To the Members of M/s Aditya Spinners Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of M/s Aditya SpinnersLimited ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2021 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||Auditor's Response |
|Revenue Recognition: ||Principal Audit Procedures: |
|The Company recognizes revenue based on the terms of sales agreed which varies with the customers i.e. upon transfer of control over goods sold. ||We obtained an understanding of the revenue recognition process and tested the company's controls around the timely and accurate recording of sales transactions. We have obtained an understanding of a sample of customer contracts. |
|For sale transactions in a certain period of time around the Balance Sheet date it is essential to ensure that the control of the goods have been transferred to the customers. As revenue recognition is subject to management's judgement on whether the control of the goods has been transferred we consider cut-off of revenue as a key audit matter. ||We tested the access and change management controls of the relevant information technology system in which delivery is recorded. |
| ||Our test of revenue samples focused on sales recorded immediately before the yearend obtaining evidence to support the appropriate timing of revenue recognition based on terms set out in sales orders and delivery documents. |
|Expected Credit Loss: ||Principal Audit Procedures: |
|The valuation of trade receivables requires management judgement due to the credit risks associated with each individual trade receivable. ||Our audit procedures included the following: |
|Management assesses the recoverability of trade receivables by reviewing customers' aging profile credit history and status of subsequent settlement and determines whether an impairment provision is required. || Obtaining an understanding of the Company's credit control procedures and assessing the design implementation and operating effectiveness of key internal controls over granting of credit to customers. |
|The determination of Expected Credit Loss (ECL) is highly subjective and requires management to make significant judgements and assumptions. || Testing a sample of the data used in the model to the underlying accounting records. |
| || Evaluating the ECL model calculations agreeing the data inputs and checking the mathematical accuracy of the calculations. |
| || Comparing the Company's definition of default as outlined in the accounting policy against the definition that Company uses for credit risk management. |
| || Assessing whether the disclosures in the financial statements are adequate. |
Emphasis of matter
We draw your attention to note 1(c) of the Financial Statements dealing withuncertainties due to COVID-I9 wherein the management's analysis and estimates were made onimpact of COVID-19 on financial reporting receivables assets and future operations ofthe company. The actual impact of the pandemic situation may differ from the estimatesmade by the management.
Our opinion is not modified in respect of this matter.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Director's report and Management discussion and analysis reportincluding Annexures Corporate Governance and Shareholder's information but does notinclude the standalone financial statements and our auditor's report thereon.
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 individual financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the individual financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so. The Board of Directors are responsible for overseeingthe Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone financial statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these individual financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
a. Identify and assess the risks of material misstatement of the individual 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.
b. 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.
c. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d. 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 standalone 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.
e. Evaluate the overall presentation structure and content of the individual financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor'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.
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 Companies Act 2013 we give in the Annexure A a statement on the matters specifiedin paragraphs 3 and 4 of the Order to the extent applicable.
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 our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flow and the Statement of Changes in Equity dealt with inthis report are in agreement with the books of account.
d. In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e. Based on the Written Representation received from the directors as on March 312021 and taken on record by the Board of Directors we report that none of the directorsare disqualified as on March 31 2021 from being appointed as a director in terms ofSub-section 2 of Section 164 of the Act.
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and the operating effectiveness of the Company's internal financial controlsover financial reporting.
g. With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has no pending litigations on its financial position in its financialstatements.
ii. There is no requirement for any provision as required by any act or IndianAccounting Standards for material foreseeable losses if any on long term contractsincluding derivative contracts.
iii. There are no amounts which are required to be transferred to Investor Educationand protection fund.
Annexure-A to the Auditors' Report
Annexure referred to in paragraph under Report on Other Legal and RegulatoryRequirements' section of our report of the Independent Auditor's Report of even date ofM/s Aditya Spinners Limited on the financial statements for the year ended March 312021.
In terms of the information and explanations sought by us and given by the company andthe books and records examined by us in the normal course of audit and to the best of ourknowledge and belief we state the following:
i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The company has a regular program of physical verification of fixed assets by whichfixed assets were verified in a phased manner over a period of three years. In accordancewith this program certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical verification is considered reasonable having regard to the size of the companyand its operations.
(c) According to information and explanation given to us and based on our examinationof the relevant records and documents we report that the title deeds of immovableproperties are held in the name of the company.
ii. The company has not carried out physical verification of inventory at the end ofthe financial year 2020-21 due to the prevailing COVID-19 pandemic and consequent absenceof many employees at the factory due to lockdown. Accordingly we are not in a position tocomment on clause (ii) of companies (Auditor's Report) order.
iii. 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 the Companies Act 2013. Thus paragraph 3(iii) of the Order is notapplicable to the company.
iv. The Company has not made any transactions in the nature of loans investmentsguarantees and security where provisions of section 185 and 186 of the Companies Act2013 are applicable. Thus paragraph 3(iv) of the Order is not applicable to the Company.
v. The company has not accepted any deposits within the meaning of provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and therules framed there under. Thus paragraph 3(v) of the Order is not applicable to thecompany.
vi. Due to ongoing COVID pandemic and lockdown restrictions we have not verified thecost records and accordingly we are not in a position to comment on paragraph 3(vi) of theorder.
vii. According to the information and explanations given to us and the records of thecompany examined by us in our opinion the company is regular in depositing theundisputed statutory dues including Provident Fund Employees' State InsuranceIncome-tax Goods and Service Tax and any other material statutory dues as applicablewith the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees' State Insurance Income-tax Goods andService Tax and other material statutory dues were in arrears as at March 31 2021 for aperiod of more than six months from the date they became payable.
Details of dues of Income-tax which have not been deposited as on March 31 2021 onaccount of disputes are given below:
|Name of the Statute ||Nature of Dues ||Forum where the dispute is pending ||Period to which the said amount relates ||Amount unpaid (Rs In Lakhs |
|Income Tax Act 1961 ||Income Tax ||Commissioner Appeals ||A.Y 2015-16 ||31.41 |
viii. In our opinion and according to information and explanations given to us thecompany has not defaulted in payment of dues to Banks Government Financial institutionsand Debenture holders.
ix. The company has not raised any moneys by way of initial public offer or furtherpublic offer (including debt instruments) during the reporting period. According toinformation provided to us term loans availed during the reporting period was utilized forthe purposes for which those were raised.
x. According to the information and explanations given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe course of our audit.
xi. According to information and explanation given to us the company has providedmanagerial remuneration in accordance with Section 197 read with schedule V to theCompanies Act 2013.
xii. In our opinion the company is not a Nidhi Company. Accordingly paragraph 3(xii)of the Order is not applicable for the company.
xiii. In our opinion and according to information and explanations given to us alltransactions with the related parties are in compliance with Sections 177 and 188 ofCompanies Act 2013 and the details of such transactions have been disclosed in the Ind ASFinancial statements of the company as required by applicable Accounting Standards.
xiv. According to information and explanation given to us the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
xv. According to information and explanation given to us the company has not enteredinto non-cash transactions with directors or any persons connected with him. Thusparagraph 3(xiv) of the Order is not applicable to the company.
xvi. In our opinion the company is not required to be registered under section 45IA ofReserve Bank of India Act 1934. Thus paragraph 3(xv) of the Order is not applicable tothe company.
Annexure - B to the 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 AdityaSpinners Limited ("the Company") as of March 31 2021 in conjunction with ouraudit of the 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 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 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 March 312021 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 T MOHAN & ASSOCIATES |
| ||Chartered Accountants |
| ||Firm Registration No. 0012482S |
|Place: Hyderabad || |
|Date: June 25 2021 || |
| ||MOHAN REDDY T |
| ||Partner |
| ||Membership No. 239635 |
| ||UDIN: 21239635AAAACU1512 |