

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

(III) The Company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under section 189 of the CompaniesAct 2013. Accordingly clause (iii)(a) to (c) of paragraphs 3 of the order are notapplicable 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) The Company has not accepted deposits from the public during the year and does nothave any unclaimed deposits as at March 312020 and therefore the provisions of theclause 3(v) of the Order are not applicable to the Company.

(VI) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 for the business activities carried out bythe Company. Thus reporting under clause 3(vi) of the order is not applicable to theCompany.

(VII) (a) According to the information and explanation given to us and on the basis ofour examination of books of accounts and records the Company has been regular indepositing the statutory dues applicable to the company with the appropriate authorities.

(b) According to the information and explanations given to us an undisputed amount ofRs. 638640/- towards Tax Deducted at Source in respect of the above were in arrears asat March 312020 for a period of more than 6 months from the date on when they becamepayable.

(c) According to the information and explanation given to us there are no dues ofsales tax service tax duty of custom duty of excise value added tax outstanding onaccount of any dispute subject to dues as per Income Tax Act 1961 as given below.

Name of the Statute Nature of Dues Amounts (In Rs.) Period to which the amount relates Forum Where the dispute is pending
Income Tax Act1961 Income tax 25850875 A.Y-2017-18 CIT (Appeal)
Income Tax Act 1961 Income tax 5447080 A.Y-2018-19 CIT (Appeal)

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

(IX) During the year under review the Company has not raised any amount by way ofinitial public offer issuing and allotting the equity shares and hence reporting underclause 3(ix) of the Order is not applicable to the company.

(X) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.

(XI) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid / provided managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V of the Act.

(XII) The Company is not a Nidhi Company and hence reporting under clause 3 (xii) ofthe Order is not applicable to the Company.

(XIII) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable 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) In our opinion and according to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with the Directors or persons connected to its directors and henceprovisions of Section 192 of the Companies Act 2013 are not applicable to the Company.

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

For Arvind H. Shah & Co.

Chartered Accountants

Firm Reg. No. 100577W

Arvind Shah

(Proprietor)

Membership No. 100/31224

UDINo. : 20031224AAAABP7182

Place : Mumbai.

Date : 30th June 2020

Annexure - 2 to the Independent Auditor's Report

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofsub-section 3 of Section 143 of the Companies Act 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Aarvi EnconLimited (“the Company”) as of 31 March 2020 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining 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'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

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 ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 about the adequacy ofthe internal financial controls system 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 systemover financial 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's 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 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting commensurate to its size and nature ofbusiness and such internal financial controls over financial reporting were operatingeffectively as at 31 March 2020 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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. : 20031224AAAABP7182
Place: Mumbai.
Date : 30th June 2020

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