To the Members of CDG PETCHEM LIMITED (Formerly Urbaknitt Fabs Limited)
Report on the Audit of Standalone Financial Statements
1. We have audited the accompanying Standalone financialstatements of CDG PETCHEM LIMITED (Formerly URBAKNITT FABS LIMITED) ("theCompany") which comprise the Balance Sheet as at 31st March 2020 the Statement ofProfit and Loss including the statement of Other Comprehensive Income the Cash FlowStatement and the statement of change in Equity for the year then ended and notes to thestandalone financial statements including the summary of the significant accountingpolicies and other explanatory information.
2. In our opinion and to the best of our information andaccording to the explanations given to us the aforesaid standalone financial statementsgive the information required by 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 March 31 2020 and total comprehensive income(comprising of profit and other comprehensive income) its cash flows and changes in equityfor the year ended on that date.
Basis for Opinion
3. We conducted our audit in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Act. Our responsibility under thosestandards are further described in the Auditor's Responsibility for the Auditof the Financial Statements' section of our report. We are independent of the companyin accordance 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 provision of the Act and the Rules there under and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion on the standalone financial statements.
Emphasis of Matter
4. We draw our attention to Note 40 of the standalonefinancial statements as regards to the management evaluation of COVID 19 impact onthe future performance of the Company. Our opinion is not modified in respect of thismatter.
Key Audit Matters
5. Key audit matters are those matters that in our professionaljudgment were of most significance in our Audit of Financial Statements of the currentperiod these matters were addressed in the context of our Audit of the StandaloneFinancial Statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. For each matter below our description of how ouraudit addressed the matter is provided in that context.
|Physical Inventory Verification ||Principal Audit Procedures |
|The auditor's responsibility is to ascertain whether the management has satisfactory procedures for physical verification of inventories so that in the normal circumstances the programme of physical verification will cover all material items of inventories at least once during the year. ||Our audit procedures included but are not limited to detailed written confirmations of inventories held by the stores in-charge of different locations. |
|Due to COVID-19 pandemic and resulting countrywide shutdown the programme of physical verification of inventories of stores and spares could not be completed. ||We have tested the effectiveness of controls present for inwards and issues for consumption. We have selected samples of current year purchases present in closing stock and have verified there Goods Receipt Notes and subsequent payments made by the company. |
|As per relevant Guidance Note Auditors are advised to witness implementation of physical verification programme; however due to the unfavourable circumstances our presence was not possible. ||We have employed analytical procedures such reconciliation of quantities of opening stock purchases consumption and closing stock; comparison of current year gross profit ratio with the gross profit ratio for the previous year; comparison of significant ratios relating to inventories with the similar ratios for other company in the same industry. |
| || |
We have determined that there are no other key audit matters tocommunicate in our report.
6. The company's Board of Directors is responsible for theother information. The other information comprises the information included in the annualreport but does include the Standalone financial statements and our auditor's reportthereon.
7. Our opinion on the Standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.
8. In connection with our audit of the standalone financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the financial statements orour knowledge obtain in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthe other information we are required to report that fact. We have nothing to report inthis regard.
Responsibilities of management and those charged with the governancefor the financial statement
9. The Company's Board of Directors is responsible for thematters stated in Section 134(5) of the Companies Act 2013 ("the Act") withrespect to the preparation of these financial statements that give a true and fair view ofthe financial position financial performance including other comprehensive income cashflows and changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards () specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 and thecompanies (Indian Accounting Standards) Rule 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation 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.
10. In preparing the financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters relating 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. The Board of Directors are alsoresponsible for overseeing the company's financial reporting process.
Auditors Responsibilities for the Audit of Standalone FinancialStatements
11. Our objectives are to obtain reasonable assurance aboutwhether the Standalone financial statements as a whole are free from materialmisstatement whether due to fraud or error and to issue an auditor's report thatincludes our opinion. Reasonable assurance is a high level of assurance but is not aguarantee that an audit conducted in accordance with SAs 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 thesefinancial statements.
12. As part of an audit in accordance with SAs we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thefinancial 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.
Obtain an understanding of internal financial controlsrelevant to the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls with referenceto financial statements system in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used andthe reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use ofthe going concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content ofthe financial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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 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 work; and(ii) to evaluate the effect of any identified misstatements in the standalone
13. We communicate with those charged with governance regardingamong other matters the planned scope and timing of the audit and significant auditfindings including any significant deficiencies in internal control that we identifyduring our audit. 14. We also provide those charged with governance with astatement that we have complied with relevant ethical requirements regarding independenceand to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence and where applicable related safeguards.
15. From the matters communicated with those charged withgovernance we determine those matters that were of most significance in the audit of thefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirement
As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure B" statement on thematters Specified in paragraphs 3 and 4 of the Order.
16. As required by section 143(3) of the Act we further reportthat: a. we have sought and obtained all the information and explanations which tothe best of our knowledge and belief were necessary for the purpose of our audit. b. inour opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books; c. The Balance Sheet Statementof Profit and Loss including the Statement of Other Comprehensive
Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this Report are in agreement with the books of account; d. In ouropinion the aforesaid financial statements comply with the Accounting Standards specifiedunder section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014Companies (Indian Accounting Standards) Rules 2015 as amended; e. on the basis ofwritten representations received from the directors as on March 31 2020 and taken onrecord by the Board of Directors none of the directors is disqualified as on March 312020 from being appointed as a director in terms of Section 164(2) of the Act; f. withrespect to the adequacy of the internal financial controls over financial reporting of theCompany and the operating effectiveness of such controls refer to our separate report in"Annexure A"; our report express an unmodified opinion on the adequacy andoperating effectiveness of the company`s internal financial controls over financialreporting. g. With respect to the other matters to be included in theAuditor's Report in accordance with the requirement of section 197(16) of the Act asamended in our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its director during theyear is in accordance with the provisions of section 197 of the Act. h. Withrespect to other matters to be included in the Auditor's Report in accordance withRule 11 of the
Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us:
(i) The Company does not have any pending litigations whichwould impact its financial position. (ii) The Company did not have any long-termcontracts including derivative contracts; as such the question of commenting on anymaterial foreseeable losses thereon does not arise. (iii) There has not been anoccasion in case of the Company during the year under report to transfer any sums to theInvestor Education and Protection Fund. The question of delay in transferring such sumsdoes not arise.
|For Luharuka & Associates |
|Chartered Accountants |
|Firm Reg No:- 01882S |
|Rameshchand Jain |
|(Partner) Membership No.023019 |
|UDIN: 20023019AAAACN2629 |
|Place: Secunderabad |
|Date: 17th July 2020 |
Annexure A - to the Auditors' Report
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
1. We have audited the internal financial controls withreference to Standalone Financial Statements of CDG PETCHEM LIMITED (Formerly UrbaknittFabs Limited) ("the Company") as of 31 March 2020 in conjunction with our auditof the Standalone financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
2. The Company's management is responsible for establishingand maintaining 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 tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.
3. Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and 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.
4. Our audit involves performing procedures to obtain auditevidence about the adequacy of the internal financial controls system over financialreporting and their operating effectiveness. Our audit of internal financial controls overfinancial reporting included obtaining an understanding of internal financial controlsover financial reporting assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.
5. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion on the Company'sinternal financial controls system with reference to financial statements over financialreporting.
Meaning of Internal Financial Controls over Financial Reporting
6. A company's internal financial control over financialreporting is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin 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 offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls Over FinancialReporting
7. Because of the inherent limitations of internal financialcontrols over financial reporting including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols over financial reporting to future periods are subject to the risk that theinternal financial control over financial reporting may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.
8. In our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls with reference to Standalone financial statements were operatingeffectively as at 31 March 2020 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.
Annexure- B' referred to in Independent Auditors' Report tothe members of the Company on the Financial statements for the year ended 31st March2020 we report that
(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets ; (b) Asexplained to us fixed assets have been physically verified by the management atreasonable intervals. According to the information and explanation given us no materialdiscrepancies were noticed on such verification; (c) According to the information andexplanations given to us and on the basis of our examination of the records of thecompany the title deeds of immovable property held in the name of company.
(ii) (a) The inventories have been physically verified atreasonable intervals by the management.
(b) In our opinion and according to the information and explanationsgiven to us the procedures of physical verification of inventories followed by themanagement are reasonable and adequate in relation to the size of the company and thenature of its business.
(iii) The company did not grant any loan to corporate covered inthe register maintained under section 189 of the Companies Act 2013 (theAct').
(iv) In our opinion and according to the information andexplanations given to us the Company has complied with the provisions of section 185 and186 of the Act with respect to the loans and investments made.
(v) The Company has not accepted any deposits from the public.
(vi) As informed to us the Central Government has notprescribed maintenance of cost records under subsection (1) of Section 148 of the Act.
(vii) According to the information and explanations given to usand based on the records of the company examined by us the company is generally regularin depositing the undisputed statutory dues including Provident Fund Employees'State Insurance Income-tax Sales-tax Wealth Tax Service Tax Custom Duty Excise Dutyand other statutory dues as applicable with the appropriate authorities in India;
According to the information and explanations given to us and based onthe records of the company examined by us there are no dues of Income Tax Wealth TaxService Tax Sales Tax Customs Duty and Excise Duty which have not been deposited onaccount of any disputes.
(viii) According to the records of the company examined by usand as per the information and explanations given to us the company has not defaulted inrepayment of loans from any financial institution or banks and has not issued debenture.
(ix) The Company did not raise any money by way of initialpublic offer or further public offer (including debt instruments) and term loans duringthe year. Accordingly paragraph 3 (ix) of the Order is not applicable.
(x) According to the information and explanations given to usno material fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the course of our audit.
(xi) According to the information and explanations give to usand based on our examination of the records of the Company the Company has provided formanagerial remuneration in accordance with the provisions of section 197 read withSchedule V to the Act.
(xii) In our opinion and according to the information andexplanations given to us the Company is not a nidhi company. Accordingly paragraph3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to usand based on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.
(xiv) According to the information and explanations give to usand based on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.
(xv) According to the information and explanations given to usand based on our examination of the records of the Company the Company has not enteredinto non-cash transactions with directors or persons connected with him. Accordinglyparagraph 3(xv) of the Order is not applicable.
(xvi) The Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934.
For Luharuka & Associates
Firm Reg No:- 01882S
(Partner) Membership No.023019
Date: 17th July 2020