To the Members of Astec LifeSciences Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Astec LifeSciences Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2020 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.
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 ("Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at 31 March 2020 and profit and other comprehensiveincome changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance withthe Code of Ethics issued by the Institute of Chartered Accountants of India together withthe ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the Standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Description of Key Audit Matter Revenue Recognition
See note 26 to the standalone financial statements
|The key audit matter ||How the matter was addressed in our audit |
|Revenue from sale of goods is recognised control of the goods has passed delivery of the goods. ||when the In view of the importance of the matter we applied the which is usually on following audit procedures in this area among others to obtain sufficient audit evidence: the company for revenue recognition including understanding and testing of key controls relating to recognition of revenue in correct period; |
|There is a risk of revenue being overstated on account of Evaluating the process followed by it being recorded in the wrong period. || Inspecting documentation/records for sales transactions recorded both side of year-end to determine if revenue has been recognised in the correct period; and |
| || Critically assessing manual journals posted to revenue to identify unusual or irregular items. |
|The key audit matter ||How the matter was addressed in our audit |
|As at 31 March 2020 the Company is having pending In view of the significance of the matter litigations under various laws ||we applied the such as Income Tax following audit procedures in this area among others to obtain sufficient audit evidence: |
|Excise VAT Customs and GST. ||Obtained and read the list of direct and indirect tax assessment/ litigations for movements from previous periods; |
|- The Management applies significant judgment estimating the likelihood of the future outcome in each case based on its own past assessments judicial precedents and opinions of experts / legal counsels when considering if and how much to provide or in determining the required disclosure for the potential exposure. ||We discussed the status of significant and potential litigations with management who have knowledge of these matters and where relevant we also obtained formal communication from the Company's external tax consultants; |
|- Due to inherent complexity and magnitude of potential exposures we regard this as key audit matter. ||Use of our own local Direct and Indirect tax specialists to assess the value of contingent liabilities in light of the nature of exposure applicable regulations and related correspondence with authorities; and Considered the adequacy of the disclosure made in relation to contingent liabilities. |
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.
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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.
Management's and Board of Directors' Responsibility for the Standalone FinancialStatements
The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit/loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness of the accounting records relevant tothe preparation and presentation of the standalone financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements the 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 the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgement 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 and 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 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 Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls 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 in the standalone financial statementsmade by the Management and Board of Directors.
Conclude on the appropriateness of the Management and Board of Directors use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor's report tothe related disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue 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.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors' report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
2. (A) 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 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 with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
(B) 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. TheCompany has disclosed the impact of pending litigations as at 31 March 2020 on itsfinancial position in its standalone financial statements - Refer Note 43 to thestandalone financial statements;. ii. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses. iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
(C) With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.
Annexure A to the Auditors Report
The annexure referred to in independent auditor's report to the members of the Companyon the standalone financial statements for the year ended 31 March 2020. We report that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.
(b) The Company has a regular programme of physical verification of its Property Plantand Equipment by which all Property Plant and Equipment are verified every year. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the Company and the nature of its assets. In accordance with the above programme theCompany has verified all Property Plant and Equipment during the year and no materialdiscrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of theimmovable properties are held in the name of the Company.
(ii) The management has conducted physical verification of inventory except inventoryin transit at reasonable intervals during the year and no material discrepancies werenoticed on such verification.
(iii) (a) The Company has granted unsecured loans to three companies covered in theregister maintained under Section 189 of the Companies Act 2013 (the Act'). TheCompany has not granted any loans secured or unsecured to other body corporate firmslimited liability partnerships or other parties covered in the register maintained underSection 189 of the Act. In our opinion the rate of interest and other terms andconditions on which the unsecured loans have been granted to companies listed in theregister maintained under Section 189 of the Act is not prima facie prejudicial to theinterest of the Company. In our opinion and according to information and explanationsgiven to us the Company has complied with the provisions of Section 185 and 186 of theAct in respect of grant of loans making investments providing guarantees andsecurities as applicable.
(b) The unsecured loans granted to the companies covered in the register maintainedunder Section 189 of the Act are repayable on demand. The borrowers have been regular inthe payment of interest.
(c) The unsecured loans granted to the companies covered in the register maintainedunder Section 189 of the Act are repayable on demand and there is no amount overdue formore than ninety days in respect of such loans.
(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 providing guarantees and securities as applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits in terms of directives issued by the Reserve Bank ofIndia or under the provisions of Sections 73 to 76 or any other relevant provisions of theAct and the rules framed there under. Accordingly paragraph 3(v) of the Order is notapplicable to the Company.
(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Companies Act 2013 related to the manufacture of Agro Productsand are of the opinion that prima facie the specified accounts and records have been madeand maintained. We have not however made a detailed examination of the same.
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees' stateinsurance duty of customs Goods and Service Tax Income Tax Cess Professional tax andother material statutory dues have been regularly deposited during the year with theappropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees' state insurance dutyof customs Goods and Service Tax Income Tax Cess Professional tax and other materialstatutory dues were in arrears as at 31 March 2020 for a period of more than six monthsfrom the date they became payable. Also refer note 44 of the financial statements.
(b) According to the records of the Company the outstanding dues of income-taxsales-tax service tax duty of custom Goods and Service Tax duty of excise value addedtax and cess on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (`) in lakh ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||58.67 ||FY 2006-07 ||High Court |
|Income Tax Act 1961 ||Income Tax ||*42.66 ||FY 2009-10 ||ITAT |
|Income Tax Act 1961 ||Income Tax ||79.36 ||FY 2009-10 ||CIT (A) |
| || ||**2.48 ||FY 2010-11 || |
| || ||0.19 ||FY 2011-12 || |
| || ||***340.79 ||FY 2016-17 || |
|Income Tax Act 1961 ||Income Tax ||****36.85 ||FY 2004-05 ||JCIT/DCIT |
|Central Excise Act ||Excise Duty ||#4455.02 ||FY 200914 ||CESTAT |
| || ||4813.14 ||FY 200914 ||High Court |
| || ||99.27 ||FY 201617 ||Joint Commissioner |
|Customs Act 1962 || |
|28.66 ||FY 2013-14 ||Commissioner of Custom |
| || || || || |
|VAT and Sales Tax Act || |
|5.61 ||FY 2011-12 ||Deputy Commissioner |
| || || || || |
| || ||##8.16 ||FY 2012-13 ||Joint Commissioner |
| || ||###97.13 ||FY 2013-14 ||Joint Commissioner |
| || ||####0.56 ||FY 2014-15 ||Joint Commissioner |
|Goods and Service Tax Act || |
|256.64 ||FY 2017-18 ||Joint Commissioner |
* Net of amount paid under protest amounting to ` 42.66 lakhs
** Net of amount paid under protest amounting to ` 1.66 lakhs
*** Net of amount paid under protest amounting to ` 30.00 lakhs
**** Net of amount paid under protest amounting to ` 41.41 lakhs
# Net of amount paid under protest amounting to ` 121.58 lakhs
## Net of amount paid under protest amounting to ` 1.97 lakhs
### Net of amount paid under protest amounting to ` 10.80 lakhs
#### Net of amount paid under protest amounting to ` 0.81 lakhs
(viii) According to information and explanations given to us the Company has notdefaulted in repayment of dues to a financial institution or bank.
The Company did not have any loans or borrowings during the year from debenture holdersor government.
(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) and has not obtained any term loans during the year.Accordingly paragraph 3 (ix) of the Order is not applicable to the Company. (x) To thebest of our knowledge and according to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees have beennoticed or reported during the course of our audit.
(xi) According to the information and explanations given to us we report that themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company and the Nidhi Rules 2014 are not applicable to it.Accordingly paragraph 3(xii) of the Order is not applicable to the Company.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is in compliance with Section 177and 188 of the Act where applicable and details of such transactions have been disclosedin the financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us the Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year. Accordingly paragraph 3(xiv) of the Order is notapplicable to the Company.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with its directors or persons connected with him.Accordingly paragraph 3(xv) of the Order is not applicable to the Company.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly paragraph 3(xvi) of the Order is not applicable to the Company.
Annexure B to the Independent Auditors' report on the standalone financial statementsof Astec LifeSciences Limited for the year ended 31 March 2020 Report on the internalfinancial controls with reference to the aforesaid standalone financial statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 (Referred to inparagraph (f) under Report on Other Legal and Regulatory Requirements' section ofour report of even date) Opinion
We have audited the internal financial controls with reference to financial statementsof Astec LifeSciences Limited ("the Company") as of 31 March 2020 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2020 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").
Management's Responsibility for Internal Financial Controls
The Company's management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note. 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 (hereinafter referred to as"the Act").
Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing prescribed undersection 143(10) of the Act to the extent applicable to an audit of internal financialcontrols with reference to financial statements. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tofinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of such internal financial controlsassessing 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 withreference to financial statements.
Meaning of Internal Financial controls with Reference to Financial Statements
A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial controls with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
| ||For B S R & Co. LLP |
| ||Chartered Accountants |
| ||Firm's Registration No. 101248W/W-100022 |
| ||Burjis Pardiwala |
| ||Partner |
|Mumbai ||Membership No: 103595 |
|5 May 2020 ||UDIN: 20103595AAAABH9473 |