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Archit Organosys Ltd.

BSE: 524640 Sector: Industrials
NSE: N.A. ISIN Code: INE078I01011
BSE 00:00 | 01 Oct 13.82 0.19
(1.39%)
OPEN

13.90

HIGH

13.90

LOW

13.45

NSE 05:30 | 01 Jan Archit Organosys Ltd
OPEN 13.90
PREVIOUS CLOSE 13.63
VOLUME 14105
52-Week high 14.41
52-Week low 5.04
P/E
Mkt Cap.(Rs cr) 21
Buy Price 13.46
Buy Qty 200.00
Sell Price 13.89
Sell Qty 500.00
OPEN 13.90
CLOSE 13.63
VOLUME 14105
52-Week high 14.41
52-Week low 5.04
P/E
Mkt Cap.(Rs cr) 21
Buy Price 13.46
Buy Qty 200.00
Sell Price 13.89
Sell Qty 500.00

Archit Organosys Ltd. (ARCHITORGANOSYS) - Auditors Report

Company auditors report

To

The Members

ARCHIT ORGANOSYS LIMITED

Ahmedabad.

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the accompanying financial statements of ARCHIT ORGAONSYS LIMITED("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas ‘financial statements').

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion the aforesaid financial statements give the information required by theCompanies Act 2013 (The Act) in the manner so required and give a true and fair view inconformity with the Indian Accounting Standards prescribed under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") and other accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 and loss changes in equity and its cashflows for the year ended on that date.

Basis for Opinion

(i) The company had entered into derivative contract for sale of foreign currencywith HDFC Bank Ltd. in financial year 2008-2009 which has resulted into loss to the tuneof ‘97.52 lacs against which the sum of ‘55.07 lacs has already been paid toHDFC Bank Ltd. and charged to Statement of Profit and Loss in the aforesaid financialyear. Consequent upon adjustment of fixed deposits amounting to ‘23.64 lacs againstthe balance loss of ‘42.46 lacs the liability on account of aforesaid loss as perbank statement provided up to 31st January 2013 stands to ‘ 47.07 includinginterest which has not been provided for by the company. Such non provision of liabilityhas resulted into noncompliance of Ind AS 37 issued by Institute of Chartered Accountantsof India and also resulted into understatement of current liabilities. Since theinterest/charges if any for the period from 1st February 2013 to 31st March 2019 hasnot been intimated to company the impact thereof on loss for the year under review couldnot be ascertained.

Had the observations made by us in Para above been considered there would have beenloss for the year amounting to ‘772.71 lacs as against reported loss of ‘625.64 current liabilities would have been ‘3273.25 lacs as against reported currentliabilities of ‘3126.18 lacs.

(ii) A Legal case is filed by appropriate authorities alleging a director and anemployee of the company causing death of Blackbucks due to drinking of contaminated water.The matter is still sub- judice pending for final adjudication.

Meanwhile the Gujarat Pollution Control Board vide its order issued in terms ofprovisions of Section 33A of Water (Prevention and Control of Pollution) Act 1974directed the company to close its production process at Bhavnagar unit with immediateeffect. In response upon application made by the company and representation made beforethe authority the Gujrat Pollution Control Board vide its order dated 5th November 2018conditionally withdrew the said order and therefore the company has resumed it'soperations at Bhavnagar unit by placing necessary measures.

We conducted our audit in accordance with Standards on Auditing (SAs) specified undersection 143(10) of the Companies Act 2013. Our responsibilities under those Standards arefurther described in the Auditor's Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Companies Act 2013 and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our qualified opinion.

Key Audit Matters

We have determined that there are no key audit matters to communicate in our report.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Board's report including Annexure toBoard's Report but does not include the financial statements and our auditors' reportthereon.

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 in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare 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 Companies Act 2013 ("the Act") with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern 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 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 skepticism 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company 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. Ourconclusions 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.

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 orwhen 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 mattersspecified in 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) Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

(d) Except for the matter described in the basis for Qualified Opinion paragraphin our opinion the aforesaid financial statements comply with the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) 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" and

(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 on its financialposition in its financial statements

– Refer Note 35 to the financial statements;

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

For Chirag R. Shah & Associates
[Firm Registration No. 118791W]
Chartered Accountants
(Chirag R. Shah)
Date : May 30 2019 Proprietor
Place : Ahmedabad Membership No. 106139

Annexure - A to the Independent Auditors' Report of even date on financial statements

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

(b) The fixed assets have been physically verified by the management at reasonableintervals having regard to size of company and nature of its assets. According toinformation and explanation given to us no material discrepancies were noticed on suchverification.

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

(ii) According to information and explanation given to us the Management of theCompany has conducted physical verification of inventory at reasonable intervals and nomaterial discrepancies were noticed on such physical verification during the year.

(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the Register maintained u/s.189of the Companies Act 2013.

(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 investments guarantees and securities.

(v) According to information and explanations given to us the Company has not acceptedany deposits as defined in The Companies (Acceptance of Deposits) Rules 2014. Accordinglythe provisions of Clause 3(v) of the Order are not applicable to the Company.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant torules made by the Central Government. We are of the opinion that prima facie theprescribed accounts and records have been maintained and being made. We have not howevermade a detailed examination of these records with a view to determine whether they areaccurate or complete.

(vii) (a) According to the information given to us the Company is generally regular indepositing with appropriate authorities undisputed statutory dues and Company had noarrears of such outstanding statutory dues as at 31st March 2019 for a period more thansix months from the date they became payable.

(b) According to the information and explanations given to us the company has nodisputed outstanding statutory dues as at 31st March 2019 other than stated below:

Name of the Statute Nature of Dues Amount in Rs. Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income Tax 0.13 F.Y. 2013-2014 CPC (Begaluru)

(viii) According to the information and explanations given to us the Company has notdefaulted in the repayment of loans and borrowings to financial institutions banksgovernment or dues to debenture holders during the year.

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) during the year or term loans and hence reporting underclause (ix) is not applicable.

(x) According to the information and explanations given to us no fraud by company orany fraud on the company by its officers and employees have been noticed or reportedduring the year.

(xi) According to the information and explanations give to us the Company haspaid/provided for managerial remuneration in accordance with the provisions of section 197read 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.

Accordingly paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us transactions with therelated parties are in compliance with sections 177 and 188 of the Act and details oftransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us the Company has notentered into non-cash transactions with directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable.

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

For Chirag R. Shah & Associates
[Firm Registration No. 118791W]
Chartered Accountants
(Chirag R. Shah)
Date : May 30 2019 Proprietor
Place : Ahmedabad Membership No. 106139

Annexure - B to the Independent Auditors' Report

(Referred to in our Report of even date to the members of Archit Organosys 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 ArchitOrganosys Limited ("the Company") as of 31 March 2019 in conjunction withour audit 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.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) pertain to the maintenance 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 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 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 31st March 2019 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 Chirag R. Shah & Associates
[Firm Registration No. 118791W]
Chartered Accountants
(Chirag R. Shah)
Date : May 30 2019 Proprietor
Place : Ahmedabad Membership No. 106139