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Avro India Ltd.

BSE: 535098 Sector: Industrials
NSE: AVROIND ISIN Code: INE652Z01017
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Avro India Ltd. (AVROIND) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

AVON MOLDPLAST LIMITED.

(Formerly known os Avon Moldplost Private Ltd)

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

Opinion

We have audited the accompanying standalone financial statements of M/s. Avon MoldplastLimited ("the Company") which comprise the Balance Sheet as at 31stMarch 2019the Statement of Profit and Loss and the Statement of Cash Flows for the year then endedand notes to financial statements including a summary of significant accounting policiesand 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 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in Indiaofthe state of affairs of the Company as at 31st March 2019 and its profit and its cashflows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

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 be the key audit matters to becommunicated in our report.

Sr.No. Key Audit Matters Auditor's Response
1. Revenue recognition:
We refer to the standalone financial statement's accounting principles on revenue recognition and disclosure in the note no. 17 related to turnover. We performed the following procedures in relation to accuracy of revenue recognized and accrued:
We identified revenue recognition as a key audit matter because the Company and its external stakeholders focus on revenue as a key performance indicator. The revenue recognition occurs at a point in time when the control of goods is transferred to the customer according to the delivery terms. • Assessed the Company's revenue recognition accounting policies. Understood evaluated and tested the key controls.
• Tested the revenue calculations and agreed the revenue recognized to the underlying accounting records.
• We carried out analytical procedures on revenue recognized during the year to identify unusual variances.
• Performing tests on the accuracy of customer bill generation on sample basis and testing of a sample of credits and discounts applied to customer bills.
• We tested manual journal entries posted to revenue to identify unusual items.
• We assessed the adequacy of the company's disclosures related to revenues.
2. Related party transactions: We refer to the note no. 24(1) 24(22). Our audit procedures included the following:
The company has entered into several transactions with related parties during the year 2018-2019. We identified related party transactions as a key audit matter because of risks with respect tn completeness of disclosures made in the financial statements; non-compliance with statutory regulations governing related party relationships such as the Companies Act 2013 and SEBI Regulations and the judgment involved in assessing whether transactions with related parties are undertaken at arm's length. • We carried out an assessment of the key controls to identify and disclose related party relationships and transactions in accordance with the relevant accounting standard.
• We carried out an assessment of compliance with the listing regulations and the regulations under the Companies Act 2013 including checking of approvals/ scrutiny as specified in sections 177 and 188 of the Companies Act 2013 with respect to the related party transactions. In cases where the matter was subject to interpretation we exercised judgment to rely on opinions provided by management.
• We considered the adequacy and appropriateness of the disclosures in the financial statements relating to the related party transactions.
• For transactions with related parties we inspected relevant ledgers agreements and other information that may indicate the existence of related party relationships or transactions. We also tested completeness of related parties with reference to the various registers maintained by the company statutorily.
3. Taxation matters: The company is involved in ongoing indirect tax litigations i.e an enquiry is being conducted by superintendent Central Intelligent Unit (CIU) under the provisions of Central Goods and Service Tax Act 2017 and rules made applicable vide section 174 of Central Goods and Service Tax Act 2017. • Retrieved details of completed as well as ongoing tax assessments and demands for the year ended March 31 2019 from the management.
Enquiries are in progress at various stages which requires significant management estimates to specify the possible outcome. We have identified tax litigations as a key audit matter as it requires management to make judgments in order to foresee significant liability on such assessments. The company operates under several tax laws and some of these have a significant impact on the financial statements of the company. Refer Note 24(4c) of the Standalone Financial Statements. • We evaluated the management's assumptions in estimating the tax provision and the possible outcome. Obtained management's assessment of the open cases and compared the same to the assessment of tax of earlier year to assess the reasonableness of the provision or contingency.
• Considered the adequacy of the Company's disclosures made in relation to taxation related provisions and contingencies in the financial statements.
4. Appropriateness of recognition criteria and measurement bases on Provisions and contingent liabilities: matters where it requires the company to recognize measure present and disclose provisions and contingent liabilities. High level of judgment is required in estimating the level of provisioning as well to classify it as provisions or contingent liabilities. • We assessed the management's basis and the groundwork for the amount recognized as Provisions and contingent liabilities.
• Performed substantive procedures on the underlying calculations supporting the provisions recorded. We ensured that Provisions were determined based on the best estimate required to settle the obligation at the reporting date. We examined the reasonableness and adequacy of the amounts provided for.
Refer Note 24(10) of the Standalone Financial Statements. • Read Actuarial valuation report as per AS 15 obtained by the management.
5. Valuation of scrap: Our audit procedures included:
We have identified scarp as a key audit matter as manufacturing companies pays close attention to their scrap rate as this affects their profits. • We reviewed the internal control on scrap materials as regards its generations storage and disposal and see whether it was properly followed at every stage.
Whether the company plans to reuse the excess materials sell it recycle it all of these tasks requires additional time labour and energy. Timely and regular disposal is very important for any organization as it saves the storage cost. • Ensured that there exists a proper procedure to identify the scrap and made sure that good quality material is not mixed up with it.
• Ascertained whether the organization is maintaining reasonable records for the sale and disposal of scarps.
Review the production for the determination of the extent of scarp materials that may arise in the given period.
• Checked the rules for re-use of scarp and valuation process.

Information Other than the Standalone Financial Statements and Auditor's 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 Board'sReport including Annexures to Board's Report and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon. The Board'sReport including annexure to Board's Report and Shareholder's Information is expected tobe made available to us after the date of this auditor's report.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the 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 during the course of our audit orotherwise appears to be materially misstated.

When we read the Board's Report including annexure to Board's Report and Shareholder'sInformation if we conclude that there is material misstatement therein we are requiredto communicate the matter to those charged with governance

Management's Responsibilities for the Standalone 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 standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting 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 safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no 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 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:

1 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.

2. Obtain an understanding of internal controls relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)0)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

4. 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.

5. 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.

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 auditor's 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 (Auditor's Report) Order 2016("the Order")issued by the Central Government of India in terms of Section 143(11) of the CompaniesAct 2013 we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act based on our audit 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 the Statement ofCash Flow dealt with by this Report are in agreement with the relevant 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) . On the basis of written representations received from the directors as on March31st 2019 taken on record by the Board of Directors none of the directors isdisqualified as on March 31st 2019 from being appointed as a director in terms of Section164(2) of the Act.

f) . With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses a qualified opinion on theadequacy 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 in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended in ouropinion and to the best of our information and according to the explanations given to us:

i). Company has disclosed the impact of pending litigations as at 31stMarch 2019 onits financial position in its standalone financial statement.

ii). The company has made provisions as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts.

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

For Sushil Lal & Associates

Chartered Accountants

FRN- 021758N

Rajib Kumar Karn

Partner

M.No.304483

Date: 30th May 2019

Place: Ghaziabad

"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in paragraph 1 under the heading of 'Report on Other Legal and RegulatoryRequirements' of our report to the members of Avon Moldplast Limited of even date:

In terms of information and explanations given to us and the books and records examinedby us we report that:

i) . (a) The Company's Fixed Asset Register requiring full particulars includingquantitative details and situation of fixed assets remained pending for updation sincelast year.

b) . According to the information and explanations given to us the fixed assets werephysically verified during the year by the management in accordance with the programme ofverification which in our opinion is reasonable having regard to the size of the companyand the nature of its assets. To the best of our knowledge no material discrepancies werenoticed on verification conducted during the year as compared with the book records.

c) . Based upon the audit procedures performed the title deeds of the immovable property are held in the name of the company of Avon Moldplast Pvt Ltd but the company hasconverged from Private Limited to Limited and title deeds has not changed.

ii) . The management has conducted physical verification of inventory at reasonableinter vals during the year. No material discrepancies were noticed on physicalverification carried out at the end of the year.

iii) . As informed the Company has not granted any loans secured or unsecured tocompa nies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Accordingly sub-clause(a) (b)and (c) are not applicable.

iv) . In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

However Company gave Corporate guarantee to IDFC First Bank Ltd of र 41435000given on behalf of M/s. Bonita Furniture which was duly approved by the shareholder intheir meeting held on 22nd March 2018.

v) . The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Act and the rules framed thereunder are not applicable.

vi) . As informed to us the maintenance of cost records has not been specified by theCentral Government under sub-section (1) of section 148 of the Act in respect of theactivities carried by the company. This reporting under clause 3(vi) of the order is notapplicable to the company.

vii) . (a) According to the information and explanations given to us and on the basisof our examination of the books of account and records the Company is generally regularin depositing undisputed statutory dues with the appropriate authorities includingProvident Fund Income-Tax Goods and Services Tax Cess and any other statutory dues.

(b) According to the information and explanation given to us there were no statutorydues related to Provident Fund Income Tax Goods and Services Tax outstanding on accountof any dispute.

viii) . According to the information and explanations given to us we are of theopinion that the Company has not defaulted in repayment of loans or borrowings to afinancial institution bank government or dues to debenture holders as applicable.

ix) . Based upon the audit procedures performed and the information and explanationsgiven to us the company has raised moneys by way of initial public offer and company'sutilization of funds from the Fresh Issue of shares is as per the objectives stated in theProspectus under section 26 & 32 of Companies Act 2013.

x) . To the best of our knowledge and according to the information and explanationsgiven to us we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit.

xi) . According to the information and explanation given to us managerial remunerationhas been paid in accordance with the provisions laid down under Section 197 of theCompanies Act 2013 and the rules made there.

However renumeration paid to Managing Director in the audit period is in accordancewith Section 197(9) and the excess renumeration will be recovered from him within 6 monthsin next financial year.

xii) . In our opinion the Company is not a Nidhi company. Therefore the provisions ofclause 3 (xii) of the Order is not applicable to the Company.

xiii) . In our opinion all transactions with the related parties are in compliancewith section 177 and 188 of the Companies Act 2013 where applicable and the details havebeen disclosed in the Financial Statements as required by applicable Accounting Standards.

xiv) .The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review. Thereforeprovisions of clause 3 (xiv) of the order are not applicable to the company.

xv) . The Company has not entered into any non-cash transactions with directors orpersons connected with them. Accordingly the provisions of clause 3 (xv) of the order isnot 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 of clause 3 (xvi)of the order are not applicable to the company hence not commented upon.

For Sushil Lai & Associates

Chartered Accountants

FRN- 021758N

Rajib Kumar Karn

Partner

M.No.304483

Date: 30th May 2019

Place: Ghaziabad

"ANNEXURE B" TO THE INDEPENDENT AUDITOR'S REPORT

Report on the Internal Financial Controls under Clause of sub-section 3 of section 143of the Companies Act 2013 ("Act")

We have audited the internal financial controls over financial reporting of AvonMoldplast Limited ("the company") as of 31 March 2019 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

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

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

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial controls 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 unauthorised 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 years are subject to the risk that the internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate

Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weaknesses have been identified in the operating effectiveness of theCompany's internal financial controls over financial reporting as at March 31 2019:

a) . The Company's internal financial controls over credit note regarding discount werenot operating effectively which could potentially result in the Company's performance.

b) . The company did not have appropriate internal control regarding creating charge onfixed assets.

c) . The title deeds of the immovable property are held in the name of Avon MoldplastPrivate

Limited and the company has converged to Public Company but the title deeds of theimmovable property are still in the name of Avon Moldplast Private Limited.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

In our opinion except for the possible effects of the material weaknesses describedabove on the achievement of the objectives of the control criteria the Company hasmaintained in all material respects adequate internal financial controls over financialreporting and such internal financial controls over financial reporting were operatingeffectively as of March 31 2019 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.

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 2019standalone financial statements of the Company and these material weaknesses does notaffect our opinion on the standalone financial statements of the Company.

For Sushil Lal & Associates

Chartered Accountants

FRN- 021758N

Rajib Kumar Karn

Partner

M.No.304483

Date: 30th May 2019

Place: Ghaziabad.

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