To the members of
AVT Natural Products Limited Chennai
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of AVT Natural Products Limited("the Company") which comprise the standalone balance sheet as at 31 March2020 and the standalone statement of Profit and Loss (including other comprehensiveincome) standalone statement of changes in equity and standalone statement of cash flowsfor the year then ended and notes to the standalone financial statements including asummary of significant accounting policies and other explanatory information (hereinafterreferred to as "standalone financial 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 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 the 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 with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI) togetherwith the 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 appropriate to provide abasis for our opinion.
Key Audit Matter
Key audit matter are those matter that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.This matter was 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 this matter.
We have determined the matters described below to be the key audit matter to becommunicated in our report.
|Key audit matters ||How our audit addressed the key audit matter |
|1. Revenue recognition: ||Our audit procedures included the following: |
|Revenue from sale of goods is recognized when the control of the goods has transferred to the customer and when there are no longer. any unfulfilled obligations to the customer. Disclosure note 22 and the accounting policies provide additional information on how the Company accounts for its revenue in compliance with Ind AS 115. || Considering the appropriateness of the Company's accounting policies regarding to revenue recognition by comparing with applicable accounting standards. |
| || Testing the design implementation and operating effectiveness of the Company's general IT controls and key IT/manual application controls over the Company's systems which govern recording of revenue in the general ledger accounting system. |
| || Performing substantive testing (including year- end cut-off testing) by selecting samples of revenue transactions recorded during the year (also before and after the financial year end) by verifying the underlying documents which include sales invoices/contracts and shipping documents. |
| || Selecting a sample on test check basis of revenue transactions and contracts with customers to re- check that sales accounting was calculated in accordance with the contract conditions. |
| || Selecting a sample of credit note issued to the customers during the year and verifying the same is in accordance with terms of agreement with the customers. |
| || Performed data analytical procedures to identify and evaluate a sample of manual journal entries. |
| || Traced disclosure information to accounting records and other supporting documentation. |
Information Other than the Standalone Financial Statements and Auditors' Report Thereon
The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theDirector's report and Management Discussion and Analysis Report but does not include thestandalone financial statements and our Our opinion on the standalone financial statementsdoes not cover the other information and we do not express any form of assuranceconclusion thereon. In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard.
Responsibilities of the Management and Those Charged with Governance for StandaloneFinancial Statements
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 financial position financial performanceand total comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian accounting Standards (Ind AS) prescribed under section 133 of the Act. 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 doubt on the Company's 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. Inpreparing the standalone financial statements management and Board of Directors areresponsible 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing the Company's financial reportingprocess.
Auditors' 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 auditors' report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted reportthereon.in accordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements. As part of an auditin accordance with SAs we exercise professional judgment and maintain professionalskepticism 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 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 the standalone financial statementsin place and the operating effectiveness 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 to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditors' report to the related disclosures in the standalone financialstatements or if such disclosures are inadequate to modify our opinion. Our conclusionsare based on the audit evidence obtained up to the date of our auditors' report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern;and
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 withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditors' report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure A" 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 standalone Balance Sheet the standalone Statement of Profit and Loss(including other comprehensive income) the standalone Statement of Changes in Equity andthe standalone 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 theIndian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.
(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 tothe standalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at 31 Match 2020 onits financial position in its standalone financial statements Refer Note 36 to thestandalone 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 Refer Note 42 to the standalone financial statements;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company during the year ended 31 March2020; and
3. 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.
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 1 on Report on Other Legal and Regulatory Requirements'of our report of even date to the members of AVT Natural Products Limited ("theCompany") on the standalone financial statements as of and for the year ended 31March 2020.
(i) In respect of the Company's fixed assets:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets
(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. In our opinion and according to theinformation and explanations 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 comprising all the immovable properties of the land and buildings whichare freehold are held in the name of the Company as at Balance Sheet date. In respect ofimmovable properties of land and building that have been taken on lease and disclosed asright of use assets in the standalone financial statements the lease agreements are inthe name of the Company.
(ii) The inventory has been physically verified by the management at reasonableintervals during the year. In our opinion the frequency of such verification isreasonable. The discrepancies noticed on verification between the physical stocks and thebook records were not material and have been dealt with in the books of account.
(iii) Based on our audit procedures & according to the information and explanationgiven to us the Company has not granted any loans secured or unsecured to partiescovered in the register maintained under section 189 of the Act and hence 3(iii) of theOrder is not applicable to the Company.
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with provisions of Section 185 and 186 of the Act in respect makinginvestments and providing guarantees. The company has not granted loans nor provided anysecurity as applicable.
(v) Based on our audit procedures & according to the information and explanationgiven to us the Company has not accepted any deposits from the public within the meaningof the Act and the rules made there under and hence clause 3(v) of the Order is notapplicable.
(vi) We have broadly reviewed the books of account relating to materials labour andother items of costs maintained by the Company as specified under Section 148(1) of theAct for maintenance of cost records in respect of the products manufactured by theCompany and are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. However we have not made a detailed examination of costrecords with a view to determine whether they are accurate or complete.
(vii) (a) According to the information and explanations given to us and the records ofthe Company examined by us the Company has generally been regular in depositingundisputed statutory dues including provident fund employees' state insuranceincome-tax duty of customs Goods and Services Tax (GST) cess and any other statutorydues as applicable with the appropriate authorities. According to the information andexplanation given to us and the records of the Company examined by us no undisputedamounts payable in respect of provident fund employees' state insurance income-tax dutyof customs Goods and Services Tax (GST) cess and any other statutory dues were inarrears as at 31 March 2020 for a period of more than six months from the date theybecame payable.
(b) According to the information and explanations given to us and based on ourexamination of the records of the Company there are no dues of Income-tax Sales TaxService tax Goods and Services Tax (GST) Duty of customs Excise duty and Value addedtax as at 31 March 2020 which have not been deposited with the appropriate authorities onaccount of any dispute except as stated below:
|Nature of statute ||Nature of dues ||Amount (Rs. Lakhs) ||Forum where dispute is pending |
|Andhra Pradesh General Sales Tax Act ||APGST 1999-00 to 2004-05 assessments ||71.15 ||Sales Tax Appellate Tribunal |
|Karnataka Sales Tax Act ||KST 2006-07 assessment ||0.28 ||Joint Commissioner (Appeals) |
|Service Tax ||Service Tax for Business Auxiliary Services for the years 2005-09 ||541.49 ||Supreme Court of India |
|Service Tax ||Service Tax for Business Auxiliary Services for the years 2009-16 ||796.35 ||Commissioner (Appeals) |
(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in repayment of loans or borrowings to bank. The Companydoes not have any loans or borrowings from financial institutions debenture holders orthe government during the year.
(ix) In our opinion and according to information and explanations given by themanagement money raised by the Company by way of term loans were applied for the purposefor which they were raised. The Company did not raise money by way of initial public offeror further public offer (including debt instruments).
(x) To the best of our knowledge and belief and according to the information andexplanations given to us we report that no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year nor have we beeninformed of such case by the management.
(xi) According to the information and explanations given to us the managerialremuneration has been paid / provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the Act.
(xii) The Company is not a Nidhi company in accordance with Nidhi Rules 2014.Accordingly the provisions of clause (xii) of the Order are not applicable.
(xiii) Based on our audit procedures and according to the information and explanationsgiven to us all the transactions entered into with the related parties during the yearare in compliance with Section 177 and Section 188 of the Act where applicable and thedetails have been disclosed in the standalone financial statements as required by theapplicable Indian accounting standards.
(xiv) Based on our audit procedures and according to the information and explanationsgiven to us the Company has not made any preferential allotment or private placement ofshares or fully or partly paid convertible debentures during the year under review.Accordingly the provisions of clause (xiv) of the Order are not applicable.
(xv) Based on our audit procedures and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with directors orpersons connected with them.
(xvi) Based on our audit procedures and according to the information and explanationsgiven to us the Company is not required to be registered under Section 45-IA of ReserveBank of India Act 1934.
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 2(f) on Report on Other Legal and RegulatoryRequirements' of our report of even date
Report on the Internal Financial Controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013
We have audited the internal financial controls with reference to standalone financialstatements of AVT Natural Products Limited ("the Company") as of 31stMarch 2020 in conjunction with our audit of the standalone financial statements of theCompany for the year ended on that date.
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 control with referenceto financial statements criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by the Institute ofChartered Accountants of India. These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring 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 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 if 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 internal financial controls assessingthe risk that a material weakness exists and testing and evaluating the design andoperating 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 as at 31 March 2020based opinion on the Company's internal financial controls with reference to financialstatements.
Meaning of Internal Financial Controls with reference to standalone financialstatements
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 in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls with reference to standalonefinancial statements
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.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls andappropriate to provide a basis for our audit were operating effectively the internalcontrol with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India (the "Guidance Note").
|For PKF Sridhar & Santhanam LLP || |
|Chartered Accountants || |
|Firm's Registration No.003990S/S200018 || |
| ||T.V. Balasubramanian |
| ||Partner |
|Place : Chennai ||Membership No : 027251 |
|Date: 29th July 2020 ||UDIN: 20027251AAAAEQ8357 |