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Acknit Industries Ltd.

BSE: 530043 Sector: Industrials
NSE: N.A. ISIN Code: INE326C01017
BSE 00:00 | 18 Jun 109.55 -4.55
(-3.99%)
OPEN

112.00

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114.85

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NSE 05:30 | 01 Jan Acknit Industries Ltd
OPEN 112.00
PREVIOUS CLOSE 114.10
VOLUME 6712
52-Week high 126.50
52-Week low 52.50
P/E 6.37
Mkt Cap.(Rs cr) 33
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 112.00
CLOSE 114.10
VOLUME 6712
52-Week high 126.50
52-Week low 52.50
P/E 6.37
Mkt Cap.(Rs cr) 33
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Acknit Industries Ltd. (ACKNITINDUS) - Auditors Report

Company auditors report

TO THE MEMBERS OF "ACKNIT INDUSTRIESLIMITED"

Report on the Audit of the Financial Statements.

Opinion:

We have audited the accompanying financial statements of Acknit Industries Limited ("theCompany") which comprise the Balance Sheet as at March 312020 the Statement ofProfit and Loss (including Other Comprehensive Income) the Statement of Changes inEquity and the Cash Flows statement for the year then ended and a summary of thesignificant accounting 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 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("IndAS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2020 and its profit total comprehensiveincome the changes in equity and its cash flows for the year ended on that date.

Basis for Opinion :

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibilities for the Audit ofthe Financial 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 (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made there under andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by usissufficient and appropriate to provide a basis for our audit opinion on the financialstatements.

Emphasis of Matter :

We draw attention to the financial results with related to COVID- 19 that has causedsignificant disruptions in the business operations of companies across India and hascaused significant accounting and auditing challenges. One such challenge being inabilityfor the Company to verify inventories physically since Government imposed restrictionsduring the lockdown on account of health travel and safety concerns.

The extent to which the COVID-19 pandemic will impact the Company's assets and futureresults will depend on the future developments which are highly uncertain. Hence theimpact of the pandemic may be different from that estimated as at the date of approval ofthese financial results.

Key Audit Matters:

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the statements of the current period. These matters wereaddressed 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.

Key Audit Matter Auditor's Response
1 Revenue Recognition Principal Audit Procedures
Revenue from the sale of goods (hereinafter referred to as "Revenue") is recog-nised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition in case of sale of goods is when the control over the same is transferred to the customer which is mainly upon delivery. The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. There is a risk of revenue being recorded before control is transferred. Our audit approach was a combination of test of internal controls and substantive procedures including:
• Assessing the appropriateness of the Company's revenue recognition accounting policies in line with Ind AS 115 ("Revenue from Contracts with Customers") and testing thereof.
• Evaluating the integrity of the general information and technology control environment and testing the operating effectiveness of key IT application controls.
• Evaluating the design and implementation of Company's controls in respect of revenue recognition.
• Testing the effectiveness of such controls over revenue cut off at year-end.
• Testing the supporting documentation for sales transactions recorded during the period closer to the year end and subsequent to the year end including examination of credit notes issued after the year end to determine whether revenue was recognised in the correct period.
Refer Note 1 to the Standalone Financial Statements - Significant Accounting Policies • Performing analytical procedures on current year revenue based on monthly trends and where appropriate conducting further enquiries and testing.
2. Litigations -Contingencies Principal Audit Procedures
The Company is periodically subjectto challenges / scrutiny on range of matters relating to direct tax indirect tax. Further potential exposures may also arise from general legal proceedings environmental issues etc. in the normal course of business. Our audit procedures included:
• We tested the effectiveness of controls around the recording and re-assessment of contingent liabilities.
• We used our subject matter experts to assess the value of material contingent liabilities in light of the nature of exposures applicable regulations and related correspondence with the authorities.
• We discussed the status and potential exposures in respect of significant litigation and claims with the Company's internal legal team including their views on the likely outcome of each litigation and claim and the magnitude of potential exposure and sighted any relevant opinions given by the Company's advisors.
Assessment of contingent liabilities disclosure requires Management to make judgements and estimates in relation to the issues and exposures. Whether the liability is inherently uncertain the amounts involved are potentially significant and the application of accounting standards to determine the amount if any to be provided as liability is inherently subjective.
• We assessed the adequacy of disclosures made.
• We discussed the status in respect of significant provisions with the Company's internal tax and legal team.
• We performed retrospective review of management judgements relating to accounting estimate included in the financial statement of prior year and compared with the outcome.
Sl No. Key Audit Matter Auditor's Response
3 Capitalisation of property plant and equipment. Our audit procedures included and were not limited to the following :
During the year ended March 31 2020 the Company has incurred significant capital expenditure. Total additions to property plant and equipment was Rs 7.52 crore in the current year.
• Assessed the nature of the additions made to property plant and equipment and capital work-in-progress on a test check basis to test that they meet the recognition criteria as set out in para 16 to 22 of Ind AS 16 including any such costs incurred specifically for trial run.
Reviewed the project completion / handover certificate provided by the management to determine whether the asset is in the location and condition necessary for it to be capable of operating in the manner intended by the management.
4. Allowance for Credit Losses Principal Audit Procedures
Our audit procedures related to the allowance for credit losses for trade receivables and unbilled revenue included the following among others :
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic c o n d i t i o n s . T h e Company considered current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss the Company has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19.
We tested the effectiveness of controls over the
(1 ) development of the methodology for the allowance for credit losses including consideration of the current and estimated future economic conditions
(2) completeness and accuracy of information used in the estimation of probability of default and
(3) computation of the allowance for credit losses. For a sample of customers: We tested the input data such as credit reports and other credit related information used in estimating the probability of default by comparing them to external and internal sources of information.
We identified allowance for credit losses as a key audit matter because the Company exercises significant judgment in calculating the expected credit losses.
We tested the mathematical accuracy and computation of the allowances by using the same input data used by the Company.

Information Other than the 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 notinclude the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the 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 otherinformationwe are required to report that fact. We have nothing to report in this regard.

Management's Responsibility for the 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 financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income changes in equity and cash flows of the Company in accordance withtheInd AS and other accounting principles generally accepted in India. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

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 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.

The Board of Directors are responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Financial Statements :

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 the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act 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 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 represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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 or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

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

a. We have sought and obtained all the information and explanations which to the bestof knowledge and belief were necessary for the purpose 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 Statement of Profit and Loss including other comprehensiveincome Statement of Changes in Equity and Cash Flows Statementdealt with by this Reportare in agreement with the books of account;

d. In our opinion the aforesaid financial statements comply with the Ind As specifiedunder Section 133 of the Act.

e. On the basis of written representations received from Directors as on March 312020and taken on record by the Board of Directors none of the Directors is disqualified as onMarch 312020 from being appointed as a director in terms of section 164(2) of theCompanies 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 A to this report;

g. In our opinion the managerial remuneration for the year ended March 312020 hasbeen paid/provided by the Company to its directors in accordance with the provision ofsection 197 read with Schedule V to 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 in our opinionand to the best of our information and according to the explanations given to us :

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses.

iii. There has been no delay in transferring amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

2. As required 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 the Order.

For SRB & Associates
Chartered Accountants
Firm Registration No: 310009E
Biswanath Paul
(Partner)
UDIN:20068186AAAALA3561
M. No. 068186
Place: Kolkata
Date: 29.06.2020

ANNEXURE 'A' TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 1 (f) under "Report on other legal and regulatoryrequirements" section of our report to the members of Acknit Industries Ltd of evendate]

Report on the Internal Financial Controls over Financial 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 "ACKNITINDUSTRIES LTD" as of March 31 2020 in conjunction with our audit of thefinancial 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the 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 Act2013

Auditor's 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 as specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 internal financial controls system 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 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 and such internal financial controlsover financial reporting were operating effectively as at March 312020 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 SRB & Associates
Chartered Accountants
Firm Registration No: 310009E
Biswanath Paul
(Partner)
UDIN:20068186AAAALA3561
M. No. 068186
Place: Kolkata
Date: 29.06.2020

ANNEXURE 'B' TO THE INDEPENDENT AUDITOR'S REPORT

[Referred to in paragraph 2 under "Report on other legal and

regulatory requirements" section of our Report of even date]

I. In respect of fixed assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b. The Fixed assets have been physically verified by the management during the year andno material discrepancies were identified 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 / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate. In respect of immovable properties of land and building that have been taken onlease and disclosed as fixed assets in the standalone financial statements the leaseagreements are in the name of the Company.

II. In respect of I nventories :

The physical verification of inventory [excluding stocks with third parties] have beenconducted at reasonable intervals by the Management during the year. However due toGovernment imposed restrictions during the lockdown on account of health travel andsafety concerns the management could not take physical verification of some inventories.

In respect of inventory lying with third parties these have substantially beenconfirmed by them. In respect of inventories of stores and spares the Management has averification programme designed to cover the items over a period of three years.

III. In respect of Loan :

The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained undersection 189 of Companies Act 2013.

IV. In our opinion and according to the information and explanations given to us thecompany has not granted loans or provided any guarantee or security to parties coveredunder section 185 and 186 of the company act 2013.

V. The company has not accepted any deposits during the year and accordingly thequestion of complying with section 73 and 76 of the companies Act 2013 does not arise.

VI. To the best of our knowledge and as explained the Central Government has notprescribed maintenance of cost records under section 148(1) of the Companies Act 2013 forthe services rendered by the company.

VII. In respect of Statutory dues:

a. According to the records of the company the company has been regular in depositingundisputed statutory dues including provident fund employees' state insurance investoreducation protection fund income tax Goods and service tax custom duty excise dutyCess and other material statutory dues applicable to it with appropriate authorities.

b. According to the information and explanations given to us no undisputed amountspayable in respect of income tax Goods and service tax custom duty excise duty and Cesswere in arrears as at 31st March 2020 for a period of more than six months from thedate they became payable."

c. According to the information and explanations given to us there are no dues ofsales tax Goods and service tax income tax custom duty excise duty and Cess which havenot been deposited on account of any dispute except the following.

Name of the Statute Nature of dues Amount (' in Lakhs) Year to which the amount relates Forum where the dispute is Pending
West Bengal Value Added Tax Act2003 VAT 8.07 2007-08 West Bengal Commercial Taxes Appellate & Revisional Board
West Bengal Value Added Tax Act 2003 VAT 20.97 2016-17 West Bengal Commercial Taxes Appellate Authority
Income Tax Act 1961 Income Tax 13.28 2011-12 Appellate Authority up to Commissioner's Level

VIII. In our opinion and according to the information and explanations given by themanagement the company has not defaulted in repayment of dues to a financial institutionbank or Government.

IX. According to the information and explanation given by the management the companyhas not raised any money by way of initial public offer or further public offer hence notcommented upon.

Based on information and explanations given to us by the management term loans wereapplied for the purpose for which the loans were obtained.

X. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no material fraud by the company or on the companyby the officers and employees of the company has been noticed or reported during the year.

XI. According to the information and explanations given by the management themanagerial remuneration has been paid and provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with schedule V to the Act.

XII. In our opinion the company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the company and hence not commented upon.

XIII. According to the information and explanations given by the managementtransactions with the related parties are in Compliance with section 177 and 188 of theAct where applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.

XIV. According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the year andhence reporting requirements under clause 3 (xiv) are not applicable to the company andnot commented upon.

XV. According to the information and explanations given by the management the companyhas not entered into any noncash transaction with directors or persons connected with him.

XVI. The company is not required to register under section 45-1A of the Reserve Bank ofIndia Act 1934.

For SRB & Associates
Chartered Accountants
Firm Registration No: 310009E
Biswanath Paul
(Partner)
UDIN:20068186AAAALA3561
M. No. 068186
Place: Kolkata
Date: 29.06.2020