The Members of
CASTEX TECHNOLOGIES LIMITED
Report on the audit of Standalone Financial statements
We have audited the accompanying standalone IND AS financial statementsof CASTEX TECHNOLOGIES LIMITED ( the Company ) which comprise the balance sheet as at 31stMarch 2020 the statement of profit and loss [including other comprehensive income] thestatement of cash flows and the statement of changes in equity for the year ended and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as standalone Ind AS financial statements )
In our opinion and to the best of our information and according to theexplanations given to us except for the effects of the matters described in Basis forQualified Opinion section of our report the aforesaid standalone Ind AS financialstatements give the information required by the Companies Act 2013 ( the Act ) in themanner so required and give a true and fair view in conformity with the Indian AccountingStandards prescribed under section 133 of the act read with the Companies (IndianAccounting Standards) Rules 2015 as amended ( Ind AS ) and other accounting principlesgenerally accepted in India of the state of affairs of the company as at 31 March 2020and its Profit and Loss (including other comprehensive income) Cash Flow Statement andits statement of changes in equity for the year ended on the date.
Basis for Qualified Opinion
We conducted our audit of the Standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act(SAs). Our responsibility under those Standards is further described in the AuditorsResponsibilities for the Audit of Standalone Ind AS Financial Statements section of ourreport. We are independent of the entity in accordance with the code of Ethics issued byICAI together with the ethical requirements that are relevant to our audit of StandaloneInd AS financial statements under the provisions of the Act and the rules made there underand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the ICAI s Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our qualified opinion on theStandalone Ind AS financial statements.
1. As per Indian Accounting Standard 36 which talks aboutimpairment of asset if the carrying amount of the asset is more than recoverable amountthen asset need to be impaired and as per Indian Accounting Standard 109 on financialinstruments which also contains provisions of impairment of financials assets throughexpected credit loss method basis these provisions we were required to seek for anyimpairment obligations from management but since the corporate debtors is still under theprocess CIRP and resolution professional and committee of creditors are in the process offinalization successful resolution applicant and the management has not determined valuein use thus impairment of Fixed Assets including Capital Work In Progress (Rs. 4545.92Crores) advances given to related parties(Rs. 551.13 Crores)in the absence ofinformation we are unable to ascertain the effect of the same on the financial statements.
As per Indian Accounting Standard 109 company was required to get theInvestment (Rs. 564.35 Crores) at fair value but the same has not been done by thecompany accordingly we are unable to ascertain the effect of the same on the Financialstatements.
2. Considering the current operating levels of the Company andthe ongoing corporate insolvency resolution process company has not made any Impairment inthe value of Tools and Dies accordingly we are unable to comment upon the effect of thesame on the Financial Statements.
Emphasis of Matter
We draw attention to the following:
a) Note No.2.1 regarding Corporate Insolvency Resolution Process (C1RP)initiated under Insolvency and Bankruptcy Code 2016 ( the Code ) and the outcome of theCIRP is subject to decision of APEX Court / NCLT.
b) The Company has been continuously making losses consequently itsnet worth is negative and the Company s total liabilities exceeded its total assets. Thisindicates the existence of material uncertainty that may cast significant doubt on theCompany s ability to continue as a going concern. However in view of the CIRP in respectof the Company which is in progress the accounts have been prepared on a going concernbasis[Refer Note No. 2.1 of financial Notes];
c) Considering the ongoing corporate insolvency resolution process (asmentioned n Note No 2.2.2) the certainty as to the realization of unused tax losses andMAT credit available cannot be ascertained at this stage.
Consequently adjustment to deferred tax (net) and MAT credit availablehave not been given effect to. (Refer Note 2.2.2 to financial results)
d) As per the Code the RP has to receive collate and all the claimssubmitted by the creditors of the company.
The RP has verified and admitted the claims submitted by the creditorsagainst the company as per the Code. Pending finalisation of resolution plan the impactof such claims if any that also has not been considered in the preparation of thefinancial statements. Further interest on the financial debt from the date ofcommencement of CIRP (i.e. from 20th December 2017 till 31st March 2020) has not beenprovided in the books of accounts and charged to the Profit and Loss account. [ReferNote2.1 to financial Notes];
a) We have relied upon the report of another auditor for valuation ofthe inventory taken in the books of account however stock held in Nalagarh & Palwalhave not been considered in the report by the external auditor and the report alsoincludes some disclaimers such as: l due to the ongoing pandemic of Covid-19 it was notpractically possible to attend the physical stock count. Therefore video call was usedfor exercise which has some inherent weakness considering quality of the product whetherit is obsolete/damaged could not be commented on replacement/movement of inventory couldnot be tracked etc. we have assumed that no such things have been taken place. l Asinformed by the management tools dies and fixtures details are available with the HO andthe same were not made available to us at the time of stock count.
e) Trade receivables are subject to confirmation.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements ofthe current period. These matters were addressed in the context of our audit of theStandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters.
Except for the matters described in the Basis for qualified opinion andemphasis of matter we have determined that there are no other key audit matters tocommunicate in our report.
Information other than the financial statements and Auditor s Reportthereon
The Company s Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Director sReport including annexure thereto Report on Corporate Governance and ManagementDiscussion and Analysis Report but does not include the Standalone Ind AS financialstatements and our auditor s report thereon. Our opinion on the Standalone Ind ASfinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon. In connection with our audit of the Standalone Ind ASfinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the StandaloneInd AS financial statements or our knowledge obtained during the course of our audit orotherwise appears to be materially misstated. If based on the work we have performed weconclude that there is a material misstatement of this other information; we are requiredto report that fact. We have nothing to report in this regard.
Management and Those Charged with Governance s Responsibility for theStandalone Ind AS financial statements
The Management and board of directors of the company are responsiblefor the matters stated in Section 134(5) of the Companies Act 2013 ( the act ) withrespect to the preparation of these standalone financial statements that give a true andfair view of the financial position financial performance and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015.
A corporate insolvency resolution process ( CIRP ) has been initiatedagainst the company vide an order of Chandigarh bench of the National Company Law Tribunal(NCLT) dated December 20 2017 under the provisions of the insolvency and bankruptcy code2016 (Code). Pursuant to the order the power of the Board of directors stands suspendedand are exercisable by Mr. Dinkar T. Venkatasubramanian who was appointed as interimresolution professional (IRP) by the NCLT vide order dated December 22 2017 and wasconsequently confirmed as Resolution Professional (RP) by the Committee of Creditors (COC)in its meeting held on January 12 2018.Hon able National Company Law Tribunal ChandigarhBench vide their order No CP (IB) No.116/Chd/Hry/2017dated 13th June 2018 approved theextension of CIRP period by 90 days(i.e. from 180 days to 270 days).
Further the Committee of Creditors of CTL had approved the resolutionplan submitted by Liberty House Group Pte Ltd (LHG) through e-voting process on August 302018. The resolution plan as approved by the Committee of Creditors of CTL had also beensubsequently submitted to Hon ble National Company Law Tribunal Chandigarh Bench forconsideration and approval as per the provision of the Code.
However in view of the failure by LHG to comply with steps envisagedin the process memorandum post COC approved its Resolution Plan as well as continuingdefault by Liberty in implementing NCLT approved Resolution plans in other CIRPs the COCfiled an application on 6th of December 2018 to withdraw Liberty s Resolution Plan andsought directions for exclusion of time spent with LHG for negotiating and finalizingResolution Plan and allow a fresh process to identify new resolution applicants for CTL.
Adjudicating Authority vide its Order dated March 15 2019 haspermitted the application for approval of the resolution plan to be withdrawn.Adjudicating Authority has also directed that the period from the date of acceptance ofLHG as the preferred bidder i.e. May 18 2018 till the receipt of the certified copy ofthe Order dated March 15 2019 shall be excluded for counting the 270 days permitted forcompletion of the insolvency resolution process. The Order has also allowed CoC to proceedwith inviting fresh expression of interest from prospective investors. Accordingly interms of the said direction the RP has invited a fresh expression of interest as on March29 2019 and has received six expressions of interests in response till date.
Appeal was filed by LHG against the order dated 15.03.2018 on29.04.2019 before the Hon ble NCLAT. During the pendency of the said appeal theresolution professional moved an application seeking exclusion of certain time period dueto the pending litigation. Therefore Hon ble NCLAT vide its order dated 16.07.2019 due tothe pending litigation excluded a period of 73 days for the purpose of calculating 270days which was completed on 11.07.2019 from 29th April (date of filing the appeal) to11.07.2019. The period of 73 days were allowed to be counted from 17.07.2019 whichexpired on 28.09.2019.
The CoC have vide another application dated 28.09.2019 soughtexclusion/ extension from the Hon ble NCLAT in view of Section 12(3) of the IBC Code. Thehonorable NCLAT vide order dated 11.12.2019 granted time for resolution till 31st January2020. The resolution plan was submitted by Deccan Value on 17th January 2020 along withaddendums dated 07th February 2020 18th February 2020 & 9th March 2020. Theresolution plan was put to vote and approved by COC on 16th March 2020.
The Government of India ordered a lockdown on account of COVID 19. As aresult the Hon ble NCLT was not functional during that period and thus the applicationfor approval of resolution plan under section 30(6) of IBC was filed by ResolutionProfessional of Castex in NCLT on 16th June 2020. The matter is pending before the Hon bleAdjudicating Authority.
The Company is presently undergoing CIRP and the Resolution process isunderway in line with the provisions of the IBC Code .
As the power of the Board of Directors has been suspended thefinancials has not been adopted by the Board of Director. However the same have beensigned by Mr. Sanjay Arora Whole Time Director Mr. Yogesh Kapur Director Mr. Ajay KumarChief Financial Officer of the company confirming accuracy and completeness of theresults. These Standalone Ind AS financial statements have not been signed but taken onrecord by the RP.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor s report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone Ind AS financial statements.
As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional skepticism throughout the audit.We also: l Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
l Obtainan understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3) (i) of the Act we are also responsible for explaining our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
l Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management. lConclude 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 exists we are required todraw attention in our auditor s report to the related disclosures in the 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 auditor s report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.
l Evaluate the overall presentation structure and content of theStandalone Ind AS financial statements including the disclosures and whether theStandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone Ind AS financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our auditwork; and (ii) to evaluate the effect of any identified misstatements in the standaloneInd AS financial statements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor s report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 exercise of powers conferred bysub section (11) of section 143 of the act we give in annexure A a statement on thematters specified in paragraph 3 & 4 of the Order to the extent applicable.
2. As required by section 143(3) of the Act we report that:
(a) Except for the matter described in Basis of Qualified opinion Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit;
(b) In our opinion except for the matter described in basis ofqualified 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) Except for the matter described in basis of qualified opinion Thebalance sheet the statement of profit and loss [including other comprehensive income]thecash flow statement and the statement of changes in equity dealt with by this report arein agreement with the relevant books of account;
(d) Except for the matter described in basis of qualified opinion theaforesaid standalone IND AS financial statements comply with the Indian AccountingStandards specified under section 133 of the Act read with the relevant rules thereunder;
(e) In our opinion the matters described in the basis for qualifiedopinion above may have adverse effect in the functioning of the Company.
(f) On the basis of the written representations received from thedirectors as on 31stMarch 2020 and taken on record by the board of directorsnone of the directors is disqualified as on March 31 2020 from being appointed as adirector in terms of Section 164 (2) of the Act; But the power of board of directorsstands suspended as the company is in NCLT.
(g) The qualification relating to the maintenance of accounts and othermatters connected therewith are as stated in the Basis for Qualified Opinion paragraphabove; and
(h) With respect to the adequacy of the internal financial controlsover financial reporting of the company and the operating effectiveness of such controlsrefer to our separate report in Annexure B . Our report expresses an unmodified opinion onthe adequacy and the operating effectiveness of the company s internal financial controlsover financial reporting; and internal audit has also not been taken placed by company.
(i) With respect to the other matters to be included in the Auditor sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
i. The company has disclosed the impact of pending litigations on itsfinancial position in its standalone IND AS financial statements [Refer Note no. 3.27.5 offinancial statements].
ii. The company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.
iii. There were no amount which were required to be transferred to theInvestor Education and Protection Fund by the company.
| ||For Raj Gupta & Co. |
| ||Chartered Accountants |
| ||FRN: 000203N |
| ||CA Raj Kumar Gupta |
|Place : New Delhi ||(Partner) |
|Date : 31/07/2020 ||Membership No: 017039 |
|UDIN:20017039AAAACR2787 || |
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT
The Annexure referred to in Independent Auditors Report to the membersof the Company on the standalone IND AS financial statements for the year ended 31st March2020.On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
I. In respect of fixed assets:
a) According to the information and explanation given to us and on thebasis of examination of books and records the Company has maintained the records howeverthe same was not showing full particulars including quantitative details and situation offixed assets and as informed the company is in the process of updating the same.
b) According to the information and explanation given to us the companyhas a regular program of physical verification of fixed assets on selective basis.
c) According to the information and explanations given to us and on thebasis of our examination of the records of the company the title deeds of immovableproperties are held in the name of the company.
However none is made available to us as they are pledged with thefinancial institutions.
II. In respect of Inventories: -We have been informed by the managementthat the inventories are physically verified by external agency during the periodappointed by the RP (Resolution Professional) at each quarter end and no majordiscrepancies have been pointed out by them. However physical verification of stock ofDies & Fixtures has not been conducted neither by management nor by third agency. Thevaluation of inventory has been certified by the management.
III. The company during the year has not granted any loans securedor unsecured to companies firms Limited Liability Partnerships or other parties coveredin the register maintained under section 189 of the Companies Act 2013 ( the Act ).Accordingly paragraph 3(iii) of the Order is not applicable to the company.
IV. In our opinion and according to the information and explanationsgiven to us the company has complied with the provisions of section 185 and 186 of theAct with respect to the loans investments guarantees and security during the year.
V. In our opinion and according to the information and explanationsgiven to us the company has not accepted any deposit from the public covered underSection 73 to 76 of the Companies Act 2013. Therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.
VI. We have not reviewed the records maintained by the company pursuantto the rules prescribed by the central government for maintenance of cost records undersub-section (l) of section 148 of the act as we have not been provided with the sameMoreover as informed by the company cost audit is under process.
VII. According to the information and explanations given to us andbased on the records of the company examined by us the company has not been regular indepositing the undisputed statutory dues including Provident Fund Employees StateInsurance Income-tax Sales-tax Service Tax Custom Duty Excise Duty Value added taxGoods and service tax and other material statutory dues as applicable with theappropriate authorities in India during the year ended 31st March 2020.According to the information and explanation given to us arrears of undisputed statutorydues outstanding for a period of more than 6 months as on 31st March 2020 wereRs.
2120.91 Lakhs and outstanding for less than six months as on 31stMarch 2020 were Rs236.76 lakhs. According to the information and explanation given to usand based on the records of the company examined by us the company has not paid/depositedfollowing statutory dues on account of any disputes.
|S.No. Name of Statute ||Period to which it pertains ||Forum where dispute is pending ||Amount In lacs |
|1 Excise/Service Tax/Sales Tax ||2008 to 2018 ||Commissioner Central Excise Appeals/Tribunal ||13615.78 |
|2 Income Tax ||2006 to 2016 ||Income Tax Appellate Tribunals ||1161.36 |
|Total || || ||14777.15 |
VIII. Based on our audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to informationand explanations given by the management A corporate insolvency resolution process ( CIRP) has been initiated against the company vide an order of Chandigarh bench of the NationalCompany Law Tribunal (NCLT) dated December20 2017 under the provisions of the insolvencyand bankruptcy code 2016 (Code). Pursuant to the order the power of the Board ofdirectors stands suspended and are exercisable by Mr. Dinkar T. Venkatasubramanian whowas appointed as interim resolution professional (IRP) by the NCLT vide order datedDecember22 2017 and was consequently confirmed as Resolution Professional (RP) by theCommittee of Creditors (CoC) in its meeting held on January 12 2018.
IX. The Company did not raise any money by way of initial public offeror further public offer (including debt instruments) and term loans during the year.Accordingly paragraph 3 (ix) of the Order is not applicable.
X. To the best of our knowledge and according to the information andexplanations given to us no fraud by the Company or no material fraud on the Company byits officers or employees has been noticed or reported during the year.
XI. In our opinion and according to the information and explanationsgiven to us the Company has paid/provided managerial remuneration in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theAct.
XII. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.
XIII. In our opinion and according to the information and explanationsgiven to us the Company is incompliance with Section 177 and 188 of the Companies Act2013 where applicable for all transactions with the related parties and the details ofrelated party transactions have been disclosed in the standalone financial statements asrequired by the applicable accounting standards.
XIV. During the year the Company has not made any preferentialallotment or private placement of shares or fully or partly paid convertible debenturesand hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.
XV. In our opinion and according to the information and explanationsgiven to us during the year the Company has not entered into any non-cash transactionswith its Directors or persons connected to its directors and hence provisions of section192 of the Companies Act 2013 are not applicable to the Company.
XVI. The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.
Annexure B to Independent Auditors Report
(Referred to in our report of even date)
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ( the Act ) of CASTEX TECHNOLOGIESLimited.
We have audited the internal financial controls over financialreporting of CASTEX TECHNOLOGIES LTD ( the Company ) as of 31st March 2020 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.
Management s Responsibility for Internal Financial Controls
The Company s management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ( ICAI ).
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 to companys policies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company s internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the Guidance Note ) and the Standards on Auditing issued by ICAI and deemed tobe prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor s judgment including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our 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 control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of standalone Ind AS financial statements for externalpurposes in accordance with generally accepted accounting principles. A company s internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofstandalone Ind AS 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) providereasonable Assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company s assets that could have a material effect on thestandalone Ind AS financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting 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 controlsover financial reporting to future periods are subject to the risk that the internalfinancial control over financial reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.
In our opinion to the best of our information and according to theexplanations given to us the company has except for the matters as described in basisfor qualified opinion emphasis of matter other points reported in the Companies (Auditors Report) order2016 and under section 143(3) in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2020 basedon the internal control over financial reporting 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.
| ||For Raj Gupta & Co. |
| ||Chartered Accountants |
| ||FRN: 000203N |
| ||CA Raj Kumar Gupta |
|Place : New Delhi ||(Partner) |
|Date : 31/07/2020 ||Membership No: 017039 |
|UDIN:20017039AAAACR2787 || |