THE MEMBERS OF
BANSWARA SYNTEX LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the standalone Ind AS financial statements of Banswara SyntexLimited (the company") which comprise the balance sheet as at 31stMarch 2019 and the statement of Profit and Loss statement of changes in equity andstatement of cash flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.In our opinion and to the best of our information and according to the explanations givento us the aforesaid standalone Ind AS financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the companyas at 31st March 2019 and profit changes in equity and its cash flows forthe 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditors Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS Financial Statements of the currentperiod. These matters were addressed in the context of our audit of the Standalone Ind ASFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Key Audit Matter ||How our audit addressed the matter |
|Fraud Committed || |
|During the Financial year 2017-18 the Company reported to the stock exchanges about a fraud of Rs. 196.89 Lakhs approximately committed by the two employees at Surat Plant by including 50 fictitious workers in the payroll and the matter was under investigation ||The Audit Committee in their meeting held on 13th August 2018 mandated us to investigate the matter with respect to the fraud committed at Surat Plant. The Audit team investigated the same by applying required procedures and found that the amount was embezzled by collusion of HR Manager with Cashier. The amount determined on investigation was Rs. 188.87 lakhs (Approx.) against the amount of Rs. 196.89 lakhs (Approx.) estimated by the Company. |
| ||In addition the Company had paid towards statutory contributions aggregating to Rs. 14.43 lakhs (Approx.) |
| ||An amount of Rs. 50 Lakhs was offered by the respondents on non- refundable basis before the High Court of Gujarat at Ahmedabad. The amount has been received by the Company pending adjudication. |
| ||The procedures adopted for the verification of wage payments included the following to ensure adequate controls. |
| || Reviewed the system of internal control in respect of human resource and performed substantive procedures to test the effectiveness of internal control; |
| || Verified the correctness of Wage Sheets with attendance records maintained by Time- Keeper to determine authenticity of wage sheet preparation and authorisation; |
| || Verified correctness of Overtime/ Extra Rewards with attendance records maintained by the Company as in the case of Wage Sheets; |
| || Checked correctness of the recording of Wage Sheets in the financial records; and |
| || Verified the robustness of the process of wages disbursement |
|Implementation of SAP at Plants ||Our audit procedures for verification of inventory and its valuation included: |
|The Company is still in the process of implementation of inventory module in ERP-SAP which is in final stages. || |
| || Review the existing system of internal control and perform substantive procedures to test the effectiveness of operating internal controls; |
| || Testing the system of recording movement in inventories by co-relating to ERP- SAP and passing of necessary adjustment in ERP system; and |
| || The year-end valuation of inventory was test checked by selecting representative sample of raw material work in process and finished goods at different locations and their physical verification on different dates by rolling forward/ backward to ensure the correctness of the same on the balance sheet date |
Information Other than the Standalone Ind AS financial statements and AuditorsReport Thereon
The Companys Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Boards Report including Annexures to Boards ReportCorporate Governance and Shareholders Information but does not include thestandalone financial statements and our auditors report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon. In connectionwith our audit of the standalone Ind AS financial statements our responsibility is toread the other information and in doing so consider whether the other information ismaterially inconsistent with the standalone Ind AS financial statements or our knowledgeobtained during the course of our 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 Management and Those Charged with Governance for the Standalone IndAS Financial Statements
The Companys 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance changes in equity and cash flows of the companyin accordance with the accounting principles generally accepted in India including theIndian accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended from time to time. 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror. In preparing the financial statements management is responsible for assessing theCompanys ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the Companysfinancial reporting process.
Auditors Responsibilities for the Audit of the Standalone Ind AS FinancialStatements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditors report that includes our opinion. Reasonable assurance is ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 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.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of managements use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompanys ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditors report. However future events or conditions may cause theCompany to cease to continue as a 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.
Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced.
We consider quantitative materiality and qualitative factors in (i) planning the scopeof our audit work and in evaluating the results of our work; and (ii) to evaluate theeffect of any identified misstatements in the financial statements. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant defficiencies ininternal 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 Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in the Annexure A a statement onthe matters specified in paragraphs 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 Sheetthe Statement of Profit and Loss (including other comprehensive income) and the Cash FlowStatement and the Statement of Change in Equity dealt with by this Report are in agreementwith the books of account.
(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards (Ind AS) specified 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 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in termsof Section 164 (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".
(g) With respect to the other matters to be included in the Auditors Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 read with Schedule V to the Companies Act
(h) 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 on its financial position in itsfinancial statements Refer Note 46 to the standalone Ind AS 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 No.50(d) of the Financial Statements. iii. There has beenno delay in transferring amounts required to be transferred to the Investor Educationand Protection Fund by the company.
Annexure A" to the Independent Auditors Report of even date on theStandalone Ind AS Financial Statements of Banswara Syntex Limited for the year ended 31stMarch 2019
i. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The fixed assets were physically verified by the management during the year. Thereis a regular program of verification which in our opinion is reasonable having regard tothe size of the Company and nature of its business. No material discrepancies were noticedon such verifications.
c) Based on our verification and according to information and explanation given to usthe title deeds of immovable properties are held in the name of the company. Fourteentitle deeds are mortgaged with the Banks/Financial Institution for securing the long-termborrowings.
ii. The inventory has been physically verified by the management at reasonableintervals during the year except inventory lying with the third parties. In our opinionthe frequency of verification is reasonable. The discrepancies noticed on comparison ofphysical verification with book records were not material and have been properly dealtwith in the books of account.
iii. According to the information and explanation given to us by the management andrecords produced the Company has not granted any loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013.Therefore paragraph 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 the Provision of Section 186 of the Companies 2013 in respect ofthe Investment made. The company has not granted any loans and has not given any guaranteeand security under the provision of Section 185 of the Companies Act 2013.
v. The Company has accepted deposits and complied with directives issued by the ReserveBank of India and the provisions of the Companies Act 2013 and the rules frame thereunder. No order has been passed with respect to section 73 to 76 by the Company Law Boardor National Company Law Tribunal or Reserve Bank of India or any court or any otherTribunal.
vi. The Company has maintained cost records as required under section 148(1) of theCompanies Act 2013. However we are neither required to carry out nor have carried Outany detailed examination of such accounts and records.
vii. a. The Company is generally regular in depositing undisputed statutory duesincluding provident fund Employees State Insurance income tax sales taxservice-tax duty of customs duty of excise value added tax Goods & Service Taxcess and any other statutory dues applicable with the appropriate authorities. Accordingto the information and explanation given to us there are no undisputed statutory dueswhich were outstanding as on 31st March 2019 for a period of more than sixmonths from the date the same become payable.
b. According to information and explanation given to us and as per our examination ofrecords of the Company following are the particulars of dues on account of sales taxservice tax entry tax trade tax income tax duty of customs royalty provident fundduty of excise and cess matters that have not been deposited on account of dispute as on31st March 2019.
|Name of the statute ||Nature of disputed Dues ||Amount outstanding Rs. ( In Lakhs ) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax ||664.88 ||AY 2010-11 2014-15 & 2015-16 ||CIT(Appeals) Udaipur |
|Custom Act 1962 ||Custom Duty ||313.38 ||Financial Year 2012- 2013 ||Rajasthan High Court Jodhpur |
viii. According to the information and explanations given to us the Company has notdefaulted in the repayment of loans or borrowings to any financial institutions or banksThe Company has not taken any loan from the Government and has not issued any debentures.
ix. The Company has not made any public offer (including debts instruments) during theyear. According to the information and explanations given to us the money raised by theCompany by way of terms loans have been applied for the purpose for which they wereobtained.
x. The According to the information and explanations given to us no material fraud bythe Company or on the Company by its officers or employees has been noticed or reportedduring the course of our audit.
xi. In our opinion and according to the information and explanations given to us theCompany has paid / provided for managerial remuneration within the limit specified insection 197 of the Companies Act 2013.
xii. The Company is not a Nidhi Company as specified in the Nidhi Rules 2014. Thusthe requirements under para 3(xii) of the Companies (Auditors Report) Order 2016 arenot applicable to the Company.
xiii. According to the information and explanations given to us all transactions withrelated parties are in compliance with section 177 and 188 of the Companies Act 2013where applicable and the details have been disclosed in the financial statements asrequired 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 under review.
xv. According to the information and explanations given to us the Company has notentered into non-cash transactions with the directors or persons connected with himcovered under the provisions of section 192 of the Companies Act 2013. xvi. According tothe information and explanations given to us the Company is not a Non-banking financecompany hence registration under section 45-IA of the Reserve Bank of India Act 1934does not arise. Accordingly provision of clause 3(xvi) of the order is not applicable tothe company.
Annexure B" to the Independent Auditors Report of even date on theStandalone Ind AS Financial Statements of Banswara Syntex Limited for the year ended 31stMarch 2019 Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of BanswaraSyntex Limited ("the Company") as of 31st March 2019 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 (ICAI)". Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to companys policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys 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 prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the Companys internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompanys assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2019"based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
For K. G. Somani & Co.
Firm Registration No: 006591N
Membership No: 063419
Place of Signature: New Delhi
Date: 30th May 2019