To the Members of
ARO GRANITE INDUSTRIESLIMITED
Report on the Financial Statements
We have audited the financial statements of ARO GRANITE INDUSTRIES LIMITED ("theCompany") which comprise the balance sheet as at March 312020 and the statement ofProfit and Loss statement of changes in equity and statement of cash flows for the yearthen ended and notes to the financial statements including a summary of significantaccounting 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 the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March312020 and profits changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditors Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw your attention to Note40to the financial statements which explains theuncertainties and the managements assessment of the financial impact due to the lock-downsand other restrictions and conditions related to the COVID -19 pandemic situation forwhich a definitive assessment of the impact in the subsequent period is highly dependentupon circumstances as they evolve. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed 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.
We have determined the matters described below to be the key audit matters to becommunicated in our report.
|Key Audit Matter ||Auditors Response |
|1. Adoption of Ind AS 116 'Leases' || |
|The company has adopted Ind AS 116 Leases (IND as 116) in the current year. The application and transition to this accounting standard is complex and is an area of focus in our audit since the company has many leases with different contractual terms. ||Our audit procedures on adoption of Ind AS 116 included: |
|Ind as 116 introduces a new lease accounting model wherein lessees are required to recognize a right-of-use (ROU) asset and a lease liability arising from a lease on the balance sheet. || Assessed and tested new processes and controls in respect of the lease accounting standard (Ind AS 116) |
|The lease liabilities are initially measured by discounting future lease payments during the lease terms as per contract/arrangement. Adoption of the standard involves significant judgments including determination of the discount rates and the lease term. || Assessed the Company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business. |
|Additionally the standard mandates detailed disclosures in respect of transition. || Involved our specialists to evaluate the reasonableness of the discount rates |
|Refer Note 31to the financial statements. || Upon transition as at 1 April 2019: |
| || Evaluated the method of transition and related adjustments |
| || Tested completeness of the lease data by reconciling the Company's lease commitments to data used in computing ROU Asset and the lease liabilities. |
| || Assessed the key terms and conditions of each lease and the key estimates such as discount rates and the lease term. |
| || Evaluated computation of lease liabilities and challenged the key estimates such as discount rates and the lease term. |
| || Assessed and tested the presentation and disclosures relating to Ind AS 116 including disclosures relating to transition. |
|2. Related Party Transactions || |
|The Company has entered into several transactions with related parties during the year 2019-20.We identified related party transactions as a key audit matter because of risks with respect to completeness of disclosures made in the financial statements including recoverability thereof; compliance with statutory regulations governing relate party relationships such as the Companies Act2013 and SEBI Regulations and the judgment involved in assessing whether transactions with related parties are undertaken at arms length. ||Our audit procedures on related party transactions included: |
|Refer Note 38 to the financial statements. || Assessed the key controls to identify and disclose related party relationships and transactions in accordance with the relevant accounting standard. |
| || Assessed compliances with the listing regulations and the regulations under Companies Act20l3 including checking of approvals/scrutiny as specified in Sections ill and 188 of the Companies Act20l3 with respect to the related party transactions. |
| || Considered the adequacy and appropriateness of the disclosures in the financial statements including recoverability thereof relating to the related party transactions. |
| || Inspected relevant ledgers agreements and other information that may indicate the existence of related party relationships or transactions. Further we also tested completeness of related parties with reference to the various registers maintained by the company statutorily |
| || On a sample basis tested Company's assessment of related party transactions for arms length pricing. |
Information other than the Financial Statements and Auditors 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 Report including Annexures to Board Report BusinessResponsibility Report Corporate Governance and Shareholder Information but does notinclude the financial statements and our Auditors report thereon.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon. In connection with our audit ofthe financial statements our responsibility is to read the other information identifiedabove when it becomes available and in doing so consider whether the other informationis materially inconsistent with the financial statements or our knowledge obtained in theaudit or other wise 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 the fact. We havenothing to report in this regard.
Managements 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 implementation and maintenance ofaccounting 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 financial statement that givea 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. That Board of DirectorsRs. are also responsible for overseeingthe Company's financial reporting process.
Auditors 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 Auditors report that includes our opinion. Reasonable assurance is a highlevel of assurancebut 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 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 financial controls system in place and the operating effectiveness ofsuch controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements 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 drawn attention in our Auditors 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 Auditorsreport. 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 areasonable knowledgeable under of the financial statements may be influences. 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 ourAuditors 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 bereasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors 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 "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2. 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 statement of Cash Flow dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified 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 31stMarch2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms 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".
g) With respect to the other matters to be included inthe AuditorsReport in accordancewith the requirements of section 197(16) of the Act asamended:
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 ofthe Act.
h) With respect to the other matters to be included in the Auditors 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 does not have any pending litigations as at31sTMarch 2020.
ii. The Company is not required to make any provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the company.
For VAPS & Company
ICAI Firm Registration Number: 003612N
Praveen Kumar Jain
Membership Number: 082515
Date: June26 2020
(32-d ANPOAL 2019-20
Annexure "A" to the Independent Auditors Report
(Referred to in paragraph 1 under Report on Other Legal and Regulatory RequirementsSection of our report to the Members of ARO
GRANITE INDUSTRIES LIMITED of even date)
i. (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets
(B) The company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets Pursuant to the programme certain fixed assets havebeen physically verified by the management during the year and no material discrepancieswere noticed on such physical verification
(c) The title deeds of immovable properties as disclosed in Note 5 on fixed assets tothe Ind AS financial statements are held in the name of the Company
ii. According to the information available to us that physical verification ofinventory has been conducted at reasonable intervals by the management and no materialdiscrepancies is noticed on physical verification between the physical stocks and the bookrecords
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 Act Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by it
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified
vi. Pursuant to the rules made by the Central Government of India the company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained We have not madea detailed examination of the records with a view to determine whether they are accurateor complete
vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the company
there had been no delays in depositing undisputed statutory dues including Income TaxGoods and Services tax Wealth Tax Sales Tax Customs Duty Excise Duty Service TaxValue Added Tax Cess and other material statutory dues as applicable with theappropriate authorities According to the information and explanations given to us noundisputed amount payable in respect of Income Tax Goods and Services tax Wealth TaxSales Tax Customs Duty Excise Duty Service Tax Value Added Tax Cess and othermaterial statutory dues as applicable were outstanding as at 31st March 2020for a period of more than six months from the date they became payable
(b) According to the information and explanations given to us there are no statutorydues which have not been deposited on account of any dispute
viii. According to the records of the Company examined by us and the information andexplanation given to us the company has not defaulted in repayment of loans or borrowingsto any bank Further the company has not obtained any loan or borrowing from governmentor financial institution.
ix. In our opinion and according to the information and explanations given to us theCompany has not raised any moneys by way of initial public offer or further public offer(including debt instruments)In our opinion and according to the information andexplanations given to us money raised by way of term loans have been applied by thecompany during the year for the purposes for which they were raised
x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement The Company has not given any guarantee for loans taken by others from bank orfinancial institutions
xi. The Company has paid/ provided for managerial remuneration during the year inaccordance with the provisions of Section 197 read with Schedule V to the Act
xii. As the Company is not a Nidhi Company and the Nidhi Rules2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Section 177 and 1988 of the Act The details of such related partytransactions have been disclosed in the Ind AS Financial Statements as required underIndian Accounting Standard (Ind AS) 24 Related Party Disclosures specified under Section133 of the Act read with Rule 4 of the Companies (Indian Accounting Standards) Rules2015 (as amended)
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xvi) of the order is not applicable to the company
xv. The Company has not entered into any non-cash transactions with its Directors orpersons connected with him Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company
xvi. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act1934 Accordingly the provisions of Clause 3(xvi) of the Order are notapplicable to the Company
Annexure 'B' to the Independent Auditors Report
(Referred to in paragraph 2(f) under Report on Other Legal and Regulatory Requirementssection of our report to the Members of Aro Granite Industries Limited of even date)
Report on the Internal Financial Controls Over Financial Reporting 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 AROGRANITE INDUSTRIES LIMITED ("the Company") as of March 312020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
Managements Responsibility for Internal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 Auditors 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 obtained by us are 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.
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 be come in adequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2020 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.
|For VAPS & COMPANY |
|Chartered Accountants |
|ICAI Firm Registration No-003612N |
|Praveen Kumar Jain |
|Membership No. 82515 |
|Place: Hosur |
|Date: June 26 2020 |