To the Members of
ABC INDIA LIMITED
Reports on the Financial Statements Opinion
We have audited the accompanying Ind AS Financial Statements of "M/S. ABC INDIALIMITED" (the "Company") which comprise of the Balance Sheet as at31st March 2020 the related Statement of Profit and Loss (including Other ComprehensiveIncome) and the Cash Flow Statement for the year ended and the statement of changes inequity for the year then ended and a summary of significant accounting policies and otherexplanatory information which we have signed under reference to this report. In ouropinion and to the best of our information and according to the explanations given to usthe aforesaid Ind AS financial statements give the information required by the Act in themanner so required and give a true and fair view in conformity with the Ind AS andaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2020 and profit total comprehensive income the changes in equity andits cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) 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 theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of the Ind ASfinancial statements under the provisions of the Companies Act 2013 and the 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.
Key Audit Matters
Key Audit Matters are those matters that in our professional judgement 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 informing 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.
|1 Evaluation of uncertain tax positions ||Principal Audit Procedures |
|The Company has material uncertain tax positions including matters under dispute which significant involves judgement to determine the possible outcome of these disputes. ||Our procedure included amongst others assessing the appropriateness of management's assumptions and estimates in relation to uncertain tax positions challenging those assumptions and considering advice received by management from external partiesto support their position. We have involved our tax specialists to consider management's assessment of the tax positions and related provision/liability accruals when necessary. We concur with management estimates and the outcome of their procedures to determine the relevant provision/ liability. |
Responsibilities of Management and those charged with governance for the Ind ASfinancial statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income change in equity andcash flows of the Company in accordance with the Indian Accounting Standards (Ind AS) andaccounting principles generally accepted in India specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. 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 appropriateimplementation and maintenance of accounting policies; making judgements and estimatesthat are reasonable and prudent; and design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Ind AS financial statement that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of Ind AS Financial Statement
Our objectives are to obtain reasonable assurance about whether the Ind AS 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 the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS financial statements.
A further description of the auditor's responsibilities for the audit of the Ind ASfinancial statements is included in Annexure A. This description forms part of ourauditor's report.
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 ofthe Companies Act 2013 we give in the Annexure B a statement on the mattersspecified in Paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Companies Act 2013 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 appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statement andthe Statement of Changes in Equity dealt with by this report are in agreement with thebooks of account;
d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act.
e) On the basis of written representations received from the directors as on 31stMarch 2020 and taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms ofsubsection (2) of Section 164 of the Companies Act 2013;
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 C";
g) With respect to the other matters to be included in the Auditors 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 explanation given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provision of Section 197 read with Schedule V of the Companies Act 2013; and
h) With respect to the other matters included in the Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our knowledge and information and according to the explanation given to us:-
i) The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS Financial Statements Refer Note 38(1) to the 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
Annexure 'A' to the Independent Auditors' Report
Responsibilities for Audit of Financial Statement As part of an audit in accordancewith SAs we exercise professional judgement and maintain professional skepticismthroughout the audit. We also:
Identify and assess the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 Ind AS financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation. We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence 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 Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror 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.
Annexure 'B' to the Independent Auditors' Report
ADDITIONAL INFORMATION ANNEXED TO THE INDEPENDENT AUDITORS' REPORT
As required by the Companies (Auditor's Report) Order 2016 issued by the Company LawBoard in terms of section 143(11) of the Companies Act 2013 and on the basis of suchchecks as we considered appropriate and as per the information and explanations given tous during the course of audit we further state that:
(i) In respect of the Company's fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings which arefreehold are held in the name of the Company as at the balance sheet date. In respect ofimmovable properties of land and building that have been taken on lease and disclosed asfixed assets in the financial statements the lease agreements are in the name of theCompany.
(ii) The inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable. The discrepancies noticed onverification between the physical stocks and the book records were not material.
(iii) The Company has not granted any secured/unsecured loan to Companies Firms orother parties covered in the register maintained under section 189 of the Companies Act2013. Therefore the provisions of sub clause (a) (b) and (c) to clause 3 (iii) ofCompanies (Auditors' Report) Order 2016 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 our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from public. Therefore the provisions of clause 3(v) of the Companies (Auditors' Report) Order 2016 are not applicable to the Company
(vi) Maintenance of cost records has been prescribed by the Central Government undersub section (1) of section 148 of the Companies Act 2013 and the company has accordinglyappointed cost auditor for the same.
(vii) (a) The Company is generally regular in depositing undisputed statutory duesincluding Provident Fund Employee's State Insurance Income Tax Sales Tax Service TaxCustom Duty Excise Duty Value Added Tax Goods and Service Tax Cess and any otherstatutory dues applicable to it with the appropriate authorities. No undisputed amountspayable in respect of aforesaid dues were outstanding as at 31st March 2020 for a periodof more than six months from the date they became payable.
(b) According to the information and explanations given to us and on the basis of ourexamination there are no material disputed dues on account of Sales Tax Service TaxCustom Duty Excise duty Value Added Tax Goods and Service Tax and any other statutorydues that have not been deposited with appropriate authorities on account of any dispute.
(viii) In our opinion and as per information and explanations given to us the Companyhas not defaulted in repayment of dues to bank and financial institutions and it has nottaken any loan from Government and debenture holders.
(ix) In our opinion and according to the information and explanations given to us themoney raised through term loans were applied for the purposes for which they were raised.The Company has not raised any money through initial public offer or further publicoffering including debt instruments
(x) In our opinion and according to the information and explanations given to us nosignificant fraud by the Company and on the Company by the officers or employees wasnoticed or reported during the year.
(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid or provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Hence the provisions of clause 3(xii) of the Companies(Auditors' Report) Order 2016 are not applicable to the Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with Section 177 and 188 of the Act where applicable and proper disclosureshave been made in the Financial statements as required by the applicable accountingstandards
(xiv) In our opinion and according to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year. Accordingly the provisions of clause3(xiv) of the Companies (Auditors' Report) Order 2016 are not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with the directors or personsconnected with the director. Accordingly the provisions of clause 3 (xiv) of theCompanies (Auditors' Report) Order 2016 are not applicable to the Company.
(xvi) In our opinion the Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934 and hence the provisions of clause 3 (xvi) of theCompanies (Auditors' Report) Order 2016 are not applicable to the Company.
Annexure 'C' to the Independent Auditors' Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of M/s.ABCIndia Limited ("the Company") as of 31 March 2020 in conjunction with our auditof the Ind AS 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.
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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.
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.
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.
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 31 March 2020 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.