The Members of
AKAR AUTO INDUSTRIES LTD.
REPORT ON THE AUDIT OF STANDALONE FINANCIAL STATEMENTS
1. We have audited the accompanying standalone financial statements of Akar AutoIndustries Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 the Statement of Profit and Loss (including 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. (Herein after referred to as the"Standalone Financial Statements").
2. 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 Act2013 (the "Act") in the manner so required and give a trueand fair view in conformity with the Indian accounting standards specified 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 31 March 2021 and its total comprehensiveincome (comprising of profit and other comprehensive income) its cash flow and changes inequity for the year ended on that date.
Basis for opinion:
3. We conducted our audit of the Standalone Financial Statements in accordance with thestandards on auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those standards are further described in the auditors'responsibilities 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 these Standalone financial statements underthe provisions of the Act and the Rule made there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI code ofethics. We believe that the audit evidence we have obtained by us is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.
Key Audit matters:
4. Key audit matters are those matters that in our professional judgement were ofmost significant in our audit of the Standalone financial statement of the current period.These matters were addressed in the context of our audit of the Standalone financialstatement as a whole and in forming our opinion thereon and we do not provide a separateopinion on these matters. We have determined the matters described below to be the keyaudit matters to be communicated in our report;
Foreign exchange fluctuation and export policies of India and other countries areconsidered to be Key Audit Matters. A significant portion of revenue is generated throughexport of products of the company. Any change in the duty structure import and exportpolicy has significant bearing on revenue realisation of the Company. Fluctuation inexchange rate of Indian currency has significant bearing on profitability.
How our audit addressed the audit matter:
Our audit approach includes verification of balances outstanding (Debits and Credits);on account of foreign exchange; as at the end of the year and to assure that the same isadjusted to a value at the exchange rate that is prevailing at the close of last day ofthe current year.
5. SUSTAINABILITY OF BUSINESS DUE TO IMPACT OF COVID-19.
We have also been informed that the management has assessed the requirement of theimplementation of business continuity plan initiated by the company due to impact ofrecent Covid -19 pandemic and have expressed their assurance of sustainability and growthpost Covid 19.
Information other than the Standalone Financial Statements and Auditor's Report:
6. The company's management and Board of Directors are responsible for the preparationof other information. The other information comprises the information included in themanagement discussion and analysis Board's Report including Annexures thereto. BusinessResponsibility Report Corporate Governance and Share Holders' Information but does notinclude the Standalone financial statements and our auditor's report there on.
7. Our opinion on the Standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
8. In connection with our audit of the Standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated.
Management's Responsibility for the standalone Financial Statements
9. The Company's management and Board of Directors are responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these Standalonefinancial statements that gives a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with IND AS and other accounting principles generally accepted in IndiaThis responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act; for safeguarding of the assets of the Company; and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
10. In preparing the standalone financial statements management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the company or to ceaseoperations or has no realistic alternative but to do so.
11. The Board of directors is also responsible for overseeing the company's financialreporting process. Auditor's Responsibility for the Audit of the Standalone FinancialStatements:
12. 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 exits. Misstatement can arisefrom fraud 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.
13. As part of an audit in accordance with SAs we exercise professional judgment 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 obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol. Obtain and understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under sec-143(3)(i) ofthe Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial control with reference to financial statements in place andthe 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 appropriateness of management's use of the going concern basis ofaccounting and base on the audit evidence obtained whether a material uncertainty existsrelated to events or commissions that may caste significant doubt on the company's abilityto continue as a going concern. If we conclude that a material uncertainty exists; we arerequired to draw attention in our auditor's report to the related disclosures in thestandalone financial statements or if such disclosures are inadequate to modified 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatement in the standalone financialstatements that individually or in aggregate makes is probable that the economicdecisions of a reasonably knowledgeable user of the standalone financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatement in the standalone financialstatements.
Communication with those charged with the governance.
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 the 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 determinedthose matters that were of most significance in the audit of financial statements of thecurrent year and are therefore the key audit matters. We described these matters in ourauditor's report unless law or regulations precludes public disclosure about the matter orwhen in extremely rare circumstances we determined that the matter should not becommunicated in our report because the adverse consequences of doing so would reasonablywe expected to overweight the public interest benefits of such communications.
Report on Other Legal and Regulatory Requirements:
14. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act and thebasis of such checks of books and records of the company as we considered appropriate andaccording to the information and explanations give to us we give in the "Annexure1" a statement on the matters specified in paragraphs 3 and 4 of the Order to theextent applicable.
15. 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; except theconfirmations from debtors and creditors.
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 & Loss including Other ComprehensiveIncome the statement of Cash Flow and the statement of Change in Equity dealt with bythis report are in agreement with the books of accounts;
d. in our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 (as amended); save and except to the extent as stated innote no. 24regarding AS 15 for employees' benefits to the standalone financial statements.
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; and
f. with respect to the adequacy of internal financial controls over financial reportingof the Company with reference to financial statements of the company and the operativeeffectiveness of such controls refer to our separate report in "Annexure 2" ofthis report.
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 has disclosed the impact of pending litigations as at 31.03.2021 on itsnfinancial position in its standalone IND-AS financial statements- refer Note 33 to thestandalone IND AS financial statements;
ii. The Company did not have any long-term contracts including derivatives contract forwhich there were any material foreseeable losses; and
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE TO THE MEMBERS OF AKAR AUTO INDUSTRIESLIMITEDON IND AS FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2021
Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of accounts and other recordsexamined by us in the normal course of audit we report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner during the year which in ouropinion is reasonable having regard to the size of the Company and the nature of itsbusiness. According to the information and explanations given to us some portions of thefixed Assets of the company have been physically verified by the company's managementduring the year. We are informed that no material discrepancies were noticed on suchverification. We have relied upon the management's representation for the same.
(c) Based on our audit procedure performed for the purpose of reporting the true andfair view of the standalone financial statements and according to information andexplanations given by the management the title deeds of immovable properties are held inthe name of the company.
(ii) (a) The management has conducted physical verification of inventory at reasonableintervals during the year except material in transit and stocks lying with third partiesand in bonded warehouses if any which are verified with reference to the certificationobtained and/or subsequent clearing of goods.
(b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) The Company is maintaining proper records of inventory and no materialdiscrepancies between physical inventory and book records were noticed on physicalverification.
(iii) In our opinion and according to the information and explanations given to us theCompany has granted unsecured loan to companies firms and other parties covered in theregister maintained under Section 189 of the Act.
(a) The terms and conditions of the grant of such loans are not prejudicial to thecompany's interest;
(b) the schedule of repayment of principal and payment of interest where applicablehas been stipulated and the repayments or receipts are regular;
(c) No amount is overdue and the company has taken necessary action for recovery ofthe principal and interest wherever applicable.
(iv) In our opinion and according to the information and explanations given to us theprovisions of sections 185 and 186 of the Act in respect of loans and advances giveninvestments made and guarantees and securities given to parities covered under therespective sections have been complied with by the company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76of the Act and the Companies (Acceptance of Deposits) Rules 2014 as amended.
(vi) The maintenance of cost record has been specified by the Central Government underSection 148 (1) of the Act. We have broadly reviewed the books of account maintained bythe Company pursuant to the Rules made by the Central Government for the maintenance ofcost records under sub-section (1) of Section 148 of the Act in respect of company'sproducts and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. However we have not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and the records ofthe company examined by us in our opinion the Company is generally regular in depositingundisputed statutory dues including provident fund employees' state insurance incometax sales tax including Value Added Tax wealth tax service tax Goods and Service Taxduty of customs duty of excise cess and other material statutory dues as applicable toeach of them respectively with the appropriate authorities. There were no arrears ofundisputed outstanding statutory dues as at the yearend for a period of more than sixmonths from the date it became payable.
(b) The dues outstanding in respect of income-tax sales-tax wealth tax service taxduty of customs duty of excise value added tax and cess GST on account of any disputethe amount involved and the forum where disputes are as follows :-
|Name of Statute ||Nature of Dues ||Forum where Dispute is Pending ||Period to which the Amount Relates ||Amount Unpaid (Rs. in Lacs) |
|Income Tax Act 1961 ||Income Tax ||Chief Commissioner of Income Tax ||A.Y.1998-1999 ||9.52 |
| || || ||A.Y.1999-2000 ||3.61 |
| || || ||A.Y.2000-2001 ||2.89 |
| || || ||A.Y.2001-2002 ||3.55 |
| || || ||A.Y.2002-2003 ||3.26 |
| || || ||A.Y.2003-2004 ||11.45 |
| || || ||A.Y.2004-2005 ||0.05 |
| ||Income Tax ||Assessing officer for rectification ||A.Y.2005-2006 ||8.72 |
| || || ||A.Y.2006-2007 ||2.84 |
| || || ||A.Y.2007-2008 ||1.81 |
| || || ||A.Y.2008-2009 ||0.15 |
| || || ||A.Y.2010-2011 ||2.00 |
| || || ||A.Y.2011-2012 ||1.38 |
| || || ||A.Y.2012-2013 ||9.10 |
| ||Income Tax ||Commissioner of Income Tax (Appeals) ||A.Y.2014-2015 ||75.06 |
| || || ||A.Y.2015-2016 ||0.17 |
| ||Income Tax ||Commissioner of Income Tax (Appeals) ||A.Y.2016-2017 ||15.12 |
| ||Income Tax ||Deputy Commissioner of Income Tax (Appeals) ||A.Y. 2017-18 ||47.37 |
| ||Income Tax ||Commissioner of Income Tax (Appeals) ||A.Y. 2018-19 ||31.04 |
| ||Income Tax (TCS) ||Commissioner of Income Tax (Appeals) ||A.Y. 2012-13 to A.Y. 2018-19 ||9.96 |
|M VAT 2002 ||VAT ||Assessing Officer ||Apr-16 to Jun-17 ||29.35 |
(viii) According to the records of the company examined by us and information andexplanations given to us in our opinion the Company has not defaulted in repayment ofdues to any financial institution or a bank or Government during the year. The company didnot have any outstanding debentures during the year.
(ix) In our opinion and according to the information and explanation given to us thecompany did not raise money by way of initial public offer or further public offer(including debt instruments) during the year. In our opinion and according to theinformation and explanation given to us the money raised by way of term loan by thecompany have prima-facie been applied for the purposes for which the loans wereobtained.
(x) To the best our knowledge and according to the information and explanations givento us no fraud on or by the Company or by its Officers or employees has been noticed orreported during the period covered by our audit.
(xi) In our opinion and according to the information and explanations given to us thecompany has paid/provided for managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 of the Act read with Schedule V to theAct.
(xii) In our opinion the Company is not a Nidhi Company and accordingly Clause 3(xii) of the Companies (Auditor's report) Order 2016 is not applicable.
(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with sections 177 and 188 ofAct where applicable and the requisite details have been disclosed in the standalone INDAS financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us during the year thecompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures and hence reporting under paragraph 3 (xiv) of the Order isnot applicable to the company.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with themtherefore the provisions of Clause 3 (xv) of the Companies (Auditor's report) Order 2016is 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.
TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON FINANCIAL STATEMENTS OF AKAR AUTOINDUSTRIES LIMITED
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 AKAR AUTOINDUSTRIES LIMITED ("the Company") as of March 31st2021 in conjunction with ouraudit of the standalone IND-AS financial statements of the Company for the year ended onthat 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 Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the company based on our audit. We conducted ouraudit in accordance with the Standards on Auditing issued by the ICAI and deemed to beprescribed under section 143 (10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls over financial reporting and the guidance note oninternal financial controls over financial reporting (the guidance Note) issued by theICAI. 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 were 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 judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.
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 IND AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone 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 31 2021 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 Jaju & Kabra Chartered Accountants |
| ||(FRN 140398W) |
| ||Sd/- |
| ||(Rahul Jaju) |
|Place: Aurangabad ||Partner |
|Dated:30th June2021 ||Membership No. 164021 |