To the Members of AVG Logistics Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of AVG Logistics Limited ("theCompany") which comprise the Balance Sheet as at March 31 2021 and the Statementof Profit and Loss and Statement of Cash Flows for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "the standalonefinancial statements").
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 Accounting Standards prescribed under section 133 ofthe Act read with Companies (Accounts) Rules 2014 as amended and other accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 and loss 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 Standards 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 with theCode of Ethics issued by the Institute of Chartered Accountants of India("ICAI") together with the ethical requirements that are relevant to our auditof the standalone financial statements under the provisions of the Act and the Rulesthereunder 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 opinion.
Emphasis of Matter
We draw attention to the below matter in the Notes to the standalone financialstatements:
Note 42 which states that management has made an assessment of the impact of COVID-19on the Company's operations financial performance and financial position as at and forthe year ended March 31 2021 and have concluded that there is no impact which is requiredto be recognized in the standalone financial statements. Accordingly no adjustment hasbeen made to the standalone financial statements.
Our opinion is not modified in respect of above matter.
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Annual Report but does not include the standalone financialstatements and our
auditor's report thereon. The Annual Report is expected to be made available to usafter the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we will 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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. When we read the Annual Report if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance under SA 720 The Auditor's responsibilities Relating to OtherInformation'.
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 ||How the Key Audit Matter was addressed in our audit |
|1 Revenue Recognition ||Our audit procedures in respect of this area include but are not limited to: |
|Revenue from services is recognised over the period of contract (in case of 'Warehousing Income') and as and when the services are rendered (in case of 'Freight Income') and collectability is reasonably assured. The Company and its external stakeholders focus on revenue as a key performance indicator. In view of the above we have identified revenue recognition as a key audit matter. ||1. Assessing the compliance of revenue recognition accounting policies including those relating to discounts and rebates; |
| ||2. Performing substantive cut-off testing by selecting statistical samples of revenue transactions recorded at year-end and agreeing to the underlying documents which included sales invoices and related documents as applicable on unorganised sector in which the Company operate; |
| ||3. Obtained an understanding of the systems processes and controls implemented by management for recording and calculating revenue and the associated unbilled revenue unearned and deferred revenue balances; |
| ||4. Performed analytical procedures for reasonableness of incurred and estimated efforts. |
| ||5. Testing the appropriate evidence in case of cash transactions. |
|2 Trade receivables ||Our audit procedures in respect of this are included but not limited to: |
|The Company assesses the recovery of all the debit balances. ||1. Obtained the listing and ageing of the trade receivables and traced their balances to standalone financial statements. |
|Further the balances which are long outstanding are actively pursued. Management creates provision for doubtful debts basis facts and circumstances of each case and the ageing of the debit balance. We have determined this matter to be key audit matter. ||2. Performed the balance confirmation procedures and alternate procedures where we did not receive response to our balance confirmation requests. |
| ||3. Assessed the basis of management's judgement regarding allowance made against aged balances and those balances assessed as unrecoverable by the management. |
| ||4. Assessed the appropriateness of presentation/ disclosure in the standalone financial statements. |
| ||5. Verified subsequent recovery of Trade receivables by tracing them in the books of accounts and bank statement on sample basis. |
|3 Lorry trip advances ||Our audit procedures in respect of this are included but not limited to: |
|The Company has outstanding lorry trip advances which are given to truck drivers for meeting transportation expenses. Any ||1. Obtained the listing and ageing of the lorry advances and traced their balances to standalone financial statements. |
|excess amount is required to be refunded back or adjusted from subsequent trips. Allowance for ||2. Assessed the basis of management's judgement regarding allowance made against long outstanding balances. |
|doubtful of recovery has been considered by the Management based on the facts and ||3. Assessed the appropriateness of presentation/ disclosure in the standalone financial statements. |
|circumstances of each case. We have determined this matter to be key audit matter. ||4. Verified settlement of lorry advances during the year |
Responsibilities of Management and Those Charged with Governance for StandaloneFinancial 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 and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 Board of Directors 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 unlessBoard of Directors either intends to liquidate the Company or to cease operations or hasno realistic alternative 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 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.
We give in "Annexure A" a detailed description of Auditor's responsibilitiesfor Audit of the Standalone Financial Statements.
Report on Other Legal and Regulatory Requirements
1. 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 Act we give in the "Annexure B" a statement on the matters specified inparagraphs 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 and the Statement of Cash Flowdealt with by this Report are in agreement with the books of account
d. In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e. The matters described in "Annexure C" to this report under MaterialWeaknesses' paragraph in our opinion may have an adverse effect on the functioning ofthe Company.
f. On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on 31st March 2021 from being appointed as a director in terms of Section 164 (2) ofthe Act.
g. With respect to the adequacy of the internal financial controls with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure C".
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 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 which would impact its financialposition.
ii. The Company did not have any long-term contracts including derivative contracts forwhich 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;
3. As required by The Companies (Amendment) Act 2017 in our opinion according toinformation explanations given to us the remuneration paid by the Company to itsdirectors is within the limits laid prescribed under Section 197 of the Act and the rulesthereunder.
ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT ON EVEN DATE ON THE STANDALONE
FINANCIAL STATEMENTS OF AVG LOGISTICS LIMITED
Auditor's Responsibilities for the Audit of the 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 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 Act we are also responsible for expressing our opinion on whether the company hasinternal financial controls with reference to financial statements in place and theoperating effectiveness 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.Our conclusions 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.
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE STANDALONE
FINANCIAL STATEMENTS OF AVG LOGISTICS LIMITED FOR THE YEAR ENDED MARCH 31 2021
[Referred to in paragraph 1 under Report on Other Legal and RegulatoryRequirements' in the Independent Auditors' Report]
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets (Property Plant and Equipment).
(b) All the fixed assets (Property Plant and Equipment) have not been physicallyverified by the management during the year but there is a regular programme ofverification which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. No material discrepancies were noticed on such verification.
(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. The inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on verification between the physical stock and the book records.
iii. The Company has not granted any loans secured or unsecured to Companies FirmsLimited Liability Partnerships (LLP) or other parties covered in the register maintainedunder section 189 of the Companies Act 2013 (the Act'). Accordingly the provisionsstated in paragraph 3 (iii) (a) to (c) of the 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 Act in respect ofloans made and the
rlotaik arp as follows-
Reporting under section 186
|Sr. No. Particulars ||Maximum principal amount outstanding during the year (INR Lakhs) ||Principal Amount as at March 312020 (INR Lakhs) ||Principal Amount received during the year (INR lakhs) ||Principal Amount as at March 31 2021 (INR lakhs) ||Rate of Interest |
|1. SVJ Developers Private Limited ||277.00 ||277.00 ||25.00 ||252.00 ||11% |
|2. RN Finance Limited ||287.32 ||287.32 ||69.50 ||217.83 ||11% |
|3. Dhan Kuber Financer Private Limited ||40.40 ||40.40 ||12.50 ||27.90 ||11% |
|4. CC Trading ||5.63 ||5.63 ||5.63 ||Nil ||9% |
v. In our opinion and according to the information and explanations given to us thereare no amounts outstanding which are in the nature of deposits as on March 31 2021 andthe Company has not accepted any deposits during the year.
vi. The provisions of sub-section (1) of section 148 of the Act are not applicable tothe Company as the Central Government of India has not specified the maintenance of costrecords for any of the products of the Company. Accordingly the provisions stated inparagraph 3 (vi) of the Order are not applicable to the Company.
(a) According to the information and explanations given to us and the records of theCompany examined by us in our opinion the Company is regular in depositing withappropriate authorities undisputed statutory dues including provident fund and employees'state insurance and there are serious delays in depositing labour welfare fundprofessional tax income tax goods and service tax with appropriate authorities.
(b) According to the information and explanations given to us undisputed dues inrespect of goods and service tax which were outstanding at the year end for a period ofmore than six months from the date they became payable are as follows:
|Name of the statute ||Nature of the dues ||Amount in INR lakhs ||Period to which the amount relates ||Due Date ||Date of Payment |
|Goods and Service Tax 2017 ||Goods and Services tax ||12188542 ||August 2020 ||September 2020 ||Not yet paid |
|Goods and Service Tax 2017 ||Goods and Services tax ||16301399 ||September 2020 ||October 2020 ||Not yet paid |
(c) According to the information and explanation given to us and the records of theCompany examined by us there are no dues of income tax customs duty cess and any otherstatutory dues which have not been deposited on account of any dispute.
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to the financial institution bank ordebenture holders except for the cases mentioned in Annexure I.
ix. In our opinion according to the information explanation provided to us moneyraised by way of term loans during the year have been applied for the purpose for whichthey were raised. The Company has not raised any money by way of initial public offer orfurther public offer (including debt instruments) during the year.
x. During the course of our audit 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 employees.
xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/ provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read 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 the provisions stated in paragraph 3(xii) ofthe Order are 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 transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has made preferential allotment ofshares during the year and the requirements of Section 42 of the Act have been compliedwith. The amount raised has been used for the purposes for which they were raised.
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 non-cashtransactions with directors or persons connected with him. Accordingly provisions statedin paragraph 3(xv) of the Order are not applicable to the Company.
xvi. In our opinion the Company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions stated in paragraphclause 3 (xvi) of the Order are not applicable to the Company.
ANNEXURE C TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE FINANCIALSTATEMENTS OF AVG LOGISTICS LIMITED
[Referred to in paragraph 2(g) under Report on Other Legal and RegulatoryRequirements' in the Independent Auditor's Report]
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 with reference to financial statementsof AVG Logistics Limited ("the Company") as of March 31 2021 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial statementscriteria 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) (the"Guidance Note"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under 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 issued by ICAI anddeemed to be prescribed under section 143(10) of the Act to the extent applicable to anaudit of internal financial controls. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the internalfinancial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to financialstatements included obtaining an understanding of internal financial controls withreference to financial statements assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols with reference to financial statements.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial control 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 control withreference to financial statements includes
those policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; 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.
Inherent Limitations of Internal Financial Controls with reference to financialstatements - This paragraph is not to be considered if Disclaimer of opinion is issued
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 control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified as at March 31 2021:
1. In case of 'Lorry Trip Advance' the Company does not have a process in place totimely reconcile the advance paid with expense settlement. Such weakness could potentiallyresult in recognition of expenses in the inappropriate period.
2. The Company did not have a robust policy in respect to KYC documentation of cashreceipts and payment. In the absence of adequate control over cash management systemthere could be inappropriate recording of cash transactions.
3. The Company does not have formal period end closure process to account foradjustment specifying the period end activities that are required to be carried out by aCompany including period-end cut offs assessment of doubtful debts reconciliation ofkey balances. Without a formal process of financial statement closure process ensuringprocessing of the documents accurately and maintaining consistency may be difficult.
4. The Company has given loans to third parties on agreed terms and conditions. TheCompany does not have a robust cash management policy to decide on providing funding tothird parties and timing of recovery of such loans. Absence of cash management policy maypotentially have an impact on the recovery of such loans.
5. In case of advance to supplier the Company does not have an appropriate internalcontrol system for documentation of related purchase order agreements timelyreconciliation with subsequent settlement etc. which could potentially result ininappropriate settlements.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control with reference to financial statements such that there is areasonable possibility that a material misstatement of the company's annual or interimfinancial statements will not be prevented or detected on a timely basis.
In our opinion except for the effects/possible effects of the material weaknessesdescribed above on the achievement of the objectives of the control criteria the Companyhas maintained in all material respects internal financial controls with reference tofinancial statements and such internal financial controls with reference to financialstatements were operating effectively as of March 31 2021 based on the internal controlwith reference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note.
We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 31 2021standalone financial statements of the Company and except for the matter stated in point1 these material weaknesses does not affect our opinion on the standalone financialstatements of the Company.
|For MSKA & Associates |
|Chartered Accountants |
|ICAI Firm Registration No.105047W |
|Amit Mitra |
|Membership No.: 094518 |
|UDIN: 21094518AAAADJ7311 |
|Place: Bikaner Rajasthan |
|Date: October 27 2021 |