The Members of
Asian Granito India Limited
REPORT ON THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Asian Granito IndiaLimited (CIN L17110GJ1995PLC027025) (the Company') which comprise theBalance Sheet as at March 31 2019 and the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Cash Flows and the Statement of Changes in Equityfor the year then ended and a summary of significant accounting policies and otherexplanatory information (herein after referred to as Standalone FinancialStatements').
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 2019 and its profit totalcomprehensive income its cash flows and the changes in equity and its cash flows for theyear ended on that date.
BASIS FOR OPINION
Weconductedourauditofthestandalonefinancialstatements in accordance with the Standardson Auditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the independence requirements that are relevant to our audit ofthe standalone financial statements under the provisions of the Act and the Rules madethereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe 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.
|Sr. No. ||Key Audit Matter ||Auditor's Response |
|1 ||Recoverability assessment of trade receivables: ||We tested the design and operating effectiveness of key controls focusing on the following: |
| ||The Company has Trade Receivable of ? 33052.29 Lakhs after providing for expected credit loss of ? 684.76 Lakhs as at March 31 2019. ||- Process of estimating expected credit loss; |
| ||Trade receivables of the Company comprises mainly receivables in relation to the Company's revenue from sale of Products such as tiles marbles and quartz. ||- Identification of loss events including early warning and default warning indicators; |
| || ||- Assessment and approval of individual loss provisions; |
| ||The recoverable amount was estimated by management based on expected credit loss model which is based on specific recoverability assessment on individual debtor with reference to the ageing profile historical payment pattern and the past record of default of the customer. ||- Governance including model validation and the assessment of the suitability of models appropriateness of assumptions and approval of provisions; and |
| ||Management would make provision based on the established model as well as specific provision against individual balances with reference to its recoverable amount. ||Completeness and accuracy of data input into models and provision calculators. |
| || ||We have performed the following procedures in relation to the recoverability of trade receivables: |
| || ||Tested the accuracy of ageing of trade receivables at year end on a sample basis; |
| ||For the purpose of establishing provisioning model to evaluate expected credit loss significant judgements and assumptions including the credit risks of customers criteria for determining significant increase in credit risk determination of probability of default timing and amount of realisation of these receivables are required to be made. ||Obtained a list of outstanding receivables and identified any debtors with financial difficulty through discussion with management. |
| ||Relevant references in the Financial Statements ||Assessed the recoverability of the unsettled receivables on a sample basis through our evaluation of management's assessment with reference to the credit profile of the customers historical payment pattern of customers publicly available information and latest correspondence with customers and to consider if any additional provision should be made; and |
| ||Impairment of financial assets: Accounting policies 1.6(g) || |
| ||Trade Receivables: Note 10 of the financial statements ||Tested subsequent settlement of trade receivables after the balance sheet date on a sample basis. |
| || ||We assessed the appropriateness and presentation of disclosures against relevant Ind AS |
|2 ||Evaluation of uncertain tax positions and recovery of tax receivables ||We have obtained details of completed tax assessments and demands for the year ended March 31 2019 from management. |
| ||The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. ||We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. |
| ||Relevant references in the Financial Statements ||Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. |
| ||Provision & Contingencies: Accounting policies 1.6(L) || |
| ||Contingent liabilities and Commitments: Note 37 of the financial statements ||We have involved our internal experts to review the nature of the amounts recoverable the sustainability and the likelihood of recoverability upon final resolution. |
| ||Other Current Assets: Note 7 of the financial statements includes VAT recoverable amounting to ? 280.59 Lakhs and Current tax assets in respect of Advance Income Tax amounting to ? 252.83 Lakhs are pending adjudication. ||Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management's position on these uncertainties. |
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 information included in the Management Discussion and AnalysisBoard's Report including Annexures to Board's Report Business Responsibility ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditors' report thereon. The other information is expectedto be made available to us after the date of this auditor's report.
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 standalone 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.
When we read the other Information if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance as required under SA 720 The Auditor's responsibilities Relating to OtherInformation'.
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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone 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 overseeing the Company's financial reportingprocess.
AUDITOR'S RESPONSIBILITY 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 standalone 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 standalone 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 in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
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.
Evaluate the overall presentation structure and content of the standalone 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 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
1. As required by Section 143(3) of the Act based on our audit we report that: a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge 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 Flows dealt with by thisReport are in agreement with relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified 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 March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial 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 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 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
Annexure A to Independent Auditor's Report on Standalone Financial Statements
(Referred to in paragraph 1(f) under "Report on Other Legal and RegulatoryRequirements" section of our report to the members of Asian Granito India Limited ofeven 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 AsianGranito India Limited (CIN L17110GJ1995PLC027025) (the Company') as of and for theyear ended March 31 2019 in conjunction with our audit of the Standalone FinancialStatements of the Company for the year ended on that date.
MANAGEMENT'S 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 ("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 Company's internal financial controlsover financial reporting based on our audit. We conducted our audit in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing prescribed under section 143(10)of the Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the ICAI. 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 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of theCompany's assets that could have a material effect on the financial statements.
INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
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 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 ICAI.
Annexure B to Independent Auditor's Report on Standalone Financial Statements
(Referred to in paragraph 2 under "Report on Other Legal and RegulatoryRequirements" section of our report the members of Asian Granito India Limited ofeven date)
(i) (a) The Company has maintained 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 of three years which in our opinion is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the program portion of thefixed assets were physically verified by the Management during the year. According toinformation and explanation given to us no material discrepancies were noticed on suchverification.
(c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds of all immovable properties of land and buildings which are freehold areheld in the name of the Company as at Balance Sheet date.
(ii) Physical verification of inventory has been conducted at reasonable intervals bythe management and no material discrepancies were noticed.
(iii) According to information and explanations given to us the Company has grantedunsecured loans to two companies covered in the register maintained under Section 189 ofthe Act in respect of which:
(a) The terms and conditions of grant of such loans are in our opinion prima facienot prejudicial to the Company's interest.
(b) The schedule of repayment of principal and payment of interest has been stipulatedfor loans granted and repayments / receipts of principal amounts and interest are regular.
(c) There is no overdue amount remaining outstanding as at the year end.
(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 in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
(v) The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2019 and therefore the provisions of the clause 3(v)of the Order are not applicable to the Company and hence not commented upon.
(vi) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Act for the business activities carried out by the Company.Thus reporting under clause 3(vi) of the order is not applicable to the Company and hencenot commented upon.
(vii) (a) According to the information and explanations given to us and based onrecords of the Company examined by us the Company has generally been regular indepositing undisputed statutory dues including Provident Fund Employees' StateInsurance Income Tax Customs Duty Goods and Services Tax and other material statutorydues as applicable with appropriate authorities.
(b) According to the information and explanations given to us and the records of theCompany examined by us in our opinion no undisputed amounts payable in respect ofProvident Fund Employees' State Insurance Income Tax Customs Duty Goods and ServicesTax and other material statutory dues in arrears as at March 31 2019 for a period ofmore than six months from the date they became payable.
(c) According to the information and explanations given to us and the records of theCompany examined by us the details of disputed statutory dues of Income Tax Sales TaxValue Added Tax Excise Duty Custom Duty and other material statutory dues which have notbeen deposited as at March 31 2019 on account of dispute are as under:
|Name of statute ||Nature of dues ||Forum where the dispute is pending ||Period to which the amount relates ||Amount ? ( in Lakhs) |
|Central Sales Tax Act 1956 ||Sales Tax and VAT ||Appellate Tribunal ||FY 2010-2011 ||7.86 |
|Sales Tax Act and VAT Laws Customs Act 1962 || ||Appellate Authority up to Commissioners' Level ||FY 2012-13 to 2016-17 ||2658.45 |
| || ||Sub Total (A) || ||2666.31 |
| ||Customs ||Commissioner Level ||AY 2013-14 ||167.97 |
| || ||Sub Total (B) || ||167.97 |
|Central Excise Act 1944 ||Excise ||Commissioner Level ||AY 2004-05 to 2008-09 ||2043.18 |
| || ||Sub Total (C) || ||2043.18 |
| || ||High Court ||A.Y. 2004-05 To A.Y. 2008-09 ||163.39 |
|The Income Tax Act 1961 ||Income Tax ||Income Tax Appellate Tribunal ||A.Y. 2006-07 A.Y. 2010-11 A.Y. 2012-13 A.Y. 2013-14 ||526.01 |
| || ||Appellate Authority up to Commissioners' Level ||A.Y. 2004-05 To A.Y. 2008-09 A.Y. 2013-14 A.Y. 2014-15 A.Y. 2015-16 ||216.98 |
| || ||Sub Total (D) || ||906.38 |
| || ||Total (A+B+C+D) || ||5783.84 |
(viii) To the best of our knowledge and according to information and explanations givento us the Company has not defaulted in the repayment of loans to banks and financialinstitutions. The Company has not taken any loans from Government or has not issued anydebentures.
(ix) The Company has not raised moneys by way of initial public offer or further publicoffer (Including debt instruments) and term loans during the year and hence reportingunder clause 3(ix) is not applicable to the Company.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
(xi) In our opinion and according to information and explanation given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provision of Section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the Standalone Ind AS Financial Statements asrequired by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures
(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with Directors or persons connected to directors and hence provisions ofSection 192 of the Companies Act 2013 are not applicable to the Company.
(xvi) According to the information and explanations given to us and based on ourexamination the Company is not required to be registered under section 45IA of Reservebank of India Act 1934.
| ||For Manubhai & Shah LLP |
| ||Chartered Accountants |
| ||ICAI Firm Reg. No.: 106041W/W100136 |
| ||J. D. Shah |
|Place: Ahmedabad ||Partner |
|Date: May 28 2019 ||Membership No. 100116 |